HANK PAULSON: 'That's bulls--t'

Hank Paulson

(Bloomberg TV)

Hank Paulson has some colorful thoughts on the Asian Infrastructure Investment Bank.

First, here's tiny bit of context: Earlier this month, some commentators — notably Harvard professor Larry Summers — said the formation of the AIIB, a new international financing consortium headed by China, marked a moment that could be remembered as "the moment the United States lost its role as the underwriter of the global economic system."

In an interview with Bloomberg's Peter Cook on Tuesday, Paulson said simply: "That's bulls--t."

Paulson, the former CEO of Goldman Sachs who also served as Treasury secretary during the financial crisis, said the Obama administration's handling of the AIIB's formation "wasn't their finest hour."

As we've noted, the major embarrassment for the US here was that major economic allies like the UK, France, and Germany were willing, in exchange for closer economic ties with China, to go against the Obama administration's request that they not join the AIIB.

But that this marked a "watershed" moment declaring the end of US global economic dominance was not something Paulson was willing to consider.

In his interview with Cook, Paulson also said China was "running out of steam" and risked a "day of reckoning" unless the country's leaders adopt a new model for municipal finances.

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