Why the Market is PlungingAugust 4, 2011
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RUSH: Why am I here today? This always happens. Every time we have one of these national holidays, nobody tells me. I don't keep track of national holidays. Obama's birthday. I don't keep track of national holidays, nobody ever tells me, and I end up being the only person in the country working. Why is the Dow going down? Let me tell you why the Dow is going down, is because there's a story out there that said that Bernanke and Obama are out of bullets. There's a story that says Bernanke and Obama are out of bullets, that they've got nothing left in the quiver, no more tools, nothing they can do to create jobs or grow the economy. And so the market is interpreting that as, uh-oh, there ain't gonna be a QE3. That's what that's all about.
See, you ask, and I have all the answers. It's a typical market fluctuation, down 294 right now. People are losing their life savings. This is not new. This has been going on ever since Obama was immaculated. They're not only losing their jobs, they're losing their life savings and their kids have lost their life savings. Their fetuses have lost their life savings. Their thoughts of future children who haven't even been conceived yet have lost their life savings and their chance to earn anything before they save it. That's what Obama means.
The scariest thing, folks, I have to tell you, the scariest thing Obama said during his birthday fundraiser last night, he said, "It's been a long, tough journey. But we have made some incredible strides together. Yes, we have. But the thing that we all ought to remember is that as much as good as we have done, precisely because the challenges were so daunting, precisely because we were inheriting so many challenges, that we're not even halfway there yet." So he's not even halfway done killing the economy. That's scary. Now it's down 307. He's not even halfway done killing the economy. I don't want to think about what this country will look like when he's all the way there. This guy obviously has a new role model, Robert Mugabe, Zimbabwe. The next thing to look out for is for Obama to take the farms. Well, that's what Mugabe did. He took the white people's farms, the only place that had any money.
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RUSH: Okay, now, we are borrowing 100% of our GDP. You've seen that story. That makes us Italy. It also, ladies and gentlemen, focuses us on the European zone, the euro zone; where we got Spain, we got Greece, we got Italy, we got an absolute mess, and that is also -- Snerdley, you asked me, "Why is the market plunging?" What's happening in the euro zone is also one of the reasons why our market plunging. Plus, we're borrowing a 100% of our GDP now, plus the story that Obama and Bernanke are "out of bullets," don't have any more. (snorts) Which is... (interruption) Well, we are. We're borrowing 100% of GDP. (interruption) That's what it said! (interruption) What do you mean it's impossible?
It's what it said out there on the Drudge Report. (interruption) What do you mean, it's impossible to borrow 100% of GDP? (interruption) It was easy! Have you seen our debt, for crying out loud? It's $17 trillion is the new national debt?
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RUSH: Here's the Wall Street Journal, ladies and gentlemen, on what's happening with the stock market. "US stocks tumbled to fresh session lows as noon approached, pushing both the Dow Jones Industrial Average and the Standard & Poor's 500 index into correction territory, as worried investors staged a broad flight from risky assets.
The Dow slumped 351 points, or 3%," midday. "Treasury yields hit fresh lows for the year. The benchmark 10-year notes rose 14/32 in price to yield 2.549%. In Europe --" and this is a key "-- stock markets were sharply lower amid growing fears the euro zone debt crisis could intensify as the European Central Bank failed to provide help for the beleaguered Spanish and Italian economies," meaning the European Fed didn't bail 'em out.
Now, the European Central Bank, despite not bailing out Spain and Italy, they did have to pump a bunch of cash into the system today to keep it operating. They also borrowed money from us, if you can believe that, because the European Central Bank has access to the Fed window. The European Central Bank can go to the Federal Reserve and get money. We don't have it. We're printing it. Snerdley, you're asking the right question. Where are we getting the money to loan? This is all a sick horror movie joke. So the euro zone is a failure. Got 17 countries, no common allegiance. They tried to replicate the United States by doing the European Union, and it's a mess. Germany is the leader, they're failing now, too, it's ugly. We bailed 'em out in 2008. In the midst of our own financial crisis, we bailed 'em out in 2008. So, anyway, what's happening in the euro zone is also a factor in addition to everything else that I have mentioned previously on today's program.
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RUSH: Charlotte, North Carolina, you're first. It's great to have you on the EIB Network. Hello.
CALLER: Hey, Rush, quite an honor. I loved you on The Haney Project, by the way.
RUSH: Well, thank you very much.
CALLER: Hey, I got two quick things. One, you got Paul Krugman out there (snickers), so-called economist, and with our debt now 100% of our GDP --
RUSH: Yeah.
CALLER: -- history tells us that no modern economic society has ever sustained itself, they've all failed -- history has proved it -- when you've reached 100% debt to your GDP. So the guy is just a nutcase, but what I wanted to talk about --
RUSH: Yeah, but he thinks we're not spending and borrowing enough.
CALLER: Ah, he says that that isn't an issue (laughs), that debt doesn't matter, and this guy's teaching the young minds at Princeton University that this is an economic theory that's, you know, plausible? But what I want to talk about now that we've gotten past the whole debt debate, and you see "Zsa Zsa" Huffington and Chuck-U Schumer and all these people now pushing the whole jobs issue, that now we can focus on jobs?
RUSH: Yeah.
CALLER: You get Rattner on MSNBC with Joe Scarborough, and he's talking about how we've got the lowest GDP-to-income ratio, we've got it 15% and they want to raise revenue -- and you know how they want to raise revenue -- and you start talking about jobs, and what their policies are; and what I was hoping you could do over the next few months while we've got the most important election coming in our history, is to expose the administration's regulations and policies they put forth. You know, you hear from Steve Wynn and the founder of Home Depot saying that this administration, with its regulations and policies, is the biggest wet blanket to capitalism that they've ever seen. But nobody ever really specifies, other than Obamacare, what the regulations are and what their impact is on job creation, and I was hoping that in the future, near future you could start delving a little bit more into this.
RUSH: You know, I have a story in the stack today that in just the last month or so, there's $9.5 billion in new regulations. President Obama just keeps issuing them as executive orders -- and you're right, nobody does explain 'em or define them or even report this. This story doesn't say what they are, either. It just that they're being issued.
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RUSH: Booker T. and the MGs and some Green Onions. Hey, the stock market is down 300. It's hovering at 292. Didn't they tell us that the stock market would do exactly what it's doing if we defaulted? We had to prevent default. "Oh, my God, we can't default. The stock market will plummet. People will lose their life savings. Interest rates will skyrocket." Isn't the stock market doing exactly what we were told it would do if we defaulted? Isn't it? Lied to yet again. We had to do the deal. We had to do the deal. We had to avoid default. The Republicans are acting in total fear, "We can't default, we will be blamed for it, the stock market will plummet, oh, my God, oh, my God." Well, we got the deal, most Americans disapprove of the deal and the stock market's plummeting. We may as well default. It's going to happen at some point down the road.
RUSH: Argyle, Texas. John, hi, and welcome to the EIB Network. Great to have you with us, sir.
CALLER: Thank you, Rush. As a Tea Party conservative, I've noticed how the names we've been called are getting worse and worse, and I think it's time we turn the table, and the "tax-and-spend liberal" no longer really meets the requirement because they're taxing me. They're gonna tax my daughters, they're gonna tax my yet unborn grandchildren. They're going after their birthday money, they're going after their piggy banks, they're going after them. They're financial pedophiles.
RUSH: They are!
CALLER: That's what we're talking about: Financial pedophiles.
RUSH: "Financial pedophiles," addicts, criminals, sticking us up. I like it. Exactly right. These people are sick. They are sick. They are destroying themselves in the process of all this, too. This is one of the things I don't intellectually understand. I don't understand how it is they think they are going to be immune from all this destruction. If they destroy the US economy, what do they think they are going to end up with? What job are they going to have or do they expect not to work, that the government is going to pay them not to work, and they're gonna be living in a hammock the rest of their lives? What do they expect is going to be their role in a destroyed private sector?
CALLER: Thank you, Rush.
RUSH: All right, glad you called. Rob in Westminster, Maryland, hello, sir. Great to have you with us.
CALLER: Hello! What I wanted to comment on was the comment you had where the Democrats were concerned that Obama is running out of bullets to stimulate the economy. In fact, he's got a huge arsenal of weapons that he could turn the economy around overnight. If Obama would simply remove the sand that his administration has thrown into the gears of the American economy, it would take off immediately. He could cancel the EPA regulations, the consumer protection and OSHA regulars. He could release the pending oil and gas drilling and coal mining permits that he refuses to process and issue.
RUSH: Yep.
CALLER: He could cancel Obamacare.
RUSH: Well, exactly. You know, I'm glad you're mentioning because, of course, there's all kinds of ammo. There's all kinds of commonsense ammo, and that is: Get Washington out of people's lives.
CALLER: Exactly.
RUSH: Your points are well made. The fact that they think they're out of bullets, the fact that they think that they're outta ammo -- and including Bernanke in that -- what that tells me is that they don't really think that they can get away with another stimulus, that either the markets won't accept it or the country won't accept it or it won't work. Something is stopping them.
CALLER: It's not bullets they're out of.
RUSH: If we believe them. I'm not sure I believe them, by the way, when I hear them complain that they out of bullets.
CALLER: No, no. There's simply out of the ability to continue to scam the way they have in the past few years with the help of the media.
RUSH: Yeah. Yeah. All right, good points. I'm glad you called, Rob. Thanks very much. Yep, we got time for another, and it is Herb in Orlando. Welcome, sir, to the EIB Network.
CALLER: Well, good afternoon, Rush.
RUSH: Hi.
CALLER: I have a question about Social Security. All it is is just a government-run annuity. You pay in for a bunch of years and then you reach a point where you start drawing out, and some actuary can easily figure out how much you need to pay in in order to cover your withdrawals. So why don't we just raise the SocSecurity tax to cover the future expenses?
RUSH: Um, you realize...? (chuckling)
CALLER: I mean, it's just an insurance plan, and we're not gathering up enough premiums.
RUSH: Yeah, and why is that?
CALLER: Why is that? I mean, they'd rather talk about how it's going broke and come up with these unacceptable things to allegedly fix it when all they need to do is be honest with the American people and say, "If you want this insurance plan, we're gonna have to charge you enough to cover your ass."
RUSH: Well, see, the problem with that is that the American people think that all of their working lives they have been paying for their Social Security.
CALLER: Well, they haven't.
RUSH: Now, if you run and tell them, "Oh, by the way, all those contributions and all those FICA deductions? Guess what? It's not there."
CALLER: Well, it's not so much it's not there, just not enough.
RUSH: Oh, it's not there.
CALLER: Oh, that's true.
RUSH: On a case-by-case, a person-by-person basis it's not there.
CALLER: That is actually correct. There's not money.
RUSH: They have been using that money to balance the federal budget or to offset the deficit and make it appear smaller. That money is long gone.
CALLER: That's correct.
RUSH: It's nothing but a bunch of IOUs now.
CALLER: Well, but I also have sort of a solution to that. We've got this unfunded liability of some $60 trillion or some outrageous number.
RUSH: Yeah.
CALLER: In addition to raising the Social Security tax to cover enough to pay people when they start withdrawing, we also need to tack on another small percentage for a hundred years until we pay down that unfunded liability.
RUSH: Well, I don't know why I didn't think of this! (laughs) Raise taxes to cover $60 trillion unfunded liability. Simple. Gee, folks, I'm sorry. I've been letting you down here.
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