Phil Gramm, the Ph.D. in economics who ran policy by everyman Dickie Flat in his unsuccessful 1996 bid for the Republican presidential nomination, appeared to be more or less correct in his diagnosis of the nation’s economic psyche. Gramm got bounced from Senator John McCain’s presidential campaign earlier this month for saying that the nation is in a “mental recession” and calling the United States a “nation of whiners.”

You don’t need a doctorate in common sense to know a politician can’t say such things because it may annoy, vex and discombobulate the voters he seeks to woo. Duh and double-duh!

But recent earnings reports from major banks suggest the end of the world isn’t nigh. However, this isn’t to say things are especially good.

Bank of America (BAC), the nation’s largest consumer bank and home lender, beat analysts’ earning estimates despite a 41% drop in second-quarter net income.

This could mean analysts were overly pessimistic in a CYA sort of way - or that Bank of America's run by some smart cookies.

Last week, Citigroup (C), JPMorgan Chase (JPM) and Wells Fargo (WFC) reported second-quarter earnings that weren’t as dire as analysts feared - not quite a ray of hope, but at least it diminished the gloom.

But before you start singing “Happy Days Are Here Again” (oops, wrong party, Phil), Wachovia (WB) reported a record (i.e. putrid) quarterly loss of $8.9 billion on Tuesday, and also announced plans to cut 6,350 jobs, or about 5% of its workforce.

All this plays out against the weakest housing market since the 1930s. Wachovia’s stock, recently trading at $14.34 a share, has dropped about 75% since it acquired Golden West Financial two years ago for $24 billion. Golden West was active in California and Florida, two markets clobbered by the housing downturn.

But at the time of the acquisition, it looked like a good bet. No one could have known that housing prices were then at their peak - or that the subsequent downturn would cost Wachovia CEO Ken Thompson his job after 8 years in the corner office.

The generally downbeat but not quite catastrophic signals from the banking sector could mean that the crunch hasn’t quite mashed everything in sight. There’s no way to know for sure until the housing market hits bottom, and that day will come...later. But you can be certain the pessimists aren’t optimistic on this one.

The only real question is: What would Dickie Flat say?