July 31, 2011, Bob Brinker's Moneytalk: Summary, Commentary, Excerpts and Discussion

Posted July 31, 2011....                                        (post and read comments)

Okay, I was wrong. Bob Brinker hosted Moneytalk today, in spite of my prediction that he wouldn't.... :)                   

(Brinker's comments summarized, paraphrased or quoted)

STOCK MARKET....Brinker said: "Isn't it amazing how the stock market has taken all of this in stride. I was looking at the S&P 500. It's actually setting about 5% below its closing high for the year, which is truly amazing.....This is resilience  when you look at this kind of political drama out of Washington DC......Remember we had a caller when the market was at 1268 at the end of June who asked whether he should sell out of the market because of the debt ceiling debate......Of course, the market is now at 1292, a couple of percent higher than when that call came in at the end of June. So this is what happens. If that individual would have sold out at 1270 at that time, he would be faced now with either sitting it out or re-entering at a higher level."

 Honey EC:  In spite of the year-to-date figure that Brinker used to make his point,  the stock market has had  six straight days of losses -- the Dow  falling 581 points or 4 percent. The S&P 500 Index closed at 1292 on Friday, down 3.9% for the week.  (Here is a link to the call that Brinker referred to from the   June 26th Summary.)

Brinker continued:  "And certainly we've seen some nice dollar-cost-average opportunities this past week in the market. I must admit on Friday I was taking advantage of some of the bargains that were out there with the market in the 1200's,  reacting to this hyper-drama out of Washington DC.    I know many of you also have been taking advantage of  the dollar-cost-averaging opportunities on short-term weakness - and certainly it's minor. I mean, 5% is really noise when you look at the market over time.......If you've been listening to this broadcast, we have not been part of the panic-brigade here on Moneytalk. 

I have said over and over on this program, this summer, that I never believed that the United States of America would default on its Treasury obligations. And certainly with the word out of Washington today that the framework has been established for the debt ceiling increase with deficit reduction, certainly that is exactly what is playing out. I think that we should congratulate those of you who listen to the broadcast that  have not joined the panic-brigade and panicked out when you are looking at a market that is trading within 5% of its high for the year,  and has shown incredible resilience in the face of probably one of the biggest fiscal passion plays of our lifetime.....

And it certainly has done damage to this country's reputation all over the world.....Let that be said.....There are stories coming out of Tokyo about the upset in Japan. About the fact that they are the second largest holder of Treasury obligations and they are being held hostage by this Washington Bruhaha. Obviously China has already made a decision to further diversify their portfolio and become less dependent on Treasuries. After all, they are holding 1.16 trillion in Treasury obligations while all this is playing out."

Honey EC:  Note that Brinker said he was buying this past week. Well, he must mean with his own money  because all of his Marketimer model portfolios are fully invested. The last time that he said on Moneytalk that  he was personally buying stocks was on the April 2008 show.  He said he was buying at low-1300's. At that time, he had also called a new market bottom and  issued a Marketimer buy-signal at the low-1300's. Of course, the market just kept on dropping, all the way down to 677 in March, 2009: 

Caller John said: “I took your recommendation, Bob.. When it was below the 1300’s I added."

Brinker replied: "And just for the record, I’m right with John. I was doing the exact same thing that John was doing. When we saw that weakness on the correction test into the low-1300’s and that very, very minor weakness that we had just below that level for a very short window of time, I was doing the same thing that John was doing – which was adding to positions."

INTEREST RATES:   Caller Don from New York asked Brinker why his Vanguard Bond Funds had not dropped much in value.  Brinker told him that "interest rates tend to fluctuate over time," but  that those who have been betting on rising interest rates are "seeing red ink" because the sluggish  economy has actually brought rates down. 

Honey EC: I am one that has been  "betting that interest rates will rise."  I believe that simply makes me early to the party, not wrong.  Brinker really wanted to rub it in because he told another caller that he "almost felt sorry" for those who have been expecting interest rates to rise. Okay Bob, then why did you sell all of your model portfolio Vanguard  TIPS;  and most of your Vanguard GNMA's  and about half of your Vanguard Short-Term Investment Grade Bond Fund?

UNEMPLOYMENT:  Still at 9.2%. This is very high considering we are two years into a recovery and it's contributing to the very slow growth.  

INFLATION: Caller Greg from Reno asked about inflation vs deflation over the long-term. Brinker said, based on the recent economic figures he is reading, we have low inflation.   

DEBT CEILING DEAL IN WASHINGTON: Brinker said that the framework for the deal is being worked out.   It will contain a balanced budget amendment, but  no tax increases.  Big Medicare and defense cuts are on the table -- none for Social Security.  The cuts would take place over a period of  ten years.  This deal would lift the debt ceiling until 2013, so would not be an issue in the 2012 elections. 

FOURTEENTH AMENDMENT: Several times on the show today, Brinker reiterated that the 14th Amendment says that "public debt shall not be questioned." He said that the "blockheads"  in Washington have actually "created this  crisis."   

STANDARD AND POORS DOWNGRADE:  Brinker said: "Standard and Poors, one of the two major rating agencies, along with Moody, both of whom currently rate US Treasury obligations triple-A. Standard and Poors  has stated that there is a 50% chance of downgrade of that rating within the next few months. Now they are going to have to decide whether they are satisfied with the deficit reduction package that we are going to see sometime over the next 24 to 48 hours.....It's said to be close to 3 trillion dollars if you can believe Senate Minority Leader Mitch McConnell.....They'll have to decide at S&P whether that is sufficient for them to hold off on any possible rating change.  S&P says they have to see a credible solution to rising US government debt obligations or they will lower the credit rating. Most people think they would lower it to a double-A. Nobody knows for sure. ......What happens with a downgrade? The taxpayers pay. It'll become more expensive for the US to finance the national debt....We'll have to pay more interest over time."

DOLLAR WORLD CURRENCY:  Brinker said: "The good news is there are no real alternatives. When you look around the world for a reserve currency, where do you go? You go to the dollar. Where else do you go? That is when your heartaches begin....The fact is, there really is no other reserve currency out there. The Chinese Yuan is not ready for prime time as a global currency. Maybe some day.....The Euro? You must be kidding. With the problems in Euroland, the Euro as a reserve currency? Don't hold your breath on that one. The Yen? You must be joking! You see the problem. So even if by default alone, the dollar remains the global reserve currency for now."  

TREASURIES: Brinker said:  "Treasuries are still viewed relatively risk-free around the world. Treasury Notes and Bonds are possessive of both interest rate risk for Notes and Bonds because of their maturities. So I think Treasuries will remain the benchmark even if they are downgraded to double-A which is unknown at this time. No downgrade as of today.....But more interest over time will have to be paid if they are downgraded. And let's not forget some very important facts here. The United States has the largest bond market in the world, and the best liquidity of any bond market in the world........This is important not only the Treasuries, but also for the dollar because the dollar is the premier currency in terms of size, liquidity, volume traded around the world in the foreign exchange markets." 

POLITICAL BULLY PULPIT:  Brinker repeated all of his previous name-calling  and said if he said what he really thinks, he'd be off the air in five minutes.

Honey EC: Brinker seems to enjoy calling names and he is fastidious about making sure he appears to be a bi-partisan politician-basher, but he still manages to give special slams to those who do not want to raise taxes or increase the size of government. I wish he'd make up his mind. Is the spending out of control or isn't it? Does he want it to stop or shall we just all go over the cliff together? How ridiculous.

SOCIAL SECURITY IS DIFFERENT: Brinker said: "I think it's very important to understand that there are elements to the Social Security program that are different from all the other programs that are out there.  Payroll taxes, as I'm sure you pay them.....are paid by both the employee and the employer, and if you are self-employed, you pay both sides, which is 12.4% up to about $100,000. If you're self-employed, you're paying over $12,400 a year into the system.  The money goes into the Social Security Fund, if you will pardon the expression, to pay current beneficiaries. Now when there's a surplus, that money is invested in special Treasury securities that pay interest to the so-called Social Security Fund.  

At the start of this year, that fund had 2.6 trillion dollars in assets. By assets, I mean they own Treasuries, government IOU's. On the Social Security Fund side they are considered assets. On the Treasury side, obviously, they are obligations, they're liabilities, they are IOU's...... For the  first time in 27 years last year, the Social Security Fund actually paid out more in beneficiary checks than it collected in payroll taxes, but the fund still grew in size because of that interest it earns on those special Treasury securities......Any excess payroll taxes that are collected are essentially lent to the Federal Government, and the government uses that money for general purposes. 

But here is what is important to remember, and this is unique to Social Security. Social Security cannot by law add anything to the National Debt. We are talking statutory here.....Also, Social Security cannot by law, pay benefits unless it has sufficient income to cover the cost.....Last year they had to make it up with the interest that they earned on the $2.6 trillion, but they still had enough revenue with the interest added in......Social Security under United States law has no borrowing authority to make up short-falls in  benefits. They can't borrow money.....So that's why the long-term funding issues at Social Security benefits must be dealt with by congress. This is not related to the national debt, the debt ceiling, then annual deficit....So for that reason, if they had had a problem on Wednesday with the debt ceiling.....you could make a strong case that the Social Security checks should be paid out."

MEDICARE PART D CAUSING PEOPLE TO TAKE MEDICINE THEY DON'T NEED:   Brinker said: "Eliminate Part-D,  there are way too many prescription drugs being consumed in America today -- way, way too many. You know that, everybody knows that. Because of all the benefits that are thrown at people, encouraging them to get prescriptions, many of which they don't even need.  So bottom line is, you will dramatically reduce consumption of prescription drugs. Just get rid of Part-D." 

Honey EC:  I have some questions for Bob: Exactly HOW DO YOU KNOW that "way, way too many" prescription drugs are being consumed by people who don't need them?    And are you saying that doctors are illegally prescribing them?  Several times today, Brinker said he was all for doing away with the Medicare Part-D Drug Plan, but  nary a word about  Obamacare. 

Brinker's guest-speaker was Vito Tanzi,  "Government versus Markets: The Changing Economic Role of the State." It's also available on Kindle.  

Moneytalk on demand and to go with Bob Brinker, is available for FREE audio/podcasting at KGO810 radio for seven days after broadcast.  I download and save all three hours, including the third hour guest-speaker. (The program is archived in the 1-4pm time-slots.) If you don't download it from KGO within seven day, it's available at bobbrinker.com by paid subscription. KGO Radio Sunday Archives

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July, 28, 2011, Bob Brinker's Debt Ceiling Advice

July 28, 2011....Here is  a  brief review of  Bob Brinker's opinions about the ongoing debt ceiling debate that is taking place in Washington DC right now and is nearing some critical deadlines.   

DEBT CEILING WILL BE RAISED, WITH OR WITHOUT A SHUTDOWN  

July 10th, Moneytalk, Brinker said: They must, those in power in Washington, must raise the debt ceiling. They have no choice. They either do it before a government shutdown, in which case, things go on as they are.  Or they do it after a shutdown, like they did back in 1994 -- short government shutdown and then they re-open. In either case, they must raise the debt ceiling....There is no alternative of no debt ceiling increase....It must be raised."

July 17th, Moneytalk, Brinker said:  "The debt ceiling must be raised with or without a short-term, stage-produced government shut-down and that's because the country cannot afford to go into default. If you wonder why,  $14.4 trillion in national debt, annual Treasury sales of way over a trillion dollars.   The country cannot afford to go into default on its Treasuries obligations."

July 20th, Moneytalk,  Brinker said:  "I guarantee you they're going to raise the debt ceiling, with or without a government shut-down....You can take that to the bank. But when you talk to the politics of this, and I think you have to take it to the general election in order to decide where the country is going to go on this issue -- spending versus revenue and fiscal responsibility." 

BUT WHAT IF THE UNTHINKABLE DOES HAPPENS?

July 10th, Moneytalk, Brinker said: "If the United States were to refuse to raise the debt ceiling -- remember, I don't believe that's an option and I don't expect that to happen -- then the credit quality of US Treasuries would be degraded....because of political posturing."  

SHOULD YOU SELL STOCK BECAUSE OF POSSIBLE CRISIS?   

June 26th,  Moneytalk: Caller David asked:  "Assuming that Congress and the president stalemate on the debt ceiling and we face a crisis of high interest rates or plunging stocks or both, would it be smart to protect against that now by transferring all bonds and stock funds to a money market fund?"

Brinker replied: "I would say the answer to that would be as long as you are willing to run the risk that if it doesn't turn out you're way, which would be a de facto default by the US Treasury, which would be an event of enormous historical significance. If we don't  have a de facto default, which can only occur if the debt ceiling is not raised, then you have to be prepared if you exit now to do one of two things. Either to stay out indefinitely or whatever, or to re-enter at a higher level......

If you are going to exit now on the theory that you're exiting because they won't raise the debt ceiling. And if you turn out to be wrong, and they do raise the debt ceiling, I think that the probabilities would be unfavorable that you would re-enter at a lower level. Of course, it would be always possible to re-enter at whatever level you were looking at .......but you might be really unhappy if you made a move like that and then  you had to re-enter at a higher level.  

And there's another factor. You would lose all of your timeline toward long-term capital gains on any positions held for less than a year in a taxable account.......Meanwhile you've got people like me saying they are going to raise the debt ceiling......... because they don't have any choice. And guess what,  they know it.....What you are looking at in Washington is political theater of the absurd."

Brinker has used his enormous word-smithing ability to avoid actually telling callers to either sell or not to sell stock based on the "political theater of the absurd" going on in Washington.  He has never told the Moneytalk audience not to sell stock.  He has only said that if you decide to do it, and nothing happens, be prepared to "re-enter at a higher level."   (Brinker's Marketimer model portfolios remain fully invested.)

On the other hand, he has said that even though the government will absolutely have to raise the debt ceiling, he admits that  it could be AFTER a shutdown.   He has also clearly pointed out that raising the debt ceiling is a "big deal," and could lead to a Treasury  downgrade or even a default.

A word of caution before reaching any conclusions based on Bob Brinker's views: Remember that he remained fully invested throughout the 2008-2009 megabear market meltdown.  And  even though he was well aware of what was happening in the banking system and the sub-prime  problems, he never sounded an alarm of warning for Moneytalk listeners or for his Marketimer subscribers. Just the opposite, he kept issuing new bottom-calls all the way down to the March 2009 S&P 500 Index low of 677.....

Smudge sent this little polished gold  beauty. I think she is hoping that Congress will lay one of these instead of the other kind. :)

We're all in this together and we all have a lot at stake.  But on  a  lighter note, take a look at this Johnny Carson as a politician taking a polygraph test. Hilarious!

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July 24, 2011, Bob Brinker's Moneytalk: Summary, Commentary and Excerpts

July 24, 2011....Bob Brinker hosted Moneytalk today.

Bob Brinker's comments summarized, paraphrased or quoted 

STOCK MARKET: Brinker did not mention the stock market today and there were no calls about it.

Honey EC: Brinker has made no changes in his model portfolio's asset allocation. They are still fully invested. In the July Marketimer, Brinker said the May correction was health-restoring and had increased the likelihood that  "the S&P 500 Index will  reach low-to-mid 1400's target range going forward." 

INTEREST RATES-BOND MARKET IF GOV DEFAULTS: There were a couple of callers that asked about this subject.  In his weekly newsletter which contains a summary of Moneytalk, David Korn wrote (posted with permission):

Caller:  What would happen to interest rates if there is a government default?  Bob said that would depend on the credit rating.  Bob said people around the world would actually believe that Americans would fail to pay their Treasury obligations.  That said, Bob estimates it would be less than a 100 basis points.   Take the 10-year Treasury which is yielding around 3% which Bob said he didn¹t think it would go above the 3s even with a downgrade.  Many investors don't even have that much regard for the credit rating agencies.  So far, however, there hasn't been much of a reaction. The financial markets have yawned as the did back in 1995 when there was a short-term government shut down.  Bob added that even though we have an August 2nd deadline, the Treasury has said that it found another $14 billion from revenues that came in above projections which could extend the deadline by another week or so.

Caller:  What do you think would happen to a holder in a Treasury Bill if the government shuts down?  Bob said he think you would get an IOU and that once the issue was resolved you could get your money.  Bob said he expected that if the government shuts down, it will be very temporary as the leaders feel the repercussions of that decision so it would be reopened quickly. Bob said he thinks a holder of Treasuries would get their money back.

David Korn's Stock Market Commentary, Interpretation of Moneytalk (Bob Brinker Host), Financial Education, Helpful Links, Guest Editorials, and Special Alert E-Mail Service.  Copyright David Korn, L.L.C. 2011

THE DOLLAR'S VALUE:  Brinker said that much of what you hear about the value of the dollar is political. For example,  even though the Treasury Secretary claims that US policy is for a stronger dollar, he has never seen a policy that actually favors a strong dollar. However, the dollar trades against other major currencies, which has benefited the dollar, because Euro-land and the Yen have had so many problems. Brinker said that whether or not the Fed printing dollars will devalue them depends on the growth rate of the economy. If they grow the money supply in excess of the rate of economic growth, then the dollar will face devaluation.  

Honey EC: Over the past decade, the dollar has lost value against the Euro, Pound, Yen and other currencies.  It is for this reason that many own gold as a hedge.  Brinker recommends GLD (gold ETF), as well as SLV (silver ETF),  for those who want a hedge against the falling dollar. 

WILL THE US GO INTO DEFAULT?  Brinker said: "I just cannot agree with those who say that we will not raise the debt ceiling and therefore we will go into default around the world on our Treasury debt. I cannot agree with that view. I'm sorry." 

WILL THE GOVERNMENT PRIORITIZE IF THE DEBT CEILING DOESN'T GET RAISED? Brinker said:  "I don't know the answer to that question. Will they prioritize? Will they pay Medicare but not Medicaid? Will they pay active military but not veteran's benefits? Will they pay Social Security, but not pay somebody else. I don't know the answer and for sure they don't know the answer to that question at the Treasury. But I'd be really surprise to see that come out from Washington.....I don't see any precedent for that kind of behavior."  

NATIONAL DEBT VS GROSS DOMESTIC PRODUCT (re-visited): Caller Les from San Jose said:  "Last week.....there was a  question about the comparison between the  national debt, which is about $14.5 trillion, versus our GDP, and you were talking about percentages. Like if it were at 70, it would be okay but if it was above 90%, it might be an issue. I was confused when I heard it. Our GDP right now looking forward  is about 14.8 trillion dollars.  So as percentage of our GDP, our debt is about 98.14%." 

Brinker replied:  "On a snapshot basis, you are correct. Now on a normalized basis, one would hope that you're not correct. Now on a normalized basis, one would hope that you're not correct.  And hopefully, this that's being drawn to the fiscal issue through this debt ceiling issue is going to bring that to the fore. You know, only a couple of years ago, that number was down around 70%.  Now we've gone through an extraodinary period of annual deficits added to the national debt while the economy has not been growing very fast. As a result, you do have the current annual deficit as a percentage of GDP in the 90s percentile, which is too high.  That's the snapshot number.... if you take a moving average of the 3 years, it would be well below that."  

Honey EC: Another reason to double-check anything that Brinker says on Moneytalk.  Just as caller-Les said, it was just last week that Brinker said unequivocally that the debt/GDP ratio was at 70% and specifically said that if it got to the 90's it would be "dangerous." Perhaps all the very smart people who send comments to this blog made Brinker realize his error. Here are my comments from last week's Summary. No equivocation here and no "snapshot" hocus-pocus either: 

"GDP AS PERCENTAGE OF NATIONAL DEBT: Brinker said that the total sovereign debt as a percentage of Gross Domestic Product is now about 70%....the danger level comes in  at about  90%."

RAISING TAXES: Brinker said: They have a lot of ideas. They're talking this weekend about eliminating the mortgage interest deduction. They are talking about eliminating the deductibility of all the retirement account moneys that go in, like IRAs and 401Ks.....They are talking about changes to Medicare and Social Security." 

Honey EC: It's astonishing how they always want to make cuts that affect those who have worked, paid into the system and saved.

NATIONAL DEBT DAILY INCREASE:  Brinker said the National Debt is growing by over 4 billion dollars a day and that is simply not acceptable.

BULLY-PULPIT POLITICS...Brinker said: "Put me down in the column of fiscal responsibility that is consistent with protecting  above all the full faith and credit, around the world, of the U.S. Treasury. And these people that want to destroy the country's credit rating and put the country into default. In my opinion, these people are not qualified to serve."  

Honey EC:  Brinker continued to preach  his political views throughout the program. To me, he seems to contradict himself. On one hand, he ranted and raved about the deficit and national debt and how it is unsustainable. On the other hand, he continually slammed those in Washington who are showing some fiscal responsibility. Having it both ways seems to be the Brinker way in more than just the  financial arena.

Brinker's guest-author was Gretchen Morgenson,  "Reckless Endangerment: How Outsized Ambition, Greed and Corruption Led to Economic Armageddon"  (If there is enough interest in this guest-speaker, I will write a summary of her rather short appearance on Moneytalk later in the week.

 Moneytalk on demand and to go with Bob Brinker, is available for FREE audio/podcasting at KGO810 radio for seven days after broadcast.  I download and save all three hours, including the third hour guest-speaker. (The program is archived in the 1-4pm time-slots.) If you don't download it from KGO within seven day, it's available at bobbrinker.com by paid subscription. KGO Radio Sunday Archives

This is my beautiful and amazingly smart, Persian cat (from before my Himalayan siblings).  He  died when he was seven years-old from kidney failure. I gave him "kitty dialysis" for about a year to extend his life. Click to see him close-up. :)

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Bob Brinker's Second Late Night Radio Guest Appearance

July 20, 2011....Bob Brinker made his second (that we know of) guest appearance on a middle-of-the-night radio program on a station that does not carry Moneytalk.  (Brinker's hour is archived in the July 19th, 1am time slot. Link posted below.) Rob from Pasadena, Ca  alerted me. 

Rob wrote:

"Bob Brinker made an appearance on Doug McIntyre's RedEye Radio again last (night). He was on the 50,000 watts of KABC radio here in Los Angeles. Doug actually lives in the San Fernando Valley so he does his show live from the KABC studios. He shows up to work a little early and goes back and forth with the local talk show hosts on KABC before he takes over the mic for his syndicated show.

Of course he could be heard on other stations as well such as WABC New York. He was on the first hours which is july 18th from 10 p.m. until 11:00 p.m. Pacific Time (then run again at 2:00 a.m.) so of course that makes it July 19th from 1:00 a.m. to 2:00 a.m. in New York.

I checked the KABC website and Doug's own site for the RedEye Radio podcast and they both redirects me to the WABC website for the podcast, so New York's WABC must be the big player that you'll have to go to in order to listen to the interview. The podcast from the East Coast July 19show isn't up yet, but when it is you'll be able to find it here

http://www.wabcradio.com/sectional.asp?id=37817

Also, Doug's website is http://dougmcintyreonline.com/

Too bad Bob doesn't get right to the point on his own show like he does on Doug's show. He doesn't repeat the same thing over three times on the same call and to me it appears he gets right to the point with only a small amount of bloviating.

Take Care,

Rob in Pasadena, CA"

BRIEF SUMMARY, COMMENTARY AND EXCERPTS OF THE SHOW:

Doug McIntyre opened his  program praising Bob Brinker and meekly said he didn't have a good understanding of how finance works, so having Bob on was very timely.  Doug's main topic was the whole debt ceiling and budget debate,  and what's going on in Washington.  (However, much of the discussion disintegrated into political pontificating by both Brinker and Doug.)

Differences between the debt ceiling,  the national debt and the deficit:  Brinker explained  that the debt ceiling is a statutory requirement on the US Treasury which limits the amount of debt that the Treasury can issue. The Treasury issues debts when it sells bond, etc.  The limit is always raised. Brinker said the national debt is the cumulative amount of money that the US owes. Right now the national debt is 14.4 trillion dollars -- that's the cumulative annual deficits for all time for the USA. The annual deficit is added on to the national debt every day and is currently running at an annual rate of 1.5 trillion dollars.    

Doug asked what would happen if the US should start "bouncing checks"  Brinker replied: "Well for the month of August, we are about 134 billion dollars short of what we need to make all the payments. So we'd have a problem right away in the month of August. We have enough money to make some of the payments, but we have no method and no precedence of making some of the payments. We owe 29 billion in interest, 49 billion for Social Security checks, 50 billion for Medicare and Medicaid payments, 32 billion for the Defense Department,  13 billion for unemployment insurance.....Those are so vital, I list those first. That adds up to about 173 billion but we have another 134 billion  that is scheduled to go out. Things like paying our military active duty......" 

About possible default:  Brinker said: "The fact that we are holding up our bond holders over this debt ceiling issue, that's what we are doing here, playing Russian roulette with our bond holders. And frankly, that's not fair to our bond-holders....."

Doug asked Brinker if we can continue to pile up debts like we have been doing. Brinker said no, it was not sustainable and we are on the road to fiscal ruin if we continue on this road. We have to pay the interest on the debt every day. Right now we are benefiting from very low rates because of the slow economy and Fed policy and low inflation, but long term "interest rates tend to fluctuate."  And when interest rates are at higher levels, it's going to cost "a fortune just to pay the interest on this debt."

Doug asks Brinker a question about the president: "I look at this as a political problem. I look at this as a president having to go back to a liberal base that he already irritated by extending the Bush era tax cuts and having to offer some kind of crumb off the table, and not even being able to get that. How do you see it?" 

Brinker completely ignored Doug's comments about the president and replied: "Well I think that it's an ideological position being taken as you point out, being led by Tea Party activists and so far they are winning on that point. I don't know what the final outcome will be. I guarantee you they're going to raise the debt ceiling, with or without a government shut-down....You can take that to the bank. But when you talk to the politics of this, and I think you have to take it to the general election in order to decide where the country is going to go on this issue -- spending versus revenue and fiscal responsibility." 

Four political parties?  Brinker continued: "We are squeezing four parties into the two party system.....We have the Tea Party and we have the Grand Old Party. And then we have the Democrat Party and we have what I would call the Progressive Party that wants to go way beyond what the Democrat Party stands for down the middle......"  

When questioned about Gold prices, Brinker said: "Gold is around $1600 and ounce because people are using it as an alternative to fiat currency which is all the paper money floating all around the world.....It's also getting  pushed widely all over the place. Anywhere you go it's buy gold, buy gold, buy gold.....And I think it's benefiting from all of that demand. (Doug: "Can it hit $2000 and ounce?") Gold is a speculative metal. Gold can do anything because it's purely a supply demand speculative metal.  You know, it's interesting because you can't go into Walmart and give them any gold, they won't take it. It's not currency. In the United States for sure and in almost all countries, it's not currency."   

Doug asked about the "previous" White House deficits.  Brinker replied: "Unfortunately, we piled up a lot of debt during that period also. The economy was better then so the debt pile-up was a lot less. I will give you an example of a program back around 2004, around election time that was passed with no funding. And that was the prescription drug benefit bill that was added to the Medicare plan without ever being funded. It's costing the country long-term  hundreds and hundreds of billions of dollars. It was frankly a give-away to the voters. There's an example of fiscal irresponsibility. So you see, you just made the point. It doesn't matter which Party is involved. They're both irresponsible." 

Here are some more of Brinker's comments from the show: 

* "We need a long-term plan to get in the direction of a balanced budget. I'd be happy to see them get within 3% of Gross Domestic Product. Right now we're running in the high single digits of GDP in terms of annual deficits......We don't need a lot of short-term pain, it will just exacerbate this sluggish economy, and this economy is really sluggish." 

* "I would be surprised to see the unemployment rate have a whole  number below 8 for quite a while. Right now, it's 9.2, and the way this economy is drifting along at a growth rate of only about 2% here for the first half of this year, despite all the stimulus."

* "We have a dysfunctional  government in Washington, and unless the country gets it right by getting people in Washington that will get it right long term, we're going to be in a lot of trouble down the road." 

* "The annual deficit as a percentage of Gross Domestic Product at 3% or less, I think we're okay there. If we can get there, we'll be alright. We are nowhere near that. We're in the high single digits...What the caller is talking about is the total National Debt as a percentage of Gross Domestic Product, and that figure is rising really fast. That number a few years ago was only about 60%. Now it's getting into the high double-digits."  

* "One concern I do have in here Doug, and this is a concern I'm getting because of these annual deficits as far as the eye can see with nothing being done about them. I am concerned that the White House does not have a proper appreciation for the importance of fiscal discipline. I'm becoming more and more concerned about that as I see these numbers pile up, and I think it's a real question." 

* "I will tell where we could save a lot of money. We should take a look at all of these troops we have stationed in places like Germany and Japan. I think the war is over, what is it, 65 years or so? I'm not convinced that we are getting value for all of our military expenditures...."  

Shameless newsletter plug: Caller Russell from Alabama said:  "Twenty year subscriber to Marketimer, and anybody who wants to know anything about the stock market  is crazy for not buying the Marketimer every year."  (Hilarious comments.....I didn't know it was supposed to be a comedy program.) 

Doug promoting Brinker's newsletter, said: "Bob Brinker authors Mark-timer (Yes, I replayed the tape 3 times, he called it "Mark-timer" but he corrected himself at the end of the program and got it right, probably much to Brinker's relief.)   Doug also said that Marketimer  "....has got everything you could possibly want."  (I wondered if he said that with a straight face. Or maybe he's never seen a copy of it.)

The subject of the stock market was conspicuous by its absence on Doug's RedEye middle-of-the-night talk show interview of Bob Brinker.  I have to conclude that he was told the subject was off-limits, but that's just my own opinion.
 

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July 17, 2011, Bob Brinker's Moneytalk: Summary, Excerpts, Commentary and Discussion

July 17, 2011.....Bob Brinker hosted Moneytalk today.

(Brinker's comments summarized, paraphrased or excerpted)

STOCK MARKET:  The S&P 500 year-to-date is up around 6%.  Brinker said: "When you consider what interest rates are, short-term rates, not too shabby. We had a couple of minor pullbacks this year. Back in March.....we had a  6 1/2% pullback there. In the May, June period we had a 7% pullback.....So far,  the market has shown a tremendous amount of resilience."

IS BRINKER RECOMMENDING SELLING EQUITIES?   Caller Lon from Oregon said he was fully invested following Brinker's  Marketimer newsletter. Lon asked: "Given this debt ceiling crisis and what I see as a potential stock market drop for who knows how long, should we move that money into money market accounts for a little while?"  

Brinker replied:  "We had this same question two weeks ago when the S&P was around 1270. And now the debt ceiling debate has heated up dramatically in the last two weeks and the S&P is up to 1316. Showing a total return year-to-date of close to  6%.  So I will repeat what I said to that caller at 1270, asked virtually identical question....I said to that caller, you need to be prepared, if you do that,  to re-enter the market at a higher level. Now if that caller re-entered today, he would be re-entering about 46 S&P  500 points higher than he exited the market two weeks ago....I have not exited the market until I see a resolution of the debt ceiling issue because I already know....what's going to happen.....I'll clue you in. They are going to raise the debt ceiling......With or without a short-term government shut down. On that issue, take your pick. They just did it in Minnesota......"

Honey EC:  The call that Brinker referred to was actually on June 26th. Here is the link to my Summary of that program and  Brinker's answer to caller-David

GNMA, VANGUARD GINNIE MAE FUND (VFIIX):  Caller Mike from Colorado praised Brinker for recommending  GNMA's and raved about how he loves to see the money show up in his account.   Brinker said:  "As much as I'd love to take credit for this, I'm much too modest, but I did recommend them.....Actually to give you a little background on that, we've had Ginnie Mae holdings in our model portfolios in my investment letter for many, many years."

Honey EC:  After all the friendly banter, what Brinker did not tell Mike was that he has lowered his model portfolio Ginnie Mae weightings a couple of times. The last time was in January 2011. The model portfolios that he mentioned are model portfolio III,  which is now down to only a 20% weighting in Vanguard Ginnie Mae Fund.  And his off-the-books "income portfolio" only has a 15% weighting. He increased the risk greatly in both those portfolios when he sold the Ginnie Maes and bought Vanguard High Yield Fund and Wellesley Income fund.

 RAISE TAX ON HIGH EARNERS OKAY WITH BRINKER:  Brinker said: "I think if they raise tax on the middle class, it would be bad news for the economy....I think if they take the top rate from 35 to 39.6, I would not expect that to have a dramatic impact on the economy because in order to get into the 35% bracket, you have to be a high earner. And if you're a high earner, you should be a  net saver. And if you're a net saver, you shouldn't have to cut back on your expenditures in order to deal with the higher bracket.  So my opinion is, raising the rates on the middle-class would be a very bad idea. I would vote against it.  Raising the top bracket, I don't really care."

DEBT CEILING "BRUHAHA"....Brinker said:   "....going on in Washington, the debt ceiling bruhaha.... The debt ceiling must be raised with or without a short-term, stage-produced government shut-down and that's because the country cannot afford to go into default. If you wonder why,  $14.4 trillion in national debt, annual Treasury sales of way over a trillion dollars.   The country cannot afford to go into default on its Treasuries obligations."

GOVERNMENT COFFERS RUN DRY IN AUGUST....Brinker said: "We also know that in the month of August, the Treasury Secretary is saying that August 2nd is the date the coffers will run dry......It looks the Treasury is about 134 billion dollars short of what they need in order to pay the bills and the interest on the national debt,  just in the month of August. I'm calculating about 173 billion dollars for several items that are considered essential. Interest on the national debt about 29 billion, checks for recipients of Social Security in the month of August, about 49 billion dollars, Medicare and Medicaid expenses in August, about 50 billion dollars. In addition to that, Defense Department about 32 billion dollars, and Unemployment Insurance benefits about 13 billion. All of that adds up to about 173 billion dollars. And the problem is, it's about 134 billion dollars short of what is needed. Even if all of that is paid, it would still leave unpaid bills. For example, all of those on active military duty......they would not be paid in the month of August. Veterans....would not be paid. The FBI would not be paid. All other federal programs and the court system would not be paid....." 

IF INTEREST ON NATIONAL DEBT IS NOT PAID.... Brinker has said for several weeks now that if the interest on the national debt is not paid, the country will officially go into default and will no longer be able to justify having a triple-A rating. 

GOVERNMENT BORROWING... Brinker  pointed out  that we are now borrowing about 40 cents on every dollar we spend - a "horrible" situation. 

SOCIAL SECURITY TRUST FUND DOESN'T EXIST....Brinker said: "Here's the way that Social Security is paid out. First, money pours in every single week from the payroll tax.....When the benefits exceed that cash flow, the Treasury has to raise the money. You know they don't have any money. They're in the red......They sell Treasuries (IOUs) to raise the money to pay for the checks..... That's the way that Social Security  works, and it's unfortunate that so many people are under the illusion that there's a trust fund out there with piles of money in it waiting to get paid out. That's not the case.....The money has been spent."

GDP AS PERCENTAGE OF NATIONAL DEBT: Brinker said that the total sovereign debt as a percentage of Gross Domestic Product is now about 70%....the danger level come in  at about  90%.

BULLY-PULPIT POLITICS...Brinker said: "I see that there are some so-called presidential candidates out there stomping in Iowa, and they are calling for the US government not to raise the debt ceiling. And of course, this is the height of folly, the height of irresponsibility.....So if you hear a so-called presidential candidate telling you  we don't need to raise the debt ceiling,  you can cross that one right off your list. That's a person who's not qualified to run the country. That we know.....No serious person would ever endorse a policy that would lead to a US Treasury default." 

DIVIDING CALIFORNIA IN HALF:  Brinker said he thought splitting California into two states would make it more "manageable."   But instead of dividing it into North and South California, he suggested  dividing it  lengthwise, turning it into Eastern and Western California. He said he would choose the coastal half.

Honey EC: LOL!  Yes, Bob...the coastal half is very nice. You're welcome to join us. All you have to do is be willing to pay all the additional state taxes, sales taxes, etc. that you don't pay in Nevada -- just  for the privilege of living in California.

DEFICIT ACCUMULATION:  Caller Rick from Hartford tried to blame the  current huge deficits on Dick Cheney, Ronald Reagan and George Bush. He claimed that 90% of the deficits are the fault of George Bush --  between 2000 - 2008.  Brinker said, "Now Rick, that talking point you just shared with us is false. Look at the figures for  2009, 10 and 11 and you will be shocked......It's  not because of the interest. Interest rates are reasonable now because of the low rates. It's because of the tremendous amount of money that the Federal Government has expended over the last three years....."

Honey EC:  LOL! Brinker told the caller to check his talking points several times....The caller was factually wrong as Brinker pointed out.   (The caller was also ignorant if he thinks George Bush was president in 2000.)  According to Bill O'Reilly, the National Debt was $5.7 trillion when George Bush took office and $10.6 trillion when he left office. It is now almost $14.5 trillion. 

2012 ELECTION ISSUE: Caller David from Chicago asked Brinker why more people aren't concerned about "what's going on out there."  Brinker blamed it on inertia and lack of interest.  Brinker said:  "I really like the  idea of keeping this on the front page and getting this into the general election next year because I think this is the perfect topic for a general election in 2012. Which direction is the United States going to go in terms of how it balances its revenues with its expenses.....And we have to get the deficit down. I'm very conservative on fiscal affairs. I always have been.....I think it will be a great subject to bring to the voters in 2012. Let's elect a whole House of Representatives on this issue, and the president on this issue, and 1/3 of the Senate on this issue. I wish we could elect the whole Senate on this issue."

Bob Brinker quote of the day: "Anybody that listens to this broadcast knows that I don't ever want to be vain. It's not in my nature to be vain."

Brinker's guest-speaker was Diana B. Henriques: "The Wizard of Lies: Bernie Madoff and the Death of Trust"

Honey EC: Interesting comment by Diana Henriques. She said that Madoff investors may get back as much as 50-cents on the dollar of their investments.

Moneytalk on demand and to go with Bob Brinker, is available for FREE audio/podcasting at KGO810 radio for seven days after broadcast.  I download and save all three hours, including the third hour guest-speaker. (The program is archived in the 1-4pm time-slots.) If you don't download it from KGO within seven day, it's available at bobbrinker.com by paid subscription. KGO Radio Sunday Archives

Jenny's Bird of Paradise. First time in bloom. Click to enlarge:

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Bob Brinker: Latest Review of Five Root Causes of a Bear Market

On  an earlier Moneytalk program, Bob  Brinker reviewed  what he believes are the five primary causes of a bear market. He uses these five  factors as tools to examine  stock market behavior as he attempts to predict future market direction. In 2010, Brinker said that all five  factors were  negative -- meaning they were not predicting a bear market. 

This month in Marketimer, Brinker again reviewed all five of these "root causes of a bear market" and said they were all still negative.  He predicts that the cyclical bull market will continue at least for the  remainder of 2011. Let's see if we come up with the same conclusion:

1. Tight Money

As of July 2011, the Federal Reserve is continuing its highly accommodation monetary policy. The Fed has a dual mandate to pursue policies that maximize the level of employment while maintaining price stability. The Fed defines price stability as a rate of core inflation below 2%. The year-over-year personal consumption core price index is 1.2%, and the CPI is 1.5%. Unemployment is 9.2% and under-employment is over 16%.   Brinker thinks that it is unlikely that the Fed will tighten monetary policy  "until 2012 at the earliest."  

Nope, no tight money on the horizon as long as the Fed likes the inflation numbers.

2.  Rising Rates

On Moneytalk, Brinker said: "What's another root cause of a bear market? No question, rising interest rates. I'm not talking about the federal funds rate going from 1 to 2. I'm talking about a meaningful rise in interest rates...." 

Since the  Fed  is not likely to raise short-term rates until the economy grows sustainably above 3%  and is accompanied by inflation pressure, Brinker expects the  "FOMC to hold short-term rates at the 0% to 0.25% level at least until 2012."

Nope, no likely rising rates on the horizon as long as the economy is growing at such a snail's pace.

3. High Inflation

On Moneytalk,  Brinker said: "What's another root cause of a bear market, a decline in excess of 20% in the S&P 500......No question about it, Hyperinflation, rising inflation. Do we have that? No. I know there are a lot of people out predicting it, but they've been wrong."

Is there any inflation right now?  Brinker claims that the principal driver of inflation is wages/salaries and that right now, labor costs are benign and showing very little movement. At the same time, productivity gains are supporting corporate profit margins. Brinker also believes there has been a recent decline in commodity prices and that capacity utilization is below the 40-year average of 81%, which provides a safeguard  against demand-pull inflation forces. 

Nope, there are no prospects for high inflation based on these fundamentals.

  4. Rapid Growth

  On Moneytalk, Brinker said: "What's another cause of a bear market. At the root, it's rapid economic growth and a boom in the economy -- the economy is roaring ahead. 

Brinker sees no prospect of rapid growth anytime soon and forecasts  a real  GDP growth at 2 to 3%, with the first-half close to the low end of that range.  Brinker even expects to see additional fiscal stimulus measures in the second half of 2011, especially the extension of the 2% reduction in the employee portion of the payroll tax. 

Nope, doesn't look like any runaway rapid growth ahead -- just the opposite, there may be more government stimulus. 

5. Over-valuation

On Moneytalk, Brinker said: "And another root cause of a bear market is over-valuation. When stock prices are so high relative to valuations they're on the moon like they were in January of 2000.

Brinker's estimate of fair value for the S&P 500 Index based on 2011 operating earnings estimate is $93.50 -- 15 times earnings. This equates to S&P  low-to-mid 1400s price range for the index.  Brinker believes the market is currently under-valued based on earnings prospects.   Price/earnings ratios factor many variables into the equation, and Brinker uses the historical 15 to 15 1/2  P/E multiple range.   

Nope, apparently no  over-valuation in the stock market -- and Brinker even thinks it's under-valued.

 Conclusion: As of July, 2011, Brinker believes that the five primary causes of a bear market are still negative -- in other words,  he is predicting that the current cyclical bull market will continue. 

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Bulb Timer: First Issue

In Edit July 16th: Some very funny comments have been added. Click the link at the bottom of this post to read them.

Posted July 14, 2011....Time for a just-for-fun break. With all the things that are going on in the world of finance including the debt ceiling debate, this is will provide a lighter few moments:

FrankJ and I are editor and publisher of "The Bulb and Bag Timer." Birdbrain is our publicity man, in charge of promotion, advertising and reeling in the shark...err, I mean signing up new subscribers.

FrankJ has put together the very first issue which focuses on  when Bulb buying-opportunities are scheduled to end:

Bulb Timer

The first of a series of irregular submissions to keep you up to date on the upcoming ban on incandescent light bulbs and how it affects you.

First order of business:  this is about LIGHT BULBS, not tulip bulbs, or any other kind of bulbs you put in the ground.

Bulb Timer is a web-based enterprise, brought to you by Honeybee, Birdbrain and FrankJ.   Like all great organizations, we have a Vision Statement.  Our Vision Statement reads as follows: 

“Bifocals, vision corrected to 20/20,

plastic frames, no lens coating, no tint,

$145, after co-pay.”

Now we have been getting a lot of inquiries from Bulb Timer fans, on just how the Energy Independence and Security Act of 2007 will affect their ability to buy light bulbs.  We want the first installment of Bulb Timer to start on an upbeat note, so let’s use the Frequently Asked Questions format to explain what types of bulbs the federal government will still allow you to have…

Q.  I have been unemployed for a while and recently started my own business, growing a certain type of  plant indoors.  Will I still be able to purchase the specialty lights that are a key part of my business?
 – Signed, Off The Grid.
  

A.  You will.  “Plant” lights are excluded from the legislation, so you won’t have to worry about the Bulb Police, just the Police Police.  Good luck to you.

Q.  I’m following portfolio 6 … which calls for selling personal possessions on e-bay.  I was cleaning out a closet and I found some Black Light Posters, which I am going to put in the den so the grandkids can see what a college dorm should look like.  Will I be able to buy the special black light bulbs to illuminate the posters?
--Signed – Old Hippie.

A.  You’re in luck, Bub,  black light bulbs will still be available, so rock on, and maybe you and “Off the Grid” should get together!   

Q.  I love government regulations, as long as they don’t affect me.  But will I still be able to buy Left-hand threaded bulbs? 
Signed – A Leftist.

A. You’re in luck, may you live in interesting times, Leftie.

Q.  I live near a swamp and the mosquitoes make life miserable so did they ban the bug bulbs?
Signed – Itching.

A.  It would have been most unfortunate if they were banned, but lucky for you, they were not.

Q.  Are there certain lamps or bulbs, I WON’T need to hoard?  

A.  Yes, this is a list of incandescent lamps that are excluded from the law:  (for now)

·         Appliance lamps,

·         black light lamps,

·         bug lamps,

·         colored lamps,

·         infrared lamps,

·         left-hand thread lamps, (who knew?)

·         marine lamps,

·         mine lamps,

·         plant lamps,

·         reflector lamps,

·         rough service lamps,

·         shatter resistant lamps,

·         sign service lamps,

·         silver bowl lamps,

·         showcase lamps,

·         3 way incandescent lamps,

·         traffic signal lamps,

·         vibration service lamps (like would go in a bathroom ceiling fan fixture).

Honey here:  For your own special free issues of this exciting new newsletter, please contact FrankJ or FrankJ.  I hear there are two of them also.....  :) 

On another subject: It was recently stated on this blog that our own Fluffy Bunny (AKA: TFB)  has personally met with Barack Obama. Some of you may have had your doubts, so I want you to know that I always tell the truth as this picture clearly shows.  I understand that the Fluffy Bunny wore his best glasses for this special occasion:

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July 10, 2011, Bob Brinker's Moneytalk: Summary, Excerpts and Commentary,

Posted July 10, 2011....Bob Brinker hosted Moneytalk today. 

Bob Brinker's comments paraphrased, summarized or excerpted:

STOCK MARKET: Brinker said:  "The stock market measured by the S&P 500 at 1363.61 on its high for the year on April 29th had a minor pullback in May and June, bottoming June 15 at 1265.72, for a minor pullback of 7%. Bernadette asked me this  week how do you calculate the size of a correction.....You take the closing high, which was on April 29th at 1363.61, then you take the closing low at 1265.72  and subtract it from the closing high, then you divide the closing high to get the correction....The total return correction was 7% and it lasted for a period of six weeks......Generally, we call a correction a loss in excess of 10% but less than 20%. This was a 7% event. That would certainly qualify as a minor pullback for the market.....The S&P 500 has subsequently traded up to the current level of 1343 and a fraction, and now stands about 1 1/2% below its closing high for the year." 

BOND MARKET: Brinker did not mention bonds or interest rates today.  

UNEMPLOYMENT/JOBS REPORT:  Recent trend continues, some jobs added in private sector, but jobs lost in the  public sector....In the month of July, 39,000 government jobs were lost...Private sector added 57,000.....That's a net increase of 18,000. Unemployment rate up to 9.2%...underemployment rate up to 16.2%....big numbers that may affect the 2012 election.  (Brinker got his info here: BLS)


ECONOMY:  GDP grew at 1.9% annual in first quarter....Later this month the second quarter is expected to be about 2%....

NON-EXISTENT SOCIAL SECURITY  TRUST FUND:  Brinker said:  "When they went  to  the unified budget many years ago, the Social Security trust fund  and all of that malarkey, it went out the window.....There is just one pot of money, so there is no trust fund, so forget about it.....There is no trust fund....The trust fund is a joke."

HOW THEY PAY SOCIAL SECURITY WHEN THERE IS NO MONEY: Brinker said: "The Treasury is running enormous deficits. Something in the area of 1 1/2 trillion dollar annual deficits we've been running in recent years and that's the reason that we've piled up close to 14 1/2 trillion dollars in our national debt. That means that they don't have any money unless they sell Treasuries to raise money, which of course is what they do every week.....So in order to pay Social Security, and I believe they will pay Social Security to the extent that they decide they want to pay it.......But the only way they'll be able to make them in the long term.....is to sell additional US Treasuries to pay out." 

DEBT CEILING HIKE: Brinker said: "Regarding this debt ceiling bruhaha that's going on in Washington. I would like to suggest to you that this is not the real issue facing the country......They must, those in power in Washington, must raise the debt ceiling. They have no choice. They either do it before a government shutdown, in which case, things go on as they are.  Or they do it after a shutdown, like they did back in 1994 -- short government shutdown and then they re-open. In either case, they must raise the debt ceiling....There is no alternative of no debt ceiling increase....It must be raised."

FIXED INCOME ADVISOR MISINFORMATION: Caller Carl from Buffalo Grove, Illinois said: "I'm a loyal subscriber to your Fixed Income Advisor."  Brinker replied: "Thank you." 

Birdbrain said: "Heard a caller during the first hour saying he subscribed to "your Fixed Income Advsor" to which Mr B uttered a quick thank you, without stating that supposedly his son is the publisher of said rag."

 Honey EC:  Obviously, this was one more (of  many) callers who mistakenly believes that the "Bob Brinker" who publishes the Fixed Income Advisor is the host of Moneytalk. This is only made possible by the fact that the real publisher/editor of the newsletter  (Brinker's middle-aged son) no longer makes any  effort to differentiate himself from his father. He used to be very careful to make sure that he was not mistaken for his father, but that changed 5 or 6 years ago, about the same time that  he started selling newsletters.

Some might conclude that Bob Brinker, the talk show host, is deliberately aiding in the deception. That's my conclusion. Readers should decide for themselves. It may also be a clue as to why he doesn't retire when he is well past retirement age, and no doubt reached "The Land of Critical Mass" decades ago.

REAL FISCAL ISSUES FACING THE COUNTRY: Brinker said: "The real issues facing the country in terms of fiscal are the annual deficits that we're running are in the 1 1/2 trillion mega, mega, mega-zone, and the growth of the national debt, which are simply not sustainable. It's already approaching 14 1/2 trillion dollars. Inaction, doing nothing is not option......There has to be some tax reform and spending reform agreement reached in order to move things forward. Tough decisions have to be made. We need leaders. We don't need whiners. The government's own bi-partisan deficit-reduction commission has already given the formula. You cut spending $3, you raise taxes $1. If you cut spending $3 trillion, you raise taxes $1 trillion....They have a formula, at least as a starting point." 

IF THE UNTHINKABLE HAPPENS: Brinker said: "If the United States were to refuse to raise the debt ceiling -- remember, I don't believe that's an option and I don't expect that to happen -- then the credit quality of US Treasuries would be degraded....because of political posturing."  

A TEMPORARY SOLUTION: "Brinker said: "If they want to come up with a temporary hike in the debt ceiling to push this thing out, turn it over to the voters in 2012. Let's have a plebiscite as part of the general election. Well, the candidates will be the answer.  They'll take positions....Let the voters decide which way they want to go." 

POLITICAL BLOCKHEADS PLAYING POLITICAL THEATER: Brinker talked at length about the debt  problems in the European countries -- Greece, Portugal, Italy, Ireland and Spain.  He emphatically explained that the  "sovereign debt" of those countries  is not risk-free. Brinker said: "If any sovereign debt out there is supposed to be risk free, it's  the USA. But wait a minute. We have political blockhead -- and I'm being very kind, I'm in a good mood today, and that's the only reason I'm being very kind -- we have political blockheads in Washington who are running the risk of a default of the United States triple-A rated paper so that they can play their game of political theater. I'm Bob Brinker. This is Moneytalk."  

In his hot-off-the-press weekly newsletter which includes a summary of Moneytalk,  David Korn wrote about caller Maria from El Paso:

REDUCING SUPPLY ON FOREIGN OIL Caller:  This caller said we have millions of tons of natural gas in our country and thinks we should use it to reduce our reliance on foreign oil. Bob said for two years, he and Dr. Wattenburg have been preaching this. Bob noted that Dr. Bill used his own money to purchase an ad in the Washington Post right after the election where he discussed these very things.  The problem is that Bob has seen no results of the ad.  Bob agreed we should be using natural gas in our transit system in a big way.

(Korn) EC:  The ad Dr. Bill placed was in the Washington Post on February 25, 2009 and paid for by Dr. Bill.  It appears on page A2 at the bottom left hand corner.  Dr. Bill actually mentions Bob Brinker in the ad.  Using unpatented and highly non-proprietary DavidK search technology, I found the ad.  Check it out at this url:  Bill Wattenburg Writes Open Letter to Barack Obama, mentions Bob Brinker

 Brinker's guest-speaker was Steven M. Davidoff:   "Gods at War: Shotgun Takeovers, Government by Deal and the Private Equity Implosion"

Moneytalk on demand and to go with Bob Brinker, is available for FREE audio/podcasting at KGO810 radio for seven days after broadcast.  I download and save all three hours, including the third hour guest-speaker. (The program is archived in the 1-4pm time-slots.) If you don't download it from KGO within seven day, it's available at bobbrinker.com by paid subscription. KGO Radio Sunday Archives 

SJ_Al sent these beautiful pictures with these comments:

"Pictures of the Stanislaus River at Sour Grass Crossing, off of Hwy 4 near Dorrington Ca, taken July 2. Sour Grass is about 20 miles downstream of Lake Alpine."

"The river area..... is normally a swimming hole. Not this year. High water like this is typical late April through early June, not in July. The dams upstream are all running over their spillways. In a normal year, the rapids shown in Pic 4318, which is just above the swimming hole, would be inner tube and plastic raft safe."

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Bob Brinker Makes 1am Radio Guest Appearance

Last March, Bob Brinker made an hour-long guest appearance on a middle-of-the-night show on New York's WABC radio.  Bob Brinker used to occasionally appear as a guest on Nightly Business Report, but has not accepted invitations from the program for almost a decade. 

On this red-eye program on Red Eye Radio WABC77 New York, Brinker talked about what caused the crash of 2008.  This has been Brinker's favorite topic since about May, 2009, when he realized the market had turned up again.  However, Brinker never addressed this subject on Moneytalk at any time when it was happening -- hindsight is wonderful.  Brinker discussed the future effects of all this.  Let's see how accurate Brinker's foresight was from 4 months ago:

Redeye host, Doug introduced Bob Brinker: "Bob Brinker has been the host of Moneytalk for well over 20 years and actually syndicated since 1986, and at Bobbrinker. com all things Bob Brinker. And his newsletter, Marketimer, many of you have and don't make an investment move without consulting it......Bob, how are you?" 

Honey EC: Perhaps Doug didn't know that many have had Brinker's newsletter and made "moves" that they lived to bitterly regret. Some have even had to postpone their retirements.  

Brinker said: "Doing well, Doug, it's great to be with you on Redeye."

Doug said: "......Of course you're heard all over the country on fine radio stations, including KABC in Los Angeles and many other. We have so much to talk about. Where do we kick this off? We've got Libya, we've got Japan, we've got all the turmoil in the middle east, and gas prices. But I think that starting point I'd like to get to is the market crash of 'o8 that sort of became the game changer when the table got kicked over.....In your opinion, have we fundamentally learned anything."

Brinker said: "It may or may not matter in our lifetimes whether we did learn anything. I know that's a surprising answer, but if you really analyze, it may not matter. Here is why I say that Doug. What happened in 2008 was something of historic significance. That is, something under the surface that was very, very difficult for most to see, which was the sub-prime crisis that had been building for some time in a stealth manner..... undermining the financial and the banking system. And of course, it blew up in 2008 and the rest is history......The reason I say it may not matter how much we learned in our lifetimes from that event..... is because the chances of something exactly like that happening again.... in any reasonable time frame....even measured.....in decades are slim and none..... and slim just left the building..... 

.....It was a particularly unique set of circumstances that brought this about. You know the drill. The government pushed to get everybody to own a house.....That never made any sense. But the government pushed to get banks to make loans to people that couldn't repay them. A mortgage industry...... which was basically running wild. And that DVD was X-rated because the things they were doing in the mortgage market were unseemly. .....Your listeners on Red Eye want to read a couple of books....It's like going to school.....One is by Andrew Ross Sorkin....His book is "Too Big to Fail." ....It's such a big hit, they are making it into an HBO film which will come on this summer. All-star Hollywood cast which will include the likes of William Hurt, and they will more or less re-live the events of 2008. Another book to go to school with....."All the Devil's are Here" by Bethany McClain....... 

.......Did we learn anything? Very hard question to answer because....the regulations that have been put into place, well now there's a campaign to undo them and frankly, they're not that tight anyway. So it's highly questionable how much things have actually changed. The good news is that the real estate market is in the doldrums. It's going to take time for it to get out of the doldrums, so we're not going really have to worry about a new sub-prime crisis coming at us. It's not going to happen."

Here are Birdbrain's comments about what Brinker said:

birdbrain said...

Kudos to Rob in Pasadena for the link to Brinker's syndicated appearance. Some of his reasons for the 2008 crash were: Government pushing everyone to own a house Mortgage brokers running wild Absurd lending practices At the time Mr B was well aware of these conditions and still was frozen in the headlights, unwilling to change his bullish stance on the market. If you knew of him only from this interview you would be impressed with his overall perspective on financial matters. Red eye radio? How about red ink?

March 22, 2011 7:39 PM

Doug and Brinker discussed the loose credit environment that preceded the crash. Brinker said that was the one thing that had changed, that the banks have become very reluctant to sign loans unless they are sure that it can be paid back.

Doug asked Brinker if the economy could recover without the housing market recovering.

Brinker said: "There is no question whatsoever that the United States economy is in a period of recovery, which is quite remarkable considering what we went through a couple of years ago. We have real..... GDP growth estimate is between 2 1/2 and 3 1/2 annual rate.....So we have what we call a slow to moderate growth in the economy track right now. And it is definitely happening without the help of the housing sector. The housing sector along the bottom.....It's unlikely to go anywhere this year because 2011 should be the peak year.... for foreclosure activity. After 2011, we should see dwindling foreclosure activity......"

Doug asked Brinker what other sectors are leading the recovery then.

Brinker said: "We have two sectors that are leading the recovery, they're very powerful. One of them is manufacturing........The reason that's doing so well is because United States exports are doing very well. Now part of the reason for that..... is because we have a weak dollar.....The price of our exported products on the shelves overseas becomes more competitive......We're actually seeing some good orders in the automobile industry, of all things......"

Doug asked Brinker what kinds of things is it that America is manufacturing that are success stories.

Brinker said: " I think one of our leading success stories has to be our technology industry. For example, the products that are being invented, improved and exported out of Silicon Valley, USA......particularly in Northern California......And I'll just give you one example of a company that's a leader in that area, which is clearly is Apple....."

Doug asked Brinker if those things were actually made here. Brinker replied that a lot of things were sent offshore because of the cheap labor -- lot of products are made in Asia.

Doug said that a lot of folks are hurting because of jobs being sent offshore. Brinker explained the "hubcap theory" and globalization to Doug, and said that we knew it was coming -- that he had talked about it for over 25 years on Moneytalk. Brinker is totally against protectionism, and said that America exported 1.3 Trillion dollars worth of goods around the world in 2010.

Doug asked Brinker several questions about China. In general, Brinker is all for trading with China in spite of the fact that they use child labor, etc.

Doug asked Brinker about oil prices. Brinker reminded Doug that "Beggars cannot be choosers."

Doug said: "Host of Moneytalk, heard all over the country on hundreds and hundreds of stations. His newsletter, Marketimer, is read by thousands and thousands of people who want to stay on top of their finances in these turbulent times and he's with us tonight to talk about all things economic."

Honey EC: I think Doug might have gotten carried away with his sales pitch for Brinker because I seriously doubt that Moneytalk is on "hundreds and hundreds" of radio stations.

As for "thousands and thousands" of people reading Marketimer, if that is so, why does Brinker still work on Sundays well past retirement age? And why is he up in the middle of the night doing guest appearance on a program that runs from 1am to 4am?

Doug asked Brinker what he thought about the 14 Trillion dollar national debt and states that are in trouble. As usual, Brinker zeroed in on California. When he finally got back to the national debt, he said that when interest rates normalize, it will be very serious.

Brinker actually took several calls, but the subjects were on world events, etc. There was nothing that had anything to do with the stock market or the title of his newsletter. One caller said he heard it reported that someone in China said they planned to take over the United States and even commit genocide here. Brinker came a bit unglued, but Doug handled it very well.

Caller Richard asked Brinker how old he is. Brinker laughed and said he had "adopted the Jack Benny model and stopped at 39." LOL! I think Richard was offended at Brinker's cavalier attitude about the exporting of real American jobs. And he sounded a bit sarcastic when he told Brinker he was probably a smart man.

SOME COMMENTARY:

Jim said...

Honey, I listened to the interview Brinker gave using the link provided. You are definitely right that his stock market advice during that time was "off limits". I'm sure he insisted on those terms before agreeing to do the interview. It's good Brinker never became a politician. Imagine for a moment if he would have to go on "Meet the Press". Suppose the host of this radio program would have started off by saying: " Bob,in 2008 you predicted the stock market would go to record highs, but instead it dropped 57%. What went wrong?"

Bartee said...

all you guys are so sharp.. and thanks to HoneyBee with her freedom of speech site .. it shows how "ON" Brinker is and the listeners are on it .. BRING IT... I can't believe Brinkers place wouldn't let Honeybee get his newsletter.. afraid?? DUH .. I think the Russian may have been a "ILove you Brinker" plant ,, his call didnt make sense... I have only one word for you HoneyBee..WINNING.

March 23, 2011 12:58 AM

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