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Bulls & Bears
This past week's Bulls & Bears: Gary B. Smith, Exemplar Capital; Tobin Smith, ChangeWave Research; Eric Bolling, FOX Business News; Pat Dorsey, Morningstar.com; Nancy Skinner, Radio talk show host.
Will Democrats' Stimulus Plan Create Millions of Jobs?
Gary B. Smith, Exemplar Capital: The stimulus plan is a big shell game. You're basically taking money from the private sector to the public sector where it'll be mismanaged. Some of the construction jobs they're talking about won't start for five years. Stimulus didn't work for FDR, Hoover, or LBJ. It won't work today.
Nancy Skinner, radio talk show host: The economy has stopped. Part of the stimulus is to create jobs, the other part to get money flowing again. The jobs will come. You could sit around and debate this issue while the country slides into a depression. The stimulus is what the country needs to get going again.
Tobin Smith, Changewave Research: Jobs are created by risk-takers taking risks. Let's say we cut tax rates to capital gains for two years, you would create probably five million jobs. But when it comes to public spending, if we take 850 shovel-ready jobs for example, many of them take 18-20 months to get approved. It doesn't make sense.
Eric Bolling, FOX Business Network: This stimulus package is going to create a lot of jobs in the oil, mining, and gold sectors. When you print money, you devalue money. And the amount of money proposed to be spent keeps rising; when is it going to stop?
Pat Dorsey, Morningstar.com: No entrepreneurial risk takers are taking risks right now. The stimulus plan is something you get to inject money into the economy, rather than cutting people checks. The stimulus package is by no means the perfect plan, but it's the best out there right now.
Nationalize Big Banks to Fix Financial Crisis?
Nancy Skinner: We're not talking about a hostile takeover of the banking industry. The federal government already has billions of dollars of skin in the game. Right now, no one knows which banks are insolvent or just illiquid. The banks certainly are not going to disclose it. The government should go in and figure out which banks are going to survive in order to protect the banking system as a whole.
Eric Bolling: If the government comes in and nationalizes banks, no private capital will ever make its way back. You've guaranteed no one wants to play in the industry any more. It rids it of any competition.
Tobin Smith: I think we should take on the "Sweden Model." Take over the banks we know are in trouble and take the bad assets and put them in a bank and sell them at low prices; that could work. It doesn't make sense for the government to keep throwing countless billions of dollars at these troubled banks.
Pat Dorsey: It creates perverse incentives. It gives someone much more incentive to put their money into a government run bank than a non-government bank. It rewards failure, and creates a very poor incentive system for banking. However, the government has a far bigger pocketbook than any private entity on the planet and could cover whatever losses the banks may incur.
Gary B. Smith: What government-run businesses work well? The postal service? I can't think of one. The government would run banks no better than it has run anything else.
Stocks Tank This Week; What's Wall Street Telling Us About New President?
Gary B. Smith: Wall Street is worried, it's confused. President Obama talks well, sounds great, but the question people have is whether it's all just a bunch of hot air that may not come true. I don't think the markets know what's going on, and Obama doesn't either.
Pat Dorsey: The liquidity flooding into the financial system right now should have some kind of positive effect sooner or later. But there is a lot of uncertainty in the market right now. This is the worst economic crisis we've been in for quite some time, and nobody seems to have any real good ideas of how to solve it.
Tobin Smith: Everybody gets nervous when they see countries like Britain taking major steps toward nationalizing banks, with stocks and their currency plummeting, and realize the U.S. could take similar steps in the near future.