Economist Ravi Batra (often on Hartmann's show) Joins TYT right now at www.theyoungturks.com

[ihavenobias]

To talk the economy (debt, subprime, credit, etc.), Greenspan and more.

www.theyoungturks.com

[Warpy]

1. Batra took a lot of flak for predicting a crash in 1991

that would lead to a new Depression. He was right on the mechanisms but didn't anticipate the rise of the computer industry and the willingness of lenders to extend credit with no collateral.

Everything is in place, now, and it will take very wise leadership to get us out of it. I don't see any of that happening until 2009, so we're stuffed in the long term.

[JDPriestly]

2. Ravi Batra is right: Wages must increase to meet the increased

supply that results from increased production. What he is not talking about, however, is that what appears to be an increase in production/supply right now is due to imports produced by the cheap labor in India and China and other developing countries not to improved industrial capacity here in the U.S. I would submit therefore that it is the too hasty and too comprehensive destruction of trade controls on products into the U.S. that has caused the imbalance between supply and demand.

American wages are stagnant because if they rise our production will not be competitive with the production in India and China and all the other third world countries that pay their workers pennies to the dollar for wages and then export their products to our country.

I hate to be sound so protectionist. But we need to rethink and revuse our trade policy. Had "free trade" been implemented more slowly, step by step, it might not have caused such chaos.

On a separate issue, Ravi Batra talks about the fact that the banks don't have anyone left to loan their money to. He also talks about the fact that retired people who rely on interest for their income will cut their spending even more due to the decrease in interest rates. He is absolutely right. I was notified a few days ago that the interest rate on IRAsI recently rolled over will be 2.23%. What good does it do to save money during your working years if, when you retire, the interest rate on the money you sacrificed to save is less than the inflation rate? That interest rate is probably less than half the inflation rate on the products we buy as a semi-retired people (we don't buy the electronic junk that the Republicans include in the cost of living basket in order to hide the truth about the actual inflation rate on things ordinary people buy).

I have heard a lot of dissing of the homeowners who took on sub-prime loans to buy houses that the dissers think they could not afford. I'm wondering how these oh so righteous dissers respond to my concern about how the low interest rates affect me and other retirees who managed to save money. The banks had the power to say "No" to the would-be homeowners. They should have. Had they "just said no," we would not be in this mess. The banks were responsible. They failed to act responsibly. They are completely to blame for this situation.

Ravi Batra is absolutely on about one thing: Greenspan was an idiot, a phony idiot. He did not know what he was doing. He worshiped the doctrine of free market economics. His faith blinded him. We are all paying the price.