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Saturday, March 6, 2010

March 6, 2010, Bob Brinker's Moneytalk: Summary, Excerpts and Commentary

Posted March 6, 2010....Bob Brinker hosted Moneytalk today. In Brinker's Saturday opening monologue, he talked about the national debt which is projected by the CBO [LINK] to be in excess of $20Trillion within ten years.

Brinker said:
"If that number turns out to be accurate, that would mean that ten years from now the national debt would equal about 90% of that year's Gross Domestic Product. A number that is getting up into a very uncomfortable range once it gets up into that area. In addition to that, the Congressional Budget Office is estimating that interest payments on the national debt will quadruple to about $900Billion per year within ten years based on the projections contained in the budget which was put forth by the White House within the last week. And if you total up all of the deficits from 2011 to 2020, a ten-year period, you would get close to $10Trillion in additional national debt that would be piled on......

......What is sustainable? If you take a pool of economists, they will tell you that basically you can get by if you run a deficit of 3% of Gross Domestic Product.....That's not the forecast. The forecast is that the deficit is going to remain in excess of 4%.......for the foreseeable future. So this is where the problem comes in. We have the expenses at the federal level and then we have the revenues......We have a mismatch between the spending side at the government level and the revenue side. And based on the budget presentation that was made in the past week, this continues to be a long-term systematic problem in terms of the budgeting of U.S. expenses and revenues.....

.....The deficit for this fiscal year ending in September is estimated to be an all-time United States record of $1.6Trillon.....Both parties in the last decade have been responsible for building up the National Debt by running deficits.
[Honey EC: Mr. Brinker, while that may be a true statement, it is VERY disingenuous of you to not point out that the Obama Administration has QUADRUPLED the National Debt.] And certainly with the recession we've had, starting in 2008, we've seen a ballooning of these numbers. But the reality is most politicians don't want to talk about this....They'd like to make you some more promises -- maybe some more goodies from Uncle Sam."

No stock market talk today, but Brinker did take a call about GNMAs. Brinker advised the caller to expect volatility, but that it should be contained between the mid-$9.00 to the mid-$10 range. He pointed out that GNMAs have returned about 6% over the past decade while the stock market has basically gone sideways. [Honey EC: When Brinker points out that the stock market has gone nowhere over the past ten years, he is basically proving that he has no ability whatsoever to forecast what the stock market is going to do, short-term, mid-term or long-term (even though, I doubt that is his intention). Brinker has not given up on promoting himself as a market-timer, even though he has never successfully called a bear market and has been a "buy-and-holder" since March 2003.]

* Caller Jeff from New York
asked if Brinker was familiar with a new tax proposal to standardize rates at 15, 25, and 35% and lowering corporate tax rates. Brinker said he had no problem with those brackets and he was for lowering Corporate tax rates, but he didn't think it "would fly" with the current congress.

* Caller Irene from Wisconsin
asked what would happen to U.S. Savings Bonds if the country went bankrupt. Brinker said that he did not think that was likely and was not worried about it "now" because several things would have to happen first. The first step would be the downgrade of AAA Treasuries. However, if in the unlikely event that the U.S. did stop printing money, all government bonds and government checks would be worthless.

Brinker said: "If I had the president's ear -- which I do not -- I would tell him to make absolutely certain that we had a fiscally sound policy to protect our credit rating." [Honey EC: Mr. Brinker...Your cheap-shot at Sarah Palin today was beneath contempt. What's the matter? Don't have the guts to take any shots at the guy whose ear you don't have? I could give you plenty of really worthwhile fodder, but you already have it, I'm sure. Just wait, you may get Hilary back and you can cheap-shot her again. Women of all stripes seem to be fair game for your insults. I remember when you called Elaine Garzarelli contemptible names and several other women, too.]

Caller Robert from Massachusetts
asked if American Funds could be used as a substitute for the funds in Brinker's model portfolio III. Brinker explained that he recommended using no-load funds. Brinker said that Model Portfolio III is balanced at about 1/2 stock funds and 1/2 in bond funds. Three times today, Brinker talked about Model Portfolio III. [Honey EC: Portfolio III largely contains Vanguard Funds that Brinker regularly talks about on Moneytalk. He recently added a VERY small percentage increase in his Vanguard international diversification in all three of his portfolios.]

To Go is Available 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:

Brinker's Saturday guest-speaker was Harry Markopolis:

Brinker's Sunday guest-speaker was Matthew Bishop, who co-authored: "The Road from Ruin: How to Revive Capitalism and Put America Back on Top"


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