Did Trump Adopt Former Treasury Secretary Hank Paulson’s Bazooka Theory?

By Mish Shedlock of MishTalk

Friday, June 20, 2025 9:15 PM EDT

Image Source: Unsplash

The answer is yes, but the context is much different.

What Is the Bazooka Theory?

“If you’ve got a bazooka in your pocket, and people know you’ve got it, you may not have to take it out.”

Former Treasury Secretary Hank Paulson made that statement on July 15, 2008, during his testimony before the Senate Banking Committee regarding government support for mortgage lenders Fannie Mae and Freddie Mac.

Paulson Fires Bazooka

In October, Paulson fired his bazooka in what was the start of the biggest bank bailout in history.

Please recall Compelling Banks To Lend At Bazooka Point written October 15, 2008.

The chief executives of the nine largest banks in the United States trooped into a gilded conference room at the Treasury Department at 3 p.m. Monday. To their astonishment, they were each handed a one-page document that said they agreed to sell shares to the government, then Treasury Secretary Henry M. Paulson Jr. said they must sign it before they left.

By 6:30, all nine chief executives had signed — setting in motion the largest government intervention in the American banking system since the Depression and retreating from the rescue plan Mr. Paulson had fought so hard to get through Congress only two weeks earlier.

All told, the potential cost to the government of the latest bailout package comes to $2.25 trillion, triple the size of the original $700 billion rescue package, which centered on buying distressed assets from banks. The latest show of government firepower is an abrupt about-face for Mr. Paulson, who just days earlier was discouraging the idea of capital injections for banks.

Fed Fires Bazookas

Also note the Fed slashed interest rates to zero, started an alphabet soup of lending facilities, suspended mark-to-market accounting (still suspended), started paying interest on all reserves, and launched QE to heights no one would have believed if I predicted them at the time.

Trump’s Bazookas

Reciprocal tariffs of up to 140 percent
Breaking USMCA
Mass deportation threats on and off
Repeat “Two Week Warnings”

None of the above threats had the intended effect.

Trump announced 200 deals “guaranteed” and delivered one. Threatening nations with tariffs at the negotiating table failed miserably, even after the bazookas were fired. Trump did not get deals he liked even after upping tariffs.

Then, Trump was forced to dramatically cut back tariffs when China withheld rare earth elements.

On April 17, Trump said he would know if Putin is tapping us, along?

Well, Mr. President, what have you found out in the last two months?

Honestly, the best thing about Trump is the fact he always chickens out.

When facing public backlash for the worst elements of his agenda, he always folds like a lawnchair. https://t.co/JsyDlUFdhJ
— Joshua Reed Eakle 🗽 (@JoshEakle) June 19, 2025

Trump Will Decide Whether to Bomb Iran Within Two Weeks

Yesterday, I commented that Trump Will Decide Whether to Bomb Iran Within Two Weeks

In saying he’ll make a decision on Iran within two weeks, President Trump has reached for an old standby.

Two weeks and he’ll know whether Russian President Vladimir Putin wants to end the war in Ukraine. Two weeks until the next move on trade. Two weeks until a health care overhaul is released. And two weeks for an infrastructure plan.

“When the next decision isn’t obvious, sometimes he just buys himself more time,” said GOP strategist Alex Conant, who worked in the George W. Bush White House. “Two weeks is forever in politics. The truth is, a lot of problems just work themselves out if you give them time.”

That appears to be Trump’s current calculation. He is trying to buy more time in hopes of a diplomatic breakthrough with Iran – or a total surrender. Putting off a decision also keeps the onus on Israel to continue the fight, and spares Trump the difficult choice of whether to commit the U.S. militarily. Trump campaigned on getting the U.S. out of wars, not joining them, and his political base is in a fierce debate over Iran.

The bazooka this time is a bunker-buster bomb.

CNN reports Israel has pushed the US to use its ‘bunker buster’ bomb on Iran. Here’s what the weapon can do

As President Donald Trump is warming to the idea of using US military assets to strike Iranian nuclear facilities, officials and experts have suggested the US’ 30,000-pound “bunker buster” bomb is the only weapon capable of destroying the Fordow Fuel Enrichment Plant, a facility thought to be key to Tehran’s nuclear program, which is carved into a mountain and extends deep underground.

The GBU-57A/B Massive Ordnance Penetrator (MOP), which has yet to be used operationally, is designed for “reaching and destroying our adversaries’ weapons of mass destruction located in well-protected facilities,” according to a fact sheet from the US Air Force.

The weapon is a 30,000-pound bomb with 6,000 pounds of “high explosives,” said Masao Dahlgren, a fellow with the Center for Strategic and International Studies Missile Defense Project.

What to Know About the Fighting Between Israel and Iran

The New York Times comments What to Know About the Fighting Between Israel and Iran

A day of talks involving representatives of Iran and Europe in Geneva on Friday broke up with no signs of a breakthrough, a week into the latest escalation of the conflict in the Middle East.

Civilians have borne the brunt of the attacks, as Israeli missiles hit some apartment buildings and residential complexes. Residents who spoke to The New York Times said they had not experienced attacks like this in a generation, with some recalling the Iran-Iraq War of the 1980s.

Some Iranians are steeling themselves for a long conflict and weighing how to find relative safety. Long lines of cars have packed highways heading out of Tehran, though many residents say they have no place to go.

U.S. intelligence agencies continue to believe that Iran has yet to decide whether to make a nuclear bomb even though it has developed a large stockpile of the enriched uranium necessary for it to do so, according to intelligence and other American officials.

The U.S. military has concluded that one bomb would not destroy the Fordo facility on its own; an attack would have to come in waves, with B-2s releasing one bomb after another down the same hole.

Trump is hoping the threat of using a bunker buster bomb will mean he won’t have to use it.

So far, no luck.

Recall Trump’s claim that Russia would not have invaded Ukraine on his watch. Then Trump pulled out bazookas, threatening sanctions on Russia. What happened to those threats?

Trump made similar claims regarding Iran and Israel. Supposedly, it would never happen on his watch. That bazooka threat vanished, too.

Since it will take more than one bomb to hit the site, perhaps Iran wants to make Trump use a bomb before it negotiates.

But who knows where the latest high-level games of chicken take us?

I have been warning about this for years. It’s now happening.

June 5, 2025: Two-TACO Trump Day on His Call to Xi Over Rare Earth Elements

Trump is hyping up his call with China’s Xi. But chalk up 2 more TACOs.

June 5, 2025: Trump Gives Negotiators the Green Light to Lift US Export Controls

There is no precedent for negotiation over security-imposed export controls.

June 12, 2025: China Keeps Leverage on the US with a 6-Month Limit on Rare Earth Exports

Trump’s crowing over a new deal is more hype than reality in 3 ways.

When other nations pull out their own bazookas, Trump backs down.

Iran wants the bomb for the same reason North Korea wanted the bomb. Some might argue justifiably so.

Does A) Israel need to take out Iran’s nuclear facilities, or does B) Israel’s action show why Iran needs a bomb to defend itself?
C) Neither
D) Bothhttps://t.co/SxT8z725o5
— Mike "Mish" Shedlock (@MishGEA) June 13, 2025