U.S. Economy

Henry Paulson - U.S. Treasury Secretary

President Bush has named a new Secretary of the Treasury. Mr. Paulson (a senior Goldman executive) will do more than put his finger on the pulse of world financial markets. Collectively, Goldman bankers ARE the pulse of world financial markets. He is a fantastic catch.

John Snow, the outgoing Treasury Secretary, is a solid citizen from industry, and Fed Chairman Bernanke comes to us with excellent credentials from the academic world. However, what we really needed was a star player from the fast lane (Wall Street), because the real game on the planet is played in the fast lane.

Everything now hinges on re-establishing the credibility of the only trading currency that the world can trust - the U.S. dollar. It's a daunting task, and Paulson's credentials are desperately needed to tackle the job.

In recent days we have witnessed short term reversals in dollar-priced markers (like commodities and currencies). If Mr. Paulson gets off on the right foot, I expect these reversals to accelerate as the U.S. dollar itself begins to recover.

Will Paulson succeed? There's no question that he has the right credentials to do the job, but it makes me think of an old saying: "You cannot push the river".

World energy consumption is soaring to keep pace with exponential population growth. That is a reality recognized by all. No one has yet agreed to acknowledge the second earth shaking reality, that the nuclear age is over.

The U.S. certainly needs to gain control of its financial affairs on the planet. Paulson will help with this, but the world trading currency also needs a foundation of secure available conventional energy. All countries that fail the energy supply assurance test are doomed to mediocrity or worse as we stumble toward the end of the age.