Dear Reader,
Hi, good morning. Happy Tuesday!
Today I want to weigh in on Trump’s much talked about pick for Treasury Secretary.
Trump has really been working out his Treasury Secretary pick, as is his way, largely in public.
You have some people pushing for Bob Lighthizer, former U.S. Trade Representative under Trump who architected his anti-tariff policy.
Others are pushing for people like Howard Lutnick, CEO of financial services firm Cantor Fitzgerald.
I’m going to tell you right now – my view, and certainly the view of anybody who understands anything on Wall Street – is that in today’s America you have to have somebody who knows Wall Street finance at a very high level.
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I wish we could go back to the days where we could pick someone like Paul O’Neill.
George W. Bush picked Paul O’Neill to be Treasury Secretary his first term. A steel guy, former CEO of Alcoa.
But you just can’t pick treasury secretaries out of the steel or any other sector anymore. They have to come from Wall Street. Which I’ll explain in a moment.
So Bob Lighthizer, despite everyone’s love of his tariff policies, etc., just won’t do as Treasury Secretary for one reason only…
Our financial deficits are 6% of GDP, which is basically a couple trillion dollars a year.
So what does a Treasury Secretary actually do this day and age?
They sell bonds.
They sell debt, basically.
So they have to have super deep connections to all the big Wall Street firms…
BlackRock, Goldman Sachs, Morgan Stanley, Merrill Lynch, Bank of America – all the firms in America.
But also Japanese firms, Saudi Arabian, German, French, English firms that buy debt.
Because remember, we are selling at least $200 billion of debt every month – sometimes more.
Unfortunately, the duty of a Treasury Secretary this day and age is to find out if there are buyers for the debt we’re selling at the rates we want to sell it.
For example, let’s say the Treasury Secretary wants to sell 30-year bonds and there’s not really much appetite in America, they call Saudi Arabia.
Now, the Treasury Secretary doesn’t do this directly – they give the job to Goldman Sachs or BlackRock, etc. – whoever’s running the book.
And those people call their clients all around the world and say, “hey, you want to buy $50 billion of 30-year debt?”
Now, what’s going to happen is, Goldman Sachs or whoever’s running the book – it used to be Salomon Brothers – they would push back to the Treasury Secretary and say, “look, nobody’s interested in your 30-year debt paying 4.5%. You’ve got to go higher.”
Bottom line is the Treasury Secretary this day and age has to have deep connections in the world of finance.
Because the job that takes up most of their time, unfortunately now, is selling debt to fund these absurd and unhealthy deficits.
You just can’t go back to George W. Bush’s way at this point who was pretty much the last person to try a corporate America Treasury Secretary.
Again, Paul O’Neill, nice guy, but not really prepared even for the deficits we were running then to finance the war in Iraq.
He just wasn’t equipped for the interactions that job required. He didn’t understand finance at that level.
Bob Lighthizer has some great ideas – really instrumental in a lot of policy – but he’s not going to have the connections to get on the phone and to finance this kind of debt.
As I’ve said before, and laid out in detail in my documentary, Midnight in America, Wall Street has already had trouble selling our debt.
So for better or worse, in today’s America, we need a Treasury Secretary who really knows Wall Street.
Now more than ever.
Right now, my research is pointing to a coming stock market crash of at least 50%, a real estate crash of 40%, unemployment tripling and savings accounts losing 30%.
But the good news is, I’ve made the vast majority of my personal fortune from market crashes. This is what I do.
Yes, we’ve had a banner year here as the market has marched up, but those who take 4 steps right now could avoid disaster and see the biggest fortunes of their lives.
Go here right now for the playbook.
“The Buck Stops Here,”
P.S. Warren Buffett just sold more stocks than at any time in Berkshire Hathaway’s history.
Is it because the last time his “Buffett Indicator” flashed this red was right before the market crashed 50%?
I think so.
