Yet More From Paulson's Secret Diary

July 10, 2009.

Dear diary, 26 weeks have passed since I last wrote. I find myself pouring out my heart to you, sharing my solitude. I read and reread my entries from September 7, 2008 and January 21 of this year and simply can't believe how things turned out.

At the end of January, I stepped down as U.S. Secretary of the Treasury, after having saved the global financial system. I abandoned politics and threw myself into an academic career, at Johns Hopkins University in Maryland.

But I follow developments on Wall Street. Every morning, when I open the Wall Street Journal, I discover anew how right I was, and how short-sighted my critics were.

This week Congress is going to be grilling me again. There's a new sheriff in town, but the morons in Congress are the same old morons. Republicans or Democrats, it makes no difference: they all want to make hay out of the financial crisis and feast on a pound of my flesh.

O Diary, what a stupid world this is. I thought they'd applaud me, understand just how brilliant my financial rescue plan was. But the halfwits are rooting about in the mud again, reenacting the events of last fall, when Ben and I dismantled and rebuilt the entire financial system.

Jerks. Don't you see that everything is just fine now? That capitalism won?

Not even 10 months have passed since the crisis began, and almost all the investment banks are back to raising salaries and handing out bonuses. What does "flourishing economy" mean if not rising salaries and bonuses in the millions? Just last week I heard that UBS is paying signing bonuses of $2 million, $3 million to superstar bond traders. Over in London, the talents are being offered three-year contracts for $10 million and counting.

But they, those midgets in Congress, those morons in the press and a million frustrated bloggers want to rummage about in those events of last September, October and November, when I let Lehman Brothers fall, forced the Bank of America to buy Merrill Lynch and poured a few tens of billions of dollars into AIG.

Why? What for? Will it create jobs? Will it raise the Dow Jones? Who will it help? Only those pygmies in Congress, that's who. Those dunderheads who urged Bill Clinton and George Bush to shove more and more cheap mortgages down Americans' throats, so the stupid voters would be happy homeowners.

Hey, Lilliputians - read the papers! The. Crisis. Is. Over. My rescue plan worked. With less than a trillion dollars, even if it's still all on paper, I solved the problem. Me! Obama is just reaping the fruits of my labor.

Obama, holy moley, Barack Obama - just hearing that name gives me hives. He's a genius, I have to admit. Since taking over he's done exactly what Bush and I did. But all those leftie bloggers and journalists adore him.

Half the clerks and aides and assistants at the White House are ex-Wall Streeters. Bankers, advisers, lawyers, lobbyists. But what do the midgets and the bloggers care about that? Obama is the "prophet of change." They accuse me of having a bias toward Wall Street just because I spent 26 years at Goldman Sachs, including seven as CEO.

What's 26 years? Why the hell are people assuming that somebody who spent 26 years at Goldman Sachs would be biased toward that firm, or see the world through the eyes of a Wall Street banker? That's exactly the kind of thinking that created this financial system: prejudice completely unbased on facts.

July 14, 2009.

The truth is out, ladies and gentlemen, and what timing! Two days ahead of my hearing before Congress, when Google News showing about 1,800 negative articles about me, the moment of truth arrived.

A moment of truth for all America, ladies and gentlemen. A moment for all of us to look into our souls and think about all the things we said and wrote in the last year. A moment of regret. A moment of naked truth. A moment when everything suddenly seems crystal clear. A moment of returning to the basic values that unite all of us in the U.S. of A.

A moment when the whole world stands still and sees the triumph of the greatest free power in the world.

The time: 8:15, Wall Street time. The event: Goldman Sachs published its financial statement for the second quarter.

It netted $3.44 billion and reported a 45% increase in revenues.

Hah! After a year of lies and garbage, and dastardly attempts by millions of midget communists to rewrite history, Goldman Sachs proved that capitalism and the free market have prevailed.

The failure of a few stumbling bankers, bungling managers and short-sighted politicians had been turned into a whole ideology about the collapse of economic models. And there Goldman Sachs goes and proves that the best win, and the rest - well, they go whine to Congress or the press.

Ideological crisis, my patootie. How could anybody even think such a thing with Goldman presenting results like that?

If I might, it isn't just that its share price jumped above $150, rising more than 200% from its lowest point. It's much more than that. In our, I mean their, financial statement (I'm not there any more, I haven't had anything to do with that company for three years), Goldman Sachs set aside $11.4 billion for worker bonuses.

Workers, my friends, workers! Ordinary workers! The little people who make up this great country! People who get up early every day, go to the office, trade bonds, sell shares, merge companies, manage money quietly, serenely, without squealing or complaining. People doing their jobs!

And what do the midgets say? They're midgets. What do you think they say, Diary? They bleat about those billions we poured into saving Goldman Sachs ten months ago, when the whole financial system stood on the brink of the void. They babble on about that decision Goldman made to become a banks holding company, which enabled it to raise money from the government at almost zero cost, and invest it back in the market. Well, when you're a midget, that's the sort of thing you can see. It's all about perspective.

But I have no expectations, diary. I'm not expecting them to apologize. I expect nothing of those pygmies in Congress. I know that only I, along with Goldman CEO Lloyd Blankenfein and a few tens of thousands of people working at Goldman and other great banks know the truth. We won't let them rewrite history for us. In every quarter, with every billion dollars given to workers as bonuses, we can stand proud before the people of America and shout: Long live capitalism! Long live Wall Street! Long live Goldman Sachs!

I can't say I was surprised by what went down in Congress today. Midgets will be midgets. They kept going back to that stupid story about Lehman collapsing and the negotiation in which Ben and persuaded that son of a bitch, Ken Lewis, the boss of the Bank of America, not to renege on his agreement to buy Merrill Lynch.

They have this thing about "taxpayers' money." They keep saying it. Once upon a time it was the province of Democrat midgets. Now it's my Republican colleagues who seem addicted to that idiotic catchphrase. You gave taxpayers' money to bankers, to the carmakers, to hedge funds, to friends. Yada yada yada.

That's my Republican colleagues for you. Just let the good times stop rolling a minute, a bank or two collapse and they fold like wet toilet paper. They forget all those wonderful things that capitalism brought us and start whining about taxpayers' money.

They kept asking me why Lehman was allowed to fall and hadn't Bank of America wanted to buy it, but I blocked it. Great gods, what am I supposed to tell these dolts? If I tell them the truth, there's no way they'd understand. Go explain that nobody needed Lehman Bros, that its boss Dick Fuld - well, his name says it all. He's a schmuck and that fu ... that bank was completely superfluous. Here we are in mid-2009 and nobody's missing it. Nobody even notices that it's gone. The claim that rivalry between Goldman Sachs and Lehman Bros affected my judgment - that's ridiculous. Lehman didn't even count next to Goldman. Look where they are today.

Then they grilled me over an open fire for a couple of hours about Bank of America and Merrill Lynch. I said I didn't remember. I really don't. What does it matter if I forced Ken to buy Merrill Lynch or not?

If I were in Congress, I'd have other questions on my mind. For instance, why did Obama inject $50 billion into General Motors? Believe me that the money I injected into the banks is a lot more likely to be returned than Obama's infusion into GM's unions. Between us, they're always going to be gasping in Toyota's dust. But Obama is the prophet of change and the midgets couldn't care less. One day, in a year maybe, or two, or never - they'll realize that the American way is a religion, a culture, and Obama can't change it.