A Nation of Whiners or Crime Victims?
Back in July, Phil Gramm gave an interview with the Washington Times in which he opined that...well, I'll let him speak for himself:
"You've heard of mental depression; this is a mental recession," he said, noting that growth has held up at about 1 percent despite all the publicity over losing jobs to India, China, illegal immigration, housing and credit problems and record oil prices. "We may have a recession; we haven't had one yet."
"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.
"We've never been more dominant; we've never had more natural advantages than we have today," he said. "We have benefited greatly" from the globalization of the economy in the last 30 years.
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've got news for you Phil. It's not as bad as you read in the newspapers-it's worse.
To give credit where it's due, John McCain did try and distance himself from Gramm in theruckus that followed.
So where's Phil Gramm now?
And how's UBS doing since July? Well, they're probably a company of whiners.
UBS is cutting 2,000 jobs, they've lost $42 billion on toxic loans, they're restructuring themselves and their share price has declined about 25 per cent since June.
For the historically minded, Gramm may well be the single key man who caused us all to become such a bunch of whingers. After all, he slipped the Commodity Futures Modernization Act into an omnubus spending bill, and this statute prohibited the regulation of credit default swaps.
Here's what Harold Meyerson of the Washington Post says:
"As chairman of the Senate Banking Committee during the Clinton administration, (Gramm) consistently underfunded the Securities and Exchange Commission and kept it from stopping accounting firms from auditing corporations with which they had conflicts of interest.
Gramm's piece de resistance came on Dec. 15, 2000, when he slipped into an omnibus spending bill a provision called the Commodity Futures Modernization Act (CFMA), which prohibited any governmental regulation of credit default swaps, those insurance policies covering losses on securities in the event they went belly up. As the housing bubble ballooned, the face value of those swaps rose to a tidy $62 trillion.
And as the housing bubble burst, those swaps became a massive pile of worthless paper, because no government agency had required the banks to set aside money to back them up.
The CFMA also prohibited government regulation of the energy-trading market, which enabled Enron to nearly bankrupt the state of California before bankrupting itself."