Suze Orman is a Fool
By Chad on Sep 17, 2008 in Current Events
Yes, the title is a little over the top, but her recent comments on Larry King Live show how little she knows about the markets and economics
Larry King: A few months ago, you said on this very show that you would be worried if there was another big government bailout. It’s now happening. Should the government be helping AIG?
Suze Orman: Well, in this particular case, I have to tell you they should. Bear Stearns, very different. Lehman, very different. AIG is an international giant that just doesn’t have ramifications here in the United States. It is worldwide. They’re like in 130 countries. They have 100,000 employees. Everybody has an AIG insurance policy. So in this particular case, my opinion, thank God, they bailed out AIG.
Per Orman there are three main reasons why AIG should be saved, but they are less than compelling:
- International giant/130 countries - Who cares? If it would have just hurt the U.S. then letting AIG fail would have been fine?
- 100,000 employees losing their jobs - Not all of the 100,000 people would lose their jobs, as much of AIG would have been broken up and sold off. In the worst case this would have caused 50,000 or so to lose their jobs. People lose their jobs all the time from failed companies and the government never steps in to save them. Sure losing your job would suck, but that is a risk we all face. Why should we pay for these people to keep their jobs? We should not. We should let the system work.
- Everyone has an AIG insurance policy - Again, who cares? The majority of their insurance businesses would have been packaged and sold off, and maybe 20-40% of their clients would have lost real money. Again, it sucks, but nothing is guaranteed, and it definitely should not be guaranteed with our money.
I know many respected people are saying this had to be done, even people I really respect, but this is getting ridiculous. We are rewarding poor management and bad companies, which is perpetuating the downward economic cycle. From the immortal Sgt. Barnes of the movie Platoon, “Shut up! Shut up and take the pain! Take the pain!”
Ms. Orman then follows this up with her dumbest statement yet:
King: The Federal Reserve decided to leave short-term interest rates unchanged today at 2 percent. Good or bad?
Orman: I personally think it was bad. Listen, the banks in the United States of America are in trouble. Anything we can do, in my opinion, to help the banking system so they can make a little bit more money, I think, would have been a good idea. If we had lowered interest rates, the Fed funds rate, the banks would have been making more money on the money that they lent out, which would be helping everybody in the long run. So I think they should have lowered, but they left the same.
Inflation is out of control and she wants to stoke the fires to give the banks a little more money? How dumb is she? This would help the banks in the short-term, but hurt the economy in long-term by increasing inflation and allowing the banks to put off tough measures longer.
It would also reduce the power of the Fed, for the immediate future, as rates this low mean they have little ammunition for future economic stimulus.
I like Ms. Orman for personal finance advice (budget, live with in your means, etc.), but she knows nothing about capitalism, the stock market or high finance. So, take her advice, but only on the subjects were she is actually an expert.
And she looks a little creepy on those book covers. She has “crazy” eyes. Spend less, save more, there I just saved you $19.95 for one of her books.
Christine Gilbert | Sep 18, 2008 | Reply
Suze Ormand on Larry King, huh?
The only reason that senile old turd’s show still exists is because it’s well known that he throws nothing but softballs and will help you sell your book/movie/DVD/stage show, whatever.
That creepy old bastard is a joke.
Dave | Sep 18, 2008 | Reply
Well, unfortunately, lowering the interest rate is needed. A major factor in the market problems is that money simply isn’t flowing well. The only way to increase the flow of money is by lowering the interest rate.
Raising the interest rates is what got us in this mess to begin with. The market is screaming for lower rates and Bernanke is refusing to do it. Sadly, there is no easy fix and Americans will be paying for it over the next 20+ years.
Ben | Sep 18, 2008 | Reply
She does have “crazy” eyes, and your last sentence is about 80-90% of the info she gives out.
He is very creepy. Very Crypt Keeper like.
@Ben
I couldn’t disagree more. This financial crisis has extremely little to do with interest rates. Companies and people aren’t borrowing or investing because it’s too expensive due to interest rates. They aren’t borrowing or investing because everyone is afraid the financial system will fail, and they will end up with $0. No one is going to buy WaMu bonds no matter how good the rate is. And, Goldman, Morgan, Lehman, Bear, etc. can’t do any bond issues for themselves or others because no one trusts anyone. How high or low the interest rate is does nothing for trust, as the risk right now seems to great.
Chad | Sep 19, 2008 | Reply
I disagree with Ben also. It’s not that the money isn’t cheap enough, it’s that the banks still are too levered to borrow. They’ve borrowed too much, now we want to prop them up by allowing them to borrow more?
Chris | Sep 19, 2008 | Reply
I agree, rates need to go up. The events of the last week are going to put “upward pressure” on inflation.
As for Orman, my goodness, I waisted my money on her first book some years ago—I actually threw it away as it offered only the starkly obvious or simple.
Suze actually told, I believe it was Larry King, that John Kerry should be elected because the tax rates in the US are too low—this is a “financial planner.” I’m sure her “clients,” if she had any at that time, loved to hear that. What an idiot. Why would anyone take her advice?
Marc | Sep 20, 2008 | Reply
Yeah, her advice is very rudimentary. Anyone who thinks she is providing ground breaking info has no business in the markets.
Also, I read somewhere (not 100% sure it’s true) she has all her wealth in bonds/CDs, with zero exposure to the market. You can’t take market advice from anyone who doesn’t own some of the market.
Chad | Sep 20, 2008 | Reply
Who knew a making the minimum payment on a 21% interest credit card would take forever to pay off and cost you a fortune? If you are that ignorant you really do need her advice. I think my real problem with her is she profits from the terminally stupid. The junk she hawks on the TV shopping channels is ridiculous.
Esteban | Oct 23, 2008 | Reply
She does profit from the terminally stupid. That stuff she sells is offensively basic. Anyone who buys it and is amazed needs to look at whatelse they don’t know. Can they find the U.S. on a world map?
Chad | Oct 23, 2008 | Reply