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FIN 101: Spotting Gurus, Paid Liars, Fools and Cheerleaders (Part 2): Donald Trump on Oil

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May 22, 2008 – Comments (11) | RELATED TICKERS: OIH

“If you can't spot the sucker at the table after 10 minutes, leave... it's you. “

-Poker Quote

It is important to identify: Gurus, Paid Liars, Fools and Cheerleaders, when you have the opportunity. Thanks to the internet, yapping a WHOPPER is easier to detect and soiling ones reputation can be quick. Today, we have to thank Bespoke Investment Group for watching Donald Trump and doing a nice write up.

Let see if we can call Trump a: Guru or Cheerleader or Liar or a Fool

Donald Trump on CNBC here;

http://www.cnbc.com/id/15840232?video=742027959

From Bespoke Investment Group 

Donald Trump on Oil

CNBC viewers had the "privilege" to get Donald Trump's thoughts on the economy, oil and OPEC yesterday morning.  Click here to view the video.  One of Trump's proposals was to "tax the oil companies into oblivion" since they're making so much money now.  Joe Kernen eventually went on to ask Trump if he would support the same taxes on real estate if it was as hot as oil was right now.  Trump's response, "Yeah, but the fact is it's not hot like oil.  You know, oil's been hot forever...I tell people to go into the oil business because since I've been growing up, literally, it's never had a down tick.  I mean, it had one year where it was a little bit down, but basically it's never had a down tick."  Kernen went on to ask about the long periods when oil didn't go anywhere, but Trump wasn't having any of it.

Below we highlight the inflation adjusted performance of oil and new home prices from 1970 to 2000.  As shown, oil did nothing but tick down from 1981 to the late 90s, while real estate stayed in a pretty nice uptrend over the 30 year period.  We realize these are residential real estate prices, but the trend was pretty much the same in commercial, which Trump is involved in.  While oil has had its fun this decade, it definitely hasn't "never had a down tick."

The oil vs home price chart should help here.

http://bespokeinvest.typepad.com/bespoke/images/2008/05/16/inflationadjusted.png 

Of interest the other suspect in the CNBC room none other then Wilbur Ross.

Mish Shedlock does a good write up as this Mr Ross' plan to Privatize Profits and Socialize housing losses.

A self-serving non-solution to negative equity in America

"Wilbur Ross, US's second largest servicer of subprime mortgages via acquiring American Home Mortgage and Option One, has a self serving non-solution to negative home equity.

Inquiring minds may wish to consider A positive solution to negative equity in America."


11 Comments – Post Your Own

#1) On May 22, 2008 at 11:41 PM, LordZ wrote:

TRUMP is a big idiot, isnt this the same guy who lost his shirt in the casino ~~ the worst part was that he happened to be the owner of the casinos in which he lost his shirt...

 

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#2) On May 23, 2008 at 1:04 AM, Evlampius (< 20) wrote:

...you're fired...

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#3) On May 23, 2008 at 3:10 AM, AnomaLee (28.58) wrote:

Although, what he says is usually ridiculous... You can't insult Donald Trump until you bow to his hair

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#4) On May 23, 2008 at 9:11 AM, leohaas (33.21) wrote:

Agree on Trump, and on the FT ariticle. That makes me wonder, are you changing your beliefs? After all, the proposal would give more power to the FHA. And the F here stands for Federal! Wouldn't a true llibertarian argue for abolishing the FHA rather than givng it more powers? Or is this a case where government intervention is beneficial to society?

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#5) On May 23, 2008 at 8:52 PM, abitare (51.93) wrote:

ALCON,

Thanks for the replies.

LordZ,

Yepper, as far as I know.

 Evlampius

I knew that was coming. I was going to get a youtube video

 leohaas,

No, no, no. I am saying Wilbur "I want a government bailout" Ross is pushing to make himself money at the expense of the tax payer. 

FHA, HUD, FRE, FNM and the FED should be dissolved.

To quote Mish Shedlock:

"Fannie Mae is a company that should not exist in the first place. The government has no business sponsoring corporations, promoting housing over rentals, or spewing nonsense about the ownership society. All of the above, in conjunction with the Fed bailing out banks in 2001 by slashing interest rates to 1% is what created the housing bubble.

Allowing Fannie Mae to take on larger loans is not the answer. Fannie Mae should be dissolved. Here is the irony of the situation: The government wants "affordable housing" but is doing everything under the sun to prop up home prices."

Mike Shedlock / Mish
http://globaleconomicanalysis.blogspot.com/

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#6) On May 23, 2008 at 10:19 PM, abitare (51.93) wrote:

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#7) On May 23, 2008 at 11:10 PM, ToKReason (81.23) wrote:

interesting post abitare appreciate it

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#8) On May 23, 2008 at 11:29 PM, TheParadox (90.84) wrote:

...good post...

I agree with the view on FHA, HUD, FNM, FRE to disolve them.  While i do not like the FED, our source of inflation (all if not most), they do have the power to "deflate" our dollar by raising rates... they just choose not too, and everyone suffers so...  I would perfer to see some policy that maybe "mandates" an attempt to deflate our currecy to protect our interests...

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#9) On May 23, 2008 at 11:41 PM, IBleedConcrete (87.11) wrote:

Sure, oil prices were low in the 80s and 90s but take a look at Exxon's share price over the last 40 years.  The major integrated oil companies have returned 10-13% CAGR with low beta compared to most other stocks.  Not saying Trump is right (he's dead wrong) but your oil price vs. home price chart doesn't tell you that.

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#10) On May 24, 2008 at 10:58 AM, cubanstockpicker (20.67) wrote:

A longtime friend of mine used to work for Merv Griffin in charge of entertainment for the casino. Merv Griffins casino in the Bahamas was up for sale and Donald was making a strong offer to buy it. He remembers Donald Trump being of an in inflated ego and self worth. Well that was an understatement, "The Donald" would have have a tall blonde with a thick european/german accent enter the conference room first and yell "All Rise for His excellence Donald Trump". My friend chuckled and Merv Griffin poked fun at THE Donald the rest of the day about that. Donald is an unabashed self promoter. And he is a moron, but he's a smart moron (intentional oxymoron). He cant shut up about himself at no moment because he knows that its all marketing.

However, in hindsight, if taxes would have gone up on oil and oil companies, as opposed to subsidies and that tax money was used DIRECTLY to have funded alternative energies, or help fund people buying alternate energy solutions in cars, we might not be in such a bind.

Think how impotent you feel when you decide you dont want to fill up with gasoline. What is your choice? 

I wrote a blog earlier on how the government would have been better served offering the 150 billion giveaway with a string attached to spending it on an approved list of money and energy saving technologies. Solar Panels, a geothermal heat pump, a home wind turbine, hybrid vehicles, etc...

It would have had a longer term impact than just giving away and spending giving us more of the same. By pumping in 150 billion in energy saving products with lets say only picking the products that generate a 15%-20% savings on energy costs either in the home or on the road I can only deduce that it would have had an impact on energy prices helping reduce demand a little bit.

Good post abitas

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#11) On May 25, 2008 at 7:05 PM, abitare (51.93) wrote:

ALCON,

Thank you for the reply. Sorry for the slow response. 

ToKReason,

Easy work. Bespoke did the hard part.

IBleedConcrete ,

Great name. I have a chart somewhere, which shows oil to be around 20-30 a barrel in real terms, for 80 years? The rest is inflation. I will try and find it, somewhere.

cubanstockpicker,

Trump is a shameless self promoter, he is non-stop self promotion. You could qualify him as a guru, at self promotion.  

I prefer the market over the government in finding a better energy solution. Would oil be at $130 a barrel if Bush were not in office? NO WAY! The market will find alternatives, if the government gets out of the way. The government should NOT subsadize any industry.

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