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Saturday, February 27, 2010

February 27, 2010, Bob Brinker's Moneytalk: Summary, Excerpts and Commentary

February 27, 2010....Bob Brinker hosted Moneytalk this weekend......First, some subjects that Bob Brinker did NOT talk about on Saturday:

* He never mentioned the subject that was so hot last week, e.g., the discussion about the possible government takeover of private IRA/401Ks. [Sunday update: A caller specifically asked Brinker about this subject.]
Brinker replied: "We talked about it last weekend is the fact that comments are currently being accepted in connection with the Employee Retirement Income Security Act and the rules under the IRS code that determine how that act can be implemented going forward. Now what they're saying is that people suffered losses as a result of the bear market in 2008 in their retirement accounts. So they're raising the question, can we provide a government annuity -- a monthly check in return for the money that's in the IRA or 401K accounts that would protect people against that kind of volatility in the portfolio.....

.....We have no information at this time on whether such a program will ever happen. And if it did happen, we have no indication yet as to whether it would be a voluntary program or a mandatory program. What we know is that they are collecting feedback from the citizenry now to see with reference to these employer-sponsored plans -- and this includes the IRAs too -- whether there is anything that will be done at the federal level in connection with these plans. Nothing has been proposed in Congress. Nothing has been voted on or signed into law. It's in the talking stages.....

.....Now there are people out there that are upset that people in the government are talking about this subject because they feel that this is private money. The money that you have in your IRA and 401K is private money, and they feel that nobody in Washington should be talking about voluntary or mandatory take-over of your IRA or 401K money. These people are upset. What we are doing right now is keeping our Moneytalk listeners informed that this is a subject that is in play.....

......I am making no changes in my IRA accounts based on this story at this time....It is too early; we don't know anything yet.....All we know is they are accepting opinions on this topic.....This all got started when President Christina Kirchner of Argentina confiscated pension money -- that's how it got started. "

* He didn't mention the so-called "health-care summit" where the possibility of another $Trillion dollars+ being added to our national debt was discussed.

* He never mentioned the stock market, and there were no calls about it.

The Dow rose 4.23 points on Friday to close at 10,325.26. For the week, down 0.7%.
The Nasdaq rose 4.04 points Friday to close at 2,238.26. Down 0.3% for the week.
The S&P 500 Index climbed 1.6 points on Friday to close at 1,104.49. For the week, down 0.4%.
Honey EC: As I wrote last week, Brinker considers this recent market pullback a "cyclical bull market correction" and a "health-restoring" buying-opportunity. Brinker's model portfolios have been fully invested since March 2003. At their worst, the model portfolios lost over 50% of value in the 2008-2009 megabear market. According to the February issue of Marketimer, Brinker's current S&P 500 Index target range remains at 1200 to 1260.

Subjects Brinker covered on Saturday:

* The earthquake in Chile.
* The tsunami in Hawaii.
* Copper producers in Chile (largest in world) report no major damage and will be running again today.
* Interest rates remain very low.
* Bernanke made it very clear to congress that the economy is sluggish.
* Fannie Mae came back for a lot more money after reporting a loss of $16.3Billion for the last three months of last year. They are asking for $15.3Billion.
* Fannie Mae lost $137Billion over the previous 10 quarters.
* Fannie/Freddie guarantee/own 28% of the 11.8Trillion U.S. home market -- that is why they are bailed out.
* Banks depleted their capital in the big rush to repay TARP money and that is one reason why it is now more difficult for people to borrow money.
* The U.S. cannot continue to run double-digit deficits. If it continues, the rating agencies will downgrade the rating of U.S Treasury debt -- that will result in higher interest rates being paid. We have time to get our house in order, but Washington doesn't seem to have the will.

Several time during the program Saturday, Brinker hammered Henry Paulson because he turned down Brinker's invitation to be a guest on Moneytalk. Brinker said he was very "annoyed with the Treasury" because Paulson had refused his invitation and considered it "stupid" since Paulson was trying to promote his book.

Brinker speculated that Paulson probably refused because he did not want to face the "hard questions" that he might get from Brinker and the callers -- that Paulson had instead chosen to face "softball questions" from Charlie Rose. Brinker said that he had not read Paulson's book because of Paulson's refusal to make an appearance on Moneytalk.

As Brinker was talking about Paulson, a caller claimed that a University of Chicago alumni had put the blame for the "economic disaster" on the "Bush administrations reluctance to regulate." Brinker said that was surprising coming from that source. Brinker said: "It's quite obvious that it was a lassez faire government policy that was partly responsible for what happened."

Brinker said:
"If you recall, Hank Paulson raised the TARP money under false pretenses....He said he was going to pay down toxic assets.....Instead of doing that, he turned it into a capital infusion item. I think it was probably a good idea to use it as a capital infusion item. After all, he already had the money. He had $700Billion to play with.... It provided a lot of liquidity into the economy."

[Sunday update: Brinker hammered Hank Paulson in each hour of the Sunday show, including in the guest-speaker hour. One might conclude that Brinker wants revenge against Paulson for declining his invitation to be on the show. Could the great and "fair" Bob Brinker be THAT petty, immature and hateful?]

Here's Henry Paulson's book:

Brinker's Saturday guest speaker was Andrew Ross Sorkin:

Brinker's Sunday guest-speaker was Lawrence McDonald who wrote a book about the collapse of Lehman Brothers.

Moneytalk is Available
To Go on Demand Totally Free at KGO810 radio for seven days after broadcast. The three hours of the programs are archived Saturday and Sunday 1-4pm. To download the programs and listen later, just choose the day, right click on each hour that you want and use "Save Link as." KGO Moneytalk Archives [Link] If you want to call KGO and complain about (or praise) Bob Brinker's Moneytalk, here are the numbers: Comments line: 415-216-1052....Listener services: 415-216-1050. Here is the KGO email address -- cut-and-paste it into your email compose window:

[For those who may not know: Bill Flanagan, Brinker's long-time guest host, passed away a couple of weeks ago. My sincere condolences to his family.]

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