wnyc.org / 93.9fm / am 820

Here is a question you should ask your next guest on the subprime mess:

-- wouldn't a cut in the prime Fed lending rate actually bail out Wall Street far more than it would bail out consumers?

Most folks who follow the markets agree that it would. Jim Grant, in an op-ed piece in the New York Times last week, said such a move by the Fed (which Wall Street is heavily campaigning for) would amount to "a kind of socialism for the rich."

http://www.nytimes.com/2007/08/26/opinion/26grant.html

Your guest, alas, said nothing about this. Instead he said a rate cut would "soften the blow" for consumers. Perhaps, but it would have a far more watered-down effect on consumers than it would on the Street. It would literally bail out the Street's unseemly derriere.

But your guest probably has a lot of regular sources on Wall Street and perhaps they have influenced him in this regard.

I love your show and think you ought to do another segment on the turmoil in the financial markets, only this time you should also bring in someone with a point of view that is not whole-heartedly endorsed by Wall Street.

What a wonderful coincidence that Congress finally passed a Banking Law making it much harder to declare bankruptcy and much easier for banks to collect on loans -- just one year before defaults on their risky loans skyrocketed!

Why shouldn't we assume that the several trillion in outstanding US subprime debt is not the exact amount by which Americans are underpaid by their employers -- made possible because of low "minimum wage" levels, combined with risky new lending practices (ie borrowers with no income or assets)?

Could it be that the Fed would rather see bankruptcies than inflation -- at any cost?

As a potential house buyer unwilling to spend more than 30% of after-tax income, we have been waiting years for the housing market to "normalize" -- in which sellers are receptive to the *best* offer.

Every time I hear about "Fed free market committees reducing bank borrow rates" and municipal special designated funds to help struggling "homeowners" I feel my plan going off kilter. Unlike what seems to be the rest of the US, I didn't overspend on a home then borrow against it to put in a pool and buy an SUV or 3.

So when is the Free Marketers day in the sun here in capitalist America?

Cuz that's the day I'm pullin' out my checkbook...