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Bryan Caplan  
PERMANENT LINK | SEPTEMBER 30, 2008

Paulson as a High-Pressure Telemarketer

Bryan Caplan
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How Would We Know If a Bail-Ou... Son of Chrysler: The Stealth B...

A few years ago, I was tormented by an aggressive broker who kept calling me at 6 AM to sell me stocks. I always hung up on him; but even when I was slamming down the phone, I could still hear him shouting his sales pitch. So I found this eerily amusing:

This technique is one of the last ones in the the Shafiroff book. Once an aggressive retail broker is upside down, the plea goes out for raising more money from the mark client. "Believe me, I hate being under water more than you. I pulled in some favors, this is the trade that makes it all back for us and then some. I could even get in trouble telling you this, so don't mention this to your pals. This is the one -- but I need you to send in more capital so we can recoup the prior trades that went bad on us."

I guess Paulson read the book in the early days of his career. That line of bull***t is identical to what the public is now being fed. A series of OpEds in the Washington Post and the Wall Street Journal (and who knows where else) are all pushing the same nonsensical line: The bailout plan is a big money maker...

Financial markets are always complicated. Now they're more complicated than ever. But the more complicated the world gets, the more you need to use your common-sense skepticism.

In other words, when someone asks you for $700B for reasons he can't clearly explain, you hang up the phone.


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COMMENTS (13 to date)
bt writes:

Bravo, well said.

Posted September 30, 2008 12:40 PM
Gary Rogers writes:

Amen!

Posted September 30, 2008 1:05 PM
Randy writes:

Hmmm... I wonder if there's a way to report Paulson for spamming...

Posted September 30, 2008 1:11 PM
Methinks writes:


This is the same line of reasoning used by gamblers, which is why they end up in so much debt.

Posted September 30, 2008 3:58 PM
Amanda writes:

Thank you for this...last week the administration's push to pass a bailout quickly reminded me of tactics I last heard used by a time share salesman.

Posted September 30, 2008 4:36 PM
aaron writes:

Yup. But if you need a more muddle reason why Paulson is wrong, here are my Best and Worse Case Scenarios. I think I might have Tyler beat.

Posted September 30, 2008 4:54 PM
The Drunken Priest writes:

Nice analogy. I also like the Paulson as Nigerian Banker thread going around...

Posted September 30, 2008 5:00 PM
donate furniture writes:

That is well put indeed! I cannot believe what is going on now. So now my guilt we be played on like kids not having access to college loans and therefore I should support the bailout. Outrageous!

Posted September 30, 2008 6:22 PM
AS writes:

First sale scene from Boiler Room

http://www.youtube.com/watch?v=TbIRedOqDwE&feature=related

Posted September 30, 2008 7:19 PM
Unit writes:

Bryan,

what do you think is the proportion of academic economists that oppose the bail-out?

Posted September 30, 2008 11:32 PM
Unit writes:

In other words, why don't professional economists institute a computer program that records each one's opinion on facts of the day and then posts anonymously on the internet this average expert opinion. That would be useful.

Posted September 30, 2008 11:35 PM
The Cupboard Is Bare writes:


"... this is the trade that makes it all back for us and then some..."

This is the same line of reasoning used by gamblers, which is why they end up in so much debt.

Posted October 1, 2008 7:46 AM
Methinks writes:

Paulson is raising capital for the largest distressed debt hedge fund - run by government. And he's saying we're all going to just die if he doesn't get the money. Sounds like a boiler room operation to me.

Posted October 1, 2008 8:16 AM
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