Interesting free wheeling conversation:
Pete Peterson on Charlie Rose
June 9, 2008 3:30am by Barry Ritholtz
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Great video. Refreshing. Scary.
Thank you very much for this contribution Barry.
I really enjoyed this video. A little about me : 24 | Masters in ECE | working/saving/living… Wondering wtf is wrong w/ America.
This guy is America…. His vision/His Dream.. His plan is genuine and I am sure it will succeed. Many in America such as myself are aware of the problems facing this nation and our future. However, we have no voice. We have no leader. We are being drowned by the stupidity, drowned by the consumption, and ignorance in this nation.
I was just coming from SanFran to SanJose this weekend and happened to be a train car in which a guy began a conversation about the economy. From his attire, he didn’t seem to be the most wealthy individual on earth but he spoke facts and made sense… Cutting it short, people laughed.. People said, I don’t give a shat and text’d away on cellphones… What have you. This is your average American… Just wanting to have a good on fun party and they don’t really care about how it is ran or who is getting screwed or if they themselves will be screwed by ‘partying’….
The problem with this nation is that there are no leaders. There are no true individuals who care about things beyond themselves. So long as a person can do what they please… Live how they please…. they don’t give a rats arse about much else. Just let me be happy and leave me a lone. Even “leaders”.. Most are concerned about appeasing their followers or their position of power… Not their role and their duty of being a true leader.. Saying what is right and pushing people to pursue what is right now matter how painful it is to hear. The logical, rational, tolerant, law abiding, and careful individuals have no voice in America….
America laughs at sensical arguments… America laughs at education. America laughs at anything of substance and fundamental Value.
From my observations, we have reached the point of no return. People love a come back story and so do I but there really is none anymore. I laugh when I hear the financial pundits go on about $$$ $$$, equation this and that… And ignore the sociological and psychological aspects.
Get a true leader who comes on air and tells Americans to get their shit together.. A real leader who shows them the books and says “look .. this is a f%#$ mess and you made it this way”… “It’s time to get on top of this”… A real leader. We are doomed. The thing about progressions is a wonderful thing called momentum and all signs point to the momentum being pushed towards a downturn.
Barry, At my young age it saddens me when I think about this future. It saddens me to have to get up everyday and know that in 5-10 years this nation is doomed. It saddens me that I want more than anything to leave this country. Why? Because when I look around I see nothing of substance, nothing of real value, and intelligence often.
I see a great deal of misdirected sheep following the next cool shepherd. I see the new shepherd leading them over a cliff and those yelling ‘stop’ are being trampled by the mad dash…
I am doing fine $$$ wise and invest and trade every now and again… But that’s not my passion. My passion is in engineering.. Solving a problem. Being a nerd. However, given the current economy you have to moonlight as a trader just to stay afloat. If this is what people call the ‘American Dream’ I feel misdirected and :(.
America will be back on track when your average American gets their head out their arse. Sometimes a recession is a good thing as it makes people aware that they are off track. I find it hilarious that the lesson ‘falling off a 250cc bike at 10mph’ is being removed while handing the reckless driver an 1000cc bike.
I am not a pessimist or a doomsdayer but I hope when the next lesson comes it strikes hard because to be a believer in fundamentals/logic/rational it is sure getting hard :(
*End of rant :(
What differentiates Peterson’s activities from past high-minded efforts is that he’s identified a major leverage point with regard to Congress. When he says a Constitutional convention may be required, what he’s really talking about is redrawing the districts and making individual members actually compete for their seats rather than rely on all the perks of incumbency and the power of special interests. High-minded and smart.
Scintillating??? I hope none of this is news to anyone.
Jombi–
You sound like one of the smartest young people I’ve met or known of in a long time. It is sad, what’s happening to this country. But it’s been seen here before, the ’20s, in the 60s. Somehow, things have always seemed to work out in the past. I have my doubts about this time, like you, but I hope we’re wrong. We can only observe carefully and make our decisions as events unfold. Good luck to you.
super interview…thanks
two questions
why is it ok to be comfortable with china and especially their government banks…and the friendly middle eastern sovereign funds,to invest in US banks but when it comes to our government owning shares (capitalizing) or nationalizing a bank like britain did with black rock, many conservatives scream “socialism”
also… ok Social security and medicaid (which is a bigger liability) are these huge unfunded liabilities. But when some suggest that as an alternative to fed IOUs to itself the SS trust fund should be invested in the stock market and corporate bonds, free market traders yell NO, No, no.
the so called conservatives can’t have it both ways…oh wait a minutes sure they can…break the system and eliminate the social safety net…i get it.
Two fastest ways to reform government: (1) absolute cap on campaign spending (let them spend what they want in the primaries, but the election – be it local, state or national – gets capped), and (2) three words for earmarks: line item veto. Obama’s use of high flying, media driven public relations and massive rallies with rock bands is pathetic. The very fact that this guy will not adhere to the spending limit ought send a wall of skepticism screaming across the electorate. My personal fav: Obama will quell the rising seas and single handedly reduce global carbon emissions….oh brotha.
I would love to hear about Ray Kurzweil’s “non-linear thinking” and the exponential viability of 70 trillion $ biotech and nano to out grow the debt payments. Exponential thinking at the end of the genome project hitting the deadline after all is the common example. It is a possibility.
Ray says we’ll have desktop replicators in some of our lifetimes!
I think a lot of us value Concord Foundation and Running on Empty bankers.
Their game plan is to gin up a false crisis, propose an unnecessary “fix”, then when the fix causes what was a perfectly fine program to collapse, they say it was too far gone to save, and we told you so, all while netting themselves a tidy profit by skimming off the top.
It’s a classic pump and dump scam.
Look, this cannot be any plainer. Even if one accepts the asinine economic assumptions of the current administration’s appointees as Social Security Trustees (all who held the position that Social Security should be scrapped and given to Wall Street before they were appointed), projections by the Congressional Budget Office indicate that Social Security can pay 100% of benefits through 2052, then direct Social Security revenue will cover about 80% of the cost of benefits thereafter (this assumes, just as one example, that you accept the trustee’s economic opinion that GDP over the next 75 years will be LESS THAN HALF what it was over the previous 75 years).
In the present day, with the U.S. government outside of Social Security, revenue covers only about 68% of total government spending. So FORTY-FOUR YEARS FROM NOW, even utilizing their twisted economic assumptions, Social Security will be in MUCH better financial shape than the rest of the U.S. government is TODAY.
Our long run federal deficit and debt problems stem from plummeting federal income tax revenues as a result of failed tax rate cuts for the Rich & Corporate, not Social Security. Once again, Social Security is more financially sound today than it has been throughout most of its 72-year history.
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Peterson and Rose are both wondering why the savings rate is negative for the past 10 years. Why is it so low?
High inflation would prompt people to save less. So would low interest rates on savings accounts. So would low interest rates on US treasury bonds (thanks to the foreign capital inflow that the bureaucrats in Washington are addicted to). A rotten return on the US stock market would help explain why the savings rate is low. In part, savings were destroyed. Savings shrink because people see the stock market is in decline and they don’t buy.
Their savings rate is down because taxes are too high. The government takes the taxes to pay for foreign aid and free health care for illegal aliens.
The real inflation rate is a lot higher than the BLS inflation rate. Per capita income has not kept up. People are worse off than they were before 9/11.
Unprecedented illegal immigration has depressed real wages and pushed up corporate profits.
Interesting that Pete compared the number of MRI machines in the U.S to Canada. Does he understand that Canada has a Single-payer health-care system run by the government? Isn’t that an entitlement that he was whining about?
Sorry, but I think he suffers from cognitive dissonance.
Want to cut the cost of health-care in this country? Cut out the middleman (insurance companies). Want people to put money in savings? Pay them a decent living wage. Want to reduce the amount of money leaving the country? Start investing in renewable energy resources.
Peter Peterson is a hitter and apparently also a great guy. However as is typical of older management his economics are weak.
1) Why should we save more when interest rates are 3-5% and then taxed at 40% rates?
2) Is America wealthier or poorer than 10yrs ago? 20 yrs ago? Does this have anything to do with the “savings rate”?
3) Blackstone is a massive debtor (through leveraged deals) yet you, the firm, and your clients seem to be doing pretty well? Should you “save more”?
—
Similar non-sense on the entitlements front. I am not “in debt” because I expect to retire nicely yet I have little in savings. I have 30 years, incomes tend to skyrocket (analogous to the growing US economy). Why should we put future liabilities on the books today?
If we just increase the eligibility age for SS and Medicare by 1-month per year going forward — every one of these problems disappears.
1-month / per year! (thats really slow…)
M
Very interesting interview…
I have respect for this guy because I think he does try to call it as he sees it.
But it is true — Petersen and Rose scratch their heads, “Why is no one saving?” Have they opened up a savings acount lately? You get 3% a year. It’s retarded. Cash money is the scarcest thing in the world right now and yet I get 3.5% on a 6 month CD? Greenspan and Bernanke have been pummeling savers into submission for a decade…
I also thought it was hilarious when Petersen started talking about how Bill Clinton and Robert Rubin balanced the federal budget and Charlie Rose wouldn’t let him finish — literally cut him off. We dare not talk about how the most fiscally conservative President of the last 40 years was a democrat! Lol…
Jayson Mayland
you are absolutely correct about Petersons comment re Clinton / gore doing their part balancing the budget,..
AND Charlie Rose cut him off…very noticeable
Right on Barry!
It was not a balanced budget. That’s another fucking lie you Clinton liberals keep trying to foist off on the nation. The Social Security money collected that exceeded required outlays was used for general operating fund purposes. Nothing new in that corrupt practice, but what really chaps my ass is that in 2000, in the ultimate display of hypocrisy, we had that lying bastard Gore running around espousing his Social Security “lockbox” as an antidote to Bush’s privatization proposals. What a sick fucking joke.
I’m sorry that interview is the biggest bunch of malarky I’ve seen in a while.
How exactly does the issue of sovereign wealth funds buying up US financial corporations have anything to do with the current account deficit? sure, sure there are macro economic connections like the exchange rate, but that is not enough to explain why these companies need to be bailed out. The real reason, the one they don’t say, has absolutely nothing to do with the spending and saving habits of average citizens, or of the US government, it is pure and simple — the US managerial class has screwed the pooch. They have engaged in a long term sustained attempt to 1) ‘manage’ without knowing anything or caring about long term business issues, rather relying on financial wizardry to cover over problems with short term gimmicks, and 2) sustained manipulation of the US political system to prevent oversight, and ensure that the US government is insolvent and unable to act in an effective manner. So Peterson seeming ‘straight shooting’ was nothing but the most convoluted spin job.
There is absolutely no way I would watch an hour of that fawning, self serving, ‘look how smart I am’ crap.
The fact that the US is at a juncture where foreign capital is able to buy up the largest and most powerful corporations (other than oil) is a sign that the managers of Peter Petersons era were just as incompetent as the fools that lived on negative savings because housing would go up forever. That doesn’t now make him a font of wisdom. That makes him a lying asshat. He and people like him control this government, and have been manipulating the US political scene in favor of ‘free market economics’ — whose real purpose is precisely the destruction of the federal government — for 30 years now. All the fawning of charlie rose does not change the fact that these guys are responsible for what is happening, not the fools buying houses at 1%. The FEDs move to 1% can be clearly traced to between Greenspan and the White House, and the obvious purpose was to prop up the administration politically — and it worked like a champ.
I’ll start believing this oh so serious and sane commentator just as soon as he starts talking reality.
In the meantime, hasnt the Blackstone IPO turned out to be another classic financial industry con? I seem to recall some real issues there but haven’t kept up.
What a joke!