In his book Pipe Dreams, Robert Bryce describes Enron's on-line commodities trading nightmare, which could not have developed as it did without a key provision in Senator Phil Gramm's “Commodities Futures Act."
The former Texas senator (who ran for the presidency himself in 1996, ending up with only one delegate to show for the $20 million he spent) is frequently mentioned as the next Secretary of the Treasury, if John McCain is elected president.
Fortune magazine describes John McCain's economic policy as "vintage Gramm." When he is not advising John McCain, Gramm is dug in at the New York offices of Swiss investment banking giant, UBS, where he is a vice chairman. McCain's recent argument against government relief for homeowners facing foreclosure recalls Phil Gramm's killing of one version of a deregulation bill in 2000 that he had otherwise supported—because it would have provided reduced-rate mortgages for low-income government employees.
No speculation yet on any cabinet appointment for Wendy Gramm, who currently chairs the Regulatory Studies Program at the Mercatus Center, a free-market think tank housed at George Mason University in D.C. Gramm's wife served on the Commodity Futures Trading Commission from 1983 to 1993. As a commissioner, she helped develop many of the trading rules her husband turned into law in 2000. When Mrs. Gramm left the commission, she joined the corporate board of Enron, as the Texas-based gas-pipeline company was reinventing itself into a commodities trading combine, with its own "trading floor" in Houston.
Enron was the first sign of the pandora’s box unleashed by the Commodity Futures Act on the American economy, and its damage is now evident in the form of the current speculative feeding frenzy that is driving up prices on commodities in everything from oil to food.The speculators have exacerbated the current economic crisis into a growing recession which is snowballing into an ever larger downward spiral, being fed by job loss, stock market volatility, worldwide political instability, lack of updated infrastructure and the continuing debacle of the subprime mortgage meltdown. Rampant profit taking is leading to a speculative bubble of oil futures trading. These are all the direct fruits of Gramm's deregulation of commodities trading, made possible in his “Commodity Futures Act,” which became law in 2000.
When Enron ended up the way it did, that should have been seen as the canary in the coal mine. The Enron debacle foreshadowed the same deregulation-caused shoddy business practices responsible for much of the instability seen today in commodities prices and the economy in general. Couple those with the massive debt being built up on the Iraq war and the future looks ominous indeed, especially if there are four more years of even worse economic and military policies under a John McCain administration. The current meltdown of the dollar is becoming a large part of further price instability and is fuelled by the policies espoused by Phil Gramm and others in the neoconservative movement.
Of course, Enron-board-chair Ken Lay is dead now, unless conspiracy theorists are right in claiming he is living under an assumed name in Vail, Colorado. Jeff Skilling is in prison, appealing his Enron-related convictions. And tens of thousands of Enron employees and investors saw their pensions disappear when that company collapsed. And today we have more of the same in the disaster that put Bear Stearns shareholders in a similar position to those that had their investments wiped out by Enron; Bear Stearns' shares originally worth $145 two weeks before the company's collapse, were acquired by JP Morgan for $10 a share.
On April 2, 2008, Gramm’s banking company, UBS, announced that it had sustained $19 billion in losses, which were also doubtless exacerbated by the deregulation that Gramm had pushed through Congress eight years ago. But the Gramms themselves are doing all right. Phil Gramm is John McCain's economic advisor and poised to become, as was stated earlier, John McCain's choice for Secretary of the Treasury.
The lesson here is obvious and frightening: We know what to expect for our country’s future if John McCain realizes his plans to put this country under the economic direction of former Senator Phil Gramm and his wife Wendy. The ride down the rathole is only beginning with George Bush ready to hand the helm to Mr. McCain, should either vote rigging or voter ignorance put the Senator into the White House.