October 21, 2011, Bob Brinker's Third Midnight Guest Appearance

October 21, 2011.........................................................................(comments)

Bob Brinker has now made his third guest appearance on Doug McIntyre's RedEye radio late night show.

Rob in Pasadena explained:

 Bob Brinker made his third 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 lives in the San Fernando Valley so he does his syndicated show live from the KABC studios. 

This allows Doug to be heard on other stations such as WABC New York. Brinker was on Doug's show during the first hours which was on October 19th from 10 p.m. until 11:00 p.m. Pacific Time (then run again at 2:00 a.m.) so of course the time difference makes it October 20th from 1:00 a.m. to 2:00a.m. in New York if you're going to listen to the WABC podcast.___Rob in Pasadena, CA"

 Here is my summary of Doug's interview of Bob Brinker:

Doug said:  "As you know, the stock market has been ping-ponging all over the place. Every other day, there's a headline about the Greek debt, or somebody's debt. To try to make sense of it, we turn to this guy because he's one of the best in the business. He's the host of nationally syndicated Moneytalk which has been heard all over the country since 1986. It's must listening as far as I'm concerned. He's the author of Marketimer newsletter and a member of the New York Society of Security  Analyst and Financial Analyst Foundation.  It's a pleasure to welcome back Bob Brinker."

Honey EC: Rob can verify this, but I don't find Bob Brinker's Moneytalk listed anywhere on the WABC or KABC program schedules. I know they used to carry the show, so evidently those to stations don't believe it is "must listening" like Doug does. BTW: What is the  "New York Society of Security  Analyst and Financial Analyst Foundation?"

Doug said: "I guess we should start with where are we in the world......Explain to us why Greece matters to us."


Bob said: "Well Greece matters mainly to the European Union, the seventeen countries that use the Euro as their exchange currency. That would be tier one. We are at second tier factor because there are some sovereign obligations, notes, and bonds and the like. Then the bank vaults of a lot of our banks in the United States that have made investments in countries like Greece....Another reason it matters to us is  the obvious, which is that  we export a lot of products in the United States. And it's one of the bright spots for creating jobs...."


Doug said: "What would the effect be if the European Union were to collapse?"

Bob said: "It would not be good. It certainly would effect our export account. It would effect the sovereign obligations owned by banks around the world.....That's not where we are. Certainly Greece is insolvent at this time.....The European banks have already been forced to write down their sovereign obligations of Greece by 21%. There's some talk that that could expand to 50%. They haven't agreed on that yet, but they're talking.....We can certainly declare that the Greek Socialist State has failed.  We have 147% Greek debt as a percentage of Gross Domestic Product. It's over fiscally for Greece. So they're trying to do now is put together a plan to transition into the next phase where everybody recognizes the obvious, which is Greece cannot pay its debts."

Doug and Bob discussed all of the outrageous Greek government spending and promises. Bob said that Greece alone cannot bring down Europe because it represents only 2% of Euro-land Gross Domestic Product.  However, Bob said  that they will definitely  need to find permanent solutions to the problems in Italy and Spain.


Doug asked: "The world's markets are so intertwined, is there an exclusive solution to America's financial problems, or does it almost have to be coordinated with global conditions?"

Bob replied: "Well,  I think our economy certainly is coordinated with world conditions....at the same time, we do have an opportunity to prudently manage our own fiscal affairs. We can do this. Now we have not done this....We're going to have to make changes to Social Security payout method. We're going to have to make changes to Medicare....."

Doug talked a bit about "Occupy Wall Street," suggesting that one of their complaints has to do with too much wealth concentrated in fewer and fewer hands. He asked Bob if that was a "legitimate complaint."


Bob replied: "Here's the figures on that Doug.  About two to three decades ago, the typical CEO in the USA made about 30 or 40 more annually than the average employee in his or her company. That figure today is a lot different. It's 300 to 400 times the average employee in the company. Has that given rise to Occupy Wall Street complaints? I guess there's the possibility. Of course, there's the other part that sounds like the Tea Party.  Bashing the Federal Reserve. Bashing the bail-out of the banks....."

Doug said: "I agree, I actually believe, uhhh. The Tea Party people object to being associated with these filthy, lay about Communists....But I think the anger in the country is uniform. It's just being expressed by the left slightly differently than the right. The bottom line is, there's a general feeling is that the right complains that there is too much government, and that it's crushing individual liberties and making a mockery of our Constitutional rights. And I think that they are exactly correct.....And I do think that we have giant multinational corporations that don't have any particular allegiance to America. It's just one market against many and they get to shape economic policy. And the too-big-to-fail companies are bigger now than they were before they failed."

Bob said: "Here's the bottom line on this as I see it. Until we change the system in the United States so that money cannot purchase political office, then there will be this kind of corruption. Lobbyist money gets what it wants because it is virtually limitless. And the average GI has no say that is comparable to the power of the money that is funneled at politicians through lobbyists. And that is why I've said, The United States of America has the best government money can buy."  (Doug and Bob then slammed both political parties for awhile.)

Caller Chris asked about leveraged funds, such as DIG and GRX. Bob said to be careful with those funds that trade at 2 or 3 times the underlying asset because the expenses can be high. He said they were better used as "trading vehicle by highly informed market players."

Caller Peter asked  what happens down the road if the deficit keeps rising year after year and we can't keep printing money.

Bob said:  "The worst case would be normalization of interest rates......Think about the expense of carrying our burgeoning National Debt, it's almost $16 trillion.....We are getting away with murder here because rates are close to zero. But what happens if rates normalize and  we have to start to  pay way more interest on the National Debt. That would be very, very alarming."


Doug asked Bob  for his take on the housing market. Bob said: "It's going to take time and probably a lot of time. Right now, people are afraid to buy because they are afraid the price will go down some more.....We have foreclosures still on the market, depressing prices. We have tightened lending standards at the banks. Whereas a few years ago, a bank would lend anyone money on a house even if there was no chance they would pay it back. Now they've gone to the other extreme. The only way to get a loan now to buy a house is to prove that you don't need the money.....It has now become more expensive  to build a new house than to buy an existing  property."

Doug replied: "And that is devastating for the job market too because it out all the construction and the supplies....I just saw a story that Lowes are closing a bunch of stores."

Bob continued:  "Housing prices have come down roughly 35% in the last three years or so. That's a big drop. And in some markets, they've come down a lot more than that.  The bottom line in all of this is, I think we have had a tremendous correction.  I think we're bumping along the bottom....And I think we will make a bottom somewhere in the general price level we are now -- give or take 10%. But I think most of the price damage has been done."  (Bob mentioned that there has been a giant increase in demand for multi-family units.)

Doug asked Bob about Herman Cain's 9-9-9 tax plan. Bob waxed eloquent about how he liked Herman Cain, but that he had studied up on Cain's  9-9-9 tax plan and it  would be "dead on arrival and will never happen."

Bob said: "Here's why: I'm in the 35% tax bracket, if Herman Cain's plan gets passed, I get a 26% reduction in my ordinary income tax. There is no way that congress would ever consider giving me a 26% tax cut in the top tax bracket.

However, if I'm in the lower or middle tax  bracket look what happens to me. As you know, close to half of the country pays zero personal  income tax. Well under 9-9-9 that changes....You had zero before, now it just went to 18%, because you have to pay 9% on personal income and  now you have to also pay 9% when you spend with your personal income, which you do in the lower and middle income sectors. 

So all of a sudden this person in the lower to middle goes from zero to 18 while some guy in the 35 goes down to 9 because he doesn't even come close spending all his money, so the 9% sales tax won't apply to all his income."

Doug agreed that it was a "regressive tax" as all flat taxes are....Both Bob and Doug agreed that our budget problem was a "spending issue" not a tax issue.


Doug asked: "The economy of the United States, the unemployment of the United States is grim....How long do you see us staying in this great recession as it's been called."

Bob replied: "Well, we have projected slow growth for this year between 1 and 2%. I think we are going to get a nice, positive number later this month for the third quarter Gross Domestic Product. We could be looking at a number close to 2% or a little better." 

Honey EC: I laughed out loud when I listened to this final question from Doug and realized that he made a big blunder with his recession question. And Bob did blow out some air before answering, but he was out of time -- the music was starting -- so he just gave his "slow growth" spiel and let Doug give his good-bye thank yous.

Doug did an excellent  job of selling Marketimer for Brinker. He did several ads sprinkled throughout the program, plus several promotions for Brinker's website. A couple of callers seemed to be on the air just  to rave about Bob and say they were Marketimer subscribers.

I was very disappointed that, even though Doug mentioned the stock market and its volatility at the beginning of the program during the introduction, he never asked  Bob about it or mentioned it again. I reached the conclusion that Doug had made an agreement with Bob not to ask his stock market views.

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