Announcer: Please note disclaimers at end of show. Welcome to Creating Wealth with Jason Hartman. During this program, Jason is going to tell you some really exciting things that you probably haven’t thought of before and a new slant on investing, fresh new approaches to America’s best investment that will enable you to create more wealth and happiness than you ever thought possible.

Jason is a genuine self-made multimillionaire, who not only talks the talk, but walks the walk. He’s been a successful investor for 20 years and currently owns properties in 11 states and 17 cities. This program will help you follow in Jason’s footsteps on the road to financial freedom. You really can do it. And now, here’s your host, Jason Hartman, with the Complete Solution for Real Estate InvestorsTM.

Jason Hartman: Good afternoon and welcome to the Creating Wealth Show. This is your host, Jason Hartman. Let’s talk about the complete solution for us real estate investors and how to get by in these very uncertain times. I came across a great article a couple of months ago in the Financial Times. If any of you travel, of course, I’m sure you’ve picked up a copy of the Financial Times when you are in Europe, or anywhere abroad around the world. And one of their award winning journalists, Gillian Tett was able to join us from London. It was later in the evening her time and I really appreciate getting her on the show. We had tried to line her up for a couple of different shows and we were unsuccessful. But we finally got some time to talk with her via phone from London and hear a little bit about some of what’s going on behind the scenes. She’s out with a new book entitled “Fool’s Gold” and I think you’ll really enjoy this interview.

Our next show we have our guest Steve Malloy, who is going to talk about Green Hell and the cost of environmental regulations and what is really behind the agenda of the environmental movement. Before we go to the interview with Gillian Tett, I want to remind you of a couple of events that we have coming up. No. 1, on September 22nd, we have “Investing in Real Estate in Income Properties with your IRA or Your 401k”. So join us for that here at our Costa Mesa office.

Creating Wealth in Today’s Economy was packed last weekend when we held it and it was standing room only for a while until we moved some extra shares and tables in. And join us for the next Creating Wealth in Today’s Economy event on October 3rd; that is the day before my birthday. So, I’m not even taking the weekend off just so I can be with you for that. And of course, the Masters’ Weekend – our semi annual event only happens every spring and every fall – October 10th and 11th – here at our office or maybe across the street at the Marriott Hotel, we’re not sure yet, here in Costa Mesa, California.

Recorded Promo for Masters’ Weekend

Jason Hartman: Good morning, everyone!

Announcer: There’s never been a better chance to learn what you need to know to achieve financial independence. And it happens over the course of two powerhouse days every spring and every fall. With a panel of 16 vibrant, intellectually motivated and – I’ll say it – slightly obsessed with real estate experts leading the way, there’s a good chance you’ll be sad to see it end.

Jason Hartman: This is the Masters’ Weekend, a gathering of experts, where we fly in experts from all over the country. We have guests here today from as far away as North Carolina and Colorado. And then we have experts flying in from many states all over the U.S.A.

Guest: Probably the most interesting thing that I’ve learned so far is about the 1031 exchanges. I thought that was an excellent presentation. Answered questions I didn’t really even know I had.

Guest: And yes, we are planning to invest with Platinum Properties and probably in the GoZone, but perhaps not exclusively. And we were greatly impressed today with the surroundings and the glamour and the style, but also the information.

Guest: And Karam and Sara and all the folks here at Platinum have helped us tremendously. So, I think we’re on the road to success.

Jason Hartman: Don’t wait to buy real estate. Buy real estate and then wait.

Announcer: The Masters’ Weekend is a twice-yearly special event. So don’t wait another six months to learn the skills that could make you financially independent. Space is limited, so your immediate registration guarantees a seat in the room at Platinum Properties Investor Network with Jason Hartman and our gathering of experts.


Jason Hartman: I wanted to mention one more thing before we go to the interview. A lot of you have sent in questions and so forth. I haven’t been addressing your questions and it’s not because I’m not getting them, but we recently changed email providers and our system is a little bit crazy right now and we’re having a little trouble hunting down some of the questions. While we have seen them and we appreciate them very much, we haven’t sort of got them all together to answer on the show. So, we’ll get to those on an upcoming show. And one of the ones came in that I found particularly important to address and it was about the interview recently with Robert Kiyosaki, the very famous “Rich Dad” author. And I have to tell you, I agreed with this listener who emailed in with a comment very much, in that Mr. Kiyosaki seemed a little bit grumpy. I think we just caught him at a bad time, but he’s such a big name we really wanted to get him on the show. And we were very tenacious about trying to get him on the show for several months. We edited that down and tried to make it sound as good as we could, but he seemed a little harried and frankly, just a little bit grumpy.

Some of you have asked questions about different guests that we’ve had on the show, and really complimented me on having guests on that disagreed with my point of view. And I’ve got to tell you, I don’t agree with everything our guests say. For example, Harry Dent, I’m a big fan of Harry Dent. But one of the things I just cannot figure out. I can’t get my head around is his view of the future in terms of inflation versus deflation. You know, Howard Ruff who we recently had on the show, he’s a total gold bug. And as you know, I agree with the premise of the gold bugs and the precious metals people. But I definitely do not agree with their conclusions. So, you’ve got to sort of pick and choose what you agree with and what you don’t. And just see what sounds right to you with these various guests we have. But we certainly want to expose them to you because they have been influential in my thinking and I think they will be in yours, too. So, just a brief comment there, let’s go to the interview with Gillian Tett.

Interview with Gillian Tett, Financial Times writer & author of &quotFool’s Gold”

Jason Hartman: We have an exciting guest today, Gillian Tett who is an award winning writer with the Financial Times and she enraged Wall Street with her book, “Fool’s Gold”. And I think she’ll have some very interesting insights into what lead to the 2008 meltdown and all sorts of news about the financial market. Gillian, welcome to the show.

Gillian: Thanks for having me on the show.

Jason Hartman: Tell us a little bit about how you predicted the meltdown coming, about a year ahead of the curve.

Gillian: Well, I certainly wouldn’t say I predicted the full scale of the meltdown. However, I was working on the ST and running the capital markets teams back in 2005 and essentially we were one of the few organizations that was really trying to get under the skin of what was making the credit markets tick, back in 2005. It really wasn’t a very fashionable area for discussions for most journalists. And as we looked at some of the developments in the credit markets and saw just how complex these markets were becoming, how rapidly they were growing, and just how opaque much of the activity was, we became increasingly concerned. And you know, not in the sense of actually predicting the full scale of the meltdown, but certainly in saying, “Well, hang on a sec guys, there’s all this activity happening here, that ought to be scrutinized more thoroughly, and more widely discussed.”

Jason Hartman: And what did you see? I mean you had some exclusive access to the CEO of JP Morgan, I guess. And some things that other journalists did not really see in the way that you did, as up close, right?

Gillian: Well, essentially, there were two stages to this whole endeavor. On the one hand, I was covering these markets in a pretty thorough day-to-day way before the crisis exploded. And you know, when I was going around these markets in 2005, 2006, what I saw was that bankers were creating these new products. There was a wave of intense innovation under way. Prices were going crazy and yet nobody out there in the markets would really explain to me how many of these products worked or what the implications were of having all this innovation. There was a feeling of the system having just spun out of control – gone totally mad. So, that certainly got me concerned. Then later on, when I decided to try and piece together the story, which I focus on in the book “Fools Gold”, I went back to the JP Morgan Group who had been so central in developing many of these products originally. And I also had some access to people like Jamie Diamond, the head of JP Morgan Chase today. And that was the kind of post crisis perspective on how this terrible saga had developed and how it was unfolding.

Jason Hartman: And tell us, when you say these products – I mean we’ve all developed a new vocabulary since the crisis, Gillian, of acronyms like CDO’s and all of these sort of exotic products that were out there. What products specifically are you referring to?

Gillian: Well, essentially the products that have been at the heart of much of the crisis are the securitized mortgage loans, and to a certain extent, securitized corporate loans and the derivatives of those securitized products. They were talking in particular about the sub-prime assets and the loans that were sliced and diced and bundled together into new vehicles of CDO’s, and then the derivatives that were then created off the back of those sliced and diced loans. And many of those derivatives were bundled together to create derivatives-based CDO’s as well.

Jason Hartman: So it was a derivative upon another derivative. That’s amazing.

Gillian: Yeah, it was multiple layers of slicing and dicing. And the impact of all this in financial terms, if you like, was a bit like creating sausage stew. You know, you start off with 100 cows, or 100 pigs. You chop that meat up. You mix it all around, create sausages, and then you get the sausages together and chuck them into a pot and create sausage stew and mix it all up again. There was just an awful lot of financial engineering going on. Both using derivatives, but also using straight forward loan sales techniques.

Jason Hartman: Looking back on what developed and the fallout that occurred and is still with us, unfortunately, and I think will be for a while – do you think this was a matter of, sort of that old expression, Gillian, of everybody just trying to make a buck and kick the can down the road and let the next entity solve the problem? Or get out while their tenure was going on and move on and retire, or be out of this market? Was it engineered in such a way that it was just blatant fraud, or was it creativity? And then I’m going to ask you your thoughts on government regulation and what part that plays?

Gillian: I think it was a mix of the two. I don’t think it was blatant fraud for the most part. Although, there certainly was some fraud involved. But in what generally happened was a group of bankers stumbled on a set of innovations that seemed to have the merit initially. And then they realized these innovations were essentially a printing press. They could create these amazing profits in the bank. And the reality is the banks aren’t run like charities. They’re profit-seeking enterprises and in the absence of any external constraint or control, they will basically exploit the situation to the max. And so they did. And they took what had started out as some quite sensible ideas – I mean some of the products involved in the crisis, such as these bundles of securitized debt, these so-called CDO’s, or these derivatives that allow people to bet against the chance of default, credit derivatives, or so-called credit default swaps. You know, at their core they weren’t bad ideas. But they were just taken to utterly, utterly crazy extremes.

Jason Hartman: They sure were. I interviewed Thomas Woods a few shows ago and he of course, wrote the book “Meltdown” and talks about what we need is not more government regulation. We actually need less and of course, that’s a pretty controversial idea. Some say the whole market was under regulated and capitalist bankers were allowed to run wild, as you just kind of alluded to. And some say it really wasn’t – that wasn’t the problem. The problems were just the nature of the way things unfolded. There were people doing illegal activities, laws weren’t being enforced. What is your outlook on that?

Gillian: Well, I think the real problem is that you can’t have a situation where you say that you need less regulation and market forces should be allowed to run their course. And basically, if you take the risk and you get it wrong and you go bust, then fine. That’s the kind of free market vision, the self-regulating, self-healing market vision that people have. You can’t have that kind of vision in practice, if it’s the case that the banks are also interconnected with each other, that if one goes bust, they drag the whole system down. And so it goes back to you have to prop them all up. And essentially, that’s been the pattern we’ve had for the last few years. I mean they couldn’t let Bear Sterns go down. They didn’t dare to. They let Lehman Brothers go down and it was catastrophic in its consequences. So these days, you basically have got all the market players propped up, so you can’t really have a very true market system. And so in that situation, I would argue the second best solution is to have governments trying to intervene and trying to make sure the banks don’t go completely mad.

Certainly, one of the key problems of the last few years has been that there was virtually no oversight or control over what the banks were doing. And as a result, the banks just basically pushed the envelope to the max. They arbitraged things as far as they could.

Jason Hartman: So, when you say the second best solution – what is the first best solution?

Gillian: Well, I would say in an ideal – I mean I think you have to have one of the two solutions. You either have a situation where banking is run like a utility and the government tries to make sure that it’s run in a fairly safe, stable way. Or you have a situation where you really have free market forces let rip and if people get it wrong, they go bust and get removed. You actually have genuine creative destruction. However, America has not been able to tolerate genuine creative destruction in the financial sphere in recent years because there was a concern it would bring down the entire system. So you’ve kind of been stuck in the worst of both worlds for the last few years. You’ve had the rhetoric and mantra of a free market system, without the reality. And nor have you had regulators actually trying to run it in a safe or stable fashion.

Jason Hartman: And when you say you don’t have the reality of the free market, is that there’s nobody’s allowed to fail? Or not enough companies are allowed to fail for abusing the system, or abusing the market, right?

Gillian: Yeah. I mean if you’re going to say, listen, free market forces rule, you have to let the companies fail. And you have to make them smaller. You have to make them less connected with each other. You have to ensure that they can go bust. But back in 1999 or 1998, they didn’t have the courage to even let long-term capital management go bust. You know one popped this little hedge fund with just you know $3 billion worth of exposure I think at its height, which, at the time, people thought was a big number. Now it seems laughably small. So that was actually not $3 billion exposure at its height – I think that was $3 billion hole that had to be plugged during the crisis. You know, these days you’ve got these giants like Bear Sterns, Lehman Brothers and all the other banks which can’t be left to go down. I mean some of the big hedge funds probably would cause chaos if they were to collapse now as well. So any illusion of having the precondition for a proper free market in finance, where the profitable survive and those who made mistakes basically go to the wall, I mean that’s an illusion right now. You don’t have that.

Jason Hartman: Sure. Yeah, it’s the furthest thing from free market or capitalism that you can possibly imagine almost. So, with the Long Term Capital Management story back about 10, 11 years ago, that was really sort of the first one that kind of set the stage for some of this stuff, at least as far as I know. Those guys had claimed that they figured out a mathematical model that could eliminate risk basically and, of course, that just wasn’t true. And when you look back on that story, everybody thinks, “How could everybody have been so stupid to let this happen?” And then ten years hence, this happens and it’s an even bigger problem. Well, let’s examine maybe the governmental response to this. What are your thoughts on the way the government has responded?

Gillian: Well, the government has responded as government sadly had been responding in financial crisis, which is, first, they tend to deny the scale of the problem and pretend it will just go away. And then they slap on a bunch of sticky plaster solutions in hopes that that would work. And then finally, they got serious, a year and a half down the road, and recognized that you know this was going to require a proper coordinated government intervention. The tragedy is that it took so long and that much of it has been so badly handled.

Jason Hartman: So you think the response now is the correct response – I mean the bailouts, the stimulus? Of course, you’re talking to us from England, so it’s different there a little bit. But it seems to be a similar response with all of the governments around the world, essentially. Is that the right thing to do?

Gillian: I think that is probably the least bad option. I mean all of the options right now are pretty horrific. That is the least bad option.

Jason Hartman: Okay. It’s just surprising to me that there are no real claw-back requirements, with just a few major exceptions – kind of almost show trials, whether it be sort of the Madoff’s or a few of the other big ones – that there aren’t really any real claw-backs of all the people that were enriched by exploiting the system and the government is just sort of – their response is print money and paper over the problem, in a sense.

Gillian: I don’t think people have any mechanism to claw things back, legally. And there’s an interesting question here is do you continue to ignore/observe the rule of law in a crisis like this. And if you ignore the rule of law in this situation, you may create a situation that’s extremely unfair, i.e., those who got rich on the back of this boom are getting away with it even now. Or do you try and overturn the rule of law and risk seriously undermining confidence in the American way of doing business and the American sort of corporate and sales fabric. The problem has been bedeviling the government for the last few years and it ranges from say General Motors, where you have this huge great fight about which creditors have priority or not in a restructuring. And should you try and protect people like the unions – so the pension fund, even though they actually probably ought to be back of the cue in terms of legal precedents, you know? Or do you rip up the rule of law, I mean – or not? And that also applies as much to the banking sector, too. For the most part, the government has decided to observe the rule of law, even though it looks very unfair. But people had contracts.

Jason Hartman: Right. And so, what you’re saying is you’re probably to some extent eluding to some of the bonus arguments and-

Gillian: Yeah.

Jason Hartman: Why? I mean, I think it was Morgan and AIG just announced a bunch of bonuses again. And they claim, well we’ve got to retain people and so forth, to get us through this crisis. They’re in their contracts and so forth. That just smacks of unfair, given what’s gone on.

Gillian: Yeah. And it’s utterly disgusting to most people. And I can understand why people feel angry about it. But as I said the choice people face is do you abide by the rule of law or not?

Jason Hartman: Right. Tell us a little bit more about the book, if you would? What do you cover in the book – in a little bit more detail?

Gillian: Essentially what I do is try to explain how some of the financial innovations that prove they’re crucial to the crisis, how they came into being, how they developed, and how they became so perverted. And I do this by telling the story of a particular group of bankers, who formerly affiliated with JP Morgan back in 1990. This group developed the concept of credit derivatives really from the mid 1990’s onward. And they weren’t the inventors of that idea and they certainly weren’t the only bank that had developed the product. But they played a very key role.

And I tell their story really from the mid 1990’s up to the present day, trying to illustrate a very important point, which is that when the idea of credit derivatives of securitization, of CDO’s first cropped up, the bankers who were developing those schemes weren’t doing that because they were on some evil, manic plan to blow up the world. Or, they weren’t even doing it because they were madly, madly greedy. They thought they had a technology that could be quite helpful in trying to build a more efficient financial system. But essentially, once the genie was out of the bottle, it essentially created this incredible spiral of activity and the bankers went mad. Ironically, the particular group of bankers, who I’ve tracked, were not those who committed the biggest crimes, if you like, in the sense that they handled the products very affordably. But others came along and copied their ideas and took them to extraordinary lengths that were critical in creating the problems we have today.

Jason Hartman: You go over – your book is in three parts: Innovation, Perversion, and Disaster. Do you want to expand a little bit more on those? I mean the way the mergers went down and especially these sorts of emergency mergers that occurred after the crisis. The leveraging, I mean, what – 30-to-1 leverage ratios, maybe even more, depending on how you look at it? Can tell us a little bit more about that, if you would?

Gillian: Well, the innovation, basically, is pretty much self-explanatory. I tell the story from in the 1990’s of how these ideas came about and how people thought they were developing a new way to do banking. And as I said before, they very much thought they were creating ideas that would make the system more efficient.

Perversion really tells the story from 2000 onwards, where essentially you had this credit boom that was unleashed partly through loose monetary policy by the U.S. Federal Reserve, which left bankers scrambling for ways to be evermore creative with debt and credit. And one of the key things that happened was the ideas of credit derivatives, which had originally been applied to the corporate loan arena, began to be applied increasingly to the world of mortgage debt as well. And that’s where things really started to go mad because from about 2003, 2004 onward you have bankers slicing and dicing mortgage loans and turning them into derivatives and becoming and creating these very dangerous products.

The last section of the book is called Disaster and that’s again, pretty self-explanatory. I track the subsequent unwind as the credit bubble burst.

Jason Hartman: When you look at what happened with the Perversion part of it, was it really the post-9/11 loosening of money? I mean Greenspan just over flooded the market with crazy crazy amounts of money post 9/11. So it’s not really 2000, is it? Or, was it before 9/11?

Gillian: Things basically got turbo-charged after 2001 when Greenspan did indeed open the floodgate. And eventually what happened was you had a lot of money swirling around the system that was central looking for ways to earn a return. And one of the key ways the bankers did that was to turn to these incredibly complex derivative products, these securitization products and then use a lot of leverage.

Jason Hartman: What are we in for? What can we expect on the road to a hopeful recovery?

Gillian: I think it’s going to be long and painful. We are at the moment in an economic upturn. At the moment, I think there is some element sense that you know things are recovering. Partly, that’s because of an over-reaction in the aftermath of the Lehman Brothers collapse last autumn when essentially the markets froze up globally. And the real economy responded by going into a sharp slump. Managers around the world cut their orders of their inventories. Working capital was very hard to get a hold of. And the system, as I say, froze. However, there is now a rebound underway as people rebuild inventories and the financial markets and systems have stabilized significantly – partly because of the sheer amount of money that the government has thrown at it. So the governments are basically propping up the system courtesy of the public sector funds.

The problem going forward, though, is that the government can’t keep propping up the financial system indefinitely. You already have this extraordinary explosion in Western government debt and at some point, you will need to start the deleveraging process of the public sector just as the private sector is going through a deleveraging at the moment. That is going to be long and painful and brutal. And there’s no real easy way to avoid it unfortunately. So, I am in the camp with those who think you know we’re not going to have a V-shaped recovery. We’re probably going to have half a V and then bump along the bottom for quite a long time. And if we get a new panic, that V could turn into a W. Although at the moment, I probably prefer something more like a square root sign or a saxophone sign.

Jason Hartman: Square root sign – yeah. I’m envisioning that on a graph.

Gillian: It so happens that that sign would be like a square root, is uncannily similar to the sign for the word bank in shorthand. And when I was a rooky trainee reporter many years ago, I was taught how to write shorthand, and that’s how you write it under the English shorthand system.

Jason Hartman: Oh, very interesting. Very interesting. So, the question is, I mean, there are people on both sides of the aisle very fervently – will this slow painful recovery be inflationary, or deflationary? Or will it be, in terms of prices, just sort of stable?

Gillian: The honest answer – I just don’t know. I mean, at the moment there are some pretty powerful inflationary pressures for the medium to long-term. But there are also some pretty strong deflationary pressures for the short to medium-term. It’s possible that you’ll have a sequence, where you have deflation and then inflation. However, you know, or it’s also possible you may have the two forces balancing each other out and getting some kind of stable prices. But I think the only real honest answer right now is to say that the future is exceptionally uncertain. We truly have been tossed into unchartered landscape. Most investors don’t have the intellectual framework to fully understand what’s going on. Many policy makers don’t have much of an intellectual compass either. And therein lies one of the key reasons why markets are pretty volatile and uncertain at the moment.

Jason Hartman: Let’s get a couple of other thoughts from you on the future. We’re looking at a stock market that has been doing pretty darn well lately. Personally, I think it’s a bit of a sucker’s rally. The DOW’s at almost 9,300 today, slightly down as I talk to you. The stock markets and interest rates, that China is not buying our debt, seems as other governments are making a lot of noise about the dollar being the reserve currency. When you look at stock markets and interest rates, what are your thoughts?

Gillian: Well, I think the stock markets have reacted to the fact we are seeing a real economy operating at the moment because of the inventory rebound. However, there’s also a lot of liquidity floating around the system. And the governments have shoved in vast amounts of liquidity into the banks, into the financial markets in the hope that that would feed through into the real economy in the sense that the banks would make loans. And they haven’t done that. Instead, much of that liquidity I suspect is finding its way into the equity market at the moment. You know, there’s a danger that by shoving all this money into the system, they’re trying to create new mini bubbles all over the place.

Jason Hartman: Can you explain what you mean by inventory rebound? You’ve mentioned that a couple of times.

Gillian: Yeah, essentially what’s happened is a lot of companies wound down their inventories at the end of last year.

Jason Hartman: Right and now they’re rebuilding?

Gillian: They were so shocked. Yeah, and now they’re rebuilding. And they’re obviously – if they all wind down at once, that creates a very nasty drop-off in demand. If they all rebuild at once, suddenly you have this pressure demand. It’s a bit like being in a household and saying one week “Oh, hold on a sec, we’re running out of money. We’re going to eat all the food in our fridge.” And then suddenly running out of food and you have to dash to the store and get some more. And if everyone did that at once, there’d be a lot of demand for food. Something like that has been happening in the last few months.

Jason Hartman: And so, I would think with the inventory rebound that mostly influences the PPI, the producer prices. But on the consumer prices side it creates more supply in a sagging economy, which means more sales when you walk through the mall, right?

Gillian: Yes.

Jason Hartman: When you look at an economy like the U.S. economy that is about 70 percent consumer spending, consumers aren’t spending. They’re finally doing what they should be doing – should have been doing for a long time – saving money. But, of course, that isn’t good for a short term economy and the government wants people to spend, of course. Ultimately, it’s better for capital formation, though. How do you see that companies will ever really have earnings when so much of their business is based on consumer spending?

Gillian: Well, that’s one of the reasons why I don’t believe in a V-shaped recovery, essentially because there is a very nasty long process of what people call de-leveraging that needs to take place. Essentially, the last few years America has been growing by borrowing growth from the future. There has been a debt-fueled boom and essentially, they’ve been acting as if they were pulling forward GDP from future years back into the present. Or back in the past now. And it’s pay-back time. And too many companies, too many households over America have to basically reduce their debt levels and they can either do that by defaulting, or they have to adjust their spending. As people cut back their spending – as anybody who has ever tried to get out of a credit card bill knows, it takes time. It’s painful.

Jason Hartman: Sure. So, that doesn’t bode well for stock markets, if consumers aren’t spending. And the other thing that concerns me is that you look at the aging baby boomers in the States and you look at them starting to take forced distributions or optional distributions for retirement plans. And that seems like we’re in for a lower stock market to me in the future, although, we’ve got this temporary little bull run. I guess that corresponds to what you’ve been saying, right?

Gillian: I think it’s pretty hard to make a case right now for believing that America is going to grow vibrantly in the next few years.

Jason Hartman: Yeah.

Gillian: That doesn’t necessarily mean it’s going to fall off a cliff. But it’s very hard to make a case for it seeing a really strong growth upswing. And the question is whether you believe that you can actually have a powerful equity market without a really powerful economy?

Jason Hartman: And a powerful consumer spending economy, definitely. Let’s kind of wrap up here with getting your thoughts on interest rates. Our Treasury auctions are not going so well lately. Governments around the world are making a lot of noise. There’s a lot of dissention out there about the dollar and about the inflationary pressures and the way the U.S. is spending. Do we see higher mortgage rates in the future?

Gillian: Absolutely – I mean frankly, what I find amazing is that there hasn’t been more of a reaction yet in the treasury market. I mean if you look at the sheer scale of debt that – or sheer scale of government bonds, that governments in America have to give away over the next few years. I mean it’s absolutely staggering. In the last few years, America has enjoyed the boost of having Asian investors buy a large chunk. Not all of it, but a significant chunk of the Treasury market of the new treasury they issue. That won’t disappear in the coming years, but it’s very unlikely that the Asian market will be able to provide the same scale of proportionate support for the treasury market that they have in recent years.

And so the big question hanging over the treasury market is who on earth is going to buy this incredible tsunami of U.S. government bonds that are going to be coming out. And if people don’t buy it, what will happen to the global bond market? Will there be a sharp rise in yields at the long end? Will there be a panic? Now, I’m not in the ultra alarmist camp, but people should be very grateful that thus far at least the treasury market and the other Western government bond markets have been pretty quiescent.

Jason Hartman: Yeah, definitely higher rates in the future. Well, tell us where people can buy the book. Of course, I see it on It’s distributed I’m sure in all the major book stores, around the world, right?

Gillian: Absolutely, yes. It’s on It’s on most of the on-line bookstores. And it’s also available in Kindle form as well, on and that’s proving very popular, too.

Jason Hartman: By the way, I’ll mention something on that, Gillian. I got my Kindle when it first came out, the Kindle 2 back in February. And I love that! It is making me a faster reader. And when I travel, I take my whole library with me. It’s fantastic.

Gillian: Well, looking at the sales pattern so far, I would say there are an awful lot of people who agree with you.

Jason Hartman: Is it really?

Gillian: Yeah. We’ve been blown away by just how – what a significant portion of our sales are on Kindle.

Jason Hartman: That’s fantastic. Good for you. Good for you.

Gillian: Hey. That’s worth it. If you want to be optimistic and end on a good note, that’s one example of creativity and innovation that’s good.

Jason Hartman: Yeah, it sure is. I think the thing that really can save us and what we can really look forward to in the future is technological innovation – a lot of good stuff coming down the road possibly with nanotechnology and biotech and so forth. And of course, the Kindle on a simple note, right?

Gillian: Yes. Yeah, the product that came out barely four months ago and already it’s accounting for a sizeable chunk of my sales, so – yeah.

Jason Hartman: That’s fantastic. Well, we will see you in the Financial Times. And of course, everyone should go out and get a copy of the book, “Fools Gold” whether it be the old fashioned paper copy or download to Kindle. And Gillian, any words you’d like to say in closing?

Gillian: No. Just thanks very much indeed for giving me a chance to talk about the book and some of the themes that are very dear to my heart right now.

Jason Hartman: And thanks for talking to us from England and being up so late for us. We really appreciate it.

Gillian: No worries.

Jason Hartman: Thank you.

Gillian: Thank you. Have a good day.

Jason Hartman: You, too.

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Duration: 34 minutes