Hank Paulson Rides to the Rescue

Hank Paulson has done a masterful job as Treasury Secretary. He lost $200 Million in salary per year by taking the job but he has set Goldman up for a great run over the next 15 years. Today, he rode to the rescue on his white horse while wearing his white cowboy hat.

The rumor is that he will now set up a government trust to take some of the "bad credit" off the books of the banks. Banks do not want to sell these positions while they are marked to a tiny fraction of their "next year value". The deal with the treasury will allow the banks to get back into the mortgage business while holding the right to repurchase the deeply discounted paper to be held by the trust.

Hank will get accolades for coming through in a pinch. The markets will be "saved" just before the election.

Meanwhile, back at the ranch, Condi Rice will light into the Russians. The big evil Russians are providing the perfect foil. They are too big and too mean to be handled "Obama the Weak". While the Gallup poll shows that the popular vote has swung back to Obama's favor, a lot of states are up for grabs. McCain is competitive in Washington, Oregon, Michigan, Wisconsin, Minnesota, Ohio, West Virginia and Pennsylvania. For a few months, I have suggested that McCain may win by 2 points (a landslide). Many a President has been elected without winning a majority of votes. I believe McCain will win the popular vote by a small margin with the potential to win the electoral college by a large margin.

Expectations are low, but big change is in the cards. Obama is running on change but a lot of the change Americans want will happen between now and the election.