[Glenn Beck, Host:] Tonight, crisis on Wall Street as Lehman Brothers files for the largest bankruptcy in history. And Merrill Lynch is bought by the Bank of America. This is great, right? Plus, Obama continues to concentrate his fire on Sarah Palin, while new polls show independent voters are leaning towards McCain and people trust her experience over his. And a special Glenn Beck series, "Exposed: America`s Broke." We`ll talk bailouts, bankruptcy and our addiction to debt. All this and more, tonight.
[Beck:] Well, hello, America. It`s quite a day. Hasn`t it? Today everybody on TV is talking about the banking industry and the financials. Most of the media is using financial language that I don`t know about you, but I don`t understand most it. And as usual, when I do understand what they`re talking about, they`re missing the real story along the way. Let`s let`s talk about, quite frankly, screw the people on Wall Street. How about on your street? Let me see if this rodeo clown can take a crack at translating all of this to English. Here`s "The Point" tonight. If you really want to understand the financial health of our country and financial the health of your business and your house, the falling price of oil should tell you everything you need to know. And here`s how I got there. First of all, the facts. Literally overnight, two more pillars of the financial industry crumbled. Lehman Brothers, which went through the Civil War, filed for bankruptcy, Chapter 11. This is the largest bankruptcy of all time. Merrill Lynch was bought by the Bank of America. Well, now when most people heard this news over the weekend, they were like, "Who cares? Who cares about these clowns on Wall Street? I mean, they got they got, really, what was coming to them, right?" Well, yes, they did, but you also got something you didn`t deserve this weekend. And more on that in just a second. But first let me start here. To understand the true health of our economy, do not look at the financial industry. Look at the oil industry. It`s a leading indicator, in my book. Today, the price of oil continued dropping down to the mid-90s per barrel. Months ago I told on this program, watch out for that. When the price of oil starts dropping for no apparent reason, that is the time to worry. Events like hurricanes over the weekend and rebel uprisings in Nigeria, which is the fourth largest U.S. supplier of oil, that happened over the weekend, too. When that`s not causing oil to go up in price, just causing it to fall more slowly, you should worry. Now, how is it that oil costing less is a bad thing? Simple. It is the law of supply and demand. The supply of oil is higher because the demand is lower. For the better part of the last year, the price at the pump has kept your car in the driveway, as has a lot of Americans. So you have less money to spend. Why drive to the mall? Why go on vacation? Why go out to eat? More supply when you stop driving. That means there`s more supply. That leads to lower prices. That usually drives up demand. People are like, "Oh, well, I can afford to go out now." But that`s not happening this time. Consistently cheaper oil highlights how much less you really have. So tonight, America, here`s what you need to know. Remember when I said overleveraged bankers are getting what they deserved ends up hurting you. Never forget this one simple fact. When the government gets called in to bail out banks, the government is and always has been you. Your taxes, in a way, went up this weekend, because they`re printing money. How do you feel about saving the butt of a guy who got more in bonuses last year than most people will make in their whole working life? Yes, kind of pisses me off, as well. Stephen Moore writes editorials about economics for the "Wall Street Journal" and is author of "The End of Prosperity." What happened to your sunny attitude, Stephen? And another equally happy guy is Peter Schiff. Peter is the president of Euro PAC and author of "Crash Proof." OK. Peter, I`m going to play good cop and bad cop with you guys. Because, believe it or not, Stephen is more optimistic than you. You say that Bank of America, the only reason they went after Merrill Lynch is because they`re fattening the calf. You believe that?
[Peter Schiff, Author, "crash Proof":] I think they got nervous when they saw Lehman go under without a bailout. I think they realize that the same fate awaits them, and they figure, you know, "Why not just buy Merrill. We`ll get so big, they`ll have to bail us out." And I think Merrill probably saw the same writing on the wall. They know they`re going to go under. And they figured, "Why not agree to get acquired by Bank of America? At least this way, we`ll be so enormous, that maybe they`ll bail us out."
[Beck:] All right. Let me go to let me go to the good cop, Stephen Moore. Stephen, you told me when we saw each other earlier today, I said, "How are you doing today?" And you said, "It`s been a wild 24 hours." You`re seeing actual would you describe it as actual panic?
[Stephen Moore, Author, "the End Of Prosperity":] It has been panic. You know, and I remember, Glenn, when I first met you, what, nine months ago. I started calling you the one of the four horses of the apocalypse.
[Beck:] Right. That`s right.
[Moore:] Because you were so dour on the economy. And I was the opposite. But I think, as I`ve looked at what`s happened over the last nine months, we`ve just seen bailout after bailout. The federal budget deficit is now over a half a trillion dollars, I think headed to a trillion. There`s one raw of good news in this story. At least, Glenn, I don`t know if Hank Paulson is watching your show, but they did not bail out Lehman Brothers. And that`s, you know we should stand up and cheer that, because this is the first time the federal government has said, "Stop, we`re not we`re not going to bail out any more of these banks." I guess that`s progress.
[Beck:] OK. But Peter, you`re saying what you`re saying about Bank of America is true, I mean, they`re going to be too big to fail.
[Schiff:] Look, all the lenders are in trouble. Because the bottom line, you mentioned in the intro, Main Street is in trouble. Remember, the problems in the financial sector reflect the problems on Main Street. They`re in trouble because we can`t pay back the money we borrowed from them. Our houses don`t have enough value to make good on all the mortgages. That`s the problem. America is broke and our creditors are feeling it first.
[Moore:] So not only is America broke. I mean, here`s the irony of this whole situation, Glenn. What`s the most broke institution in America? Uncle Sam. I mean, we`ve got and so this idea that somehow Uncle Sam has the money to bail out banks and to bail out Freddie Mac and to bail out airlines and auto companies, that makes no sense.
[Beck:] So let me take it there. Because again, I think people see America as this you know, this country that is just it`s always going to be like this. It`s always going to be fine and we`re going to weather this, et cetera, et cetera. We`re wrecking our credit rating. We are wrecking problems of us spending too much money on the credit card by having Uncle Sam pull out his credit card, which is worse than any of ours, and just racking these things up. So Peter, what does it mean? What is coming?
[Schiff:] Well, what`s coming is the world is going to figure this out. We`ve had this gigantic explosion in this country, and right now, everybody is running towards the blast. Once they figure it out, they`re going to turn around and run in the opposite direction, and the dollar`s not going to be going up; it`s going to be falling through the floor. They interest rates aren`t going to be falling; they`re going to be skyrocketing. And then we`re going to have a real financial crisis. Because we`re going to see higher consumer prices, higher interest rates. And every American on Main Street is going to feel it as a standard of living.
[Beck:] OK. Good cop, please. Give me some good news.
[Moore:] Again, the only good news today I do feel...
[Beck:] Wait, wait, wait, Stephen. You`ve got you`ve got to answer that. Do you agree or disagree with that?
[Moore:] I`m not quite as dire on the situation. I mean, what I was going to say was the fact that we didn`t do this bail out, and Wall Street wanted they wanted the free money. The fact that we finally said no, I think, is a significant development. It means that we`re not going to allow every bankrupt company that knocks on Uncle Sam`s door to get free money.
[Beck:] OK.
[Schiff:] What else did the Fed do? The Fed now expanded, and we`ll take it to discount with us. So who are we kidding?
[Moore:] That`s true, and that is a form of a subsidy to the bank. But it`s not...
[Beck:] I will tell you, Stephen, you are so you you when we first sat down for dinner and we talked about this, you said, "Yes, but Glenn, this has to happen, and this has to happen, and this has to happen, and this has to happen." It`s the government. Of course, those things will happen.
[Moore:] What`s sad about this, you listen to both presidential campaigns. They`re not talking about it. They`re not talking about reducing the government spending and bringing the bank out. That`s out. I`m hearing more spending.
[Beck:] OK. Peter, let me go to you on this, because I saw some pictures of you know, at the Federal Reserve bank which is not a government institution. They have nothing to do with the federal government. It`s a separate global banking system. When everybody was meeting this weekend with our secretary of treasury, I thought to myself, who the hell is in that room representing the United States of America? Everybody seems to be looking out for these banks, but who`s out there looking out for the little guy?
[Schiff:] The Fed got us into this mess. It drives me crazy when I see Alan Greenspan on television...
[Beck:] Right.
[Schiff:] ... talking about this 100-year flood, like the events that are taking place today are random and they have nothing to do with his monetary policy. He blew up the bubble, and now it`s burst. He created the bubble and helped the bubble with easy money. And why why did we do that? We didn`t want to suffer through the recession we should have had after the bursting of the dot-com bubble after 911. We should have taken our lumps then. We wouldn`t have this problem today.
[Moore:] By the way, who elected Ben Bernanke and who elected Alan Greenspan? Nobody elected them.
[Beck:] I was just going to say, anybody notice they`re not talking about who is in that room representing you, America. Thanks, guys. Coming up, a poll shows that more people trust Palin`s experience than Barack Obama`s. Experience? Really? Plus, the latest round of campaign ads turns nasty. Our political panel will weigh in, in just a second. And we`ll kickoff our weeklong series, "Exposed: America`s Broke." Tonight, we focus on America`s addiction to debt, our quickly rising deficit and the deceit which lies beneath all of us. Don`t miss it. It`s coming up.