McNomics

By Ron Beasley

The issue in the general election should be economics.  The occupation of Iraq will wind down or end in 2009 even if John McCain is elected because it can't continue and the Iraqis will probably tell us to leave anyway.  But what about the economy?  We have this headline today:

Stocks fall on economic, inflation worries

NEW YORK (Reuters) - Stocks fell more than 1 percent on Monday, weighed down by financial shares after the No. 4 U.S. bank ousted its chief executive and a British mortgage lender reported a loss and gave a bleak outlook, reviving fears of more credit market losses.

Adding to the gloom was the Institute of Supply Management's report showing U.S. factory activity contracted in May for the fourth consecutive month, while prices paid by factories surged to their highest since April 2004.

Wachovia Corp (WB.N) shares fell more than 4 percent after the bank announced the departure of its chief executive over what it termed as "disappointments," including the purchase of a big mortgage lender at the height of the U.S. housing boom.

"The negatives are that the economy is still in a contraction mode, as we've seen in the ISM today. The financial companies are still in trouble, as we saw with the removal of the head of Wachovia," said Joseph Battipaglia, market strategist at Stifel Nicolaus in Yardley, Pennsylvania.

"So the outlook for what kind of growth and profits we can have is quite uncertain."

John McCain has admitted that he doesn't know much about economics.  That's OK as long as he surrounds himself with people who do.  But who does McCain go to for economic advice?  This should scare everyone.

Gramm Speaks! The Views of Our Next (Maybe) Treasury Secretary

If John McCain is elected the 44th president of the United States, the 75th secretary of the treasury just might be Phil Gramm. The deficit hawk former U.S. senator from Texas is currently a vice chairman of UBS Investment Bank and a top economic adviser to McCain.

As I have discussed here earlier Phil Gramm's fingerprints can be found on nearly economic problem this country and the world is experiencing now.  That includes high energy prices and the mortgage crisis.  Writing at Mother Jones David Corn documents Gramm's part in the Mortgage Crisis.

Foreclosure Phil

Who's to blame for the biggest financial catastrophe of our time? There are plenty of culprits, but one candidate for lead perp is former Sen. Phil Gramm. Eight years ago, as part of a decades-long anti-regulatory crusade, Gramm pulled a sly legislative maneuver that greased the way to the multibillion-dollar subprime meltdown. Yet has Gramm been banished from the corridors of power? Reviled as the villain who bankrupted Middle America? Hardly. Now a well-paid executive at a Swiss bank, Gramm cochairs Sen. John McCain's presidential campaign and advises the Republican candidate on economic matters. He's been mentioned as a possible Treasury secretary should McCain win. That's right: A guy who helped screw up the global financial system could end up in charge of US economic policy. Talk about a market failure.

But that's not all - remember Enron?  Yes Phil Gramm played a big part in that disaster too.

Phil Gramm�s Enron Favor

Watchdog: Senator Pushed End to Oversight for Campaign Contributor

The one person in the Enron scandal whom congress is not likely to subpoena is its own revered Phil Gramm, the retiring Republican Senator from Texas. Gramm and his wife, Wendy, have tight links to Enron, Wendy being a director and Gramm the pusher of legislation that assisted the company during its troubles last year. In December, his press secretary denied the latter charge, saying, "Senator Gramm took no role, had no say, and did not vote on the energy futures provisions."

That's not the story presented by the D.C. watchdog Public Citizen, whose tale goes like this:

In an apparent response to a 1992 plea from Enron, Dr. Wendy Gramm, then chair of the federal Commodity Futures Trading Commission, moved to exempt the company's energy-swap operation from government oversight. By then, the Houston-based Enron was a major contributor to Senator Gramm's campaign.

A few days after she got the ball rolling on the exemption, Wendy Gramm resigned from the commission. Enron soon appointed her to its board of directors, where she served on the audit committee, which oversees the inner financial workings of the corporation. For this, the company paid her between $915,000 and $1.85 million in stocks and dividends, as much as $50,000 in annual salary, and $176,000 in attendance fees, according to a report by Public Citizen, a group that has relentlessly tracked Enron, which in turn has called the report unfair.

Meanwhile Enron had become Phil Gramm's largest corporate contributor�and according to Public Citizen, the largest across-the board donor in its industry. Between 1989 and 2001, the company tossed Gramm just under $100,000.

In 1998, Wendy Gramm cashed in her Enron stock for $276,912. There's nothing unusual about a Washington regulator quitting the government and going to work for a private company she was regulating. And people often get rich in the process. Wendy Gramm, whose office didn't return Voice calls, has told reporters she sold the stock expressly to avoid any hint of a conflict of interest.

And there is more.

In June 2000, Senator Gramm co-sponsored the Commodity Futures Modernization Act, a measure aimed at deregulating certain kinds of futures trading, but not energy futures. That bill never made it to the floor, and thus quietly died. Six months later, on December 15, Gramm curiously turned up as co-sponsor of a bill with the same name, the Commodity Futures Modernization Act, which did deregulate energy futures and which, without undergoing the usual committee hearings and preliminary votes, was immediately attached as a rider to an 11,000-page appropriations bill. It passed and was signed into law by President Bill Clinton six days later. Few lawmakers had likely perused the rider carefully, if they even knew it was there. And at any rate, Enron had given to the campaigns of over 200 legislators.

That's not to say no one opposed Enron's aims. An economics advisory group to Clinton�with representatives from the Federal Reserve, SEC, and Commodity Futures Trading Commission�had come out against deregulated energy trading. They argued the market was ripe for manipulation. Yet the bill passed, setting Enron free to run what amounted to an energy auction, which Public Citizen claims "gained control over a significant share of California's electricity and natural gas market."

When we refer to John McCain as "McSame" we normally think of foreign policy.  With Phil Gramm as his economic mentor John McCain is truly "McSame".  Yes it is the economy stupid.

Update

Crooks and Liars has even more dirt on Gramm

Now, it appears Gramm�s association with the aging Republican senator�s campaign is doing far more harm that previously known. UBS, a bank for which Gramm lobbied, is now under investigation for alleged use of overseas tax havens to hide assets of its wealthy clients from U.S. authorities � while in office, Gramm also supported these tax havens after 9/11, which hampered the government�s ability to track Osama bin Laden�s financial network before 9/11.

There are lobbyists and then there is Phil Gramm - a man who has had a hand in every economic problem the US has experienced in the last eight years.