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June 03, 2008

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Gramm should rather be rotting in a cell, it seems.

You should also include SameFacts piece titled Phil Gramm, ghoul:

"Phil Gramm tried to get the state of Texas to sell bonds to buy life insurance on state employees. Not insurance to help support the employees' families, you understand. No, that would be liberal. Insurance whose proceeds were to go to Gramm's employer, UBS, which would use them to pay off the bonds and then share the profit with various state pension plans. This scheme is a variant on the rather gruesome financial maneuver called "dead peasant insurance," in which employers take out insurance policies on the lives of their low-wage employees...In the private sector, "dead peasant insurance" is big business: billions of dollars per year. Some states have banned it, but the rather mild scandal that erupted when word of the scheme hit the press has largely faded away. The IRS had actually managed to take away the tax benefits of the scheme, but in August 2006 the Republican-controlled Congress gave them back again....(The fact that the Republican-dominated government of Texas decided to take a pass suggests either that their morals are better than Gramm's or that they have more political sense than he does.)"

You should also include SameFacts piece titled Phil Gramm, ghoul:

"Phil Gramm tried to get the state of Texas to sell bonds to buy life insurance on state employees. Not insurance to help support the employees' families, you understand. No, that would be liberal. Insurance whose proceeds were to go to Gramm's employer, UBS, which would use them to pay off the bonds and then share the profit with various state pension plans. This scheme is a variant on the rather gruesome financial maneuver called "dead peasant insurance," in which employers take out insurance policies on the lives of their low-wage employees...In the private sector, "dead peasant insurance" is big business: billions of dollars per year. Some states have banned it, but the rather mild scandal that erupted when word of the scheme hit the press has largely faded away. The IRS had actually managed to take away the tax benefits of the scheme, but in August 2006 the Republican-controlled Congress gave them back again....(The fact that the Republican-dominated government of Texas decided to take a pass suggests either that their morals are better than Gramm's or that they have more political sense than he does.)"

This is a compelling post. But how can such arcane details be packaged to be understood by most Americans? I suppose the place to start is the high price of gas; one could also re-examine the price bubble in California energy markets caused by deregulation.

Ultimately it calls for a compelling narrative about regulated markets as a good thing, as opposed to the overly simplistic mantra of free markets that has been the calling card of the Reagan and post-Reagan Republican party. Of course few (if any) markets are in fact "free." But to make the case in a simple and compelling manner is still wanting.

This may be a task for the Obama campaign. But of course there is risk inherent in that, because it could then expose him to being a "big government liberal". The case needs to be made first by intellectuals.

And by the way, corporations do not exist without grants from the state. And they cannot merge without permission from the state. No market with a corporation in it is a "free" market.

"I suppose the place to start is the high price of gas; one could also re-examine the price bubble in California energy markets caused by deregulation.

Ultimately it calls for a compelling narrative about regulated markets as a good thing, as opposed to the overly simplistic mantra of free markets that has been the calling card of the Reagan and post-Reagan Republican party."

The California case doesn't show what you seem to think it shows. Energy providers were banned from making the routine long term supply contracts which are necessary to smooth out spot-price problems. CA legislators thought that the lowest prices at the time were the norm and thus specifically did not allow long term contracts with a price any higher than the nearly 30-year low spot price. That doesn't excuse the fact that speculators attempted to use the fact that California was required by law to use daily spot prices (or was it weekly, I can't remember). But even without the speculation, the contract prices would have been much lower than the spot price only a few years later. Legislators disallowed one of the most normal market tools, and got burned. That example doesn't make for much of a "caused by deregulation" narrative.

The price of gas doesn't help you either so far as I can tell. Looks like high demand and limited supply equals high price to me.

Didn't Enron admit to manipulating the California electricity market to defraud the state of billions of dollars?

Didn't Enron admit to manipulating the California electricity market to defraud the state of billions of dollars?

Well, they were taped saying so with respect to Snohomish County in Washington.

The article linked in the main post is from the Texas Observer, not the Texas Monthly. The Observer is a fantastic left-leaning political and investigative journalism mag that's been around in Texas for decades, and deserves a lot more love in the blogosphere. It was Molly Ivins' home, and broke the Tulia drug story, just to name a couple of reasons to keep it on your radar.

synchronicity:

I just opened my newly acquired copy of "The Way we Never were" to this apt quote (p 10)

Sen. Phil Gram, for example...is well known for his opposition to government handouts. However, his personal history is quite different from his political rhetoric. born in Gerogia in 1942 to a father who was living on a federal veterans disability pension, Gramm attended a publicly funded university on a grant paid for by the federal War Orphans Act. His graduate work was financed by a National Defense Education Act fellowship, and his first job was at Texas A and M University, a federal land-grant institution. yet when Gramm fianlly struck out on his own, the first thing he did was set up a consulting business where he could be, in his own words, "an advocate of fiscal responsibility and free enterprise." From there he moved on to Congress, where he has consistently attempted to slash federal assistance programs for low income people."

aimai

mss: thanks; corrected.

But does he wear a flag pin?

Democrats should make "Enron" become Phil Gramm's new middle name.
Phil "Enron" Gramm.
Gramm is a crook, a mean and selfish bastard; his presence on McCain's team is a huge opening for Democrats seeking ammunition in the general election.

Here is Molly Ivins explaining about Phil and Enron;
here is another 2004 Ivins piece about Gramm;
here's one from 2002.

Here's an Aug 1995 Mother Jones piece about one of Phil's good-ol'boy associates.

"This is a compelling post. But how can such arcane details be packaged to be understood by most Americans?"

Let me try....

"Phil Gramm's irresponsible legislation led to the subprime crisis".

"This may be a task for the Obama campaign. But of course there is risk inherent in that, because it could then expose him to being a "big government liberal". The case needs to be made first by intellectuals."

I couldn't disagree more. The "big government liberal" charge is made directly to the public by almost any conservative you could name. It goes right to the heart of progressive politics. What's needed is an argument with some ethos, rather than an intellectual argument. Something like:

"Conservatives have been talking for years about 'getting government out of your life'. They think the way to do this is to privatize, deregulate, and give more power to large corporations. Corporations control what you pay for healthcare and medications. They control whether you can get insurance, or whether you can get a loan to go to school. They even control what you're allowed to see on the news. So.... who is going to get big corporations out of your life?"

Vote Democrat.

Here's another one - for the young voters:

Republicans talk a lot about 'big government' versus 'small government'
Why is it that they never talk about 'good government' versus 'bad government'?
Why are they so obsessed with size?
Maybe they're compensating for something.

"But in the world of SBCs, neither requirement exists. SBC contracts can be sold and resold"

Perhaps it might be helpful to explain what an "SBC" is in your post? Or just what the letters stand for?

I've gone through eight of your linked articles so far, and still haven't found the acronym, or an explanation. Probably this is something everyone but me knows, though.

Or did you possibly mean "CDS"?

"Republicans talk a lot about 'big government' versus 'small government'
Why is it that they never talk about 'good government' versus 'bad government'?
Why are they so obsessed with size?
Maybe they're compensating for something.

Posted by: david kilmer"

Brilliant. Simply brilliant.

**golf clap**

As far as a sound bite goes:

"McCain admits he 'doesn't know much about the economy' so he takes advice from Phil Gramm, whose legislation led to the subprime crisis. So who are you going to trust with your family's home -- someone with a plan for you to keep it, or someone who created the foreclosure crisis?"

Or, shorter:

"McCain's economic adviser is the reason you lost your house."

The latter is a bit of a stretch, though ...

The NYT explanation is a little puzzling. If you don't know who your counterparty is, how do you know who to send the premiums to? And are there really no limits on who can buy the contracts, thereby assuming the default risk? That's an obvious recipe for disaster, since it would be easy, and I suppose legal, to buy a bunch of contracts without having the means to pay off, and then declare bankruptcy if necessary.

One of the important functions of a futures exchange is to guarantee performance on traded contracts. That is, if I buy a carload of wheat for delivery in November it is the exchange, in effect, that guarantees performance (in the form of cash, not wheat). That makes anonymous trading possible.

In over-the-counter derivatives trading there is normally an intermediary between the parties who perfoms the same function. Surely some similar mechanism exists in the CDO market. Doesn't it?

Maybe someone with experience in the area can explain.

"Vote Democrat."

Better to either vote for the Democrat, or to vote Democratic. We don't actually call ourselves the "Democrat" Party.

Gary: fixed; thanks. (Duelling acronyms in my head.)

What is the harm in Dead Peasant Insurance? I don't know a durned thing about it, just googled and read a couple of news stories that confirm the description upthread, but I don't see how the workers are harmed by it - I kinda doubt the company is slipping asbestos into the break room coffee to cash in on the policies, and it's not their money being spent on premiums. It's a weird, ill-targeted way to give large employers a tax break on otherwise mediocre investments, but stupid tax breaks for big corporations are not exactly a new part of the Republican platform. Why the outrage?

trilobite: that's why I didn't mention it. I thought it was ghoulish, but probably harmless, unlike credit default swaps, and the Enron loophole.

"Better to either vote for the Democrat, or to vote Democratic. We don't actually call ourselves the "Democrat" Party."

Do you mean it's better to say that in an ad, or better to actually vote for Democrats?

If the latter, I agree with you.

What's so difficult about "Phil Gramm wanted to see your kid's teachers die?" and "Phil Gramm hates workers so much he wants to bet on their deaths?" Short and sweet.

aimai

David Kilmer: So.... who is going to get big corporations out of your life?"

Vote Democrat.

That's 'Vote Democratic'.

Which, as things now stand, has about as much chance of getting big corporations out of our lives as it has of causing the sun to revolve around the earth.

"That's 'Vote Democratic'."

Says you. And Gary.

"Which, as things now stand, has about as much chance of getting big corporations out of our lives as it has of causing the sun to revolve around the earth."

You're officially evicted from my target audience ;).

Former federal office holders should not be allowed to work as lobbyists, ever. While they are in office, their family members should not be allowed to work as lobbyists. Period, full stop, no exceptions.

Won't that be a strong disincentive for lots of folks to run for office? Yes, it will. That's the point. Those are not the folks we want in office.

Tangential to Gramm, of course, but offered as a modest proposal.

Thanks -

...Maybe they're compensating for something.

I'm with Nell on the practical aspect, but I lol'ed.

"Former federal office holders should not be allowed to work as lobbyists, ever."

I suggest a ten-years-long ban is more reasonable and sufficient.

I suggest a ten-years-long ban is more reasonable and sufficient.

Sounds fine to me. It's pretty unlikely that policy-makers will be influenced by the prospect of a fat gig ten years down the line.

Plus, it's something I could actually imagine becoming law, as opposed to my original proposal.

Thanks -

Oddly enough, there doesn't seem to be any mention that the bill was signed into law by Bill Clinton...

Hmmm, rather strange, that...

the U.S. Senate rushed to pass an essential, 11,000-page government reauthorization bill.

I think you may have missed that adjective, Robert.

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