Ben Stein’s Money Bet on the Wrong Things

For market Bears like me, the current market environment is absolute heaven. I’ve been making money off of my short positions, but I decided to close those today (which should make the government happy) because gold stocks are starting to look very attractive to me. Specifically I’m thinking of backing up the truck and buying Barrick Gold (Ticker Symbol ABX). Gold stocks have been down quite a bit in the last few weeks and considering how much money the government has decided to throw at the financial bailout this week I’m thinking gold miners are going to make out like bandits. You see, the government doesn’t actually have any money to bailout anything. As I’ve been telling my friends, America is broke. And I’m not sure that foreign lenders are going to want to line up to loan another Trillion or so to us given how indebted we are and how our financial system seems to be imploding. Inquiring minds suspect that the government may have to resort to just printing the money for the bailout, and that would be VERY good for gold and even better for gold miners. 

GRRRR! Bear market profits are the best kind. But what can be even more satisfying is reading Ben Stein’s latest offering. For those of you who don’t follow him (and I recommend you don’t), Mr. Stein is known as a permabull for his perpetually sunny outlook on the American economy. So it is with special satisfaction that I read Mr. Stein as he tried to explain how exactly the US economy got into such a pickle, and I most confess a few moments of self-congratulatory laughter as he explains why exactly he was so wrong in saying a year ago that subprime mortgages were not capable of sinking the American economy. You see he reasoned that subprime mortgages were only $250 billion or so and could not sink a multi-trillion dollar economy. He is now admitting that he neglected to figure in the Credit Default Swaps that DID run into the trillions of dollars and how all of these unregulated debt instruments floating around that were pyramided on top of that debt are in fact causing a real problem. Oh well, Ben. I guess we all get them wrong from time to time.

Except it seems like all Ben would have had to have done to avoid having to scrap egg off of his face now would been to have visited some bear market sites and read what the bears were saying. Heck, even if he wanted to write us all off, he could have listened to Warren Buffett saying that credit derivatives were financial instruments of mass destruction. It’s not like nobody knew this was going to happen. I specifically remember reading Mr. Stein’s work a year ago in absolute astonishment that he did not seem to comprehend the ripple effect that these defaults would have.

Mr. Stein closes his financial advice column by asking what it is that we should all do. Which isn’t really any advice at all. Well, I’ve already told you what to do. Load up on gold miners. If you’re looking for more advice on how we got into this mess, how you can save money, and the best ways to invest for your future, why not buy a copy of my book.

I promise it doesn’t end with “What the heck is to be done?”

4 thoughts on “Ben Stein’s Money Bet on the Wrong Things”

  1. For the most part, the US economy has grown and grown and grown throughout its history with mostly only hiccups representing the breaks in growth. It seems that for every year of growth, you might only have a month of contraction. The problem is that most bears who’ve had any reasoning behind predicting that the US banking system would fail were permabears. While permabulls are right 90% of the time, permabears are wrong 90% of the time. Why are they willing to be wrong so much? It seems obvious to me – permabears WANT the US economy to fail (perhaps they are mostly communists, who knows). As a result, no one EVER listens to them. It was kind of like when the National Enquirer claimed that John Edwards was having an affair. No one listened because they have a history of sensationalizing everything. Bears are no different.

  2. Wow Preston,

    Consice and indepth retort on the state and conscience of our goverments fiscal irresponsability. I often feel hogtied as to my options to do anything with the situation. I feel that “I’m only one person with little or no power, what can I do” synrome. I’ll vote for Obama try to keep myself educated and stay out of debt. You seem to be off to a good start educzating the masses, keep it it my friend.


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