Economists are not noted for their political sensitivity, but today's comments by Dr. Phil Gramm, John McCain's Chief
Economic Adviser, may have set something of a record.
In an interview with the cult-owned Washington Times, Gramm suddenly flipped the switch, tossed away the meds, and took off on the flawed character of modern American society as a whole.
Decrying the news media for exaggerating "misery" to "sell newspapers" and create artificial "anxiety" over the state of the economy, Dr. Gramm declared that:
We have sort of become a nation of whiners. You just hear this constant whining, complaining about a loss of competitiveness, America in decline. You've heard of mental depression; this is a mental recession.
John McCain, Dr. Gramm's principle client, was quick to distance himself from these remarks, declaring that "Gramm does not speak for me. I speak for me," and that he "strongly disagreed" with the comments. 
Dr. Gramm has sometimes been mentioned as a candidate to become McCain's US Treasury Secretary, should McCain win the White House this November. Gramm's remarks today recalled the similar "foot in mouth" propensities of another academic economist and recent Treasury Secretary, Dr. Larry Summers.
Summers lost his position as President of Harvard in 2006 when, among other things, he addressed a group of outstanding female academics in Boston and could not resist floating the pet theory that their relative lack of success in "hard sciences" might be due at least in part to "intrinsic differences" between the sexes.
Meanwhile, Dr. Gramm's other current employer, UBS AG, the largest Swiss bank, is facing a criminal indictment for facilitating massive amounts of tax evasion by wealthy Americans, as well as billions more of loan write-offs in the continuing sub-prime lending mortgage debacle. its shareholders and option owners, who undoubtedly include senior managers like Dr. Gramm, have just experienced four consecutive losing quarters, the forced resignations of its CEO and Chairman, the outflow of billions from its pool of assets under management, the prospect of increased losses in its exposure to hedge funds and the "repo" market, and a new lawsuit by the State of Massachusetts, charging it with massive securities fraud. Not surprisingly, all this has done little to help its share price, which has dropped by 70 percent since its May 2007 peak, and is now back to about the same level as when Dr. Gramm signed up to work for it.
Indeed, some observers believe that UBS may have been so badly damaged by all this that it will be unable to survive without an outside buyer.
But of course we don't want to be a party
to spreading any unfounded stories about "misery," "anxiety," or "the
loss of competitiveness."
(c)SubmergingMarkets, 2008
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