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Former Reagan Budget Director Despairs: ‘I Wouldn’t Touch the Stock Market With a 100-Foot Pole’
The Blaze ^ | 03-03-12 | Becket Adams

Posted on 03/03/2012 2:52:46 PM PST by Lazlo in PA

He was an architect of one of the biggest tax cuts in U.S. history. He spent much of his career after politics using borrowed money to take over companies. He targeted the riskiest ones that most investors shunned — car-parts makers, textile mills.

That is one image of David Stockman, the former White House budget director who, after resigning in protest over deficit spending, made a fortune in corporate buyouts.

Former Reagan Budget Director Despairs: I Wouldnt Touch the Stock Market With a 100 Foot Pole

But spend time with him and you discover this former wunderkind of the Reagan revolution is something else — a scared investor who doesn’t own a single stock for fear of another financial crisis.

Stockman suggests you’d be crazy to hold anything but cash now, and maybe a few bars of gold. He thinks the Federal Reserve’s efforts to ease the pain from the collapse of our “national leveraged buyout” — his term for decades of reckless, debt-fueled spending by government, citizens, and companies — is pumping stock and bond markets to dangerous heights.

(Excerpt) Read more at theblaze.com ...


TOPICS: Business/Economy; Crime/Corruption; Front Page News; News/Current Events
KEYWORDS: collapse; dow; stockman; stocks
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To: dalereed; jwalsh07; Freedom_Is_Not_Free

The original poster was talking about a 50 year period. Sorry, but over a random 50 year period (pick one... any one....), as an individual investor, you’re going to win if you buy and hold stocks. It’s not a “ponzi scheme”. Its betting on the ingenuity of the American people and American business.

Also, since 2000 you haven’t done too well... unless you bought AND HELD dividend paying stocks. In that case you’re likely doing just fine.


41 posted on 03/04/2012 5:46:26 AM PST by bigdaddy45
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To: gorush; Rusty0604

I don’t think it was Stockman who invented “voodoo economics.” He was an ardent supply sider and, as OMB director, worked hard to pass the Reagan Budget (the Gramm-Latta Budget).


42 posted on 03/04/2012 6:07:09 AM PST by RoosterRedux (Newt: Drill Here, Drill Now, Pay Less. Barack Obama: Have Algae, Pay More, Be Weird.)
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To: Lancey Howard
Can you imagine the run on the stock market (and probably the banks, too) if most people were NOT clueless?

What is interesting is that the markets are controlled by institutional investors...and they too, just small retail investors, appear to be clueless.

You can see their cluelessness when the markets rally over a prospective EU solution to the Greek conundrum. Any sensible person realizes, there is NO sense to any solution that tries to prop up socialism.

Socialism must die for any economy under its thumb to survive or to re-emerge.

43 posted on 03/04/2012 6:12:54 AM PST by RoosterRedux (Newt: Drill Here, Drill Now, Pay Less. Barack Obama: Have Algae, Pay More, Be Weird.)
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To: Lazlo in PA; Kartographer

Bookmarked for further study.

@kartographer - of possible ping interest?


44 posted on 03/04/2012 6:42:26 AM PST by EnglishCon (Gingrich/Santorum 2012.)
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To: Freedom_Is_Not_Free

Excellent post!


45 posted on 03/04/2012 7:32:05 AM PST by mojitojoe (American by birth. Southern by the grace of God. Conservative by reason and logic.)
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To: dalereed
>>Real Estate, purchased without a mortgage!

Bingo. And the ability to make it productive - like real Americans have been doing for >200 years whilst dishonest merchants wearing LyLons and neck ties tried to steal it from them.


46 posted on 03/04/2012 10:20:44 AM PST by LomanBill (Animals! The DemocRats blew up the windmill with an Acorn!)
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To: bigdaddy45

1928-1968, when taking inflation into account, the market was flat.

Peak to trough from 1928-2008, was a gain from 5k to 6.2k, or about 20 percent.

Does that strike you as a particularly good return? That’s 80 years, returning 20 percent. Until 1995, the market was the same then as it was in 1928, so 67 years with a return of zero.

You’d have earned more money cashing out and letting compound interest do it’s work than investing in the stock market.


47 posted on 03/04/2012 10:32:22 AM PST by LeopoldvonRanke
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To: Lazlo in PA

It is indeed scary.

1. MONEY CREATION The Federal Reserve creates money out of thin air, actually by simply entering digits on one of their special computers and making it available to investment bank members and others that they have given access.

2. US DEBT BONDS OR STOCK MARKETS The members in 1. above put the Fed’s thin air money into buying US Debt (T-Bills, Treasury Bonds etc.) OR into index stocks. The latter is done to pacify the retirement accounts, keep the boomers feeling somehow secure otherwise the political sh*t will hit the fan.

3. DEBT CEILING EFFECTS When the Tea Party gets uppity and opposes trillion dollar increases in US Debt, the members of 1. above react by shutting off the spigots of money to the index stocks causing the markets to spiral down and create panic. Boomer retirement accounts take a hit and boomers groan. The financial and state controlled press reacts by blaming the TP for causing the scare and making them the scapegoat for Boomer retirement account reactions.

4. TEA PARTY CAVES And the stock bubble resumes.

Right now any different action politically is suicide. If rational people formulated and implemented policy to stop this madness, then panic and mayhem would ensue. Such panic might be temporary, maybe a year or so but no one in politics with the exception of Ron Paul is willing to do anything about it and I am not sure Paul would do anything either but it does not matter, he will never get the chance.

Newt Gingrich could be clever and pick his fights strategically. I am sure he would chase a vision of growth first and then get the levers of the financial powers back into a responsible position. At least he would try.

As for me I see nothing short of Revolution, meaning people so much in a tizzy that they start radical movements such as Constitutional Conventions to effect needed changes.

Unfortunately in these situations those that have knowledge of history, know what must be done, are aware of what is wrong, such people can do nothing until it stinks so bad, I mean the height of stink so bad that even the Maxine Waters, the Shiela Jackson Lees and all these types run from the stink and sit it out.

Think of stink when Giulani defeated Dinkins or when Lingle nearly defeated Cayetano and ultimately won against Hirono. It doesn’t matter if the stink was or was not caused by the democrats, it matters that voters only react to it.

I believe Ronald Reagan would never have won the presidency if Carter had a better economy to run on, meaning less stink.

So stink is what we need, unfortunately.


48 posted on 03/04/2012 11:03:45 AM PST by Hostage (The revolution needs a spark. The Constitution is dead.)
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To: Hostage

[radical movements such as Constitutional Conventions to effect needed changes.]

Great idea. Let’s let the mob who elected comrade chairman Odumbo rewrite the constitution. NOT.


49 posted on 03/04/2012 12:19:15 PM PST by LomanBill (Animals! The DemocRats blew up the windmill with an Acorn!)
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To: bigdaddy45

“Its betting on the ingenuity of the American people and American business.”

Which might not actually be a good bet anymore now that the people, the businessmen, the corporations, the innovators, the inventors and the the producers are all being crushed under the fascist heel of Obammunism. If Obama gets four more years, the United States will be unlikely to ever obtain the greatness that preceded Obama. We’ll slowly (or maybe not so slowly) decay into a lawless citizenry of poverty and despair until the entire edifice crashes in a multi-trillon dollar heap of borrowed dollars conjured out of thin air by the Federal Reserve and exchanged for equally large heaps of equally worthless Treasury bonds, for Congress, regardless of the party in power will be unable to restrain itself from spending impossible amounts of money that no one has.


50 posted on 03/04/2012 12:35:33 PM PST by catnipman (Cat Nipman: Vote Republican in 2012 and only be called racist one more time!)
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To: LomanBill

You obviously haven’t studied how it’s done else you wouldn’t be showing your ignorance.

Start here:

http://online.wsj.com/article/SB124044199838345461.html


51 posted on 03/04/2012 12:59:04 PM PST by Hostage (The revolution needs a spark. The Constitution is dead.)
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To: bigdaddy45
Also, since 2000 you haven’t done too well... unless you bought AND HELD dividend paying stocks. In that case you’re likely doing just fine.

My mother has held a dividend paying stock since 2000. Right until 2008 the dividends were great but nothing since then. The stock? Oh, only Bank of America.

2000 price, $24.34. Current price, $8.13. Yeah, her dividends were just peachy but she lost her ass on principal. If she listened to me and pulled everything out in 2006 when I suggested she do so, she would have saved over $400,000. Instead, she lost her ass.

52 posted on 03/04/2012 1:13:51 PM PST by Freedom_Is_Not_Free (The only priority: Repeal Obamacare)
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To: LeopoldvonRanke

Compound interest... or reinvesting dividends. Your figures don’t take the compound interest of reinvesting dividends into consideration. To suggest that the stock market is a “ponzi scheme” is quite frankly something I’d expect to read on democratic underground. I’ll bet on the US economy and the US worker long term any day.


53 posted on 03/04/2012 1:16:48 PM PST by bigdaddy45
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To: Freedom_Is_Not_Free

Well no kidding... she held ONE dividend paying stock. And she picked a loser. Who’s fault is that? I said STOCKS. Plural. A diversified portfolio. Its investing 101.


54 posted on 03/04/2012 1:18:46 PM PST by bigdaddy45
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To: mojitojoe

I just wish I could wake people up to help them. We are in a secular bear but people won’t listen to me. It is like when we were screaming that housing was in a bubble and values were certain to crash. People just refused to listen. The shysters on CNBC say “best time to buy ever” and then think I am the idiot because all of these experts are saying to buy.

It is very frustrating to try to help people avoid taking a big loss when they won’t listen. I’m not saying they need to let me decide for them, and I’m not saying they would agree with my conclusions. I’m saying I can’t even get them to let me show them the underlying fundamental information so they can make a more informed decision.

It is supremely frustrating.


55 posted on 03/04/2012 1:20:57 PM PST by Freedom_Is_Not_Free (The only priority: Repeal Obamacare)
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To: juno67
People forget just how “off the reservation” he was.

Whose reservation..the folks that didn't want to slash spending?

56 posted on 03/04/2012 1:24:08 PM PST by mac_truck ( Aide toi et dieu t aidera)
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To: bigdaddy45

I haven’t even taken into account the fact that the government lies about their inflation numbers too since 1996 or so to make the market numbers look even better.

Yes, back in the 80’s your strategy made sense, but it hasn’t for quite some time now.

Where is the real economic growth going to come from?


57 posted on 03/04/2012 1:30:53 PM PST by LeopoldvonRanke
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To: Hostage

I understand how it’s done numb nuts.

There’s nothing wrong with the present constitution other than it’s being ignored.

Who you planning on having enforce your new and imroved edition, suuuper genius?


58 posted on 03/04/2012 2:28:45 PM PST by LomanBill (Animals! The DemocRats blew up the windmill with an Acorn!)
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To: TweetEBird007

“He sold off nearly 90% stock holdings and put about 30 something % in property.

And, how did that work out?

Just wonderin.


59 posted on 03/04/2012 2:30:41 PM PST by GladesGuru (In a society predicated upon freedom, it is necessary to examine principles."...the public interest)
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To: LeopoldvonRanke

“Real” economic growth is going to come from the fact that our population keeps growing. More people needing more goods and services. Unlike Europe, especially Western Europe where populations are stagnant or shrinking. We are the engine of innovation and ingenuity in the world. Any new product of significance is generally developed in the US.

I think Obama is the worst President we’ve ever had. I can’t wait till he’s gone. His administrations policies are bad for business, and bad for the country. But in spite of that, I remain bullish on America. Thats what differentiated Reagan. He was perpetually bullish on America. I refuse to buy into the doom and gloom that our best days are behind us. We will get past this.

A decent chunk (not all) of my money is in the stock market. It will go up, it will go down. I started investing in earnest in 2000, and in spite of everything have done just fine. And for anyone with a long view, the US stock market is the best place for one to invest. If you disagree, thats fine. But going back to the original post, anyone who thinks that US stocks are a “ponzi scheme”, and haven’t been a good bet over the past 50 years is just flat wrong.


60 posted on 03/04/2012 2:50:38 PM PST by bigdaddy45
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