Wednesday, October 15, 2008
Phil Gramm's law and the crash
Matt Taibbi lays it out here in a (rather one-sided but hilarious except for the subject matter) conversation with Byron York of the National Review. He lays a large fraction of the blame on a 262-page amendment, by John McCain's adviser Phil Gramm, to a 2000 law that opened the market for credit default swaps: he says the market ballooned from $900 billion then to $62 trillion in 2008 -- five times the value of the New York Stock Exchange, and all of it effectively a Ponzi scheme. He also answers criticisms, raised by York and previously by various people from pseudonymous bloggers (see reader comments here) to George Will, that defaulting home-loan takers were responsible for the crisis.