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Bulls & Bears
This past week's Bulls & Bears: Gary B. Smith, Exemplar Capital managing partner; Pat Dorsey, Morningstar.com director of stock research; Scott Bleier, HybridInvestors.com president; Gary Kaltbaum, Kaltbaum & Associates president; Bob Olstein, The Olstein Funds president, and Laura Schwartz, White House Strategies principal.
Trading Pit: Politically Correct Police Bust Imus: Good or Bad for Business?
Don Imus fired. No radio show. No TV show. Is it good or bad for business if the "PC" police are calling the shots?
Gary B: It's terrible for business! This kind of censorship acts like a tax on all businesses. The proof is in the money. Imus brought in millions of dollars a year for CBS. Now that money goes away. Whether or not Imus should have been fired based on ethics and morality is a whole different story. Strictly from a business perspective, this is a tax, and that is terrible!
Scott: It's great for business! A situation like this gives a company an opportunity to show it has a soul. If a business responds to the public's opinion there is an opportunity to get a lot of free publicity. Yes the money Imus made is lost, but CBS will make it up with someone else. The bottom like is that this is good for business because corporate America looks responsive to what the public wants.
Gary K.: Not good for business! Al Sharpton has said that this is only the beginning and he will go after more and more businesses. I'm worried about how this moves forward. If this movement becomes more aggressive, a lot of businesses will be in a lot of trouble if they act the wrong way, look the wrong way, or say the wrong thing. This is not a good thing for business.
Laura: All publicity is good publicity. Controversy invites an audience. The risqué Abercrombie & Fitch catalogue that was too hot to send through the mail, caused kids to flying into the stores. The same thing happened with the Donald Trump and Rosie O'Donnell feud. It created more viewers and better ratings on The View. Wal-Mart forbade Christmas for a year a few years ago. There was a public outcry, the company brought Christmas back, and now is doing better than ever. This keeps everyone on their toes, and controversy creates an audience.
Bob: Businesses always react to pressure. In the case of Imus, this was a shock jock radio program, which made a lot of money for CBS. But it doesn't impact all businesses, just CBS. If Imus didn't do what got him into trouble, CBS wouldn't have made all this money over all these years.
Pat: This is a non-event for business. Think of Don Imus as an entrepreneur who takes risks. They take risks, it pays off, and the business succeeds. But eventually they take a risk that doesn't work out, like what happened with Imus. Imus pushed the envelope and it worked, so he got an audience. But this time he pushed the envelope a little too far and his employer fired him.
Dems' Housing Bailout Disaster?
U.S. Senator Charles Schumer, D-N.Y., and other members of a key banking committee said the federal government should bail out subprime mortgage borrowers facing foreclosure. But should homeowners who bought houses they couldn't afford get a bailout from American taxpayers?
Laura: Democrats aren't choosing a government bailout. They are making a choice between foreclosure and refinancing, because preventing foreclosures is more cost effective. I've got to be honest I really thought only the borrower and the lender lost money. But a foreclosure costs on average eighty thousand dollars. However, if you refinance a property it's only thirty-three hundred dollars. It's cost effective and people get to keep in their homes.
Bob: The government cannot interfere in this. This is a three hundred billion dollar problem. How about the people that lost nine trillion in the Internet bubble?
Gary B: The government should stay out. The government should not have bailed out companies like Chrysler and the Airlines. At some point, someone must accept personal responsibility!
Gary K: This is ridiculous. We live in a country where if you take a risk there are consequences. These people took risks and have to eat the consequences. You can't put it on the government all the time.
Pat: Creditory lending is regulated pretty well at the state level. If an unscrupulous mortgage broker duped you into something, you have the right to take legal action at the state level. This way, the federal government does not get involved. If the government gets into the business of bailing out stupidity, our country is going to go broke in a hurry.
Scott: I would like to see the government sue Alan Greenspan for creating a housing bubble and taking interest rates so low. The government has no right in bailing out people that took these loans.