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Paulson tries to rewrite the record

US Treasury secretary Hank Paulson seems to be making an effort to rewrite his part in the failure of the US financial system, perhaps in an effort to influence the verdict of history.

English football fans have a reputation for hurling foul-mouthed abuse at opposing teams and supporters. But their most fearful chant contains no profanities and is aimed at the team’s manager when things are going badly wrong. It is a slow, mournful, sometimes contemptuous refrain. It often precedes a coach’s sacking.

"You don’t know what you’re doing. You don’t know what you’re doing."

Has soon-to-depart US Treasury secretary Hank Paulson been hearing this reproach in his dreams? He seems to be making an effort to rewrite his part in the failure of the US financial system, perhaps in an effort to influence the verdict of history.

In his testimony to the house committee on financial services in November, he seemed to admonish the politicians for delaying his Tarp plan. Paulson asserts that market conditions worsened so much in the two weeks it took Congress to pass the legislation – while the stock market lost more than $2 trillion – and the global market crisis became so broad and severe that he was forced to change tack and resort to direct injections of capital.

One can only sympathize with Paulson when he points out that there is no playbook for responding to this turmoil, being of a kind not seen before, and that this requires policymakers to adjust their responses as the damage to the economy and financial system reveals itself.

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