Rush Limbaugh

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RUSH: Democrat Governor David Paterson, boy, wait ’til you hear about what this guy’s budget and tax increases have planned for people that live here. It is a recipe for disaster. He’s gonna tax music downloads to your iPod. They’re going to tax radio. We can’t figure out how. It doesn’t specify in the story, but it’s gotta be taxing the sales of radios, such as in cars. Because how do you tax what people listen to on the radio?

They’re going to tax cable television reception. They’re going to tax satellite reception. They’re gonna tax everything! They’re gonna tax sugar-filled soda pop. They’re going to tax cigars, gonna tax cars, yachts, airplanes over half million dollars. Yachts over $200,000? There’s no such thing as a yacht that cost $200,000. Dinghy’s today cost $200,000. Maybe some fishing boat, but a yacht? I guarantee you, a person who owns a $200,000 boat does not think it’s a yacht, and is still dreaming of having a yacht. We know what happened the last time they did all this. They drove people to New Jersey and Pennsylvania to buy things and they shut down the yacht industry because the yacht workers got laid off — and they’re not doing much cutting of spending on the budget side. It’s just breathtaking, and the people here cannot afford this.

They end up doing all this as we head into a genuine economic downturn. I’m beginning to think we haven’t even hit the tip of the iceberg on this yet, based on some things that I saw. When I got back from New York last night I started doing a little show prep for today’s program, I saw some of the most outrageous requests. All these universities with all these endowments are now trying to get their hands out and into the TARP funds, sending Obama letters asking for money, ’cause if they don’t get it they won’t be able to build their Medical Center or build whatever. Well, join the club! If you don’t have it, you don’t have it. If you don’t have it, go out and earn it. Run around asking everybody for money. I’m getting such a sour taste in my mouth about fundraisers. The whole notion of getting all kinds of accolades and credit for running around with your hand out and saying, ‘Please give me this. Give me that.’

And then, when you do that… These people that spend a million dollars on a charity party to raise $100,000, and they get themselves into the paper for having the nicest clothes and what great citizens they are, how they give and give and give. Hell, they spend a million bucks on a party and raise a hundred grand? Big whoop! And this has come to light because so many charities have been wiped out or severely hurt by this Madoff scandal. You know, I’m convinced, folks (I have not lost my place on Caroline Kennedy, by the way), that with this never-ending and burgeoning, growing-by-leaps-and-bounds credit in our society — credit card credit, personal credit; all of these banks, lending institutions, stockbrokerages, whatever; borrowing and borrowing and borrowing with a 30-to-one leverage ratio meaning for every dollar you have, you owe 30?

It’s absurd, and what has all this done? Effectively, it has raised prices of things beyond what their actual value is, if people had to pay the full bill to buy something. I know in certain instances with cars and automobiles, you have to finance them. You can’t go out and just, you know, plunk it down. Well, some people can, but the vast majority of people can’t. We, as a society, decided long ago people are going to have houses, so we came up with a mortgage. But you see what’s happened to that. All this stuff is finally coming home to roost. The point is all these people and all these institutions who thought that they had all this money and we thought they had all this money, they don’t have it, and they never did have it! What they had was a bunch of borrowed money that they had to pay back with ridiculous leverages and so forth. Man, it’s just scary.


RUSH: I’ll get back to this financial stuff in just a second, but it got me worried because nobody has any money. The people that we all thought had all the money don’t really have it, and we’re finding this out each and every day. Some great big, ‘Prominent NY Law Firm to Seek Bankruptcy — A prominent Manhattan law firm scandalized by charges that its founder masterminded a massive fraud will seek bankruptcy protection, according to a receiver appointed to run the firm. In a letter to a federal judge, the receiver also predicted founder Marc Dreier will soon seek protection too. The Securities and Exchange Commission,’ which is about worthless. They sat by while this Madoff thing was going on. They were told that people feared the guy was running a Ponzi scheme; they looked into it and said, ‘Nah, we can’t find anything.’

People looking at the records now find out the guy was making it all up. He recorded sales, or trades, of Apple Computer in a specific year at a hundred dollars per share. Apple did not trade at a hundred dollars per share during the date range that Madoff said that he was buying was 90 to 92 bucks. But they didn’t even look. They didn’t even look. So now the SEC ‘has been notified [that] the receiver, Mark Pomerantz,’ is going to seek bankruptcy protection. ‘The mid-size firm, Dreier LLP, has represented celebrities including retired football star Michael Strahan and … publishing executive Judith Regan. Dreier’s lawyer has said his client would cooperate fully with the court-appointed receiver overseeing his assets.’

This is something that I think what it commonly referred to as average Americans, the people that make this country work, they have instinctively known. All of this massive, massive wealth that’s being reported — people with four and five houses and all stuff — there is something instinctively something about it just hasn’t seemed right and now we know what’s not right about it. They never had the money. It’s all leveraged or borrowed, and now all these institutions, universities and so forth that claim they can’t go on now, it’s… Everybody happens to be failing at the same moment and we’re bailing everything out. You find that a little curious? All these massive institutions say they can’t go on, ever since we appointed the Treasury secretary the Czar of Finances in this country.

It burns me, because the people who have not lived irresponsibly, people who have not leveraged themselves to the point of collapse if something goes wrong for just one month, they’re going to be the ones who have to pay for all this. They’re going to be the ones that they’re going to come to and say, ‘So, you’ve got money? Fine. Your pension plan has money? Fine. We’re taking it, because we’ve already printed enough. We can’t print anymore without causing a serious…’ Interest rates? You talk about a huge gamble? You talk about a huge gamble? This is about the last shot we got: giving money away! Interest rates just barely above zero. Not, of course, for your credit card. And not, of course, for your financing of a car or what have you. Now, people, ladies and gentlemen, are taking cash out of their money market accounts in banks where they’re getting, I don’t know, about two to 6% or whatever it might be and they’re buying treasuries at practically zero because they’re worried the bank won’t exist tomorrow.

What’s happened… The point I want to make about this, before I get into an even greater detail (and I’m in pretty great detail now), but health care is a great example of what happens when market forces are taken totally out of the equation. External market forces, outside of the market, then determine the cost of everything. There is no way that nine-out-of-ten people in this country can afford an average hospital stay. Somebody else has to pay for it. Now, the ‘somebody else’ is them. They just don’t know it. Insurance, whoever — Medicare, Medicaid, whatever the maze, the intricately woven web of financial deceit, whatever it is — the various entities in health care get paid, but if there hadn’t been all this run-up in debt and government involvement here, the price in medical services would have to comport with what they can afford, just as anything else in our economy does.

The price of an airline ticket, the price of a hotel room, you know, various tiers of service you can get; the kind of hotel you want to stay in and so forth. But there is no hotel insurance. There is no airline ticket insurance. Most entities, most products are priced based on what people can afford, and, of course, when you go buy a house or you buy a car, you’re not really buying the house or car, you’re buying a monthly payment. You’re not saying, ‘Yes, I can afford a $50,000 car.’ You’re saying, ‘I can afford a $2,500-a-month car payment,’ and so you’re buying money, and all of this extended and rolled-over debt with these incredible leverages at the financial institutions has led to an inflation of real prices. Health care is just an example. A Band-Aid costs 300 bucks in a hospital.

Now, that’s absurd. There’s no way a free market system would allow that. But since some entity will come along and pay it, well, who won’t charge 300 bucks? And the people charging 300 bucks for the Band-Aid are still losing money because they, too, are awash in debt; and they have to run around to people and say, ‘Please build us a cancer center here. We’ll put your name on it.’ So some egomaniac who wants his name on a cancer center goes ahead and makes the donation, gets a charitable deduction for it. We get a cancer center at a hospital, the X and X so-and-so Beatrice and whoever cancer center and so forth; and we wonder if the guy who donated the money actually had it or did he go through Bernie Madoff to make it. Well, the point is —

I’m not doing as good as a job explaining this as I want to. But I just remember growing up, my parents came out of the Great Depression. ‘Son, if you don’t have the money, don’t buy it.’ It always stuck with me. In fact, the first credit card I got was an American Express card, ’cause you had to pay it off in 30 days. You couldn’t roll it over. The only reason I have credit cards (Visa, MasterCard) is because some places don’t take American Express. I use the American Express every time, and I always have, since I first got one when I was 22. I’ve been broke a couple times, but I always vowed that if I owned anything, I was going to buy it, and I’ve been fortunate in that regard. But the fact is that the ability to buy something that costs fifty to a hundred to $850,000, does not require you to have that.

It requires you to have just the monthly payment for it. I think that has raised the real prices of things. Real prices are what they are, is what they cost. But without all this debt, without the inability of people to spend as much as things cost today, the prices would have had to have been lower. But we, as a society, determined that the American dream was owning a house, and from the moment we did this… My house I grew up in, I think, was $15,000. There’s no way my father would have bought that house for $15,000. We made the decision that we’re going to create mortgages, we’re going to loan people money and we’re going to give them 30 years, 30 years to pay it off. Well, now, what does that tell you? If it takes you 30 years to pay off something, what does it mean? It means that we have made a decision as a society that we’re going to let you have something you really can’t afford.

Now it’s got an to the point that we let people who really can’t pay a dime on these things are let in. And we gotta bail all these people out. We can’t handle the suffering; we can’t handle the tumult. There are too many expectations of prosperity in this country. But I seriously have been asking myself, ‘How much of our prosperity is genuine, and how much of it is fake and phony, based on debt that can’t be repaid and based on other elements here?’ These are troubling times, and you look at what this guy in New York — the governor, David Paterson — is doing, and it’s a microcosm of what’s going to happen with Obama. These guys are going to go ahead with their spending. Despite the trillion-dollar-plus budget deficit next year, from everything I can determine we’re going to get a trillion-dollar stimulus package. Trillion!

Now, folks, we have had in just this year, at least $700 billion of the stimulus package. We have more than that because in the spring, we had a stimulus package where everybody got what? Well, you and I didn’t get ’em Snerdley, but what was the size of the check people got? Sixteen hundred bucks? No, it wasn’t that high. Six hundred bucks. The stimulus package was 600 bucks, right? Where are we? What did it do? You know what people did? They retired some of their debt with it. What is all well and good for them, but that doesn’t stimulate the economy. We had a $700 billion bailout that cost us 150 additional billion in pork, and that was to make money, credit markets fluid again. Banks are not lending the money, and Paulson says he’s still working on that. But even if they were, where is the stimulus here? The idea that government, by spending, stimulates?

Where are they getting it? Printing it? Borrowing it from the ChiComs? Buying it from Dubai. Dubai is in the tank. Dubai’s having problems. Prince al-Salid Waladid Skyhook Bandhook, whatever, is down four billion on all this. Everybody’s getting lopped off here. Dubai’s not in the tank, but all of this, if you look… When you take the dollar off the gold standard, for example, there’s nothing backing up the dollar. When the dollar is worth, you know, whatever the inflated value of it is, when there’s nothing substantive behind it, when you have all these runaway trains here — and we’ve reached a point where it’s all coming due here at one time; and we’re going to make it even worse with this trillion-dollar stimulus package of Obama’s. The idea that we’ve gotta go in there and have all this new government spending because we’re going to emulate FDR? Well, the dirty little secret is that FDR prolonged the Great Depression with the exact thing Obama is going to do.

I look at these people that have lost all their money with Madoff or a portion of it, and I wonder: Did they ever really have it? I mean they did, but was it really solvent? Madoff would still be flying along, folks, if people hadn’t gotten nervous, some of his clients, and asked for $7 billion out of the market. They thought he put their money in the market. They wanted seven billion, he didn’t have it, and that’s when the whole thing imploded. Well, how many other people, if they went and asked for what is theirs, would be told it’s not there? And not because of fraud, not because somebody has stolen it from them, just because it’s not there. I’m not starting a run. I’m not starting anything here. I’m reflecting what is already happening. Look, I didn’t start anything. I told you, people are already taking money out of money market accounts and putting them in treasuries for zero return because at least the principal will be there. They’re worried about the banks. With the Drive-Bys news every day, who wouldn’t be worried about banks?


RUSH: No, no, no, Snerdley, don’t misunderstand here. I am not criticizing or ripping debt as a concept. I understand in certain instances it makes all the sense in the world to use other people’s money to do something, and I realize that we would not have big buildings; we wouldn’t have a whole lot of things without people taking risks and going into debt and so forth. What I’m talking about is ridiculously leveraged debt. Leverage ratios of 30-to-1, which is what we’ve had in these markets which is one of the things that’s led to this collapse, you know, selling all these mortgages, the subprimes and then the derivatives and leveraging everything at 30-to-one and then having to go out and sell insurance on that. I mean, it’s absurd and it’s obscene. Some of these people taking on debt never intend to pay it back, that’s the whole point, they think they’re never going to have to. Just keep rolling it over and then all of a sudden a day like this comes.

Sean in Kalamazoo, Michigan, welcome to the EIB Network, sir. Nice to have you with us. Hello.

CALLER: Hey, Rush. Thanks for taking my call and —

RUSH: Yes, sir.

CALLER: — have a wonderful holiday. It’s a real pleasure talking to you.

RUSH: Appreciate that.

CALLER: All of my childhood, my father taught me the value of working hard for a dollar. As a result, I work two jobs currently to support my family.

RUSH: Yes, sir.

CALLER: What I’d like to get better at is working smart, and in all the years that I’ve listened to you talk about being motivated, self-starter, and being self-reliant, it’s occurred to me that the one thing I don’t know how to do is to spot and identify an opportunity in the marketplace and how to capitalize on that.

RUSH: Well, now that is an excellent question.

CALLER: That’s not the kind of thing they teach you in public school anymore, of course.

RUSH: Well, I don’t know that they ever did, really. Schools were not about entrepreneurism, they were about conformity.

CALLER: Well, exactly.

RUSH: The only way you can —

CALLER: We could have a discussion for a month of Sundays on that topic.

RUSH: Well, I know. Look, you’re going to bring 1,200 kids into a building, and you’re going to ostensibly teach ’em, you gotta have some conformist standards. You can’t have a bunch of renegades running around that you couldn’t keep control of the place. But, look, this is one of the interesting things. Most people in this country are raised under the concept of thinking of themselves as an employee and that their improved living conditions, standard of life, living, whatever, will come from raises or from a new job here or there. And that’s all well and good because some people want no more than that, to be an employee. Other people have this desire to not be constrained as an employee, rather, they want to take risk. It’s not about people specifically having a talent for spotting opportunity. I don’t have that. What I had was sheer, 100% love and passion for what I do, and nobody was going to stop me from trying it, nobody was going to tell me it couldn’t be done, and they did. It happens to every entrepreneur. Everybody in the world is told, ‘Your idea won’t work.’ So I’m not unique there. But most people’s passions, real passions and love end up being hobbies. So, find a way to get somebody to pay you for doing your hobby or your passion. That’s where you’ll find opportunity.

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