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[2:37] ..." and L crisis back in the late eighties we had that the stock market crash of 87 we have. You know -- recession in the seventies we -- in the early seventies another recession in the in"...
[3:44] ..." plain stupid or in this case. They would leverage in other words. Wall Street kind of look and everybody else they he would they're doing it look at their investments. Ideas of how to make money. And what happens is they look around there's there's urged for profitability and to make more money because money is about money -- Wall Street. And when we got to that point we actually said he spoke more things still look good we should get into that yet we should get into that and they all kind of followed her. And I'd like to say -- for the first time it's happened but it -- I mean this is eerily reminiscent of 1990 we're having these same sort of issues coming out so. Wall Street always does -- look for the profit. Then what happened this time is that you all for lever stated just by --"...
[5:00] ..." the great depression because Lehman's 158 years old. Yet they could survive President Bush. I know what a lot of you gonna say gee how can you blame this on President Bush. Here's how I blame them he was turn a blind -- when people buy -- house with no money down -- interest only. Take in the equity out of those houses and go on I'll buy -- thirty. 1040050000. Dollar as -- on vacations by. Forty and sixty and eighty inch TV it's right -- that he finishes up I think so yes I -- is a little bit longer had read it all so yes I blame President Bush but I also blamed the stupid American people. For want the same old thing. How much the politicians. In your opinion I"...
[7:49] ..." on -- awarded is where was but the reality is is that Wall Street. -- have a tendency to go into one direction and the real estate market the stock market and the comeback when he"...
[8:35] ..." these people who were selling this stuff these people were opiate for Washington Mutual and all of these other companies I guess Washington. Mutual there of them that's a that's now it's a bad but I did what they also sell in this commercial these mortgage"...
[12:25] ..." decisions -- after the crisis. There's no proactively to react the world Wall Street before. Look at -- pulled my head. Wall Street's current scene that's so I think they discounted that it's going to be economy in the strike in the borrowing in the"...
[0:00]" Gave welcome I think. I was that smart -- the ability to get out of market. Well you know I Lanka it's well -- any. Look what happened they meet people don't understand this. I certainly have a sense of it but I don't understand that does anyone understand it."
[0:17]" There was they don't know what the ramifications everything and they would happening in the amber going through a couple of phases of markets and interview and they -- just a little more than a year ago factor that as far as going on vacation last year I was sitting down the -- and that is known to happen we have one day with the markets were going to be opened found 400 and effectiveness okay were coming to the rescue so. The first phase of the plan was to say okay. Let's just go to the rescue the financials and people can't dependent BankAmerica dependent anything except. There was a lot of support from the Fed and and the government and it really help the -- market -- has rallied taught overnight when we have we peek out of things. So we're we're going through the first phase which was okay let's give it to support. Then we January it was a tough times that all of this is going to be difficult and then we have the Bear Stearns and I think whatever and so pierced or is this is this is real this is a problem but -- get out of the way and that it will Mabel move up from here so. Phase one basically what let's give them everything they need. Well what we've that it came out last week is that you know what we're not gonna scale everybody you know we're we're not going to play this moral -- were we going to have to worry about the moral hazard game which basically says they're going to Bela they're replaced so. Phase one was going out and say okay let's. Protect everything in this picture referrals comfortable all in Cuba last week it's as you know we're not Kabila Pretoria will take care of those a -- like government agencies like Fannie and Freddie Mac. Take care of them chill out we're -- a couple of these investment -- suffered a book that it's six months to clean up their best and so last march Lehman I'm talking about today. And they didn't do it so I don't know whether it was you know Eric cancer whatever the case may be -- queen of the recommend that could bosh and I think that's assignments that were not -- everybody out some perceive that as being negative I think others say okay we we can't -- they're the ones -- made --"
[1:59]" Well why should our tax money what is the argument I mean I what is even the argument does."
[2:05]" Good -- people put their money someplace. If they think it's a critical wander and they don't want to hold the rest of therapeutic it's gonna go wander. So if you're afraid of we're you gonna depositor money they're -- it's stuck and and there are frozen which it. It never really has in the last 48 years more air with firms but it's is that perception that if I can't feel safe it is investment firms. Then -- not going to do anything about going invest in and forget about it."
[2:31]" Now when we hit Enron go down a few years who will win -- I think we need to remember that we had the S and L crisis back in the late eighties we had that the stock market crash of 87 we have. You know -- recession in the seventies we -- in the early seventies another recession in the in the in the late seventies. We had a recession in in the early nineties but. A look at this guy who I'd never heard of before you know last couple of days this guy a -- the head of we're leaving right. To this guy picks up 22 million dollars in March. Not very -- now it does the government. Or do the investors or does anyone have any access it on average this is just this is absurd it's obscene. You know Kenneth lay went jailed Indian Enron should -- be some people go to jail here."
[3:21]" It would that's a question. It was a fraud -- was it bad management and then what was."
[3:26]" Happening with -- brought -- stupidity -- fraud you go to jail if we just plain old stupidity Erekat."
[3:31]" Well you know put thirty that if we didn't break the -- we were to go home. Peoria and again I think that's where -- we -- Enron and the World Cup there was fraud I mean they were cook in the book in the we've got a lot of people go to jail for cooking the books but it could just plain stupid or in this case. They would leverage in other words. Wall Street kind of look and everybody else they he would they're doing it look at their investments. Ideas of how to make money. And what happens is they look around there's there's urged for profitability and to make more money because money is about money -- Wall Street. And when we got to that point we actually said he spoke more things still look good we should get into that yet we should get into that and they all kind of followed her. And I'd like to say -- for the first time it's happened but it -- I mean this is eerily reminiscent of 1990 we're having these same sort of issues coming out so. Wall Street always does -- look for the profit. Then what happened this time is that you all for lever stated just by -- watch goes down. They actually the case of Lehman's over the others that they've been borrowed thirty times what these securities were worth. -- 1% investment -- it's a 30% that's probably as you can lose your mind that dress so. We got over leveraged at least two is we're going to keep leverage this and that's what's happening right now we're saying we got a cool off we gotta stop this we can't bilk people out. It's time to get on with business and not."
[4:45]" What what do -- normally we read -- as the show goes -- and a lot of emails today in advance of the show and in one came in which I thought was pretty good. Get your reaction in this. The -- name is Paul writes I just can't believe that these companies -- by the great depression because Lehman's 158 years old. Yet they could survive President Bush. I know what a lot of you gonna say gee how can you blame this on President Bush. Here's how I blame them he was turn a blind -- when people buy -- house with no money down -- interest only. Take in the equity out of those houses and go on I'll buy -- thirty. 1040050000. Dollar as -- on vacations by. Forty and sixty and eighty inch TV it's right -- that he finishes up I think so yes I -- is a little bit longer had read it all so yes I blame President Bush but I also blamed the stupid American people. For want the same old thing. How much the politicians. In your opinion I mean this supposedly the regulators in place who I assume our our look at some of the stuff right."
[5:44]" I'm mature than some of the regulators so what was going on and and I don't blame the press care who is or who it's going to be reality is that markets the markets in the -- they do. And when you're talking about you know blame the president for what you're controlling our our economy imagine these little you can't buy those things be -- for the it would be you can't buy the stuff that you want with your own money."
[6:03]" it would I think what Paul is seen -- ways you know where's the regulation where the the safeguards following. The -- the great depression all these safeguards were put in place to make sure that the bottom would never fallout again we clearly had. You know probably 9/11 -- you're going to war we spent the ten billion dollars a month -- understand that the dollars down oils up all of these factors. Isn't there anyone down there in Washington. Democrat or Republican who should've said a year ago -- said this problem is deeper than just you know a little we're a little. Blip in the market we -- 40000 dollars of 14000. Points a year ago now we're we're we're we're down under 11000."
[6:43]" And not -- with the but I don't think they could've done something like that and the reason is is because a lot of the reason that the market's got hit in particular the bonds were talking about the mortgage market. Is back in the nineties and and before. You really never had to take these mortgages and more competitive value the mortgage is called mark to market every single day and and in the 1990s we have our problems but what happened in this new age of securitization. All of these securities were sitting there. And you have money that you could put up and show where they are well when you have these securities and every single day of every human being the United States. Even over 50% of the equity group of I have two mortgages is they are so people to have a lot of equity. But if you took every single security and every -- United States and mark to market. We'd be a lot worse off so I think what we saw it more than securitization. And then -- add insult to injury when you're not just by one of these things can -- borrow thirty dollars to buy more than thirty times. The value that could do it I think this will leveraging. Putting it to the extreme. And no one really knew what was in those mortgages and they get on -- going to be forensic account of the coming on -- awarded is where was but the reality is is that Wall Street. -- have a tendency to go into one direction and the real estate market the stock market and the comeback when he -- a recession that's when your stuff -- the --"
[8:02]" But it sounds to me like the people who really making these decisions. You had people -- the throwing money at people giving them more mortgage money than the property was really worth. I remember Dave call -- fast when I bought my first condominium. I'd put the only 20%. And it was a 67000. Dollar condominium and I'm thinking my god it's 12000 dollars I gotta put down so that I can get the mortgage on a 55000 dollars. I mean. Forget the dummies who were signed him off the individuals who in many cases could care less. But these people who were selling this stuff these people were opiate for Washington Mutual and all of these other companies I guess Washington. Mutual there of them that's a that's now it's a bad but I did what they also sell in this commercial these mortgage notes as well."
[8:49]" BO almost edited it's got a lot of realistic and -- hot water pure digital artists that are under the scrutiny right now so they're trying to figure it would want to do idea but what you're not going to get any argument whatsoever with what you just said I absolutely agree. That they were given these things -- way they are being forced sold -- if forceful during so that they were so attractive you couldn't give it up and people didn't give it up."
[9:11]" Okay my question is and and again and my who have -- for investment advice here but for people who are getting shaky and are concerned about to look at -- one K the values drop and what should they do at this point I assume you're gonna say the last thing you want to do is sell into a down market."
[9:26]" Yet you can separate -- caucuses a lot of issues in my word about the recession about worried about losing my job in my worried about getting my mortgage and my word about my cash there was a lot of things of people worry about. But the one thing else they would -- your portfolio. After the market at some point 5% that's about the kind of the typical little market goes down about 33% if you look at the last seven bear markets. We've had most of it so much sense and don't try and get that left 8% get out get in because you're making two very very difficult decisions. But the warm windy get out of which usually the long time when you're feeling back as the third and and then went to get back into my senses. Make sure you got a good portfolio don't be vested with the etiquette not sure which you got or how much risk you take it. Cool find somebody that can explain it to you and to make -- wrote -- so yes what along with it wears thick that is not the kind of be selling or were were late you should've sold Lester talked overnight."
[10:17]" And in the if you if you took your money out October ninth and you put in a bank. You worried about. The 100000 dollar FDIC limit because you're worried about the the the quality -- the bank if you threw it into gold you -- and some of that stuff you would have had a little bit of an uptick but now that's going to how I mean. It'll at this point is there's seems to be. No good decisions. That are out there to record."
[10:44]" This that you shorted bank stocks have a pro we've let that happen but what this target than that would prohibit the right thing but. You're right there aren't many places for people put their money we have upon these boom and then that wasn't there. Border telling you -- that all these finger archive of involved together a commodity prices are coming down is because the world slowed down a little bit and quite frankly does that boost that's going to be a big boom when we saw oil today you know that in ninety private you can book could lower that and over in the overnight. We're going to that's come ago we -- oil back -- extract that there's a lot more impact of most people's budgets. Then what you're going to see about what Lehman Brothers used to hear what Rick returned you're gonna get undersea it is."
[11:20]" Less -- question for for me -- at this point. I guess we just got a hold on is it your sense. That the election which of course will be a big event come November. We will finally elect after twenty years someone whose last name is neither bush. Nor Clinton. I mean that's. True mean girl it's -- with -- with had a a White House run by either bush or Clinton and you know some will argue one was great one was bad whatever okay. How much psychologically do you think from your -- experience will the election in the election of someone other than the bush or Clinton have come November."
[12:00]" I don't think it's gonna matter that much because I think they're both talking about change they're both talking about. You know may have on main street and limit on main street so I don't think it's gonna matter and quite frankly. If you look at whether you did better Republican that would be good did better -- or Democrat or under Clinton or bush. The reality is just the economy stupid and encountered who were treated to a quick frankly it's really hard for the politicians. To do anything forcefully -- time politicians make decisions -- after the crisis. There's no proactively to react the world Wall Street