• With: Eric Bolling, Tobin Smith, Gary Kaltbaum, Jonas Max Ferris, Scott Martin



    Job Fears Mount as Average Government Workers Makes Twice as Much as Private Workers

    BRENDA BUTTNER: Jobs still taking a hit. Filings for new jobless benefits hitting a six month high. And there are new signs that companies aren't planning on hiring anytime soon. Is this why? Look at where all of our money is going. The average government worker making twice as much as a private employee. Is that what's killing the job market?

    ERIC BOLLING: This is exactly what the problem is and it will kill the job market. Any time you pay government workers more, give them better benefits, and then can't get rid of them when they're not performing, that will bring down the job market. It artificially inflates the value of a worker. $123,000 if you work for the fed. $70,000 if you work for the state or local. $61,000 if you do it privately. That's all in wages and benefits. It can't be sustained.

    JONAS MAX FERRIS: There are no low-end jobs in the government. The government doesn't run a McDonalds. Pay in the private sector has upside—there is no upside in the government. At Max Funds, we paid people from Goldman and Harvard half of what they would have made in the government because if we ever went public, they would all be richer than anyone who works in the government including the President. You don't have upside in government work so it has to pay you more.

    SCOTT MARTIN: Over the past decade, you've seen federal payrolls increase by 30 percent as far as wages go, while we've seen the private sector grow at 9 percent or 10 percent. That's a huge disparity—bad dispersion between the federal and the private.

    TOBIN SMITH: Let's not forget that wealth is created in the private market so by taking these workers into the federal government we're also taking wealth. But let's look at some of these numbers. A clergy makes $70,000 in the federal sector, $39,000 at the private sector. A broadcast technician makes $90,000 working for the fed, $49,000 working in the private sector. And that's before benefits. The best and the brightest in this country went to the private sector because that's where the opportunity is. Now our best and brightest are going to the government.

    GARY KALTBAUM: There is absolutely no accountability in government, in its spending, how many employees it has, and what it pays them. What all of this does—what these massive deficits do—is crowd out the private sector and hurt the economy, which hurts the employment picture. You're seeing it on a daily basis. The job market should be much better at this point and it's not even close.


    New Plan To Rescue "Too Big To Fail" Banks Overseas

    BRENDA BUTTNER: Remember this?

    President Obama, July 21, 2010: "There will be no more taxpayer-funded bailouts. Period."

    Well, that didn't take long. Less than a month after the President makes that promise, Congress released a new report suggesting taxpayer bailouts are going to go global.

    GARY KALTBAUM: You know, the last I looked, when all of these banks, foreign and domestic, were making trillions of dollars, I wasn't opening my mailbox and getting the profit checks from them. When they leveraged their balance sheets and lost tons of money, now, all of a sudden, I and everybody else is on the hook for their stupidity? We shouldn't be, it's immoral, and it needs to stop.

    ERIC BOLLING: I thought they were going to take care of "too big to fail." I though it was going to be out completely. Listen, don't bail our own banks out. Let the foreign banks bail out our butts. I don't think we should be spending a dime. Take "too big to fail" out of your vocabulary completely.

    TOBIN SMITH: The idea is, in the old days, you know, like two, three years ago, when a financial institution went bust, and we had plenty go bust, there was a standard way of doing this. The equity shareholders got the hair cut. They got killed. The bondholders got what was left and the depositors were covered and they sold it to a profitable bank. Now, if I'm a bank like Citibank, I have more of my deposits overseas than in the United States. The other countries have to sign a no-bailout pledge as well. Mutually assured destruction—they've got to get out of it.

    JONAS MAX FERRIS: When the government bailed out AIG, Europe got a bailout. The authority was in fantasyland with the number. We were directly giving checks to Goldman and then all of the foreign banks who had deals with AIG, so you want to officialize that and make that a better policy. TARP is probably the most profitable thing this government's done with its money since the Louisiana Purchase and it has had a pretty good return on investment.

    SCOTT MARTIN: Poor Deutsche Bank and Societe Generale. Why do we have to protect these guys from their investments? These overseas banks should regulate themselves and take care of their own portfolios. This global regulation is only going to contract credit even further, which is bad for the consumer and for the business man. I'm saying that we don't bail them out.


    Fears Mount That New, Risky Government Mortgages Will Create Second Financial Crisis

    BRENDA BUTTNER: They're back: 3.5 percent down for a government-backed loan to buy a luxury condo worth $3 million. Check. People buying a new home and then letting their current one go into foreclosure. Check. And a government plan offering a $1,000 down for high-risk mortgages. Check. Unless we get these risky lending practices in check, is a new financial crisis coming by this time next year?

    ERIC BOLLING: That's right, unless we get it in check, they'll be another housing crisis, another downturn in the economy, possibly another recession and maybe a depression. You can't give someone a house with a $1,000 down or a $3.5 million condo or home for 3 percent. This is crazy. This is one of the most broken systems in the economy.

    JONAS MAX FERRIS: That is exactly the problem. And the reason why the housing bubble crashed and cost into the trillions to clean up, is because the backing doesn't stop at the median home price, or even half the median. You're talking about $1.1 million dollar credit you get on interest for deductions. Fannie and Freddie raised the limits to over $700,000 in some cases, and FHA raised their limits a couple of years ago. So we have more taxpayer-backing of people buying large houses that aren't always their first homes. It's absolutely ridiculous and it's why it costs so much to bail them out when they come undone.

    TOBIN SMITH: I don't buy it. We'll have a bailout, there's no question the taxpayers are going to be taking out FHA in a big way because we're completely upside down and the only saving grace we have here is this time we're not financing homes at the top level. These homes financed are 50 percent lower, many of them are significantly below the actual cost to build the structure, and they're also below the rental equivalent. So, yes, we're going to have to bailout FHA. No, it does not create the next financial crisis.

    GARY KALTBAUM: Well, all I know is they screwed up. They blew up and now they're doing the same things again to screw up again. It's amazing. They're just repeating history and the financial system is tied to housing prices, still—ten fold and twenty fold and thirty fold. That's what caused the collapse in the first place. This is classic. It can feed right into it again and we're going to be back to ground zero again, if somebody doesn't do something about it. You just can't hand out homes to people that don't have money to buy them.

    SCOTT MARTIN: I'm just surprised about the FHA thing, that these aren't for low income people. These are really interesting deals they're giving out. I'm kind of with Toby on this. The bailout is going to come from the taxpayer or the FHA. I'm worried about it, but the prices have fallen and I've taken a good look at some of the apartments and they are twice as much as they were a couple years ago.





    Gary Kaltbaum: McDonalds (MCD)

    Jonas Max Ferris: Diageo (DEO)

    Tobin Smith: Mulson Coors (TAP)

    Scott Martin: American Elsectric Power (AEP)

    Eric Bolling: Pfizer (PFE)