|Moneytalk Show Review
July 17, 2011
Brinker Fan Club Home Page
July 17, 2011 Summary with Editorial Comment ("EC") by Kirk Lindstrom
Today Bob Brinker started the show out by saying his Moneytalk program now in its 26th year is "the longest running investment broadcast in America and for that to you we say thank-you very much."
Brinker's first topic of the day was declaring that the debt ceiling must be increased. He said we have 14.4 trillion dollars in national debt with well over one trillion dollars in annual treasury sales.
He said there are some "so called presidential candidates are out there stomping in Iowa" who are "calling for the US government not to raise the debt ceiling." Brinker said you can cross anyone saying this off your list as "a person who is not qualified to run the country."
EC: I guess we now know where Brinker stands on this issue with democrats on one side and Republicans and Libertarians on the other side.Brinker pointed out we are now borrowing 40¢ for every dollar we spend and it is "horrific!"
Article: How to Get the Best CD Rates
|Social Security Trust
Fund - A Topic that Brinker said would be on the "Moneytalk Final Exam"
Brinker got quite animated about this subject. He said money "pours in" from the Current Payroll Tax which is 6.2% for the employer and 4.2% for workers. Bob Brinker pointed out that Washington went to a unified federal budget which allowed the government to raid the "Social Security Trust Fund" to pay their bills.
EC: As part of the economic stimulus program, payroll taxes on workers were reduced from 6.2% to 4.2% for two years. This means Bill Gates and Warren Buffett saw their taxes reduced by over $2,000 while someone making only $50,000 only saved $1,000 in taxes. Both parties passed this measure with little debate.Brinker said that currently there is more money going out to pay Social Security benefits than is coming in with this tax rate! To generate the extra money, Brinker says the government sells US treasuries to pay these benefits since there is no money in the trust fund, just a bunch of IOUs! Again, Brinker said anyone running for the office of president who suggests the government should default rather than increase the debt ceiling should go home as they are not qualified to run the country.
Caller Tom: This caller said if nobody takes a stand on the debt, then the politicians will just kick the can down the road where the problem will be even worse in the future. Brinker agreed and said he wants this to remain "on the front page" but he doesn't want a default. He would like to see a small increase in the debt ceiling with some "fiscal responsibility."
EC: Brinker didn't say what programs he favors cutting or if he favors higher taxes to solve this problem.
|Caller Dave: A caller asked if QE2 was
part of the debt ceiling. Brinker said no, quantitative easing
has nothing to do with the debt ceiling debate. Dave then asked
if a QE3 could save the day.
Brinker got even more animated as he answered. He again said There is about a $134 Billion shortfall just for AUGUST!
Brinker said the Fed under QE2 "only" purchased $75 billion a month so that would not cover the current shortfall just for the month of August! "It doesn't work!"
EC: Brinker and the caller are missing the point that the Federal Reserve purchasing new debt still requires the US to raise the debt ceiling to issue the debt for the Fed to buy. I think Brinker understands this but is more concerned with the government not defaultingBrinker came back from the break and said he wants this issue to stay in the front of the news but does not want to see the US destroy its credit rating with a default.
EC: Brinker and others don't seem to consider what a couple with two incomes does if one loses their job while they have a mortgage payment due. They might want to ask parents or friends or tax payers to give them money but they usually cut their spending to the bone so they can keep making their mortgage and other payments while they eat beans and rice.Later the show Brinker said he thinks cutting spending NOW would slow the economy which is counter productive to efforts made to stimulate the economy.
Brinker came back from the break and said he wants this issue to stay in the front of the news but does not want to see the US destroy its credit rating with a default.
EC: Brinker and others don't seem to consider what a couple with two incomes does if one loses their job while they have a mortgage payment due. They might want to ask parents or friends or tax payers to give them money but they usually cut their spending to the bone so they can keep making their mortgage and other payments while they eat beans and rice.Caller Julian in Mountain View asked if there was an economic advantage to split California into two states. Brinker made a joke out of it and suggested maybe they will split the state between East and West rather than North and South.
A caller tried to blame the problems on 2000 to 2008 changes. Brinker said this was false and most of the debt was accumulated in the last three years since we are spending borrowed money to try and revive the economy and we have a recession that lowered tax collections. He did conceded that the prescription drug plan for seniors enacted under the Bush administration added to our problems, it was a disgrace and should never have been passed.
Fixed Income Question:
Caller Robert asked if there was a way to get a better return without dipping into savings accounts to put food on the table. Brinker recommended a fully insured CD ladder of 3,6 9 and 12 months to keep his portfolio safe even though you barely get 40 basis points.
EC: you can do much better. See Best Savings Account Rate Survey where you can get over 1.05% on FDIC and NCUA insured savings accounts. Also see Best CD Rate Survey where you can get a 6-month CD paying 1.12%!
Lon in Oregon asked if he and his wife move their stock funds into money market funds until the debate over the debt ceiling ends. Brinker said no because you might have to come back into the market at a higher level. Brinker said he has not exited the market because he KNOWS they will raise the debt ceiling because they don't have a choice. He says there could be more political theater for headlines where they could shut down the government to have cash to pay bills without a default like they did in Minnesota but they will eventually raise the debt ceiling and reopen the government.
Brinker said taxes in California are now over 10.5% for the top earners and the regular folks can easily get to 9% (9.3% actually) and it applies to capital gains taxes as well as income! He said it is an "egregious" rate when you add the 15% federal capital gains taxes to this.
Who to Tax to Pay for Debt we have?
Brinker said he doesn't want to see tax rates go up on the middle class but he would not care if they raised the rates on top earners from 35% back to 39.6%.
Brinker also said you don't get a tax deduction for mortgage interest in Canada and he discussed the favorable capital gains rules we have today where you can exclude the first $250,000 on any capital gains you make on your home. He believes the real estate lobby will not allow elimination of either benefit.
EC: Brinker is down over 80% on his condo investment in Las Vegas (according to public records) so he's probably unaware some of us are way up and the present rules make it extremely costly to downsize since we'd owe hundreds of thousands on the massive capital gains we have on our homes due to inflation. Why should we pay a tax to move when the government created the inflation to steal our wealth?Caller Mike in Colorado thanked Brinker for his great idea for GNMAs as a great idea up there with compound interest and duct tape. See VFIIX - Vanguard GNMA "Ginnie Mae" Fund
Mike then asked Brinker to explain "swaps." Brinker said to think of them as an insurance policy on a failed bond.
David in Chicago asked why the public is not more concerned about all this. Brinker blamed "inertia and lack of interest" since they were working paycheck to paycheck and more interested in getting through the day. Brinker again said he wants to keep this on the front burner so things change. Brinker concluded by saying the benefits and salaries are too generous for the money collected.
Bob's guest was Diana B. Henriques, author of
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