Bob Brinker began today's show talking about the situation in Japan. It started with an earthquake then the tsunami and now they face a nuclear disaster. We don't know how the nuclear problem will work out. While he sees this as a dire problem for the poor people directly affected he does not see much impact on the global economy. He estimated that it may reduce it by 7/10's of 1%.
In the second segment he went through all of the economic data that is scheduled to come out next week. These include the empire manufacturing index, PPI, housing starts, CPI and industrial production.
The first caller was from KGO country. He was concerned about the dollar losing its value because of QE2. Bob said the Federal Reserve was walking a tight line and they would return to more normal interest rates when the economy improved. He felt that even with our problems other currencies face even bigger issues and the US dollar would remain the world's reserve currency. The caller said he was in Asia within the last year and there were banks that didn't want US dollars. Bob said he wasn't aware of that.
Ed called in from Missouri. He was concerned that the Japanese would liquidate all their US treasuries to get money to rebuild. Bob expected them to look upon these bonds as a source of funds but he didn't feel that selling them would have a significant impact on the bond market.
Allen from Pennsylvania was next. He thought that the nuclear problems in Japan would set back new construction of plants in the US by 25 years. He said that the event at Three Mile Island resulted in a 25 year set back. Bob mentioned that he was living just 90 miles away from Three Mile Island when that problem occurred. Bob seemed to agree that future plans for plants in the US could be delayed but he didn't think it would impact construction projects in other countries.
Andy called in from Redwood city. He said he didn't agree with Bob's position on nuclear power but he didn't want to go into it. Then he quoted some statistics on tax revenues and felt they justified increasing taxes. Bob didn't agree. He said that the problems caused by Sacramento were the result of run away spending and mismanagement. Andy went on to blame prop 13.
Bob started the second hour by quoting the current stock market numbers. Next he went through the rates on treasury notes and bonds.
Bob was the next caller. He had an idea to improve the economy. He wanted the banks to lower existing home loans by 1% for people who were up to date in their mortgage payments. Bob Brinker said it was an interesting theory but he didn't think the banks would go for it.
Bob spent an entire segment talking with Dr. Bill Wattenburg. Dr. Bill said that the nuclear plants in Japan survived the earthquake but were severely impacted by the tsunami. He felt that the nuclear regulatory commission would not allow plants to be built in the United States in areas subject to tsunamis. Dr. Bill also had some ideas for the relief efforts in Japan.
Bob's guest in the last hour was Barton Biggs. He wrote a novel about a hedge fund manager. The title is hedge fund tale of reach and grasp. Bob ask him about the government allowing Lehman Brothers to go under. Barton didn't give Bob the answer he was looking for. He felt Lehman was a big but not essential and the government can't bail everyone out.
Moneytalk is FREE and available for downloading at KGO810 radio up to seven days after broadcast. The program is archived in the 1-4pm time-slots: KGO: Moneytalk free on Demand
Another picture I took at the Fort Mason Orchid Show last week (click to enlarge).
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