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Afternoon Topic: McCain’s Economist says We are a “Nation of Whiners,” But He is Hiding his Own Responsibility for Economic Decline |
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Phil Gramm’s interview in the Washington Times has created a great deal of reaction among all media, on and off the Internet. His bizarre statements about us being in a “mental recession” rather than a real one illustrates just how removed both he and McCain are from reality. Some excerpts:
We have sort of become a nation of whiners,” he said. “You just hear this constant whining, complaining about a loss of competitiveness, America in decline” despite a major export boom that is the primary reason that growth continues in the economy, he said…
Mr. Gramm said the constant drubbing of the media on the economy’s problems is one reason people have lost confidence. Various surveys show that consumer confidence has fallen precipitously this year to the lowest levels in two to three decades, with most analysts attributing that to record high gasoline prices over $4 a gallon and big drops in the value of homes, which are consumers’ biggest assets.
“Misery sells newspapers,” Mr. Gramm said. “Thank God the economy is not as bad as you read in the newspaper every day.”
I am sure that with his seven-figure salary, Gramm does not feel as though the economy is in a sharp decline. But for a large portion of this country, the attempts to get by on a day-to-day basis has very real effects on their lives. It isn’t what they read in a media that is trying to sell misery, but their own, real experiences. Obama struck back pretty quickly:
“That’s what he said. We’re in a mental recession. He didn’t say this but I guess this is what he meant, it’s just a figment of your imagination.â€
“This comes after Senator McCain recently admitted that his energy proposals for the gas tax holiday and the drilling will have mainly psychological benefits,†Mr. Obama went on. “Well, you know, America already has one Dr. Phil. We don’t need another one when it comes to the economy.â€
He added, “It isn’t whining to ask for more than psychological relief.â€
John McCain quickly realized the damage that Gramm’s comments could cause him and suggested that if elected the only thing that Gramm would be considered for is Ambassador to Belarus. But McCain’s and Gramm’s problem is bigger than this. The whole shape of this economic downturn is due to a runaway, unregulated investment environment put in place by one Phil Gramm.
Former Senator Phil Gramm is not simply a friend of John McCain, he isn’t only McCain’s “Economic Advisor” or a Vice-President of the Swiss bank UBS. Gramm was also once Chairman of the Senate banking Committee, and from this perch he designed and passed laws that basically got the economy in the fix that it is in. When he was on the Banking Committee he constantly argued for less regulation of financial services, and fewer restrictions on the types of business that such companies could engage in. As David Corn explains, Gramm’s crowning moment was in a midnight legislative maneuver accomplished in the shadow of Bush v. Gore in December of 2000:
As Congress and the White House were hurriedly hammering out a $384-billion omnibus spending bill, Gramm slipped in a 262-page measure called the Commodity Futures Modernization Act. Written with the help of financial industry lobbyists and cosponsored by Senator Richard Lugar (R-Ind.), the chairman of the agriculture committee, the measure had been considered dead—even by Gramm. Few lawmakers had either the opportunity or inclination to read the version of the bill Gramm inserted. “Nobody in either chamber had any knowledge of what was going on or what was in it,” says a congressional aide familiar with the bill’s history.
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For starters, the legislation contained a provision—lobbied for by Enron, a generous contributor to Gramm—that exempted energy trading from regulatory oversight, allowing Enron to run rampant, wreck the California electricity market, and cost consumers billions before it collapsed…
Because of the swap-related provisions of Gramm’s bill—which were supported by Fed chairman Alan Greenspan and Treasury secretary Larry Summers—a $62 trillion market (nearly four times the size of the entire US stock market) remained utterly unregulated, meaning no one made sure the banks and hedge funds had the assets to cover the losses they guaranteed.
The article goes on to explain the problems in detail (including a very good explanation of financial swaps), but the essence is that because of the unravelling of the regulatory and oversight authority in these arenas, most transactions were “done in the dark The current housing crisis is to a great degree due to the shady investment and trading projects that were ventured by various financial services companies. With the appetite for investments growing, subprime mortgages became increasingly attractive as an under-tapped market. you know the rest of the story — more and larger loans to borrowers who could not afford their mortgages once interest rates went up. Considering how essential the housing industry is to the health of the U.S. economy, the problems in that market is a big piece of the current economic downturn.
So Phil Gramm’s recent comments are not simply made to attack Barack Obama and all those who look at reality and say, “Hey, The Economy Stinks right now.” he is trying to defend his own ideology, his own work, his own record. But if his record is examined, we can see that due to his service on the banking Committee he was able to land a high-paid job in the financial sector, while the rest of us have to live with the consequences of his so-called accomplishments.
