Confidence...

We quoted FDR's advisor Ray Moley recently, who spoke about the "...vital part that public confidence had in assuring solvency".

The UK Telegraph (and others) report: Financial crisis: Hank Paulson warns that more banks and businesses will fail

In his talk, Paulson identifies the four key challenges in our economy today as "Confidence, Capital, Systemic Risk, and Liquidity".

We agree with the Secretary, and Ray Moley, that Confidence is #1. We thus find it unsettling that Secretary Paulson went on to say (emphasis added): "One thing we must recognize - even with the new Treasury authorities, some financial institutions will fail."

Dartmouth, Harvard MBA, Investment Banker... hasn't this guy ever heard of a euphemism ? Confidence is all about the glass being half-full, or, perhaps in this case, one-quarter full... rather than three-quarters empty.

While certainly a true statement (financial institutions fail every year, even during booms), perhaps "may fail", "still face difficult challenges", "have a hard road ahead", etc., would have served Priority#1 better than damning "some institutions" to oblivion and leaving investors to sort out which ones he's talking about.

Taking no chances in this environment, and assuming the Secretary of the Treasury knows more than themselves, market participants' safest bet is to get the heck out of the way and watch from a safe distance... Not the best way to bring capital into the financials.

After seeing Mr. Paulson's recent performances during Congressional testimony, a frantic press conference after the first failed bailout vote, and yesterday, we suggest that Hank move into the background in any further public appearances and that a new 'Undersecretary for Confidence' be appointed.

We have the perfect candidate:

Billy Mays, Pitch-man extraordinaire

.