Lessons From Crash and Resurrection
* Auction-rate securities. These are financial instruments that were widely touted as being just as safe and just as liquid as money market funds, but paying slightly higher interest. Neither consumers, businesses nor the sharks that sold them understood them. Check out the two links below: "Lehman screws over its rich clients" and "Goldman screws over its rich clients." As Liz Rappaport wrote in The Wall Street Journal of July 25, 2008:
The state of New York on Thursday joined a widening array of prosecutors and customers accusing Wall Street firms of wrongdoing in efforts to hold together the $330 billion auction-rate securities market before it collapsed in February. State Attorney General Andrew Cuomo filed civil fraud charges against UBS AG, accusing the firm of a "multibillion-dollar consumer and securities fraud," and demanding that the firm pay back its profits from the business, make investors whole and pay damages.
UBS AG? Gee ... ugh ... isn't UBS where Phil Gramm ended up after he left the Senate in 2002? "Senator Gramm's experience gained from more than 35 years in academia and government make him uniquely suited to assist our clients to meet the challenges presented by today's business environment," UBS Warburg CEO John Costas crowed in a release on Oct. 7, 2002.
"This is a mental recession," Phil Gramm said on CNN on July 9, 2008. "We've never been more dominant. We never had more natural advantages than we have today. We sort of become a nation of whiners. You hear this constant whining, complaining ..."
Watch Phil Gramm call us "a nation of whiners":
Gramm is rumored to be John McCain's choice for Secretary of the Treasury.