The financial market meltdown

John McCain's former economic adviser is ex-Texas Sen. Phil Gramm.

Last February, Fortune Magazine called Gramm "McCain's Econ Brain." Gramm lost the official title of economic adviser for making an impolitic remark about this being "a nation of whiners." But Gramm's belief in letting speculators do as they please was never an issue. And even after he left the campaign, Gramm had been mentioned as a possible treasury secretary in a McCain administration.

On Dec. 15, 2000, hours before Congress was to leave for Christmas recess, Gramm had a 262-page amendment slipped into the appropriations bill. It forbade federal agencies to regulate the financial derivatives that greased the skids for passing along risky mortgage-backed securities to investors.

And that, my friends, is why everything's falling apart. That is why the taxpayers are now on the hook for the follies of Fannie Mae, Freddie Mac, Bear Stearns and now the insurance giant AIG to the tune of $85 billion.

Reuters, estimates that when you combine all of the bailouts and other rescue deals orchestrated in the past year, taxpayers could be on the hook for up to $900 billion, or about $6,500 from each and every taxpayer (not including interest, of course).

I don't think conservatives have truly grasped what this means for the big picture. The fact federal authorities had to essentially nationalize the largest mortgage companies and the largest insurance company within weeks makes the government's role in our financial markets unprecedented. This is not the Republican party I grew up with.