John Bogle of Vanguard

We asked the legendary investor, John C. Bogle, patriarch of the trillion-dollar Vanguard family of funds, for wisdom that would get us past the weekend in this financial rockslide. He sees an avalanche and three years of severe pain ahead, but something less than Armageddon, and no reason to realize Sarah Palin’s vision of another “great depression,” except that the Washington cast in the drama so far has been inept. “Embarrassing,” he said. John Bogle is famously a “value investor,” not a speculator. The overgrown financial sector of the economy is doomed, he says. But “America will continue to grow,” even in “fettered capitalism,” or whatever it comes to be called. And healthcare, technology, energy and consumer-product stocks will prove yet again to be good buys.

Click to listen to Chris’s conversation with John Bogle (30 minutes, 14 mb mp3)

Bogle is an insider who thinks, writes and invests like an outsider. At 78, he is a prolific, incisive, often philosophic observer who has written eight (8) books, best-sellers among them, since his heart transplant 11 years ago. He has always spoken as a common-sense sort of common man and often a very tough scold of his own industry.

We were looking for nest-egg advice and the broadest brushstrokes on the crisis. If Warren Buffett can get a guaranteed 10-percent return on his investment in Goldman Sachs, what stake should the taxpayers get for the companies they will bail out? Where, as Ralph Nader asks, is the shareholder uprising? If this is the end of market capitalism as we’ve known it, what is the common-sense name for the alternative system we are backing into?

I’ll tell you something about capitalism — and I somehow remember this, I don’t know how, from the first edition of Paul Samuelson’s textbook ‘Economics: an Introductory Analysis’ — my first taste of economics at Princeton University in 1951 — and what Paul Samuelson said in his introduction was, ‘The problem with capitalism, like the problem with Christianity, is that it’s never been tried.’

John Bogle, in conversation with Christopher Lydon, September 26, 2008.