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Dec. 22, 2008 - Rush Limbaugh Program
35:26
December 22, 2008, Monday, Hour #3
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The views expressed by the host on this program make more sense than anything anybody else out there happens to be saying because this is a relentless pursuit of the truth, ladies and gentlemen.
We find it.
We proclaim it.
Great to have you here.
Rushlin Baugh during Christmas week.
800-282-2882.
If you want to be on the program, the email address is lrushbow at eibnet.com.
I want to expand my thought process on this whole Madoff thing and take it into the realm of the current economic crisis.
Because, quite naturally, all this fascinates me.
It's about money.
And it's, well, it's all of our money here, folks, that's literally being tinkled away.
And I've been asking myself, how in the world did we get to this point when it all seemed to happen so overnight?
Now, I understand that there were some foundational problems that we were being told of as far back as last summer and in the spring.
But if you search your memory bank, you will conclude that a lot of this appeared to happen within a month, starting in October.
Now, the Madoff thing is larger and more vast than anybody realizes.
The New York Times on Saturday had a front-page story.
I printed it out, and it was 11 pages, had 11 contributors.
It was written by one person, had 11 different reporters around the world digging up data.
Money from Abu Dhabi was put into Madoff's fund from China, from Indonesia, from Singapore.
He was trying, in the process of shaking down the Chinese when the thing blew up, Chinese businessmen.
It was just, it was huge.
It was so huge, no one person could possibly have done this for all these years.
This required a whole team of people, even with false and phony monthly statements to the so-called investors.
But you look at the group of people that were most, at least in America and in Europe, the group of people that were most affected by this were these people, sad to say, who structure their lives on a public relations basis.
Look at me.
Notice how wonderful I am.
Look how charitable I am.
Look at the boards I am on.
Look at how I dress.
Look at me sitting in my antique car in a picture taken by a newspaper photographer.
Look how cool I am.
Look how they describe the way I live.
I have elegant suits.
I have an aristocratic aura about myself.
And my wife is just as equally aristocratic.
And our children, who are just, it's just, I've never thought any of it was real.
I thought it was all contrived.
Some of the money does go to charity, and the charities do exist.
And I'm sure that some of these charities do good works.
But were the people involved really, really care about the charities?
Was it all about them?
I think it's all about them.
And when you make it all about you, you are ripe to be ripped off.
You are ripe to be swindled.
When somebody comes along that's got this super exclusive club that's closed and you can't get into it, but you think you're something special.
And the big allure is being in something so exclusive that nobody else can get in it, yet you can brag about being in it.
All these phony baloney, plastic banana, good time rock and roll reasons for doing things.
And the first people that go belly up, unfortunately, are these people that live not on substance, but on symbolism, an image.
We've just, by the way, elected a guy who does this.
But that's for another day.
NATOF is what it is.
I've just, when I got old enough to start reading all of the newspaper besides a sports section, When I started reading society pages, none of it made any sense to me.
I said, who are these people?
Because the stories about it made them sound like from the moment they got up till the moment they went to bed, everything they did was charitable.
It just didn't seem real, but I couldn't put my finger on why.
It just didn't seem, because I didn't know anybody like this where I grew up.
You know, these kinds of that are phonies, but I mean, they were obviously phonies.
They weren't able to pull it off.
And then I started, you know, when I started this program in 1988, up till that time, nobody who knew me personally hated me.
But a month after I started this program, I was hated by half the country.
I was totally taken aback.
What is this?
Nobody thinks I'm what the press says I am.
How can that possibly?
I started noticing the people who got universal love and appreciation and respect.
And I noticed that they were all involved in charity.
They were all very wealthy or thought to be.
They all had structured lives where their lives were really not about them, but their devotion to others.
Even their lines of work were oriented to help others.
And, you know, it took me a while to become educated and informed enough because I was so naive about all this, to understand the game.
And now I live amongst a whole bunch of people who play the game.
I don't know them, but I read about them every damn day.
And I see all their pictures at all these stupid events that are organized just for pictures in the paper.
The secondary purpose is to generate some money for the charity.
And now a lot of them have been wiped out.
And I feel horrible for them.
I'm not, I don't have any Schadden Freud about this.
There are a lot of people.
You go to websites and run Bernie Madoff details, and you'll find, you'll find some of the meanest, I mean, some people happy these people are wiped out.
Just ecstatic.
Good, let them find out what it's like to live like the rest of us.
A lot of these people did earn their money legitimately.
They just threw it away with the scam artist.
Now, remember, the root of this is this Nicholas Christoph column that got all this started today, Saturday in the New York Times.
Arthur Brooks, in a book that he wrote, how stunned he was to learn that the most personally charitable people in America are conservatives who don't do it for show.
It's a stunning bit of news because they wouldn't get credit for it anyway if they tried to.
Credit being accolades and the drive by media.
So it expanded to that to a discussion of what's real?
Look at all of these empty suits.
All of these institutions and traditions that we had all this faith in.
Now we all have nothing but doubts about them.
And we're wondering, no matter where we put our money, however small or large our nest egg is, is it going to be safe?
Is it safe in the bank?
Is it safe with a hedge fund?
Is it safe with a money manager?
All these questions arise.
And that got me to thinking about the overall financial collapse.
You know, I've said On this program, you might have thought I was joking and I wasn't, that this financial collapse, the stock market plunge, the housing crisis, this may be the best October surprise that has ever come down the pike.
I don't know that there could ever be a better one.
Yeah, the stock market started precipitously falling, and it went wacko real soon.
And then the bottom seemed to fall out of the housing market, and then the banks had nothing.
And there were runs on banks, and then there were people that were getting worried about it.
We had a couple, like the Lehman Brothers was not bailed out.
AIG was.
And then the first $700 billion bailout, the TARP money, the build-up to that was it's a crisis.
I mean, even educated, informed media people, not on the left, were going on television, imploring people to support this.
Do what you can.
We don't have a moment to waste to save America.
And I remembered back to something that a lot of people have forgotten.
And I'm operating under the premise here that a lot of this is an October surprise.
By the way, I have a little story here.
Do you know that the Treasury Secretary, Hank Paulson, was giving Bernie Madoff and his associates personal briefings on the market as it was plunging through a political action committee?
So the regulators were telling Madoff in advance where we're heading, what's happening.
I'll give you details in it in just a second.
And then Mr. Snirdley reminded me, it was Chuck Schumer.
When was this?
In September?
Early October?
It was sometime in the fall.
It was in the heat.
It was in the post-convention presidential campaign.
I believe it was.
We'll double-check it.
Chuck Schumer started a run on a California bank.
And people listened to what Schumer said, it's my responsibility.
People have to know the health of our financial institutions.
And so whatever this bank was in California, people started a run on it because a United States senator on high-ranking committees had told them their bank was worthless.
And I'm just wondering, of course, this cannot be proven.
IndyMac in late June, IndyMac in late June.
All right, so it was pre-convention.
And that's when all of this started, when people started losing faith in their own bank.
Oh my God, Indie Bank account, Indy Bank?
And there was a run with people standing in line started by Chuck Schumer.
And he was asked about it.
He denied it.
No, we're just trying to protect the solvency and the safety of Americans' assets out there.
Within days of Chuck Schumer starting this run on IndyMac, $1.3 billion had been taken from the bank.
People had taken that much out.
The feds, FDIC had to step in there and stop to save the bank because there was such a run.
It was started by Chuck Schumer.
Now, just to cut to the chase here, back to this October surprise.
I am just wondering, and as I say, it can't be proven.
I'm just wondering if a lot of this was by design to create economic pan.
You know, the economy that remember now, the Iraq War had dominated everything, and the Democrats were, the economy was said to no longer be an issue in the campaign for the first time.
The economy didn't seem to be corruption.
Other things were ethics when the Republicans have those problems, but the economy wasn't.
They wanted to create economic crisis, a mindset of this.
So Chuck Schumer goes out, starts a run a $1.3 billion run on Indy Mac, and then all of a sudden, look what we learned.
All these mortgages are worthless.
All the mortgage derivatives and the assets and the mortgage-backed assets, they're worthless.
Everything was worthless.
There was no there.
Every institution, every guy in the institution was an empty suit.
And we had to bail out this and bail out that, and it didn't help.
And I just wonder if what was a planned attempt to scare people economically by starting to run in a bank and do this, that, and the other thing, has now spun so far out of control.
It's gone so far beyond what the intention was just to win an election that nobody knows what to do about it now.
The only mitigating argument against that is that the number one, the primary beneficiary of this, and you have to look, even in an economic collapse like ours, there are beneficiaries.
Who's benefiting?
Who is benefiting?
Aside from the people being bailed out, the Democrat Party and Barack Obama are benefiting from they got elected.
They increased their numbers in the House.
They increased their numbers in the Senate.
They got the White House now.
And they've got a crisis that people think can only be fixed with the almighty and powerful government interceding to save this or to save that or to do whatever when, in fact, the government is going to nationalize the automobile industry, going to nationalize some banks, is going to nationalize the mortgage industry and may end up nationalizing the automobile industry.
And everybody is sitting around arguing on the merits.
Oh, God, I'm glad they did it.
Oh, I'm glad they did it.
Oh, thank God they saved the UAW.
They saved the auto companies.
Oh, we couldn't let them go.
Everything has been presented to us.
We can't let this fail.
It's the end of America.
We recently learned also that the Treasury Secretary Hank Paulson was cited talking about how bad the economic conditions were was wrong.
The numbers that he was given to cite how rotten they were wrong just before we did the $700 billion TARP bailout.
But it doesn't matter.
We've done it.
And now TARP has become United Auto Workers bailout.
And people are sitting by letting this happen with great hope, by the way, that it will fix what's wrong, that miraculously the stock market will rebound.
So the Obama team and the Democrat Party are benefiting tremendously from this, even if it has spun out of control.
If it's spun out of control, they'll make do with the new crisis they've created, a la Ram Emmanuel.
But I think the reason I think it has spun a little bit out of control and gone a little further than they intended is that even the Obama people are saying, hey, it's going to be really bad for a really long time.
We'll be back.
This is little George Winston.
This is from an old CD back in the 80s, but it's great.
It's called December.
And George Wilson's one of those Birkenstock libs, but it's still good music.
And I, El Rushbo, happen to like it.
All right, here are the details.
Pasadena, California-based IndyMac, $32 billion in assets, was seized by the government on Friday, this L.A. Times story, July 13th.
The loss-ridden mortgage lender had faced an outflow of deposits since Schumer on June 26th made public a letter that he sent to the Office of the Office of Thrift Supervision, the FDIC, saying he was concerned that IndyMac's financial deterioration poses significant risks for both taxpayers and borrowers.
Now, here's Chuck Schumer, senator from New York, who sends this letter and then makes the letter public.
And this causes a run on IndyMac.
Schumer's decision to go public with those comments I'm reading for the L.A. Times ignited a firestorm in Washington.
Regulators on July 2nd said that he was contributing to rumors and innuendo about the bank that could hasten its demise.
On Friday, regulators specifically fingered Schumer for IndyMac's failure.
So regulators say that a Democrat senator caused a bank failure in late June that transpired into July into the conventions and into the campaign.
So I'm thinking October surprise.
And I'm thinking it has spun out of control.
It's gotten worse than any of these people thought it was going to get, and they don't know what to do now.
Well, they do know what to do.
Spin, spin, spin, spin.
Hey, look what we've got here.
Crisis, we can maximize it.
Donna in Dallas, great to have you on the program.
Thanks, Rush.
It's good to talk to you.
Same here.
My opinion about why liberals don't give as much as conservatives is because deep in their heart, they believe that it's the government's job.
Yeah, there's a lot of truth to that.
Remember, liberals, too, are people who they get by.
They really think they're good people just because they tell people they care.
Liberals don't have to do diddly squat to fix anything.
In fact, liberals can make it worse.
But as long as while they're making it worse, they talk about how much they care, their good intentions, of course, versus their results.
But I think if you look, Donna, and this will be controversial to some, but that's what you expect when you hire me.
I think you'll find religion is a, if not the dominant, a keeper.
I can't prove it.
It's my instinct here.
I think religion and the notion of private charitable works is a fundamental reason why there is far more personal charity from conservatives as opposed to liberals.
Back in a moment.
Merry Christmas from all of us here at the EIB network, to all of you out there who are not with the EIB network, at least officially.
Hope you're able to give everything you want this Christmas.
Pompado Beach, Florida, Bob, you're next.
Nice to have you here with us, sir.
Thanks for taking my call.
I appreciate it.
You bet.
Merry Christmas to you, and thanks for the enlightenment.
Appreciate that.
I have a problem, a very serious problem.
I'm a four-generation American, and what's happening to the American automobile companies is, to me, beyond belief.
I just can't believe that three companies that made this country what it is and certainly have contributed in many, many different ways, is almost on the path of going down a tube, which really blows my mind.
The average American is absolutely madly in love with his American car.
And I just can't understand how people will.
Do you think people are really in love with their hybrids?
Hell no.
Buying them because it's like wearing a ribbon thing.
Hey, look at me.
I'm a big caring person.
Well, I don't know about that.
I'm not smart enough to know what people buy cars for or what reason.
Well, when you're young, you buy them to get girls.
Well, hello.
And go fast.
Hello.
Yeah.
That's true.
Yes.
But when you get old, what happens?
Well, when you get old, you want one that you don't have to fix every week.
That's true.
You want the most expensive one you can afford because it's reliable.
And depending on how large your family is, you want it big enough to be able to cart them all around.
Well, but the point I'm getting at is that if the American automobile companies go out of business, I don't think anybody's going to have enough money to buy a car from anybody.
Quite frankly, it looks to me like the country will go down the tube.
I may be wrong.
It's not that.
See, this is the problem.
General Motors, these companies are not that big anymore.
Do you know that Bed, Bath, and Beyond, in terms of stock price, Bed, Bath, and Beyond has a larger market cap than the big three, than General Motors.
Don't you think a lot of that has to do with the media and what's been going on?
Yeah, but it is what it is.
Whoever's driven down the stock price has driven down the stock price.
Well, I suppose.
Don't worry.
The automobile industry is not going to go kaput because the United Auto Workers will not be allowed to go kaput.
Well, God knows I'm going to.
What's going to happen is the UAW is going to end up owning it.
After the government invests and nationalizes the auto industry, the Obama administration, out of a sense of compassion, will transfer ownership free of charges, transfer the deed to the United Auto Workers.
Well, I think that's partially in the works now.
It is.
It is.
Yeah, it's too bad.
It's a shame.
However, there are a lot of people like myself that are still madly in love with the American automobile companies and what they have given us through the years.
I'll tell you something else.
By the way, full disclosure here, General Motors is a sponsor, a proud sponsor of this program, and we're proud to have them.
I'm familiar with that.
But I have to tell you something, this notion that General Motors is making cars that nobody wants and is making cars that are worthless is simply absurd.
There's no doubt about it.
They have revitalized the Cadillac line, and they're getting no credit whatsoever for it.
They have remade that whole brand.
I wish they would, you know, and I wish them luck in doing the same thing.
But there's some fascinating Chevrolets out there you wouldn't think are Chevrolets based on what they look like 10, 15, 20 years ago.
To say that they're making cars that nobody wants is crazy.
If people had the money, they would keep buying those SUVs and pickup trucks.
There's all kinds of cars General Motors is making that people want.
They're being forced to make cars that people don't want with all these ridiculous cafe standards.
I'm telling you, when you've got, try this.
General Motors, 96,000 direct employees and over a million retired people being paid by General Motors, former employees, paid their health benefits.
I heard you say that.
No, I mean, at some point, it's going to implode.
It doesn't matter how quality your cars are.
Well, they are quality, because I just went to the automobile show in Myanmar recently, and I tell you, the cars were magnificent.
I was impressed.
Yeah, you know, the thing about those auto shows, I used to go to them when I lived in places where they had them.
And I always thought every automobile company in the world made the biggest mistake by bringing in the sharpest looking, sleekest-looking car of the future and never making it.
Why show it to us?
You know, our memories collect, no, they're not going to make that, they're not going to make that.
They show us this, and it never happens.
Why even show these prototypes?
Well, this is to show the advanced techniques the auto companies are make the car.
If you're going to show it at the auto show, make the car.
Put it in the pipeline.
Well, you know, it takes a long time to ramp up these.
Look at whatever.
Chrysler comes out with a PT Cruiser, and within months, Chevrolet's got its version.
What is this?
Takes years to ramp up production of a new model.
Well, Rush, what happened is General Motors hired away the Chrysler designer who designed the PT Cruise.
Doesn't matter.
You're still able to ramp up production of the Chevrolet version of it, get it out, and people are buying it.
It's a mysterious, it's a mysterious business.
I think basically General Motors and Ford and Chrysler have become retirement homes.
And they have a subsidiary business, which is manufacturing cars.
That's how Mark Stein characterized it in a column on Friday.
It makes total sense when you look at.
And we've even heard Rick Waggoner.
So I didn't know when I took the CEO job here that I was going to become an expert in healthcare.
But it is what it is.
All these mandated standards requirements, the emissions, mileage, all this crap put on by a bunch of lugheads like Barney Frank and Nancy Pelosi who haven't the slightest clue what they're doing other than to punish successful American corporations.
Thanks for the call out there.
Bob, I appreciate it.
Andrew in Molala, Oregon.
Hey, nice to have you on the program, sir.
Welcome.
Welcome to your two Rush.
Merry Christmas.
Good to talk to you.
Appreciate that.
I had a question on the Madoff scandal.
They're telling us the news, media, and everything that that money just disappeared.
I thought maybe you were the expert that could tell me where in the world it disappeared.
All right, now, where do you think the money?
Let's use the figure 50 billion because that's what Madoff said.
But nobody really knows yet how much.
But let's use the 50 billion.
And it's a Ponzi scheme.
You know what that is, obviously.
Yes, sir.
Okay, so where do you think the money went?
That's still an unanswerable question.
No, it's very answerable.
Let's walk through the steps here.
Because this is, by the way, I don't blame you for asking.
This is the one element of the story that the exhaustive examinations by the drive-bys have yet to answer.
You got a 50 billion Ponzi scheme.
Starts whatever number of years ago.
You go out to your original investors and they give you, I'll just use a few, give you whatever, you know, a billion.
And you have that billion and you take your share of it as the schemer.
You siphon off whatever you want, and then you pay whoever your runners are.
I mean, the notion he was doing this on his own are difficult to believe.
He had to have people hyping the business.
And we know, we found out who they are.
They were getting a point and a half per investment, gross investment made by clients.
And the way they were doing this was running out and then telling people about these great returns this guy's getting and then denying them access to the fund.
And you tell somebody, especially this crowd that thinks they're a cut above anyway, you tell them there's something super exclusive outperforming anything and they can't get in.
That just makes them want it more.
And so you hook them.
So he had a bunch of runners.
He had a bunch of hookers that were getting these people in.
The money comes in.
The runners, the rainmakers, they get their take.
The schemer takes his and puts it someplace.
He buys three yachts.
He buys a corporate jet.
He buys four homes.
Then he buys a brother home.
He buys all these things.
And that creates the public image that, wow, is this thing really growing?
Look at Bernie.
And then Bernie starts joining country clubs, starts playing golf with these guys.
And he starts joining these charities himself.
And he starts showing up with all these charitable benefits in black tie.
And he's the toast of the town.
He's making everybody rich.
And he's getting rich, understandably so.
People don't begrudge him his five houses or four.
And his airplane and his three yachts, one in the middle, oh, four houses, had one on the Côte d'Azur in the south of France.
Well, he's not paying returns.
What happens is that the first billion or whatever it is that comes in, Bernie lops off his share, and he does probably invest that money somewhere for a while.
He keeps recruiting new money, Andrew.
And what happens is these original investors, they're the ones that do get paid.
The first people in the Ponzi scheme always get paid, but how did they get paid?
In this case, they got paid by seeing a financial statement that said their investment was growing at 10% a year, no matter what happened.
They might have taken some cash out of it now and then, but the odds are they left it there.
So the money that went in, Madoff got to do with whatever he wanted.
And this just kept going and going and going.
As new people sent money in the front door, Madoff would send out financial statements to his early investors showing these increased profits.
And if some of them wanted cash, he had the cash on hand to send to them.
The money on paper actually went to the investors.
What has happened is we find out that it was all on paper, that there was never actually really invested.
What he had to do, what any Ponzi scam artist has to do, is to keep taking money coming in the front door and giving a little bit of it away to the people in the backside who were the first in order to make it look like things are growing.
Now, there was whatever it was, $50 billion is somewhere.
It has not vanished.
It's just not in the investment accounts that the investors put up that Bernie Madoff started for them.
It is somewhere.
It didn't just vanish.
It vanished from those who had it.
It was stolen from them.
And you know, Andrew, what brought all this to light was, in fact, the Democrat Party may have brought down Bernie Madoff with this October surprise plunging market because even his robust clients who thought he could do no wrong, who were seeing 10% increases while the market was down 30%, apparently enough of them got panicked at the same time, and they made requests for redemptions,
meaning they wanted their cash out of these accounts that they thought they had, totaling $7 billion, and he didn't have it.
And he couldn't raise it.
He was feverishly trying to raise new money from new investors for his scheme from China and from the Middle East to cover that $7 billion.
He could not get it.
So when there was no cash, that's when he gave it up.
The money is somewhere.
It's impossible for it to have vanished because it existed.
And remember, some of the people who invested got some back early on.
And this was going on for years.
You know that people have cashed out some of these investments and sold them.
At some point, this had to be legit.
There had to be a small share of it that was legit.
There had to be some genuine investment in some genuine market instruments early on.
After a while, after the early customers are satisfied, they then sell the reputation of Madoff.
Oh, yeah, it's always there.
Whatever I need, it's always there.
You don't want to take it out, though, man.
It's growing like leaps and bounds.
So after a while, nobody wants it.
They trust him totally because everybody doing business with him sings a song of his reputation that is just inpecable.
Unassailable.
So the money is somewhere.
That's what they're trying to figure out now, the lipstick building and the three floors that Madolf occupied.
Folks, it's holiday season, as you know.
It's the Christmas season, and you're probably going somewhere.
You're going to drive.
You're going to travel by plane.
You're going to get on a bus.
You're going to get on a train.
And you're going to go where there are kids.
And kids are incubators for diseases.
Their immune systems are fine.
Don't forget the Zycam.
You do not want to get a cold during the holiday.
I caught this, whatever it was, bronchitis or flu over Thanksgiving.
I know who did it.
I know who had it.
Zycam doesn't work on that stuff, but the common cold, it does, and it is a lifesaver.
It will stop.
You catch your cold at the outset.
First time you think.
You're coming down with something.
Don't chance it.
Swab your nose with one of these gel swabs every four hours, and it will work miracles.
Zycam, Z-I-C-A-M.
We only talk about things here that work, my friends.
Now, where did the money go?
One of the ways that people donate to charities, and a lot of charities have been wiped out here.
And you go, well, how do the charities get wiped out?
They got the money.
No, no, no.
What if the charities got most of their contributions in the form of stock that had increased?
One of the great ways to limit capital gains taxes or any taxes at all is to give appreciated stock to a charity.
So if you give what you think Bernie Madoff has created for you, if your portfolio has shown 10% increases, well, you can lay a lot of that off, get a charitable deduction, pay no income tax on the appreciated stock by giving it to a charity.
Appreciated stock is a great way to give money to charity.
It really is, because you get the charitable deduction and you avoid any kind of gain or tax on the gain.
And you don't have to give it all away.
You don't touch your principal.
Well, if you're the charity getting appreciated stock from Bernie Madoff account, Sayonara.
Because it wasn't there.
Gail in Sioux Falls.
I have one minute, but I wanted to get to you.
Welcome to the program.
Rush, Christmas greetings from the frigid Midwest.
Thank you, sir.
Being one of your students, I hark back to about eight years ago when Dick Cheney divested himself of his holdings and gave, I think, nearly $7 million to charity.
And I believe that Al Gore, the record that was made public, was just a little under $400.
My memory, that's right.
Cheney, $7 million from his Halliburton holdings.
Right.
And I think the number for Al Gore was $256.
I might be confusing it, but you're right.
It was less than $400.
They gave it.
But see, that's not hypocrisy.
No, no, no.
In the current realm, see, Al Gore cares.
He spends his life helping other people.
Not being cold-hearted.
He spends his life helping people.
His whole public persona has been to help people.
So that's how this works.
That's it for today, folks.
Thanks so much for being here.
We'll be back tomorrow, and we'll do it all over again with whatever comes up.
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