Motley Fool Money - Motley Fool Money: 04.09.2010

Episode Date: April 9, 2010

What do surging same-store sales numbers mean for investors? Is Apple's latest offering a threat to Google? And is KFC's latest offering a threat to your health? In this week's Motley Fool Money Radio Show, we tackle those stories, share three stocks on our radar, and talk with business journalist Roger Lowenstein, author of The End of Wall Street.       Learn more about your ad choices. Visit megaphone.fm/adchoices

Thanks for dinner. I should get going now. Not without dessert. Done, ordered on DoorDash. Delicious, but tomorrow's Juan's graduation. Then let's bake him a cake. I'll order ingredients. No, no, no, no. For every reason to stay together, I DoorDash in La Casa. Everybody needs money.

That's why they call it money. From Fool Global Headquarters, this is Motley Fool Money. Welcome to the show. Thanks for being here. I'm your host, Chris. joined by Motley Fool Senior analyst, Seth Jason, James Early, and Shannon Zimmering. Guys, good to see you. Good to see you, Chris. On today's show, Alan Greenspan admits to being 30% wrong. Amazon finds a new target, and KFC cooks up Homer Simpson's dream sandwich. Plus, bestselling author Roger Lowenstein

on the future of Wall Street, and as always, we'll give you an inside look at the stocks that are on our radar. But we begin with some big numbers from the world of retail. Guys, double-digit same-store sales increases for many stores in March and the biggest monthly sales increase in more than a decade. Now, Shannon, I know we had weak comparables from a year ago and in early Easter helped juice the numbers, but what was your takeaway for investors? Yeah, well, the Easter Bunny's early arrival is a big part of this. Sales that would typically have occurred in April occurred in March. Still, broad-based gains across the spectrum.

Discounted shops like Coles and Ross, they did well, but then so did upscale retailers like Nordstrom and Neiman Marcus. Wet Seal, a shop that's near and dear to all our hearts here on the radio. radio show. We all look great in wet seal. Every week I'm there. So that's good news for our consumer-led economy. But did you know, Chris, that figure that gets reported backs out Walmart?

Why does it back out Walmart? Well, because it's so huge that would skew the results. And in fact, if you put it back in, the same source sales year over year were actually down. So as we were talking about last week, when things are going well for Walmart, that's probably not a good time for the overall economy. And when things are going poorly, as they seem to be, if you look at their same-store sales, that probably is a good sign for the market. probably is a good sign for the economy. That is an interesting point about Walmart. I mean, they have not been doing as well as same store sales-wise.

You know, people have been trading up. But Walmart itself is now, according to a Wall Street Journal article, sort of betting against the U.S. economy. They're trying to position themselves as, get this, a low-price leader. Wow, that's a change. Expecting a double dip and thinking that people are going to flock to them instead of the dollar stores. Seth, what do you think?

I can explain it all. The Easter shift is important. And it's also that Armageddon comparable. Last year, I mean, think of it in terms of simple math. If a company did 15% worse last year and they do 15% better this year, they're not back to where they were in 2008. They're still in the whole. Exactly.

I did a little digging on this. I actually listened to some of these calls to take a look at the numbers. Yeah, the earnings calls. They're pre-recorded at the numbers behind the numbers. And what I'm finding out here, at least I was five for five, and the ones I managed to get through, this is really boring, is that a lot of these companies, and American Eagle is one of them,

so is Abercrombie, so is Zumis, are reporting that average retail unit prices, in other words, the average price is something they sell is down. And that's not just because they happen to be selling a mixture of lower priced goods, but that they're actually charging less for this stuff. So it suggests that a lot of companies are putting a lot of stuff on sales,

and that may have been what brought people in. And this is not just at American Eagle, Zumis, Abercrombie Gap. did not say that this is what happened, but they did say they will no longer report information, which would let us judge whether this is the case. Nordstrom, a high-end retailer, right, you'd expect them maybe to be able to sell more at full price. Nope, average ticket decreased at Nordstrom. Investors need to really watch this because if they cannot make up in volume what they are losing by selling stuff cheaper, those stocks are going to look overpriced real quick.

Guys, on a recent show, we talked about how Lehman had temporarily removed more than $50 billion, in debt from its balance sheet through a legal accounting maneuver called Repo 105. Legal but sleazy. Can we just make that clear? You can make that clear. Slegal. Well, it turns out that Lehman has company. The Wall Street Journal reported that 18 banks, including Goldman, Bank of America, J.P. Morgan, and Citigroup hid risk by temporarily lowering their debt just before

reporting it to the public. James Early, what was your take on this? Chris, I think... You were shocked. weren't you? I was totally shocked. I would never have expected this. More than one sleazy bank of America spokesman's quote to the Wall Street Journal reporter says it all. Dot, dot, dot, dot. Our policies are consistent with all applicable accounting and legal requirements. And that's kind of the point is whether this was repo 105 or other things. These things

weren't technically illegal, but they were clearly on sportsman-like. I mean, they were specifically designed to mislead investors. If I have $100 of debt mid-quarter, I bring it down to $58 at the end of the quarter and it bounces back up to 100 again. That's sort of false advertising. And let's be clear. We're not talking about it bounces back to 100 because you have to by the middle of next quarter. We're talking about hiding it for a week or so so people can't see it, then getting right back to it, right? Correct.

This is just a counting window dressing. It may be okay, but some things, I guess, like riding a motorcycle in Speedos, which I saw recently. It's legal, but you just don't do it, you know? That really should be against the law. Alan Greenspan testified before Congress this week and said that over the course of his career, he was, quote, 70% right and 30% wrong. So guys, let's just go around the table and fill in the blanks. What do you think? Alan Greenspan is 70% blank and 30% blank.

Shannon? 70% country, 30% rock and roll. James? 70% Vasset hound, 30% Sharpay. Seth, Jason? Alan Greenspan. 70% full of himself and 30% even more full of himself. I have to be a little serious about this.

This is a ridiculous thing to say because think about it in terms of Russian roulette, right? You load a revolver up and you leave only one or you leave one shell in there. So you've got a one out of six chance of shooting your brains out. It doesn't matter if you're going to be right most of the time because the one time you're wrong, a horrible, horrible thing happens. So taking that analogy one step further, it sounds like you're saying that Alan Greenspan shot the U.S. economy in the head.

Not entirely by himself, but he had a much greater role in it than he would like to admit it. Does he need to take a page out of Tiger Woods' rehabilitation playbook? Like maybe, you know, shoot a commercial where his deceased father is talking to him, that sort of thing?

No, but he needs to take a page out of the previous part of Tiger Woods playbook because that would be a lot more interesting for all of us. But there is similar. That really would be. If anyone has film of Alan Greenspan out there with Denny's waitresses, send it to us. My boost his reputation.

And Andrea Mitchell, too, of course. Motley Fool Money at Fool.com. Keep those photos and emails coming. In other Fed Chief news, some praise for the way the Fed Chief and other policymakers handled the financial crisis. Quote, the world was spared an even worse cataclysm that could have rivaled or surpassed the Great Depression. Who said that? That praise coming from none other.

than the Fed chief himself, Ben Bernanke. All right. But he said he did a good job? Self praise? Yeah, a little bit of self-praise. A little bit of self-price. You get to set his own pay? That'd be great, wouldn't it?

I mean, obviously, we will never know how bad things could have gotten in the abstract. But to what extent does Bernanke legitimately deserve credit here? I think he does deserve some credit. Although, you know, in 2008, he was telling us that the mortgage crisis was all about subprime and that it was contained. Boy, was that ever wrong. But then the Fed, under his guidance, was very aggressive and very bold in the role that it played to stave off complete financial collapse. So I think that he does deserve some credit because I don't think that that would have happened had, say, Alan Greenspan still have been the Fed share. Yeah, I would not have wanted to be Bernanke.

I mean, you have to give him some credit. He took a lot of heat. I mean, everybody's sort of a Monday morning quarterback when it comes to the economy. And he did what he thought was best. So, yeah, he made the best of a tough situation. Yeah, we'll never know. but I think he eventually did the right thing. And so we'll give him a lot of heck, but it's not so bad.

All right, coming up, the week in Apple, and KFC gets ready to unveil nothing less than the greatest sandwich in the history of food. Stay right here. You're listening to Motley Fool Money. Welcome back to Motley Fool Money. Chris Hill here in the studio with Seth Jason, James Early, and Shannon Zerrin as we break down some of the headlines from the week. China is moving toward letting its currency rise against the day.

dollar. According to reports, China would gradually increase the yuan's value up to 3% a year, a move that would make Chinese exports more expensive. Shannon, is that a good thing for investors? Well, this is an interesting story, of course, because little Timmy Geithner has been under a lot of pressure to declare officially that China is a currency manipulator, which is that really a debate? Obviously, you know, if you don't let your currency float and it hasn't been re-valued in two years, that's a form of currency manipulation. So 3% float, well, I guess that's something. And of course, the reason is that you don't let's, you know, and they want a devalued currency so that their exports will be remarkably cheap.

The problem for China is they're also trying to cultivate a service economy, a middle-class economy, and that cannot be sustained by cheap exports alone. Yeah, and remember the thing with having a cheap currency is maybe it's great for exports, but it's not very good if your people want to buy stuff from other countries. Exactly. And that's what China wants. Another problem, too, is that by keeping the currency so low, it's sort of like China's been running this currency car at a very high RPM.

In other words, if the economy, suffers and exports actually fall. People just don't want to buy as much from China. They don't really have much gas left to do anything else. But maybe it's a Toyota. It just keeps going and going. Can I ask the obvious question maybe? Is this just a lot of static based on a misunderstanding?

I think that it seems to me that there's a lot of political grandstanding here along the lines of, if we can just get those darn Chinese to quit cheating on their currency, then we'll get those manufacturing jobs back. Yes. That's absolute nonsense. sense and everybody out there, be careful what you ask for because for most people, more expensive goods from China are going to hurt you more. That's right. There is grandstanding, and there's a principle involved, and I think there's a lot of attention

that's being paid to the principal. The practical impact is going to be negligible in the near term. And remember, they're only saying a 3% float. So, you know, that wouldn't have a big impact anyway. This week in Apple, the iPad is up and running. Steve Jobs implied that Apple has sold at least 7 million iPhones in March. And the company also unveiled its new I-Ad platform, which will compete with Google's ad platform. Shannon, there's a lot there.

What was your big takeaway from Apple? Well, there's no zealot like a recent convert. And I got an iPhone in December, and I love it. So I was a little bit disappointed, though, because the hype was that they were going to talk about some features that were baked into the new OS for the iPhone that's going to come out in a few months. There wasn't a lot of attention paid to that in terms of the coverage. The I-Ad network is kind of interesting to me because it's another way that. that Apple's going to get in the face of Google. Google's already pushing back,

but Steve Jobs thinks that the way people interact with their mobile devices is fundamentally different from the way that they interact with their desktops. And the kind of ad placement, that TechBase ad placement that Google specializes in, he thinks it's not the way it's going to go on the mobile devices. Baking those ads into the apps is a new opportunity for them to build out the ecosystem and generate some revenue. And now you see why Google worked so hard to invent

by buying its own phone operating system to try and stem. this because they knew where this was headed. So is that really Apple's long-term strategy? Is they're going to move into the ad market and take on Google? I think that they are still dealing and are kind of freaked out by how successful the App

Store has been for them. So yeah, this is another way of bringing out some additional bucks and motivating developers to work with them because they're going to be sharing that revenue throughout the ecosystem. All right. Exit question. On a scale of 1 to 10 with the iPhone being a 10 in terms of success and Apple

TV being a one, where do you think the iPad will be a year from now? Well, and Apple TV is a one for now. I mean, they claim it's a hobby, but they're doing a lot of work behind the scenes. Like I said, I am a jelly. So you haven't given up on Apple TV. I got it. No. I don't know. It's not as elegant looking as I thought it would be. And for now, it's like a 3.5, but two years from now. I thought it was very, very pretty. Somebody had one at work, and I played with it. And everything, I thought it was clunky to use. You can't double thumb it. And I still couldn't figure out what you would do with it really that you wouldn't do with an iPhone. I would give it a higher rating than that though. I'd probably say it's going to be a four or five men. You were making the point,

just one thing to say, you were making the point earlier that it's heavy. It's not really, it's a pound and a half or something, but when you pick it up, it feels heavier than it should. That's also true of the MacBooks, the early MacBooks. I don't know why they're that heavy, but I have one from 2006. You probably have an awful lot of battery in there to get that much life. James Early? As I've animated earlier, I'm just waiting until they make an iPad that you can actually flip up to reveal a keyboard underneath, and I think they should call it a laptop. They would get credit for inventing it. Ebooks are coming to a bricks and mortar retailer near you.

Target is going to start carrying Amazon's Kindle later this month, and Best Buy will be carrying Barnes & Noble's unfortunately named Nock e-reader. Seth, you're a Kindle guy. Are you excited about this? No, I don't think it really moves the needle much. I figure a few people will pick them up, but for the most part, people don't go to Target, really to browse the latest in technology. So I think this has a pretty small addition to sales.

But Amazon and Target have been tight for a while. Amazon provides targets web front end for now. So it's not surprising, but I don't think it changes much. But don't you think that these devices in particular, e-readers are the type of thing that a whole cross-section of people are not going to buy into unless they actually get the chance to, you know, test drive them a little bit? Oh, I think that's true, but I don't think they're going to find them at Target. Remember, Target is a giant store where people like me go to buy eight months with a toilet paper and a shot, so they're not necessarily looking to buy an e-reader there.

Where do you store all that TV? In the basement with other things. Some crushing news for all you Bebo fans. Both of you. AOL said this week, it was considering selling or shutting down Bebo, prompting some of us to ask, what the hell is Bebo? Some. All of us. Nobody knew what it was.

It's a social networking site. that AOL bought two years ago, forget this, $850 million. And how many users did it have about then? Several. And we were not making this stuff. We came in today. Our producer Mac had this on the docket, and we all asked, what is Bebo in the first place? We had not heard of it.

And then I still thought it was a kid's social networking site, like that Penguin one. This is one for adults. It sounds kind of kitty, yeah. I've got it on my screen right here, and there's this horrible game-crazy ambulance race that It looks like something from 1985. I can't understand why these people would have lost nearly two-thirds or three. It's all the work I put into my Bebo profiles out the window now. So you're feeling pretty good, Seth, about your chances for survival in a post-Bebo world?

Wow. Yeah, but what about the 16 people who are actually in that social network? And I think they're all pictured on the front page of the website. But they bought it for $800-something million, right? $850 million. Should we try to be somewhat serious about this for a second, which is that this is not unusual. It's happened with the geo-cities and the geo-cities.

How old am I? But it's happened with search engines, with other social networks. And right now, Facebook is in this position where people just talk about how much it's worth, but nobody really knows if it makes any money or anything. If Facebook isn't exactly this position at some point, people will act surprised and there's no reason they should be. But don't you think at some point, AOL, a couple years ago, when they were in the position to buy Bibo, just said to themselves, this is our only chance to get into social networking. Oh, this was obviously made in some kind of a panic. But why are you panicking?

You got to buy one of these. Shareholders wouldn't have cared if they didn't buy this thing. And they could have created their own for, you know, sunk costs. According to an interactive Harris survey of 29,000 Americans, Berkshire Hathaway and Johnson and Johnson have the best corporate reputations. Also in the top 10, Google, 3M, Intel, and Microsoft. Nine of the bottom 10 companies were recipients of government bailout money. Guys, which companies top your best reputation list? I like a company called Genuine Parts.

They have the Napa Auto Brand, some other miscellaneous stuff. It's kind of a boring company, but it's well-run. But let me say this. I looked at the fine print of this Harris survey, and they surveyed 29,000 random people. And one of the categories that they bake into this amalgam, it looks like, is a workplace environment. So I guess I'm wondering how many of these random people, first of all, are familiar with a company like Berkshire Hathaway to begin with,

let alone feel qualified to rate like it's workplace environment? Well, yeah, I mean, with Berkshire, you're talking about, you know, obviously lots of different companies, everything from, you know, Geico Insurance to seize candy. So come on, cease candy, that's got to be a pretty awesome place to work. Yeah, you're right, you're right. And finally, it's one small step for man, one giant leap for Homer Simpson. next week, KFC will begin selling the Double Down sandwich.

They call it a double down? A double down sandwich. Bacon and cheese sandwiched between two pieces of fried chicken. Yes, the fried chicken is the bread. Any takers? Absolutely. I'm with Homer Simpson. It sounds delicious.

You want to test drive it next week? Yeah, let's go after the show. Steve, any chance you're going to join me and Shannon next week, KFC, Double Down sandwich? It does sound delicious, but I may have to pass on this one. You know what? I'm just going to call you out right now. I know that you really want to do this. I know you want to do this, but you're on a new diet. I am. And that's why you're walking away. That's the truth. What if Shannon and I promise we won't tell your lovely new wife?

Sold. I'm in. All right. Guys will be back later in the show to share some of the stocks that are on their radar. But up next, bestselling author Roger Lowenstein joins me to talk about his latest book, The End of Wall Street. chicken fried. A cold beer on a Friday night. A pair of jeans that fit just right. And the radio. Stay right here. You're listening to Motley Full Money.

Welcome back to Motley Full Money. I'm Chris Hill. Roger Lowenstein is a Bloomberg columnist and a contributing writer for the New York Times magazine. He's also the author of five books, including Buffett, The Making of an American Capitalist, and his latest book is The End of Wall Street, a book that profiles a lot of the major players in the financial crisis, including CEOs like John Thane and Jamie Diamond, as well as one guy, Mutual Fund Manager Bob Rodriguez,

who saw the crisis coming. Roger, welcome to Motley Full Money. Chris, it's a pleasure to be on the show. So a lot of books out there about the financial crisis, you're a financial reporter. What's a part of the story that you think hasn't gotten enough coverage to this point? You know, I think the focus, Chris, up to now has been on those week, that week or two in September 2008, when Lehman went down and AIG went down or was bailed out, were the various government agencies right out, depending on which case. Other books have focused on particular firms such as Lehman or Bear Stearns. What I tried to do was to step back and begin the story with Fannie Mae and Freddie Mac and the origin of this sort of moral high. hazard where they do more and more responsibility and show the development of the credit bubble

with people walking in and getting loans without having to say with their earning and in many cases being buy and commit fraud and then and then doing it and to show so that you'd feel by the time you got to September of 08 that it wasn't just about a bank failing or a bank and insurance firm failing it was a whole ethos a whole way of doing business for you know perhaps a generation that was with it was coming crashing down it was a bigger story You did over 180 interviews for this book. Of all the people you interviewed, who changed your thinking about the crisis the most? You know, Bob Rodriguez is sort of my Greek chorus. He's the fellow I lead with, and the book opens in the prolog. And this, Bob Rodriguez, is actually fast asleep. That doesn't sound like an exciting way to start a book, but it is because he has a dream.

and he has a dream that Fannie and Freddie are going bankrupt and that he's being sued because of it. And it's two and a half years before any of that will happen, but he's so prescient that he runs down to the office on a Sunday and decides to sell out every bond he owns from Fannie and Freddie. And in hearing that and getting to know him better, I realized that this was all foreseeable. In fact, it was foreseen that there was a long germinating story here.

and when, you know, when Ben Bernanke was saying in 2007, if he did repeatedly, this is just a subprime crisis. It's contained or a subprime problem. Rodriguez and others like him were saying, but Rodriguez said it specifically. Yeah, it's just subprime, but who owns subprime? City Group owns it. Merrill Lynch owns it. All the biggest bank owns it.

If it goes down, they're going down. And, you know, through, I would have to point to him first as someone who gave me a greater sense of what a long germinating crisis this was. You're listening to Motley Full Money talking with Roger Lowenstein. His new book is The End of Wall Street. There are so many CEOs that you profile in this book and do so with such a clear and in some ways a very blunt eye, which is just great to read. One of them, Chuck Prince, a CEO of Citigroup at the time,

We're going back to July 2007, and this quote caught my eye. He said, when the music stops in terms of liquidity, things will be complicated, but as long as the music is playing, you've got to get up and dance. Greenspan, Bernanke, the Fed, they're all making that music. Why didn't they realize that the music was going to stop at some point? It's an absolutely naive comment, because any child who's played musical chairs knows that when the music stops, there's never a seat for anybody. okay and you laugh but but that is a really accurate analogy of what happens in markets

when the market stops when the music stops in markets everybody wants to sell and suddenly there are no buyers and you know for a man to have risen to become CEO of Citigroup and think that he could sell not a small position but tens and tens and tens of billions of dollars of assets after everyone else decided the music wasn't playing after it is stunningly naive and And he said in Congress recently that he wasn't aware of these assets on their books. Well, he was certainly aware when he made that comment that he was still doing the dance. Well, also talking to Congress this week was Alan Greenspan. How much blame do you think he deserves for the crisis?

I think Alan Greenspan deserves a lot. When I talked about the ethos, I think at the center of that ethos was the ideology that markets always knew best, that there was no place for government in Wall Street. That, as Alan Greenspan said, and I'm quoting, in 1999, that derivative transactions negotiated by private bankers do not need regulation from government. I think for Greenspan, this really was an ideology, almost a religion. He believed that markets were sort of a pure, you know, derived from nature,

and who were we to interfere in them? He said repeatedly that he didn't believe in stepping in the middle of asset bubbles. you know i think is it's a permissive interest rate policy uh... on the one hand and on the other hand his refusal to regulate which is also a job of the fed the banks who were dishing out these mortgages you know he he bears a very great responsibility

you're talking to roger lowenstein his new book is the end of wall street what most surprised you when you were working on this book you know what surprised me i have to confess that when i started out of the working title was um... six days of it shook the world and then um it turned into two weeks it took the world and six weeks and so and finally i just junked that whole crazyology and the more i went back i i was and began crashing down in fact my wife is reading a draft she kept saying you sure this is 2007 not

2008 because we were really in a financial freeze from about august of 2007 the subprime industry was collapsing. By the time we got to 2008 when Lehman failed, but beforehand, the foreclosure rate had quadrupled. Delinquencies were up by a factor of three. Jobs in Main Street America had fallen for eight straight months in a row. This is all before Lehman. The cake was baked, and yet Bernanke was still saying that the economy was going to continue to grow. This was the sort of the best advertised collapse we've ever had, and it stunned me to see. you know, how deep the pain was. Last week I interviewed Simon Johnson, economist and author.

He said that what he thinks President Obama needs to do is take a page out of Teddy Roosevelt's playbook and break up the biggest banks and cap bank size. Do you agree with that? Would that help? No, I don't. I think, what are we afraid of? Are we afraid of big banks or are we afraid of leverage banks, leverage financial firms? If you look at this episode and if you look at prior episodes, the danger always comes when firms take on too much leverage. If you look at 1998 and long-term capital management, the hedge fund, that was not a big firm as banks go, but it was leveraged ultimately 100 to 1, and it sent Wall Street practically over the edge.

Bear Stearns was not a particularly big firm. Lehman was not a big firm as Wall Street firms go. So certainly the financial products group of AIG, a little insurance, a little offshoot of an insurance company over in London, what was terrifying and terrorizing about those, all of those, wasn't their size per se. It was a degree of leverage, and I would, you know, if I had to do one thing, that thing would be to limit leverage of financial firms. I'd much rather have a big, well-capitalized bank than a small, highly leveraged bank any day of the week. Okay, we're going to hold it right there. Coming up, we'll continue the conversation with bestselling author Roger Lowenstein and find out what lessons have been learned from the financial crisis.

This is Motley Fool Money. Welcome back to Motley Fool Money. I'm Chris Hill, and I'm talking with Roger Lowenstein, author of The End of Wall Street. All right, help me look smarter to my friends. Let's say I'm out with my friends at a barbecue or out for a drink one night, and the conversation turns to the financial crisis and the problems on Wall Street. what's one observation I can make that will impress people? Well, one observation you could make is that Wall Street has an incredible inability to learn from its own mistakes. If we had had this conversation 10 years ago after the collapse of LTCM, when markets again panicked,

we would have said, gee, that firm was highly leveraged. It's ridiculous that we let it get so leverage, and we would have said, gee, they relied on all these computer models that were based on past history of market prices as if they could predict how prices would behave in the future. What happened this time? Instead of one hedge fund, just about every firm on Wall Street piled up on debt, and just about every firm on Wall Street used these models to predict what would happen to mortgage defaults. Models that were entirely based on the past,

a period that had nothing to do with the present period when mortgage standards were so much. much looser. So you could say, when are these guys going to learn? And you could say, you know what? Since these guys may never learn, we may need some government to learn for them or to regulate them. What do you think it is about bubbles that make people on Wall Street and people in business almost incapable of recognizing them, whether it's dot-com bubbles 10, 11 years ago, housing bubbles. What is it about that? People are very impressionable. You know, when somebody gets an iPad and then the next person does,

the third person wants to not because they know whether it's any good or not, but because, you know, everybody's doing it. And that's human nature. But I guess I take issue with the idea that no one can recognize them. All that is the position of Alan Green's bandit's position of Ben Bernanke. But I like to quote the economist Bob Barber as I do in my book that a child of four could have detected the dot-com phenomenon as a bubble. You know, when you have stocks that are trading, you know, the double and treble on their first day,

and they don't have any earnings and don't have any prospect of earnings, but there were plenty of people who were saying that that was a bubble. And when you have people walking into thrifts, as we did in 2003 and 2004, and getting mortgages without having to show that they actually had any income, and then got mortgages on top of the first mortgages, so they had no capital at all involved, you know, you would have to say, gee, it seems like credit standards are getting kind of loose. That wasn't so hard to detect. With an inability to learn, do you think there will be any lasting lessons from this crisis?

I do. I do, because I think the pain, I think there'll be lasting effects. I think the pain was very great this time. And, you know, if you think on a sort of a political metaphor of how our notions of our own security changed after 9-1-1, I think, you know, prior to that, many Americans had figured this. the era of wars and worrying about our physical safety was over. And regardless of what's happened since, none of us ever quite feel the same, I think, in an airport. By the same token, you know, we grew up in the 90s and O's hearing that recessions or serious

recessions were a thing of the past. The Fed had learned how to control them. We didn't really need regulation anymore. Economometric models could predict the future. Bankers certainly didn't need any guidance from regulators. I think that whole ethos has passed. And I think for this generation anyway, this bus will have been a scarring experience. You're listening to Motley Full Money.

We're talking with Roger Lowenstein about his new book, The End of Wall Street. All right, Roger, before we let you go, we've got to play a quick round of buy-seller hold. I'll spot you up with some ideas, concepts, products, that sort of thing. And you tell me, if they were stocks, would you be buying, selling, or holding them? And let's start with Buy-Seller Hold, the legacy of Allen Greenspan. I would be selling the legacy of Allen Greenspan right now. And is that in part because of his performance on Capitol Hill earlier this week? No, it has nothing to do with Capitol Hill this week.

It has to do with his performance as Fed Chairman from 1987 to 2000 and early 2006. Fair enough. Buy seller hold, the future of Tim Geithner. I think a sell. I think Geithner has been a very capable administrator and public servant. at some point, it will be useful to have a Treasury Secretary who's not tied down to all the decisions that the Geithner-Pawson-Bernanke team made in 2008, just a fresh pair of hands and a fresh pair of eyes. So I would think in the first round of cabinet shuffling or something

that he could be going. You've written a book about Warren Buffett, Buffett, The Making of an American Capitalist, so Buy-Seller Hold the likelihood of a Warren Buffett movie at some point in the future? Geez, you know... I'm not asking you to cast it. Having written about Warren Buffett, I can tell you that, you know, he drives to work every day and he drives home. But there'll be a Warren Buffett movie someday. I would buy that one.

The Economist calls his writing, storytelling journalism at its best. The new book is The End of Wall Street. It's available everywhere. Roger Lowenstein. Thanks so much for being on Motley Full Money. Chris, it was my pleasure. As always, people on the program may have interest in the stocks they talk about. Don't buy ourselves stocks based solely on what you hear.

Joining me in the studio once again, our trio of senior analysts, Seth Jason, James Early, and Shannon Zimmerman. But guys, it's time to bust out the full mailbag. Steve Broido, what do we got? Well, Scott has Palm on his mind. He writes, I was wondering about how you judge the likelihood of a company like Palm as a buyout candidate. Palm and HTC seem to fit together very well.

HTC, the Taiwanese manufacturer of very slick smartphones, can make the great hardware for a good price, but pays companies like Google and Microsoft to use their software on the devices. Palms is probably the best software, but can't seem to sell the phones to save profitable, and their current phone has hardware issues that I think HTC could really improve upon. Guys, what do you think? Palm is a good buyout candidate? I think that it was probably a good acquisition candidate maybe six months ago, but they've had very disappointing results lately. I think that has made them much less attractive to potential buyers. Why buy now when you just let it die in the vine and yeah and and and I don't think actually that technically they have to pay to use

Android that's open source right so yeah but yeah if they wanted the OS and I don't think they do you just let it you let the company die and you buy the OS from them Steve what else Mike from Austin emailed us about our recent calling out of Best Buy for lumping in online sales with same store sales Mike writes I wanted to remind you guys that Best Buy has an option on their website to pick up your purchases at your nearest Best Buy store so you don't have to wait for it in the mail I bring this up because it seems fair to give the physical store at least some credit for that purchase, since it's the store inventory that will take the hit for the purchase.

Yeah, I actually, that's something I thought about before I brought it in. I don't think it makes any difference. In fact, I think it just confuses things even further. What you want to judge when you're hearing about same store sales is how much are these individual bricks and mortar structures on their own, adding to the revenue and the profit line. And as long as you're mixing up these metrics, you're not helping investors see it clearly. best buy, just strain it out. These are very smart questions, though, and

I'm a little daunted, but people are actually paying that close attention to what we say. I'm flattered, I agree. Motleyfulmoney at fool.com. Keep those emails coming. Steve, one more. And Peter from Germany weighed in on our recent discussion of favorite cereals. My favorite cereal is definitely

Captain Crunch. Yes. I first ate it when I was eight years old and was visiting my uncle who lived near Chicago. I still love it today, but as I live in Germany, I can't have it because it's not sold here. So every time I visit the States, I bring a suitcase full of that stuff, and pop tarts too. America's finest. This is my favorite German right now.

I love that. I just love the idea of a guy with a suitcase full of Captain Crum. I wonder if he's ever gotten in trouble with the customs people. What is wrong with Germany? That there's no Captain Crunch on the shelves. Well, they're not necessarily... I can regulate that stuff. Germany doesn't have necessarily the highest reputation for fun.

Yes, that's right. If you have any comments on anything you've heard on the show or any questions, questions, drop us an email at Motley FoolMoney at Fool.com. All right, guys, in the time we have left, let's talk about the stocks that are on our radar. Shannon Zimmerman, we'll start with you. My company is a company I own, and the Fool owns it through one of the services that I run here. It's FACSET, tickers FDS, great company, rock-solid balance sheet. Looks a little pricey right now. Folks who may be invested in this should keep a close eye on it. And what do they do?

They are a provider of financial facts and figures widely used in the financial services industry. All right. James Early? Chris, I'm almost tempted by Young Brands after hearing about the disgusting sandwich you mentioned earlier. I wouldn't want to use an iPad after reading that sandwich, by the way. But I'm going to go with Bemis. This is a former income investor stock. My newsletter makes flexible packaging, 3.1% yield, good returns, good dividend raises, solid company. BMS is the ticker. Not like a moonrocket, but it's definitely stable. Seth, Jason? I've got another one for James. Brookfield infrastructure. Ticker is BIP. It's kind of a weird, boring company. They own pieces of infrastructure.

Electricity lines, hospitals are considered social infrastructure, pieces of ports. In other words, kind of cash generating stuff. They pay a pretty good yield. It's usually above 5% or so. The stock is trading right now what I think is a reasonable, though not dirt cheap valuation. And I think they have a lot of price protection built into the business just because of the way it is. BIP. All right.

Seth Jason, James Early, Shannon Zerring. Guys, thanks for being here. You're welcome. Thanks to our special guest this week. Roger Lowenstein, his new book, The End of Wall Street out in Surrey. stores now, go out and pick up a copy. And James, the offer still stands. Shannon and I will be hitting the road.

We are going to find a KFC. We're going to find the new double-down sandwich. And we'll probably, Shannon, we'll probably stop by like a hospital and pick up some heart paddles. That's right. That's right. If you missed any part of the show, you can find it at our website, motleyfoolmoney.com. You can also get a copy of our free report,

the Motley Fool's top stock for 2010. All that and more at motleyfoolmoney.com. Our engineer is Steve Broido. Our producer is Matt Greer. I'm Chris Hill. Thanks for listening. We'll see you next week.