Somebody has wrecked a lot of people's lives. Somebody has walked away with an enormous amount of plunder. Somebody is undoubtedly sitting atop vast stores of looted wealth waiting for their opportunity to pounce as soon as everything bottoms out and parlay their ill-gotten gains into ever greater megawealth.
The United States is looking a a trillion-plus dollar Wall Street and bank bailout plus something around another trillion-dollars for economic stimulation. Around the world there's at least another trillion or two being shoved into bailouts.
All that taxpayer money is money going in to make good the damage caused by equally vast sums of money that flowed out to create this global meltdown. One expert interviewed on 60 Minutes several weeks ago claimed to personally know at least one individual who became an instant billionaire out of this scam. There must be new billionaires in the hundreds keeping their heads low until the heat dies down.
These scoundrels have inflicted damage on the United States and the West on an order of magnitude, several probably, greater than bin Laden's wildest, most malevolent dreams. They have injured their country, caused it real and lasting harm, probably even knocked it off its perch as the top nation in the world. So why is no one outing them?
Could it be because they've actually done nothing illegal? How could ponzi schemes this cancerous to the most powerful nation on earth not be illegal? Oh yes, I forgot - because Congress, in particular the Senate Banking Committee then headed by Republican Phil Gramm - decriminalized them and even exempted them from regulatory oversight. Credit Default Swaps. Upwards of $60-trillion of bogus insurance policies that had to be called "swaps" because they couldn't legally be called insurance. Credit Default Turnips, Credit Default Turds, Credit Default ________ (pick a word).
The housing bubble and associated subprime mortgage/securitized mortgage/credit default swap scandal was both similar and markedly different than previous bubbles. There were huge losers left in its wake but also huge winners who gamed the market, took total advantage of its vulnerabilities, and got out before the crash with truckloads of loot. They sailed away from the dock with the shiploads of money that taxpayers now have to make good. Why are taxpayers taking the hit? Because this swindle was hatched by their elected representatives and, as such, was conducted in their name.
Where is Phil Gramm?
If you don't know who Phil Gramm is and what he's done, you'll never understand the mess we're all in. He's at the centre of it all and I mean Ground Zero.
Most recently Gramm was the co-chair of the McCain presidential campaign and chief economic advisor to the Arizona senator. Gramm received a doctorate in economics from the University of Georgia in 1967. A Texas Republican, he was first elected to the US senate in 1984. He won again in 1990 and 1996. He retired in December, 2002, a few weeks prior to the end of his third term.
During his 18-years in the US senate, Gramm moved steadily up through the Republican ranks. From 1995 to 2000, Gramm held the chairmanship of the powerful US Senate Banking Committee from which perch he sowed the seeds of the disaster that's befallen us all today.
It began in 1999 with the Gramm-Leach-Bliley Act that served as the springboard for what became, in 2007, the subprime mortgage crisis. But the real landmine came in the 2000 Commodity Futures Modernization Act, that Gramm co-sponsored, which contained a variety of deregulatory provisions including one that became known as the "Enron Loophole." Gramm's wife was sitting on the Enron board at the time. The CFMA also decriminalized what became known as Credit Default Swaps.
So who says Gramm is the evil Dr. Moriarty of the ongoing global meltdown? Well, let's see. The Washington Post this year named Gramm one of seven key players instrumental in winning dergulation of derivatives trading. Nobel laureate economist Paul Krugman ranks Gramm, along with Alan Greenspan, as the two individuals truly responsible for the current global recession. CNN had Gramm among the Top 10 individuals to blame for this mess. And a former Securities and Exchange Commission lawyer, Michael Donovan, claimed that, "Phil Gramm is the single most important reason for the current financial crisis.”
So where is Phil Gramm today? He pretty much slipped beneath the surface back in July when the fit hit the shan. Yet he surfaced in an article in the New York Times last week that's a must-read if you have any delusions about Gramm's role in this:
There must be something powerful in Texas drinking water because Gramm, like Bush, is utterly incapable of taking the slightest responsibility for the devastation he has wrought.