why would someone trade leadership of Wall Street's premier firm for a bit role in a dying regime?
Excellent analysis in the WSJ regarding the recent appointment of Paulson (CEO of Goldman Sachs) to the position of Treasury Secretary
Goldman Sachs Group Inc. boss Hank Paulson already has one of the best jobs in the world. So why would he trade leadership of Wall Street's premier firm for a bit role in a dying regime?
Under President Bush, the Treasury secretary's job has been gutted like a bass at a fish market. Mr. Paulson's predecessors failed to influence policy meaningfully. Deficits widened and the dollar dropped. Alan Greenspan's flooding of the market with liquidity really kept the economy moving. What's Mr. Paulson thinking?
In one respect, his departure from Wall Street looks timely. It is hard to imagine a better economic scenario: interest rates are still low by historical standards; companies, private-equity firms and hedge funds are awash in cash; mergers and acquisitions are at a cyclical peak; and securities trading volumes are booming.
Goldman recently reported mind-blowing profits. The stock, while off its highs, is up 60% in a year and has tripled since Mr. Paulson led its initial public offering. So leaving now with about $500 million of stock under his belt seems sensible. That's especially true given the dominance of the trading businesses to Goldman's bottom line. It's only natural that a former client banker like Mr. Paulson would now pass the baton to Lloyd Blankfein and his merry traders.
But it would be disingenuous to view this as a simple trade at the top. Patriotism undoubtedly plays a role. And Mr. Paulson must have felt some obligation given Goldman's emerging role as a sort of "Team America," supplying the human capital to sort out the nation's fiscal problems. Moreover, one suspects Mr. Paulson felt there is plenty of work needed to be done to prepare America's finances for more difficult times.
The dollar's recent decline reflects eroding confidence that America can keep spending profligately without consequence. With a greater percentage of government debt held by foreigners, it is imperative the nation has an articulate and persuasive chief financial officer. That Mr. Paulson is a known quantity in Beijing, and in other capitals that increasingly influence America's financial destiny, only adds to his attraction as Treasury boss.
For the sake of the country, and its creditors, one can only hope the president lets his third Treasury boss do the job.
Goldman Sachs Group Inc. boss Hank Paulson already has one of the best jobs in the world. So why would he trade leadership of Wall Street's premier firm for a bit role in a dying regime?
Under President Bush, the Treasury secretary's job has been gutted like a bass at a fish market. Mr. Paulson's predecessors failed to influence policy meaningfully. Deficits widened and the dollar dropped. Alan Greenspan's flooding of the market with liquidity really kept the economy moving. What's Mr. Paulson thinking?
In one respect, his departure from Wall Street looks timely. It is hard to imagine a better economic scenario: interest rates are still low by historical standards; companies, private-equity firms and hedge funds are awash in cash; mergers and acquisitions are at a cyclical peak; and securities trading volumes are booming.
Goldman recently reported mind-blowing profits. The stock, while off its highs, is up 60% in a year and has tripled since Mr. Paulson led its initial public offering. So leaving now with about $500 million of stock under his belt seems sensible. That's especially true given the dominance of the trading businesses to Goldman's bottom line. It's only natural that a former client banker like Mr. Paulson would now pass the baton to Lloyd Blankfein and his merry traders.
But it would be disingenuous to view this as a simple trade at the top. Patriotism undoubtedly plays a role. And Mr. Paulson must have felt some obligation given Goldman's emerging role as a sort of "Team America," supplying the human capital to sort out the nation's fiscal problems. Moreover, one suspects Mr. Paulson felt there is plenty of work needed to be done to prepare America's finances for more difficult times.
The dollar's recent decline reflects eroding confidence that America can keep spending profligately without consequence. With a greater percentage of government debt held by foreigners, it is imperative the nation has an articulate and persuasive chief financial officer. That Mr. Paulson is a known quantity in Beijing, and in other capitals that increasingly influence America's financial destiny, only adds to his attraction as Treasury boss.
For the sake of the country, and its creditors, one can only hope the president lets his third Treasury boss do the job.
posted by Double M at 7:56 AM
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