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Bulls & Bears
Brenda Buttner was joined by Eric Bolling, FOX Business Network host; Tobin Smith, ChangeWave Research; Gary B. Smith, Exemplar Capital; and Patrick Dorsey, Morningstar.com.
Job Losses Keep Mounting: Proof Stimulus Isn't Working?
Tobin Smith, ChangeWave Research: In Missouri, they took their stimulus money and sent it out as income tax refunds. "Shovel ready" is nothing but a lie. If you could actually take money and invest it in stuff that'd create jobs, that would be stimulus. Instead the stimulus package is paying off the payrolls of badly managed states.
Julia Piscitelli, Democratic strategist: Rather than 44 states losing jobs in April, it could have been 50 states. What President Obama said is we were going to save or create jobs. We are saving jobs, stemming the tide of an intense level of unemployment. It's exactly what Obama promised.
Eric Bolling, FOX Business Network: President Obama first said we'd create four million jobs with the stimulus, which then went down to creating or saving three million jobs. I'm not sure what that is. "Shovel ready" means give us money now and we'll figure out what to do with it later. Stimulus money continues to be used in ways that differ from what the American taxpayer was told the money would be spent on.
Gary B. Smith, Exemplar Capital: You can spin the numbers and look for little green shoots any way you want. Why not just claim the stimulus package saved 20 million jobs? Just the name "shovel ready" is a huge lie. For example, in the Washington, D.C. area, they've been trying to build a freeway connector between I-95 and I-270. They've been working on the zoning, contracting, and bid process, etc. for 10 years. These shovel ready jobs may not actually begin to exist until the economy is already back on track.
Pat Dorsey, Morningstar.com: We're looking for a quick turnaround, but there was plenty of pork in the stimulus bill. It was not well designed. The most important effect of the stimulus was psychological and restoring confidence. The idea was that with this amount of government spending, you would make up for the lack of spending in the private sector. Confidence is a leading indicator of business spending, and it's gone up in the past two to three months.
New Credit Card Law: Rewarding Deadbeats?
Eric Bolling: First it was mortgages, then cars, and now credit cards. If you pay your bills on time, here you are. Then there're the people don't pay on time. Now, credit card companies can't raise their rates. Those losses have to be eaten by those that pay on time, and their rates will go up. Essentially, we're bailing out deadbeats that should be paying their bills.
Tobin Smith: This is the business model the credit card industry was built on. What is different now is that do-gooders will have to essentially pay for people who are delinquent on their bills. This is do-gooderism running amuck. If we had let the market solve this, the bad guys would be out of business.
Pat Dorsey: The bad guys have gone out of business. People with bad credit ratings are not getting loans. If you're a deadbeat or have a bad credit score, you're not going to get a credit card. Why would you lend unsecured money to someone who can't pay you back?
Julia Piscitelli: This credit card legislation helps people who are in a hard time. This is for people who generally do pay on time, but may have gotten into a difficult financial situation. I don't feel bad for the people with gold and platinum credit cards who are going to have to pay a $20 a month fee.
Gary B. Smith: The government is deciding what is good and what is bad. They're legislating how much the credit card companies can make, and that money needs to go from customers doing well financially to those who aren't. It's another welfare program. Eventually though, people that shouldn't have had credit cards in the first place will be denied credit, and those who are credit worthy will start paying in cash more often.
Obama vs. Investors on the Markets: Who's Right?
Gary B. Smith: I think investors have it right, in terms of low confidence of where the financial markets are headed. California is about to declare bankruptcy. GMAC needs more money. Every day the government shows it wants to take over more and more institutions. It's depressing.
Tobin Smith: Our numbers have clearly shown we've reached a bottom with the markets. There has been a tremendous change in capital spending from corporations, and a major shift in spending patterns. You have to remember there is a difference between surveys that ask what you're investing in, and how you feel about financial markets in general. Nine to 12 months down the road, I think we'll see a mild expansion.
Pat Dorsey: I think we're far closer to normal than we were a few months ago. Credit spreads have tightened considerably. It's good to see the economy is getting back together. The particular Rasmussen poll we're referencing is problematic because it was conducted on one night with only 500 people. Market confidence bounces around a lot day to day.