The Growth of Greed

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THIS INSANITY MUST STOP ( Our National Security is AT STAKE)

It is high time this INSANITY SHOULD STOP. The reason why the U.S economy is so vulnerable to Wall Street speculation is because of SHORT SELLING. The economists DO NOT REALIZE that these people (short sellers) are like PRINTING MONEY UNHINDERED. Earning money at the expense of others (short selling) is NOT EARNING BUT STEALING. It's the same reason why we can't print money freely because it is tantamount to stealing.

UNLESS the regulators BAN THIS SHORT SELLING IN THE STOCK MARKET, Americans will continue to SUFFER ECONOMICALLY as what is happening now. The ENEMIES of America does not need an airplane to crash to our buildings. They only need to PLAY UP THE OIL PRICE IN THE STOCK MARKET and then start BETTING ON THE OTHER STOCKS TO FAIL thru SHORT SELLING. Not only can they ruin the economy of America, but they can also make themselves rich by doing so.

NOW WHERE ARE THE BRAINS OF OUR LEADERS AND ANALYSTS ?

BAN SHORT-SELLING AND IMPLEMENT THAT OIL PRICE STABILIZATION MECHANISM NOW and all will be well again.

That 700 billion dollar bail-out should be used to relieve American homeowners by lowering their mortgage interest rates and those who already lost their homes should be asked to return with their payments restructured.

WE NEED THAT OIL PRICE STABILIZATION MECHANISM LAW NOW.

We have seen how the price of oil jumped 16 points in just one day for no valid reason. It's very clear that the government (both Congress and the executive branch) has NOT DONE anything to rein-in speculators. It is therefore NOT farfetched that oil would rise up again to an all time high as before.

I hope they would now legislate a bill that would rein-in the STUPIDITY of these speculators. Oil has been the lifeblood of world economy and people should not be allowed to play on this commodity. It's very clear that the speculators are not using their minds. They do not understand that they are slowly hanging themselves as the price of oil shoots up to where the economy cannot perform anymore. Their money would be deemed useless if there would be a work stoppage worldwide.

I hope Congress would make a law that would put a price cap on oil everytime speculators are playing with it. If the price of oil today (Monday) is 120 dollars per barrel, the price cap tomorrow (Tuesday) should be 120 dollars per barrel. Since it cannot go up that price, there would be massive panic selling which would pull down it's price. If the price of oil closes at 110 dollars tomorrow (Tuesday), the price cap should be set at 110 dollars per barrel on Wednesday. There is no way to go for the price of oil but DOWN if this mechanism would be put into place. Once the oil price reaches a SANE LEVEL of maybe about 90 dollars, regulators can then SWITCH-OFF that mechanism so it can settle to it's true value. There must be a body that can switch that mechanism on or off as the need requires.

We NEED THAT MECHANISM NOW AND CONGRESS SHOULD ACT NOW BEFORE THESE IDIOTIC SPECULATORS WOULD HAMMER THE ECONOMY AGAIN.

-Voto Se! Yea! Yes!

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"WE are US!"

Somebody has rightly said : "There is enough in this world for everyone's need but not for everyone's greed".

Allowing more and more articles of human consumption to be traded like a company's shares has opened up new avenues for people to fulfill their greed by gambling in these articles. Today, one can trade in currencies, a large number of (essential) commodities, metals, interest rates etc. This is nothing but the promotion of legal gambling in the new civilized (?) or globalized world.

'Greed' is a profound human instinct. Today's world is providing vast new fertile land where people can try their luck and get addicted to cultivating their greed for maximum monetary benefit.

'Morality' has become a relative and old-fashioned (in fact, obsolete)virtue and everyone has his/her own definition, interpretation, standards and ideas about this term (morality) as per the person's own convenience.

I think the present trend will continue unabated with some so called 'structural modifications' which might provide even greater and wider opportunities to humankind to stretch as well as manipulate their greed.

MAY GOD BLESS ALL OF US.

I do not believe that people are any more or less greedy now than they have ever been in the past. And I do not believe that Americans are any greedier than other people, nor that Capitalism makes people greedy.

I do believe that having great wealth motivaties people to be greedy and miserly of what they have, and jealous of what others have, even when others have very little.

That is what is motivating this great orgy of greed that is dragging us down, GREAT WEALTH. People do not seem to realize how much excess wealth is out there, seeking a resting place, seeking a place to be safely, or wrecklessly invested.

The fact is, America is IMMENSELY wealthy. No matter how had things get, there is still a long, long way to go, before we sink to a 1930's style Depression.

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Viejita del oeste-

and thank you. You're perfectly right- the history may not be something most people know and I was too quick to assume richard knew.

I thought we had discovered the sinfulness of greed back in 1987 when the movie Wallstreet came out.

Twenty years later and greed is more motivating than ever.

There is a philosophy of Prosperity Christianity that has hijacked the US. It says that wealth is proof of God's grace. Ann Coulter says Christians are perfected and forgiven. If this is true then there is nothing a person can do that is not forgiven.

So if it's all right to do anything and God shows his grace by bestowing wealth, then what stops people from attaining money any way they wish? Surely if God disapproved of the actions these people have taken he would have smote them down. Instead, he smote the poor sinners who invested, but didn't believe strongly enough.

All those reminders in the Bible about neither spinning nor weaving, about a camel going through the eye of a needle, are simply swept aside. Christians are perfected. Forgiven. The architects of this collapse will move on with their wealth intact and secure in God's good grace.

Thanks, Sparrow. I was at a loss myself to reply to Richard's casual anti-semitism. Hypocrisy is the great weakness of institutional Christianity, but that isn't always obvious to individual believers.

Att: U.S. B L U E S;

Interesting; like a Propensity to Buy etc.., then Meta Religio Propensity also can hath their Ups & Downs , or Boom & Bust Cycles...

Note: "Choice" means ECONoMiCS! Soo,

Choosing to be a Judeo-Ju, or a Judeo-Christ ior a Judeo-Islamic or Judeo-Hindu or Judeo-Buddha etc.. is also somwhat inicticbly tied to , let's say Abortion [choice of] aye????

important Fact:

"Modern-Morality" will always be Superior to any Tauto-illogical 'Biblical-Morality!"

-- Therefore:

Choose the "Religion Of Everything , Before The Sience Of Evcerything!"

Hence: "LET There Be PHOTONS" via the FiAT-Lux & not any Biblical , god said [not G-D] 'Let there Light' Storys, is the Reality!

So, There are only Two Types of CONSUMER(s): Believe in MYTH (opposite of Truth) or in TRUTH (opposite of Myth).

Please, Take ye Pick of a Story & Song! Note: Like Todays Air, it is not FREE!

In times like these it is common to invoke apocalyptic visions. This is the next step in a cycle of public consciousness that I will call meta-religious. The next step will be a desire to return to fundamentals, "basics" as an adaptation to economic realities. What is not fully realized is this is an attempt to attone and be purified following a period of overindulgence. I will end by mentioning the ensuing period of questioning and re-learning that follows beyond, which marks the start of the next cycle. Yes morality and religion are inextricably tied to economic cycles.

HALLALUYA! Praise The Hol{i}-NO-Wo-MEn!

From: The Americ JO{KTAN-Eberu-Nationalis Party with Unity & LOVE, not imported PELEG-Eberu-un-Nationals Party , Division & mixed w/HATE, Jealousy & Apathy.! Aka W.M.D.!

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richard wrote:"Am I then out of line in surmising that there may be some premium placed by their culture on careers involving (as Jesus in the Temple called it) "money changing"?"

You need to know a lot more about Jewish history than you obviously do. the fact that there were moneychangers in the temple has nothing to do with bibical times and everything to do with the medieval church. Read up on it, why don't and find out how the church forced the Jewish community to become its bankers so that the church could commit usury without admitting to it- after all, it was the Jews, right?

And banking became the safe business Jews could conduct in Christian society. There is nothing in Judaism that makes the financial industry a premium. Christianity did that to us. I'd also like to point out that for all the perception of Jewish riches, the wealthiest of all was the Church, and much of it gotten on the backs of Jews.

PERMANENTLY BANNING INSANITY (a guideline to who should become president)

From the time humanity started, there never was a practice that a person can sell what he DOESN'T OWN. It is only logical that NOBODY can sell a house or any property which he doesn't own. And yet, this kind of practice is LEGALLY done in the stock market thru SHORT SELLING. That is the term they use for the "PUT OPTION" in stock trading. YES, it is legal to sell stocks which you don't own in the stock market thru short selling. What happens is the one engaging in short selling gets a profit from the loss of another. The lower the stocks plunge the richer they become. What is worse is if they make creative ways to pull it down. That is how insane the stock market has become. GREED and INSANITY has become their god.

Finally, upon seeing that there's a possiblity that all banks around the world could collapse because of this practice, they've made a decision to TEMPORARILY BAN SHORT SELLING. It was not a galant act on their part but only a REACTION TO SURVIVE. They are only TEMPORARILY STOPPING THEIR GREED TO SURVIVE.

It was NOT the planned government BAILOUT which saved the market although it could help ease the money crunch. I hope the bailout would bring down mortgage interest rates so homeowners would also benefit. With the government now owning Fannie and Freddie and the planned absorption of foreclosed properties thru a massive 700 billion dollar bailout, the government has NOW the POWER to REDUCE them.

The point is, let SANITY PREVAIL. The government should now focus on that ONE GOAL to bring DOWN mortgage interest rates and MOST IMPORTANTLY make SHORT SELLING BE BANNED PERMANENTLY.

The PRESURE TO BRING IT BACK coming from the SHARKS would be great. I think Bush would buckle to the pressure. What we need is a next president who can STAND FOR WHAT IS RIGHT. The presidential candidate who can promise to abolish SHORT SELLING ( profiting from the LOSS of others) should be the NEXT President.

What is even more disheartening than greed is the actions of lawmakers and executives who refused to regulate, to enforce, to take responsibility or to protect the little investors and the taxpayers who have now lost so much. Speculators and big corporations bought off the leaders we trusted and, for a few pieces of silver, they sold themselves out and looked the other way. After this complicity, politicians now reach into the pockets of American taxpayers to bail their irresponsible bedfellows out.

Americans like point their twisted, judgmental fingers at other countries like Mexico for their corruption, but like many things the "religious" advocate, it's "do as we say, not as we do"

It's certainly nice to see people criticize the morals that underlie this fiasco. It seems like only yesterday that Milton Freedman declared that it would be "immoral" for CEOs to take account of social or environmental interests. And everyone nodded at this shocking statement, for He Who Knows had spoken.

Still, morality alone won't fix anything. It only takes a small immoral minority to ruin the world, if the law is on their side. And it is. The rules that govern corporations are all designed to limit or eliminate responsibility. The CEOs say they are only working in the shareholders' interest. The shareholders say they don't even know what the company does in their name. And no one pays the full cost of the damage done. At worst, the shareholders lose part of their equity holdings - that is, if the taxpayers aren't forced to foot the entire bill. But even then, that loss can be only a fraction of the damage done; the largest part is left to society or to the next generation.

We have to redesign the rules that govern economic behavior to impose full liability on economic actors. Break something worth a million dollars? Pay a million dollars. It's that simple. We have to do away with the dominant corporate structure, which was originally invented to exploit colonies, namely, the limited liability company. Impose full liability and people will be more careful before destroying the environment, laying off workers without need, creating financial bubbles, or otherwise exploiting society with utter selfishness.

When tackling the scope and magnitude of human folly, it is best to quote from the sages. I will say this though: regardless of either a capitalist or non-capitalist persuasion, once more, the salient feature of human nature goes undetected, unacknowledged, and consequently "under-dealt-with". Someone once said, "What we have here is an unfortunate fact of our planet: Its dominant species combines extreme cleverness with an unreliable morality and a persistent streak of insanity. Thus it has ever been; thus it shall ever be." It is that tiresome, troublesome, and unwarranted "faith in humanity" that Rabbi Adin Steinsaltz refers to, which keeps catching us with our collective pants down. Any political/socioeconomic/philosophical system of belief whether Republican or Democrat, conservative or liberal, totalitarian or anarchistic, rich or poor, must take into account man's dark underbelly and his infinite capacity to rationalize his weaknesses in service to his greed. Thus, we need more checks in place to ensure that the lethal combination of stupidity and turpitude do not result in economic or social WMDs. So much for the macro level. For the micro level of the human heart—those scarlet threads that constitute the fabric of the macro level—consider what the bard said: "This above all: to thine own self be true, And it must follow, as the night the day, Thou canst not then be false to any man.” Let us stop lying to ourselves about who we are, shall we? And instead work with the more reliable presupposition: all men have a basic evil streak. Then let us work up from there in this knowledge: “. . . sin crouches at the door. Its desire is for you. But you must learn to master it.” And I believe there is some One waiting patiently who can help us do just that.

Mr. Steinsaltz,

I agree with your diagnosis. But, sadly, I don't share your faith in humanity.

This financial "crisis" is a result of the same phenomenon as the stock market crash at the turn of this century, and the S&L crash of the 80s, and the stagflation of the 70s, and the depression of the 30s and the stock market crash of the turn of the 20th century, and the 20 year depression of the late 19th century... Each was a direct result of the growth of a culture of greed and love of money. Each was a result of the corruption of capitalism and the corporate system gone bad. It's like of never ending cycle of greed and crisis.

Nonetheless, I am genuinely interested in the source of your faith in humanity, and open to suggestions as to how we might bring about a world in which moral and compassionate behavior reign.

CCNL. "The correction beings!"

You mean revenge that is based on hatred, right?

Where do you get that "burnomg someone" is correction? It is called murder.

September 21, 2008 3:28 AM | Report Offensive Comments

Posted on September 21, 2008 03:28

Anonymous:
Gasoline is expensive. I was in advance auto today and a guy came in reeking of the smell of gasoline. Three people in the store comment on it including the store manager. I was so bad that the manager was ready to ask the gut to leave.

Ironically, one of the people in the store was someone that I know, haven’t seen him for a long time but it was nice to see him again. Jim said to me that gut smells like he has been rolling in gasoline, that’s when the manager said he was going to ask the guy to leave because he smelled so bad. The guy in the parking lot said his engine caught fire from a gas leak and that he poured water on it and it didn’t stop the fire, he was in a black truck, and I could recognize both of them. The guy in the truck was talking about burning his wife to death with gasoline. I told him that he would go to jail for murder and that I would be a witness to what he said. He also told me that he has hidden cameras in his house to spy on his wife with microphones and that he put a GPS system on her car so he could track her whereabouts. I told him that he will go to jail for doing these things and he laughed and said I won’t get caught. I said the very ones that think that they are above reproach are the ones that get caught. He said he didn’t care that he had people to do it for him and that they would lie for him.

The guy said “she has to pay for what she did to me.”

Rabbi, I think greed is a symptom of societal disease which entraps people in some sort of spiritual kindergarten whereby the needs of a teenager are trapped inside adult bodies, ie. Adult children. What a needy lot they are to me. And I should know, I am one of them. Oh yes and do exploit me swiftboaters, it's what I live for today. I will take me chances with a bit of self disclosure because the truth must be out there as in there as well.

Sometime on the evening of 09/11/01, POTUS asked Americans for help. Sometimes it is wise to consider results of such requests as blessings gained through the petitions of prayer may vary. For example, praying for company in bed, may lead to an infestation of bed bugs, one never knows. Thy Will be done seems to be a safe bet to me.

You know, many people who are disabled are not so in the mind. Those of us forced to retire not just by age but by disease, accident or greater designs beyond ourselves still have lots of potential to contribute to society through volunteerism. I think younger generations would benefit through mentoring by people who have graduated from that "It's all about me" generation or stage of human development to altruistic levels of Human Development. Leaving legacies is a good example. BUT, there are no shortcuts.

People know that arrested development for whatever reason keeps some forever young in a negative way. The study of abnormal Human Development is just as important as the study of Abnormal Psycology to me. And one day I hope science closes this gap through those specializing in abnormal social-psycology which could, and I posit could, reduce the incidence of terrorism on a global basis.

Religion and practicing spirituality is just too complicated for me at times although my real friends have urged me to "Keep it simple dummy". Feeding sheep is an easy concept just as helping others is an easy concept. If One has been raised to be a caretaker it is easier to be altruistic rather than to be egocentric. And yet in that regard One could lose sight of oneself if the family or commune of origin expects altruisic behavior 24/7 of the time.

Yea, it is all too complicated for me so I just try to waltz through life like 1,2,3 otherwise it just never ends. Speaking of obsessions with "threes" how about this simplication of life; It's all about "me", "us" and "All".

There is myself born dependent which hopefully joins community finally hooking up with the all or everything, the ONe, that Alpha and Omega thing. Now certain diseases I have experienced had at times isolated me from community; too bad, so sad and sucks to have been me. That was then and this is now so I am happy to report that I am still sucking air, onward and upward as it were then and hopefully now.

Or, has Stephen Hawkins gained eternal life as yet ?

JJ,

Yes, robber barons is what they are. Now, what do we do about them? Shouldn't criminals, even those in Congress, be held accountable for their crimes?

"The intellectual and community-focused tradition of Judaism must overcome the greed of those Jews who have, with both their Protestant MBA Prez and Catholic Democratic partners, allowed this obscenity to grow over 30 years."

But what will they do about the Christians and Catholics? The ones who own the oil companies, the big farmers, the AIG, the real estate? The C's who send Americans to Iraq to steal the people's oil and kill Iraqis? The tradition of Christianity is to grab what it can and forgive itself for doing it, as we see with AIG and Merrill Lynch, BP, Exxon, etc.

Judaism can't stop the Christian marauders.

Mr. Steinsaltz, I agree with your article "The Growth of Greed". Montesque summed it up best when he wrote about the weakness of republican democracy as its dependency on virtue as the key element of its prosperity. The eventual loss of virtue inevitably leads to a nation’s decline through selfishness and greed. Montesque could well have been prescient of our American society.

Adam Smith, whom the Reaganites profess to admire, was well aware of some of the weaknesses of the commercial nation, in particular the equity shared by all its participants. Today we see the obvious inequity in the shrinking of the middle class and stagnation of salaries; as well as skewing the nations wealth to the top few percent instead of with the productive workers who have created it. In addition, the free market "ownership" society advocates have managed to erase public protection policies essential for a free society and have debased this country into nothing more than a predator state.

Capitalism has no moral compass, it is, in fact, amoral. Its only raison d'etre is profits. What fool could think otherwise? It is only through the regulatory framework, established through a democratic process, that will avoid conflicts between economic activities and public purpose. Yes, government does have a role in our society, a fact even acknowledged by no less than Adam Smith. That role is the mediation of moral behavior between capitalistic endeavors and its citizens.

Thank you, Rabbi. I would hope that other rabbis would counsel their Wall Street and Greenwich congregants the way that Catholic bishops have reminded politicians of their duties.

The intellectual and community-focused tradition of Judaism must overcome the greed of those Jews who have, with both their Protestant MBA Prez and Catholic Democratic partners, allowed this obscenity to grow over 30 years.

My, how Obama would do if he enlisted Krugman, Reich, and you to form policy, rather than the usual suspects, Rubin, Goldman, Lehman, et al.

I think that I am concluding objectively that the number of Jews represented in the U. S. financial system, as typified by Wall Street and in related government posts, is way beyond proportion to their numerical representation in America as a whole. Am I then out of line in surmising that there may be some premium placed by their culture on careers involving (as Jesus in the Temple called it) "money changing"?

I believe that several of the old testament "prophets" criticized the ancient Israelites for their neglect of their own indigents and other internal social inequities. (Of course there was little or no rebuke for horrors and atrocities against "Gentiles" or other non-chosen peoples of those periods), but at least the rudiments of civility appeared.

I realize that a lot of Jewish social theory has been developed since the destruction of the Temple in Jerusalem and the losses in the wars against the Romans which coincided with the end of the age of prophesy (that time in which Jews fantasized about Yahweh's regular conversations with them). I am not familiar with the canons of morality that have so evolved but aren't there some that would bind upon the behavior that has been rampant within financial circles and cause Jews to have more consideration for the well being of American society? I feel that their main use for the United States is as an unconditional guarantor for preservation of Israel itself - a place itself in desperate need of a new Jeremiah.

"Corporate America is not inherently 'evil.'"

No but it is inherently amoral. The executives need outside restraints to keep them somewhere near the straight and narrow. The myth of the invisible hand is exactly that, a myth.

Re-regulation is a clear necessity. The repeal of the Glass-Steagall Act was a disaster. That was put into place in response to the 1929 disaster, and when the old guard died, the new one repealed this stodgy, anti-free market, restrictive relic of another age. Guess what? They were right back then. We need an updated version for the twenty-first century.

Here's the thing. It goes beyond or below both greed and unregulated capitalism to the actions of individual men and women who managed to get their agendas through to the ruinous situation we're currently in. (See below for recent article from Mother Jones on "Foreclosure Phil," Gramm, that is.) Add to them, a Congress that literally doesn't read the addenda and bills it signs off on and is never held accountable, a media that is owned by vast corporate interests, all headed by men and women who are never held accountable by anyone.

We need more than the equivalent of the S&L RTC to oversee the current bailout. We need an independent oversight commission to investigate Congress, its earmarks, special interests, etc. The same goes for the media, which was stolen from the people in the 1930s, Is either candidate up to the task of radical reform? Reform which will take us significantly beyond our own borders, even as it seizes on unconsionable earmarks from within? Obviously not. It has to come from us. Perhaps, as we move into the recession, and who knows how deep it will be, Americans will get the message.

Foreclosure Phil
Years before Phil Gramm was a McCain campaign adviser and a lobbyist for a Swiss bank at the center of the housing credit crisis, he pulled a sly maneuver in the Senate that helped create today's subprime meltdown." />

David Corn" />
May 28" /> , 2008" />

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.

Gramm's long been a handmaiden to Big Finance. In the 1990s, as chairman of the Senate banking committee, he routinely turned down Securities and Exchange Commission chairman Arthur Levitt's requests for more money to police Wall Street; during this period, the sec's workload shot up 80 percent, but its staff grew only 20 percent. Gramm also opposed an sec rule that would have prohibited accounting firms from getting too close to the companies they audited—at one point, according to Levitt's memoir, he warned the sec chairman that if the commission adopted the rule, its funding would be cut. And in 1999, Gramm pushed through a historic banking deregulation bill that decimated Depression-era firewalls between commercial banks, investment banks, insurance companies, and securities firms—setting off a wave of merger mania.

But Gramm's most cunning coup on behalf of his friends in the financial services industry—friends who gave him millions over his 24-year congressional career—came on December 15, 2000. It was an especially tense time in Washington. Only two days earlier, the Supreme Court had issued its decision on Bush v. Gore. President Bill Clinton and the Republican-controlled Congress were locked in a budget showdown. It was the perfect moment for a wily senator to game the system. As Congress and the White House were hurriedly hammering out a $384-billion omnibus spending bill, Gramm slipped in a 262-page measure called the Commodity Futures Modernization Act. Written with the help of financial industry lobbyists and cosponsored by Senator Richard Lugar (R-Ind.), the chairman of the agriculture committee, the measure had been considered dead—even by Gramm. Few lawmakers had either the opportunity or inclination to read the version of the bill Gramm inserted. "Nobody in either chamber had any knowledge of what was going on or what was in it," says a congressional aide familiar with the bill's history.

It's not exactly like Gramm hid his handiwork—far from it. The balding and bespectacled Texan strode onto the Senate floor to hail the act's inclusion into the must-pass budget package. But only an expert, or a lobbyist, could have followed what Gramm was saying. The act, he declared, would ensure that neither the sec nor the Commodity Futures Trading Commission (cftc) got into the business of regulating newfangled financial products called swaps—and would thus "protect financial institutions from overregulation" and "position our financial services industries to be world leaders into the new century."
Subprime 1-2-3

Don't understand credit default swaps? Don't worry—neither does Congress. Herewith, a step-by-step outline of the subprime risk betting game. —Casey Miner

Subprime borrower: Has a few overdue credit card bills; goes to a storefront lender owned by major bank; takes out a $100,000 home-equity loan at 11 percent interest

Lending bank: Assuming housing prices will only go up, and that investors will want to buy mortgage loan packages, makes as many subprime loans as it can

Investment bank: Packages subprime mortgages into bundles called collateralized debt obligations, or cdos, then sells those cdos to eager investors. Goes to insurer to get protection for those investors, thus passing the default risk to the insurer through a "credit default swap."

Insurer: Thinking that default risk is low, agrees to cover more money than it can pay out, in exchange for a premium

Rating agency: On basis of original quality of loans and insurance policy they are "wrapped" in, issues a rating signaling certain slices of the cdo are low risk (aaa), medium risk (bbb), or high risk (ccc)

Investor: Borrows more money from investment bank to load up on cdo slices; makes money from interest payments made to the "pool" of loans. No one loses—as long as no one tries to cash in on the insurance.

It didn't quite work out that way. For starters, the legislation contained a provision—lobbied for by Enron, a generous contributor to Gramm—that exempted energy trading from regulatory oversight, allowing Enron to run rampant, wreck the California electricity market, and cost consumers billions before it collapsed. (For Gramm, Enron was a family affair. Eight years earlier, his wife, Wendy Gramm, as cftc chairwoman, had pushed through a rule excluding Enron's energy futures contracts from government oversight. Wendy later joined the Houston-based company's board, and in the following years her Enron salary and stock income brought between $915,000 and $1.8 million into the Gramm household.)

But the Enron loophole was small potatoes compared to the devastation that unregulated swaps would unleash. Credit default swaps are essentially insurance policies covering the losses on securities in the event of a default. Financial institutions buy them to protect themselves if an investment they hold goes south. It's like bookies trading bets, with banks and hedge funds gambling on whether an investment (say, a pile of subprime mortgages bundled into a security) will succeed or fail. Because of the swap-related provisions of Gramm's bill—which were supported by Fed chairman Alan Greenspan and Treasury secretary Larry Summers—a $62 trillion market (nearly four times the size of the entire US stock market) remained utterly unregulated, meaning no one made sure the banks and hedge funds had the assets to cover the losses they guaranteed.

In essence, Wall Street's biggest players (which, thanks to Gramm's earlier banking deregulation efforts, now incorporated everything from your checking account to your pension fund) ran a secret casino. "Tens of trillions of dollars of transactions were done in the dark," says University of San Diego law professor Frank Partnoy, an expert on financial markets and derivatives. "No one had a picture of where the risks were flowing." Betting on the risk of any given transaction became more important—and more lucrative—than the transactions themselves, Partnoy notes: "So there was more betting on the riskiest subprime mortgages than there were actual mortgages." Banks and hedge funds, notes Michael Greenberger, who directed the cftc's division of trading and markets in the late 1990s, "were betting the subprimes would pay off and they would not need the capital to support their bets."

These unregulated swaps have been at "the heart of the subprime meltdown," says Greenberger. "I happen to think Gramm did not know what he was doing. I don't think a member in Congress had read the 262-page bill or had thought of the cataclysm it would cause." In 1998, Greenberger's division at the cftc proposed applying regulations to the burgeoning derivatives market. But, he says, "all hell broke loose. The lobbyists for major commercial banks and investment banks and hedge funds went wild. They all wanted to be trading without the government looking over their shoulder."

Now, belatedly, the feds are swooping in—but not to regulate the industry, only to bail it out, as they did in engineering the March takeover of investment banking giant Bear Stearns by JPMorgan Chase, fearing the firm's collapse could trigger a dominoes-like crash of the entire credit derivatives market.

No one in Washington apologizes for anything, so it's no surprise that Gramm has failed to issue any mea culpa. Post-Enron, says Greenberger, the senator even called him to say, "You're going around saying this was my fault—and it's not my fault. I didn't intend this."

Whether or not Gramm had bothered to ponder the potential downsides of his commodities legislation, having helped set off an industry free-for-all, he reaped the rewards. In 2003, he left the Senate to take a highly lucrative job at ubs, Switzerland's largest bank, which had been able to acquire investment house PaineWebber due to his banking deregulation bill. He would soon be lobbying Congress, the Fed, and the Treasury Department for ubs on banking and mortgage matters. There was a moment of poetic justice when ubs became one of the subprime crisis' top losers, writing down $37 billion as of this spring—an amount equal to its previous four years of profits combined. In a report explaining how it had managed to mess up so grandly, ubs noted that two-thirds of its losses were the fault of collateralized debt obligations—securities backed largely by subprime instruments—and that credit default swaps had been "key to the growth" of its out-of-control cdo business. (Gramm declined to comment for this article.)

Gramm's record as a reckless deregulator has not affected his rating as a Republican economic expert. Sen. John McCain has relied on him for policy advice, especially, according to the campaign, on housing matters. The two have been buddies ever since they served together in the House in the 1980s; in 1996, McCain chaired Gramm's flop of a presidential campaign. (Gramm spent $21 million and earned only 10 delegates during the gop primaries.) In 2005, McCain told a Wall Street Journal columnist that Gramm was his economic guru. Two years later, Gramm wrote a piece for the Journal extolling McCain as a modern-day Abraham Lincoln, and he's hailed McCain's love of tax cuts and free trade. Media accounts have identified Gramm as a contender for the top slot at the Treasury Department if McCain reaches the White House. "If McCain gets in," frets Lynn Turner, a former chief sec accountant, "we'll have more of the same deregulatory mess. I like John McCain, but given what I know about Phil Gramm, I wouldn't vote for McCain."

As a thriving bank exec and presidential adviser, Gramm has defied a prime economic principle: Bad products are driven out of the market. In John McCain, he has gained an important customer, so his stock has gone up in value. And there's no telling when the Gramm bubble will burst.

David Corn is Mother Jones' Washington, D.C. bureau chief.

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Well Rabbi - It looks like just you and me on this topic.

Anyone else out there...?

I think the uncritical enthusiasm for unregulated capitalism may have reached its nadir this week.

Corporate America is not inherently 'evil.' However, corporations are by their nature amoral entities that seek only to maximize profit. They don't exist to advance any public good, so we should not be surprised at the events of this week.

In fact, I'm surprised it took as long as it did for deregulation to erode the foundation of our financial system.

Since the GOP is the party that has spoken the loudest and longest over the last two decades against the evils of regulation, it must share most of the blame for the meltdown.

Would an Obama administration fix things? Maybe not, but I'm more than willing to give it a shot while I still have a few bucks in my retirement account.