Remember that lovable goofball "Baghdad Bob"? He was Saddam Hussein's last Minister of Propaganda, telling the world that the infidels (the Americans) weren't in Baghdad and that Iraq under Saddam Hussein's leadership was going to win war. We all know how that turned out. Well, get ready for an American parade of Baghdad Bob(s). Only this time these guys are clueless as to what's happened to financial markets, and what role they played in the market meltdown.First up is former senator Phil Gramm (R-TX), who was the financial world's deregulator extraordinare. Gramm had as much to do with deregulating markets and propping up the dangerous derivative (bets) and swap ("insurance") markets as anyone else. His Washington deals helped swell derivative markets from roughly $900 billion in 2000 to $62 trillion in 2007. But it was all an illusion.
Gramm's claim today is that deregulation played no role in speculation, the subsequent financial boom, and the 2008 market collapse. The real villains according to Gramm? The "predatory borrowers" who bought homes they couldn't afford.
Somehow "clueless" doesn't seem to capture the world Gramm lives.
- Mark
Here's the 60 Minutes story that explains Phil Gramm's role in building up and exploding the derivatives market.
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