A letter from an economist

In his recent speeches, John McCain has said that if he is elected he will go after the "crooks" and "cheats" on Wall Street. The thing is, nothing the folks on Wall Street have done is illegal. Not now!

Almost all of the financial manipulations that created the current crisis used to be illegal. That is, until John McCain and his chief economics adviser, then-Sen. Phil Gramm, wrote and pushed through a 268-page amendment to an appropriations bill, late at night, just before the Christmas recess in 2000, to make it all legal. The amendment prohibits the government from regulating the financial derivatives that are the source of the current crisis. McCain admits that he does not know much about economics, but he sure knows how to reward the corporations that contribute to his campaigns.

McCain wrote the law that created the greatest financial crisis since the Great Depression, so why would anyone think he can or will do anything to fix the problem? He will just keep bailing out his campaign contributors, while the middle class watches their savings and retirement plans disappear.

Doug Orr
Professor of economics, Eastern Washington University

http://www.spokesmanreview.com/opinion/letter.asp?ID=18790

The Obama campaign should now start speaking forcefully about the repeal or/and re-writing of the "The Commodity Futures Modernization Act," Phil Gramm's 262 page gem that set the stage for the crisis were in. Gramm, who is well acknowledged as John McCain's "economic brain" and lead adviser (rumored to be set to become Treasury Secretary in a McCain Administration), quietly slipped in a 262-page amendment to a government re-authorization bill in 2000 that created what is now the $62 trillion market for credit default swaps (CDSs) Credit default swaps. To give that size some perspective, worldwide GDP is roughly $54 trillion Worldwide GDP, so the notional amount of this completely unregulated, opaque market is larger than the world economy.

This is the market that Warren Buffet once called "financial weapons of mass destruction".

http://www.dailykos.com/story/2008/9/23/6152/56945/954/607222