What Paulson Meant to Say

If you listen carefully, the treasury secretary sounds pretty gloomy.

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If anybody knows how much worse the meltdown of 2008 is likely to get, it's Treasury Secretary Henry Paulson. But he's not telling.

Paulson held a press conference in the midst of momentous developments involving Lehman Brothers, AIG, and Merrill Lynch to say everything would be OK. In a few years. If the market cooperates. And the government doesn't run out of money. And politicians don't make things worse. And oh, by the way, don't blame me.

In fact, if you read Paulson's words closely, he wasn't that reassuring at all. Here's what Paulson said, along with some guesses about what he might have said if the global financial markets weren't scrutinizing every syllable:

Paulson: "The one thing I think I'd like to focus on is the way our financial system came together, and those institutional leaders coming together to support the markets. And that's what I'd like to see continue to happen here."

Translation: Hey guys—yeah, we all used to be buddies up in Manhattan, joking about what a bunch of buffoons the feds were. That's over. Help me out, or heads will roll. Paulson: "We have an archaic financial regulatory structure that came in place a long time ago, after the Depression. It really needs to be rebuilt."

Translation: When I first came to Washington from Goldman Sachs, I thought the government was outdated and inefficient. It's worse than I ever imagined. Reporter: "Don't you accept some of the blame? You've taken steps, and the economy hasn't gotten better. The situation is getting worse."

Paulson: "I'm playing the hand that was dealt me. A lot of what I'm dealing with, you know, I'm dealing with the consequences of things that were done often many years ago."
Translation: Seriously? You're blaming ME for this mess? Dude, go talk to Alan Greenspan or Bill Clinton or Ronald Reagan or FDR. Paulson: "The situation and facts around Bear Stearns were very, very different to the situation we were looking at here in September. And I never once considered that it was appropriate to put taxpayer money on the line in resolving Lehman Brothers."

Translation: OK, we panicked by helping salvage Bear Stearns in March. We should have let it fail altogether and saved our $29 billion for bigger problems. There, I said it. At least we didn't make the same mistake twice. Paulson: "The president has been a great boss as we work through [this].... He's encouraging me to do the right things."

Translation: President Bush doesn't understand this any better than all the rest of you. He's letting me handle it, thank God. Paulson: "Until we stem the housing correction, until the biggest part of that is behind us and we have more stability in housing prices, we're going to continue to have turmoil in the financial markets."

Translation: I'll be long gone before this nightmare ends. Paulson: "When I look around the world and look at the long-term economic fundamentals we have in this country, I think they compare favorably with what I see in any major developed country in the world."

Translation: What a disgrace. Once we were the envy of the world's capitalists. Now we're no better than France. Paulson: "There is a reasonable chance that the biggest part of that housing correction can be behind us in a number of months. I'm not saying two or three months, but in months as opposed to years."

Translation: Let me be as vague as possible: If you add enough modifiers to the clause, the financial crisis will end sooner or later.