Monday, 25 August 2008

Credit Crunch Creator

Continuing to read the Michael Moore book, Electction Guide 2008, I learned about the history of the credit crunch. Its widely known that USA banks leant money to poor risks and caused a global credit crunch, but I hadn't known that the then Republican Senator Phil Gramm authored legislation that reduced banking legislation. He then became a top economic advisor for, you guessed it, John McCain!

For his lobbying work, Gramm and two others collected $750,000 in fees. In the past year, UBS alone has written down more than $18 billion in exposure to subprime loans and other risky securities. Phil Gramm is now vice chairman of UBS.

McCain and Gramm have a long political history. The two became close when they worked together as senators to defeat Hillary Rodham Clinton’s 1993 health care plan, holding meetings at hospitals and clinics across the country. In 1996, McCain was national chairman of Gramm's unsuccessful presidential bid.

In a July 9, 2008 interview explaining McCain's plans in reforming the U.S. economy, Gramm downplayed the idea that the nation was in a recession, stating, "You've heard of mental depression; this is a mental recession," and "We have sort of become a nation of whiners, you just hear this constant whining, complaining about a loss of competitiveness, America in decline."

"Misery sells newspapers," Mr. Gramm said. "Thank God the economy is not as bad as you read in the newspaper every day." 'McCain's economic program will seek to enliven growth by enabling taxpayers to opt into a new, simplified tax system with two low rates of 10 percent and 25 percent'.

Gramm's comments immediately became a campaign issue. McCain's opponent, Senator Barack Obama, said, "America already has one Dr. Phil. We don't need another one when it comes to the economy. ... This economic downturn is not in your head."

McCain strongly denounced Gramm's comments. Gramm later attempted to clarify, explaining that he had used the word "whiners" to describe the nation's politicians rather than the public, stating "the whiners are the leaders." In the same interview, Gramm stated, "I'm not going to retract any of it. Every word I said was true." On July 18, 2008 Gramm stepped down from his position with the McCain campaign.

Along similar lines was the storey that McCain didnt know how many houses he owned, not a problem for most people, but he does has a rich wife. The McCain campaign said that McCain and his wife, Cindy, have at least four in three states, Arizona, California and Virginia. Newsweek recently estimated the two owned at least seven properties. Property records reviewed by The Associated Press show McCain and his family appear to own at least eight homes: A ranch and two condos in Arizona; three condos in Coronado, Calif.; a condo in La Jolla, Calif.; and another in Arlington, Va. The number of houses is a bit trickier to determine since the ranch has at least four houses and a two-story cabin on it.

On the campaign trail, McCain doesn't refer to his wife's wealth, estimated by some at $100 million and based on her late father's Arizona beer distributorship. Obama and his wife, Michelle, reported making $4.2 million in 2007. In the 2004 campaign, Republicans tried to use wealth against Kerry even though President Bush and Vice President Dick Cheney were multimillionaires themselves. In 2005, Kerry reported a net worth between $165 million and $235 million, most of it controlled by his wife, Teresa Heinz Kerry. It seems you need to be rich to do well in their system.

McCain campaign:
Obama campaign:

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