PNBS's News Hour's Solman "explains" current credit crisis WITHOUT MENTIONING THE WORD DEREGULATION

[JohnWxy]

On Tuesday evening's broadcast of the News Hour with Jim Lehrer - an "explanation" of the current "credt crunch" was offered from Paul Solman:

GWEN IFILL: Next, a closer look at what triggered the dramatic credit crunch that prompted the government's rescue effort. The NewsHour's economics correspondent, Paul Solman, explains..."


Mr. Solman launched into a fairly lengthy (a good 4 minutes I would say) lecture on how credit makes the economy work. Credit has to be extended to businesses and home buyers and car buyers to enable the economy to go. Mr. Solman explained that when you businesses get too many bad loans or when a farmer loses a crop (that he borrowed money to enable him to plant) they lose credibility (credit-ability) and then those with the money to loan are reluctant to loan these businesses or farmers money in the future.

Well, yes, credit has been extended to businesses, farmers and home-buyers for many decades. That is nothing new. But what is new here and was NOT mentioned in the entire 4 to 5 minute lecture by Mr. Solman was the (apparent) TABOO word "DEREGULATION". Yes, DEREGULATION AS IN the COMMODITIES FUTURES MODERNIZATION ACT (CFMA) SPONSORED BY PHIL GRAMM - YES, THE SAME PHIL GRAMM WHO IS JOHN McCAIN's ECONOMIC ADVISOR. The CFMA allowed for the unregulated trading of energy futures by business entities.

Phil Gramm sponsored the CFMA but it couldn't get passed in a straightforward way because Congress was advised by people from the Federal Reserve and the Commodities Futures Trading Commission that it would lead to market manipulation of energy futures contracts prices. SOOOOOO, what did the Republican's do, they attached it as a RIDER to an 11,000 page omnibus funding bill (the night before it was to go to the floor for a final vote - who says our Congressmen don't work hard? - well, actually the people who wrote the legislation were Phil Gramm's wife and a few Wall Street lawyers).

After the CFMA was passed, Phil's wife left the Commodities Futures Trading Commission (pretty nice appointment that was) and six weeks later she jouned the board of ENRON. Remember those guys? Because of the passage of the CFMA, Enron was able to perpetrate one of the greatest frauds in U.S. history. They closed power plants in California and forced that state to buy out of state supplied electricity at artificially high prices (driven up by Enron traders in the UNREGULATED energy futures market). OF course, in time Enron collapsed and thousands of employees of Enron who had invested a significant portion of their pension funds in Enron stock were not only out of a job but their pensions were worth a fraction of what they were a year earlier.

BUT WHAT DOES THIS HAVE TO DO WITH THE CURRENT CREDIT CRISIS?? Well, in the final form, the CFMA had an addditional provision (APPARENTLY written by Gramm's wife and some Wall Street Lawyers) that permitted UNREGULATED TRADING IN "CREDIT SWAPS" - THAT IS MORTGAGE BACKED SECURITIES (these instruments also involve corporate bonds and municipal bonds but in the last several years mortgage backed securities were being sold in large numbers (this market is bigger than the stock market) and this seems to be where the trouble really developed.

So there is your answer folks. IT's not credit being given that's the problem. We have been doing this for decades. IT DEREGULATION PER THE CFMA - TOUTED BY REPULBICANS, SPONSORED BY PHIL GRAMM, McCAIN's EDONOMIC ADVISOR THAT LEAD TO THE ENRON DEBACLE, THE GAS PRICE EXPLOSION AND NOW THE CREDIT DISASTER OF 2008 WHICH WILL REQUIRE THE U.S. GOVERNMENT (ie. the taxpayers) TO BAIL THEM OUT. ALL BECAUSE OF UNREGUALATED SPECUALTION IN FUTURES CONTRACTS AND CREDIT DERIVITAVES (CREDIT DEFAULT SWAPS) BY BANKS, INSURANCE SOMPANIES, HEDGE FUNDS, BUSINESSES ... AND NOW PAID FOR BY YOU AND ME THE "LOWLY" TAXPAYER (THE SUCKER IN REPUBLICAN/WALL-STREET PARLANCE).

But not a word about this was mentioned ini the 5 minute lecture that was offered as an explanation of the current credit "crunch" (the crunch you hear may be the entire damn economic system). No WONDER PEOPLE REMAIN CONFUSED!

...oh, I guess that's the idea (Karl Rove, tenet 1: keep the common bastards so confused they won't know who to blame. Them tell them the Government (or the Democrats) are responsible for "it" Ha-ha-ha-ha).













http://www.pbs.org/newshour/bb/business/july-dec08/solmancredit_09-23.html