Mental

What was that sound?

In an interview with the Washington Times, Phil Gramm, a former Texas senator who is now vice chairman of UBS, the giant Swiss bank, said he expects Mr. McCain to inherit a sluggish economy if he wins the presidency, weighed down above all by the conviction of many Americans that economic conditions are the worst in two or three decades and that America is in decline.

"You've heard of mental depression; this is a mental recession," he said, noting that growth has held up at about 1 percent despite all the publicity over losing jobs to India, China, illegal immigration, housing and credit problems and record oil prices. "We may have a recession; we haven't had one yet."

"We have sort of become a nation of whiners," he said. "You just hear this constant whining, complaining about a loss of competitiveness, America in decline" despite a major export boom that is the primary reason that growth continues in the economy, he said.

"We've never been more dominant; we've never had more natural advantages than we have today," he said. "We have benefited greatly" from the globalization of the economy in the last 30 years.

Perhaps we need to get the Office of Thrift Supervision some Prozac, eh, Phil?

One of the largest US mortgage lenders, the California-based IndyMac Bank, has collapsed amid a growing credit crisis.

Federal regulators seized the bank's assets, fearing it might not be able to meet withdrawals by depositors.

It is the second-largest financial institution to fail in US history, regulators say.

The failure came on a day when shares in the two biggest US home loan institutions - Freddie Mac and Fannie Mae - fell at one stage by almost 50%.

Maybe, if you're vice chairman of a giant international bank, everything is sunshine and bluebirds, but I have to think, even the people who understand economics at UBS are looking over their shoulder. The problem with this interview isn't just that Gramm is insulting, it's that he's talking crazy. It is 'whining' to be aware that large financial institutions are foundering. It isn't some delusion that the euro is now worth more than one-and-a-half dollars. The downside of that cheap dollar that is driving the export boom he speaks of is, of course, that petroleum prices in dollars have skyrocketed, and that threatens every part of the economy that uses fuel. (Which, in case Mr. Gramm doesn't realize it, is every part of the economy.)

To his credit, McCain rejected Gramm's comments, though apparently that wasn't the campaign's first reaction. Gramm remains as a national co-chair of McCain's campaign. (They are a great bunch of guys over there.)

PS: Video commentary from Talking Points Memo: