Tag Archives: Great Depression

Phil Gramm, Architect of Sequester and Recession, Looks for Someone Else to Blame

blame_25_grammNew Orleans   Phil Gramm, the former Texas Senator and head of the Senate Banking Committee from 1995-2000, wrote a “pin the tail on the donkey” piece in the Wall Street Journal trying to find someone other than himself to blame for the Great Recession.  The piece was almost unintelligible, though the headline and the first shot fired tried to blame Bill Clinton, not for when he was President, but for a campaign position paper urging more pension investment in affordable housing while he was a candidate.   Wow!  Who knew as old as Gramm must be that he can still do such a somersault?

            If he had good judgment or listened to good advice, Gramm would have kept his head down in whatever bunker he calls home.   This is the man who might rightly be called the “father of the sequester” for his leading role in the Reagan era passage of the Graham-Rudman-Hollings budget bill setting automatic deficit reduction targets.  The US Supreme Court in a more enlightened pre-Roberts era held that bill unconstitutional, because Congress was overstepping its authority on budgeting matters.  I know that almost sounds unbelievable since that seems to be the only way Congress steps these days.  Nonetheless Gramm saddled up and got the bill passed later with some changes and the sons of Gramm-Rudman to this day are what led to the painful sequester.

            Gramm can probably live more easily with that ignominy than the fact that he is also on the shortlist with a bunch of criminal conspiracy bankers as the Father of the Great Recession thanks to his work steering through the elimination of the Glass-Steagall bill, passed after the Great Depression, that had forced banks to separate their basic consumer banking operations from their no holds’ barred wild investing when commercial operations and securities were allowed to comingle under the same roof.  Many economists believe this was the trigger that led to the housing bubble that created the recent recession.  Make a note that Larry Summers who is trying to run the Federal Reserve was also deep in that do-do, which should disqualify him for the job, while Janet Yelsin, argues we need more bank regulation.

            With a record like that, Gramm obviously needs to find someone else to shoulder the blame he has earned.  Not surprisingly he wants to shift it to the poor.  His almost incoherent argument is that the government started pushing affordable housing goals for about 25 years from the Community Reinvestment Act forward and though it moved home ownership in the country to almost 70%, Gramm believes that the process of the government setting such a goal intoxicated bankers and private wealth so much that they essentially lost their heads.  He says, “…wealth cannot serve two masters and …the government was the dominant master.”  He also argues a couple sentences before that the government regulators were asleep at the switch and not doing their job. The master wasn’t mastering I guess, so the low-and-moderate income people getting a chance to build citizen wealth through home ownership with a favorable governmental policy somehow conned the rich and the banks into creating the recession.

            It all just makes your head spin, but once you get a grip, this kind of cockamamie policy irrationality reminds us why Phil Gramm, father of the sequester and the great recession, should be on the short list of folks who have almost killed the country and economy over the last 30 years.


Cultural Shift: The Media Suddenly Rediscovers Poverty

New Orleans  I swear there’s a shift suddenly in the recognition that poverty is a big freaking problem.  Everywhere I turn in recent days commentators, columnists and reporters feel obligated to at least mention poverty and the poor either directly or euphemistically.    In a cultural shift from recent decades, folks feel they should at least pretend to be grossed out by ostentatious and disgusting displays of wealth and inequity.  Although there is no indication that this will do one scintilla of good for lower income families or citizen wealth in the short term, it speaks to at least a heartbeat of hope for the future perhaps.

The evidence is everywhere:

  • A Times tech columnist writing about how grand it is to live and work in California’s Silicon Valley starts out by detailing the intense economic pressure of living there and details the million dollar parties, fake snow drifts, and other excesses of wealth abounding in the area.
  • Another Times columnist, Gina Bellafante, in her “Big City” report the day before starts out her story on low wage workers who can’t make it in New York City’s economy by pointing out the paradoxes of rich kids of the 1% and their gold tinted bubbles.
  • The AP garnered headlines with a tragic story that poverty will hit levels we have not seen since the 1960’s, more than 50 years ago before the Great Society and the War on Poverty because of the Great Recession.  Furthermore, all indications are that this level of poverty will be pronounced and enduring as low wage jobs proliferate, unions have become sclerotic, toothless, and ineffective, and corporations ascendant with the social safety net in tatters and any hope of mending it lost in the ideological polarization of politics.
  • Increasing realizations that the devastation of the economy is such that single-parent families have created a new dimension of the class divide essentially because you just can’t make it any more with only one income.
  • Stories proliferate on the enduring consequences of a “lost” generation between 18-35 in this economy that parallels the impacts and lasting effect of the Great Depression.  You don’t easily get over long term unemployment.  Similar stories are now abounding about the death sentences of older workers past 50 who can never dream of recovery, even if they were to win the lottery of fate and be able to find a job, any kind of job.

I could go on and on and on….

Don’t get me wrong.  The gilded grossness of Wall Street and Silicon Valley should go underground.  Recognizing and naming the persistence impact of low wages and the life sentences of the service economy is vitally important.

Unfortunately this ray of hope is far from a plan, and though we start by naming the evils of the economy and the victim filled crimes around us, there still seems to be no one talking about the ways and means of solving any of this or a real program that might gain traction to relieve the pain and once again build citizen wealth.