Thursday, September 18, 2008

A Nation of Village Idiots

I complained early this morning that I really couldn't explain the economic meltdown that's going on right now. What I meant was there was no way I could possibly untangle the twisted story of the investment vehicles and schemes that brought about the current mess. I wonder if anybody can. This is not to say, however, that broader explanations of what's going on are not easily understandable. This article makes such an explanation in absolutely splendid fashion. Its author is James Moore, who co-authored Bush's Brain: How Karl Rove Made George W. Bush Presidential among other things. Anybody, he says, who has seen greed and corruption can grasp it.

Read the article. It talks about the key role former Senator Phil Gramm (R-Texas) played in facilitating the current mess with his bill that released the financial industry from any governmental oversight. It goes on to talk about how Gramm's bill also exempted energy trading from scrutiny too. Result: Enron. And the infamous Keating Five, of whom John McCain was one, and the cozy relationship the Arizona senator had with a sleazy pirate named Charlie Keating. And the S&L bailout of the late 1980s--which has cost the taxpayers an estimated $1.4 trillion. (God alone knows what the current bailouts are going to cost us.)

Here it is in a nutshell: The Republicans passed laws to facilitate just what's happening now. The first was a bill to keep the government from overseeing the financial shenanigans of the whole tribe of financial institutions. Who specifically? Why the then-chairman of the Senate Banking Committee, Phil Gramm, McCain's chief financial advisor. "A few days after the Supreme Court made George W. Bush president in 2000, Gramm stuck something called the Commodity Futures Modernization Act into the budget bill. Nobody knew that the Texas senator was slipping America a 262 page poison pill. Th[is act] was designed to keep regulators from controlling new financial tools described as credit "swaps." These are instruments like sub-prime mortgages bundled up and sold as securities. Under the Gramm law, neither the SEC nor the Commodities Futures Trading Commission (CFTC) were able to examine financial institutions like hedge funds or investment banks to guarantee they had the assets necessary to cover losses they were guaranteeing."

Another piece of Gramm legislation called the Gramm-Leach-Bliley Act was passed the year before. This act killed provisions of New Deal legislation that prevented banks from engaging in other financial activities such as sale of securities and insurance. John McCain who is now calling for federal regulation of these financial entities that are crashing all around us enthusiastically supported both of these bills.

John McCain would now have us believe that he's got our interests at heart. This same guy who's carried water for the banking industry for years, who's taken their healthy political contributions, drank their booze, rode their jets? Who has basically jerked them off since he's been in the Senate? Whose wife made a cool $1 million in a transaction with Keating's S&L? This is the guy who's going to look out for us small fry?

As James Moore comments: "He must think we are a nation of village idiots. Hell, maybe we are."
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