The S&P 500’s Bubble Trouble

How the housing bust burned the index's investors

By Daniel Gross | Newsweek Web Exclusive

Jul 10, 2008 | Updated: 4:35 p.m. ET Jul 10, 2008

« Return to Article

Discuss

Posted By: Nins @ 07/10/2008 7:28:13 PM

Comment: Know why McCain wants to distance himself from former Senator Phil Gramm? It is not just because of Gramm's recent obnoxious remarks calling Americans "a nation of whiners" and that unemployed Americans are in "a mental recession." In fact, those remarks were so obnoxious that I wonder if they were engineered just to provide McCain an excuse for publicly distancing himself from Gramm. This issue is a lot deeper than it looks on the surface.

When Gramm was a Senator he was chair of the Committee on Banking, and in that capacity he was able to push through the legislation now known as the "Enron Loophole." This loophole allowed US investment banks to bypass the Federal regulations governing futures trading, and is the reason why the investment banks were able to falsely inflate the prices of oil, wheat, corn and other commodities through massive futures trading, causing your costs of gas, heating oil and food to go through the roof.

Gramm was a member of McCain's campaign team, but now Gramms' name is turning to mud. In addition to the Enron loophole, Gramm pushed through the Gramm-Leach-Biley Act in 1999, which got rid of the laws that seperate banking, insurance and brokerage activities in America. Essentially, this Act did away with all of the good laws written after the Great Depression to protect us from another Wall Street/Banking Industry collapse. That's right, Gramm stripped the system of it's safe guards nine years ago, and guess what? The value of the dollar has nose-dived, Wall Street is highly unstable, and we are in the midst of a recession.

Now you could say that this is not Gramm's fault, that he didn't know what the outcome of his actions would be. However, it turns out that the same investment banks that benefited from the Enron loophole and from the Gramm Act gave more than a million dollars to Gramm's campaign. Uh oh. A Congressional hearing is going to be convened to investigate this. And McCain wants to have noting to do with Gramm, wants us to forget that Gramm has been a key player on McCain's campaign team. Gramm was McCain's campaign CO-CHAIR and LEADING ECONOMIC ADVISER.

With Gramm in the driver's seat as his leading economic adviser, now you know why economists and analysts are saying that McCain's economic policy plans are untenable.
- Posted By: SPORTLOCK09 @ 07/11/2008 12:12:49 PM
  
  Comment: So who are you voting for? If you dislike McCain there is noway you can possibly like Obama.
  - Posted By: Nins @ 07/11/2008 11:45:01 PM
    
    Comment: I'm a Republican and voting for Obama. And I don't dislike McCain, I just don;t think he would be a good President in these difficult economic times. I REALLY WISH that the GOP had a candidate AS GOOD AS OBAMA for me to vote for. We need a Republican candidate who is well and truly FREE from connection to W. Bush, Rove, or the banking scandal. However, we do not have one. Being a business owner and investor, I have to vote my wallet (fiscal responsibility is THE great Republican issue). And my wallet says that any more Bushonomics and America goes into a full blown economic depression.
    
    I am not the only Republican who feels this way. Rupert Murdoch, for gosh sakes, the owner of FoxNews, is voting for Obama, even though he does not agree with his social policies, but because the economic downturn is so dire. Murdoch, Warren Buffett and countless economists and analysts have compared the economic plans of the two candidates, and Obama consistently comes out ahead of McCain on this issue.