|Moneytalk Show Review
July 24, 2011
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July 24, 2011 Summary with Editorial Comment ("EC") by Kirk Lindstrom
Sunday Bob Brinker started the show by saying "Our Toll Free Line 1-800-934-2221. That is our contact number."
Brinker then summarized the debt ceiling issue. Brinker said there is an interest payment due on August 4 that is large enough to put the Federal Government beyond the debt ceiling unless the government can find a legal way to extend the debt ceiling. He said on a "technical basis" we are beyond the debt ceiling but the Treasury has found various ways to extend this.
EC: There is a decent summary of the issue at Wikipedia 2011 US debt ceiling crisisBrinker said the question we are debating is "how much government will Americans be willing to pay for?" He said the voters will have an opportunity to give their opinion on this issue in the next election.
Near the middle of the show Brinker made what I believe is an excellent point. That is BOTH parties are to blame for holding to unreasonable demands they won't compromise on. He says it is because we have squeezed four parties into two with the unreasonable demands by both extremes and summarized his opinion of the differences as:
Article: How to Get the Best CD Rates
said the house of representatives and a third of the Senate come
up for election every two years. The next election is in 2012
when the office of the president is also up for election.
Brinker said the politicians are playing a "silly and dangerous game" with the credit rating of the United States.
He kept this up for the whole show and didn't talk about the stock market.
In last week's summary, I wrote "Brinker pointed out we are now borrowing 40¢ for every dollar we spend and it is "horrific!"
Brinker concluded his first hour monologue by saying it is amazing how far the US government will go to prove they are dysfunctional.
Brinker's Stock Market Outlook
Brinker didn't take calls on the stock market nor did he discuss it. Here is what he said last week
Marketimer Portfolio QuestionBob Brinker remains fully invested. His last "sell" for his model portfolios was way back in 2000. His last "buy" was when he returned to fully invested in March 2003. See "Bob Brinker's Asset Allocation History"
More about the debt ceiling
Brinker said the US Government is growing the national debt by over four billion dollars a day which is "not acceptable." Brinker said this is unacceptable but he is not in favor of putting the credit rating of the United States at risk by defaulting. He repeated what he said last week that anyone calling for not increasing the debt ceiling while running for president is "not qualified to run the country."
Brinker said the national debt as a percentage of GDP is 90% which is too high. He says we are addicted to spending and it is a good thing tax increases such as eliminating the deduction for a home mortgage and money saved into IRAs are on the table. He's happy this is getting attention.
Caller Derek in the "Show Me State" asked about the people who want to take the deficit back down to where it was when president Bush left office. Brinker got argumentative and didn't answer the question by saying: "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." Derek held Brinker's feet to the fire and said nobody said the Treasury will default on bonds.
EC: The option Derek is speaking of is Congress could shut down government as they did in 1995 and 1996. See Wikipedia for "United States federal government shutdown of 1995 and 1996"Derek said the Treasury would prioritize with payment of Treasury Interest at the top of the list. He also said we need to look at not paying people unemployment for three years rather than go out and look for a job along with other special programs we didn't have when Bush left office. Brinker cut him off and went on a ramble saying he would be really surprised and "I don't see any precident for that type of behavior."
Caller Vince in California said our great state has a new law where legislaturs don't get paid unless they have a budget and we got one for the first time. Brinker agreed and said this was a great point and there is no reason to pay government employees in the congress or executive branch if they fail to resolve this situation.
Bob's guest was Gretchen Morgenson, Assistant Business Editor at the New York Times to talk about a book she has co-authored entitled,
"Morgenson and Rosner have written the long-awaited volume that gets to the heart of the mortgage crisis. The fearlessness and breadth of reporting make the book as compellingly readable as it is exhaustive. Reckless Endangerment is a remarkable achievement—and should be required reading for all Americans."Return to
—Bryan Burrough, Vanity Fair special correspondent and bestselling author of Barbarians at the Gate and The Big Rich
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