Dressed in His Fred Imus T-Shirt, Dick Grasso Tells Imus Why the U.S. Stock Market is a Safe Bet

Before discussing Wall Street’s wild week, Dick Grasso, the former head of the New York Stock Exchange, offered his condolences to Imus on the passing of his brother Fred. “If there’s a silver lining to his loss,” Grasso said. “It’s that he’s up in heaven now at that big cattle ranch in the sky, taking care of all the kids we’ve lost to cancer.”
 
Grasso was an integral part of getting the Imus Ranch off the ground in 1998, coming up with the idea that Imus sell commemorative acres for $5,000 a pop to raise money. “I was in Kuala Lumpur, and I gave you that advice,” Grasso recalled. “And you said, ‘You’re the bleeping chairman of the New York Stock Exchange?’ and hung up the phone.”
 
But Imus called Grasso back minutes later, asking if he really thought they could do that. And what happened the next day? “We raised $5 million in three hours,” Imus said.
 
Despite its volatility last week in the wake of Standard & Poor’s downgrading the U.S. credit rating from AAA to AA+, Grasso told Imus today, “Over time, there has never been a better asset class” than the U.S. stock market.
 
“You have to step back and say, ‘Why am I investing?’” Grasso continued. “Am I investing for my children’s education? If you’ve got a four year-old or a five year-old, my guess is they’re not going to Harvard next year.” On the other hand, “if you’re 69 years old, and you’re concerned about your retirement income, you’ve got a different propensity to assume risk.”
 
Earlier this morning, Dagen reported that investors were taking their money out of stock funds and putting it into money market funds, which Grasso called “absolutely the worst thing you can do in a period like last week.” He cautioned people against panicking, and suggested everybody take a deep breath. “Anyone who bets against America inevitably loses,” he added.
 
Grasso believes S&P’s downgrade was a political stand more than a financial one. “If you read their report, their concern was about the gridlock in the Congress, the inability to seriously attack our budget deficit, and to cut spending in a significant way,” he said.
 
The saddest part of the downgrade, in his view, is that while people poured money into U.S. bonds last week, municipalities also rely on bonds, and are evaluated off the credit of the United States. As a result, Grasso said, it will be “much more expensive to build roads and bridges, and fix tunnels, and do all the things local municipalities have to do.”
 
America will never default, and anybody who thinks it will should “sell everything you have, and move to Botswana,” Grasso advised, then quoted Winston Churchill, to whom Imus compared him earlier for how he ran the NYSE in the aftermath of 9/11: “Count on America to do the right thing, only after they’ve tried everything else.”
 
Treasury Secretary Tim Geithner came into office at “perhaps the most perilous time in the history of financial markets,” Grasso observed. Geithner has done a good job, in his opinion, but needs to focus on a “pro-growth” strategy that stimulates the tax code, perhaps by bringing offshore corporate dollars back into the U.S. to create jobs.
 
Imus thanked his buddy Grasso for appearing this morning, and was informed that for the duration of their chat, Grasso was wearing an Auto Body Express t-shirt emblazoned with a picture of Fred Imus—a shirt he paid for, thank you very much, though he couldn’t remember the exact price.
 
“You know what it cost me?” Imus said. “Four million dollars.”
 
-Julie Kanfer