Hank the Hypocrite (Tradecraft)

Published July 20, 2009 at 4:00 a.m.

Open your wallet and pull out a dollar bill and note that it isn't the president's signature on our country's currency, but that of the Secretary of the Treasury...Known as the country's chief financial officer, the Treasury secretary is the principle economic advisor to the president...From taxes to borrowing to currency, he is integral at shaping the nation's economic policy and path.

There wasn't much love for former Treasury Secretary Henry "Hank" Paulson while testifying before Congress last week...Appearing in front of the House Committee on Oversight and Government Reform, Paulson was repeatedly accused of deceiving lawmakers into supporting the original Troubled Asset Relief Program — a.k.a. TARP — plan to have government purchase illiquid assets only to instead make direct cash infusions into banks, many of which reportedly didn't want the government's "help" in the first place...He's also been charged with pressuring Bank of America (BAC) CEO Ken Lewis into completing a buyout of Merrill Lynch.

But what's truly shameful about Paulson's testimony is his pride in engineering the unprecedented interventions and bailouts that have left a significant amount of the nation's private economy in politicians' hands...From taxpayer funded support of GM's electric car to Congress's attempts to steer TARP dollars or government jobs to favored constituents, we've documented numerous ways over the past 18 months in which Washington now runs the economy, not profit-seeking corporations and individuals.

That began under Paulson...It's almost as if you'd expect the Department of Health and Human Services or Education to come up with that sort of plan...but Treasury?...Shouldn't the free market's chief financial officer actually support a free market? Paulson honestly seems to believe that, without his quick maneuvers, the nation's economy would have imploded into a post-apocalyptic, Mad Max-style dustbowl in which we'd all resort to bartering with shells and scraps of tin. Really?

As Paulson takes yet another victory lap over the fact that unemployment is "only" at 9.7%, ask yourself if the country be better if unemployment was at 0% — but we lived in a totalitarian state? Do we expect leaders to govern based on principles...or does "anything go" in order to achieve short-term results that look good above the fold in the New York Times? The man or woman who signs our country's currency should be expected to advocate, promote and protect capitalism...It's hard to see how Paulson didn't fail miserably on that front.

Out of the Ordinary Income

Missed out on the historic rally in emerging market bonds? Investors hunting for income and exposure to the now-white-hot sector might consider DWS Multi-Market Income Trust (KMM), a diversified income fund heavy into emerging market credits like Peru (4.3%), Turkey (2.8%) and Russia (2.2%).

Bank From the Brink Bonds

DWS Multi-Market Income Trust - 3 years

The fund now yields 11% and is still trading at a -13% discount to its underlying NAV.

SMARTMONEY ® Layout and look and feel of SmartMoney.com are trademarks of SmartMoney, a joint venture between Dow Jones & Company, Inc. and Hearst SM Partnership. © 1995 - 2009 SmartMoney. All Rights Reserved.

Back | Read more at Smart Money