DISCLAIMER: THE FOLLOWING "Cost of Freedom Recap" CONTAINS STRONG OPINIONS WHICH ARE NOT A REFLECTION OF THE OPINIONS OF FOX NEWS AND SHOULD NOT BE RELIED UPON AS INVESTMENT ADVICE WHEN MAKING PERSONAL INVESTMENT DECISIONS. IT IS FOX NEWS' POLICY THAT CONTRIBUTORS DISCLOSE POSITIONS THEY HOLD IN STOCKS THEY DISCUSS, THOUGH POSITIONS MAY CHANGE. READERS OF "Cost of Freedom Recap" MUST TAKE RESPONSIBILITY FOR THEIR OWN INVESTMENT DECISIONS.
LOSER PAYS IN TEXAS COURTROOMS; IS THAT HOW TO MAKE AMERICA'S ECONOMY WIN AGAIN?
Tracy Byrnes: It sure is. Heck, think about all of the extra money these companies are going to have sitting around because they don't have to beef up their legal accounts for these lawsuits that happen every day. God, somebody trips on the curb and the next thing you know they're suing headquarters. Stop it. It's stupid. It's become a waste of money. We've become such a litigious society. The money could be put to better use like jobs.
Wayne Rogers: Well as you know, the same law is true in Alaska and the British have had that law for a long time and in this country as a matter of fact, a trial judge can make that decision too. So it's not necessarily that it has to be on the books as a law because you can end up paying for a lawsuit if the trial judge determines that it's a frivolous suit or without merit. So that's going to come from a lot of places. I'm not sure how much that has to do with creating jobs, however, but it is a good law and it's standard procedure in Britain and it should be in the United States.
Krystal Ball: The problem is there is absolutely no evidence to back it up. In fact, President George W. Bush - his council of economic advisors did a study to try to find some economic benefit from tort-reform and found absolutely nothing and in fact Texas did tort reform about eight years ago to try and combat medical malpractice to bring down healthcare costs and it hasn't changed the rising health care costs a lick. In fact Texas has some of the most expensive healthcare in the entire country.
Gary Kaltbaum: Hiring is about how people feel; how employers feel about how much they have to spend going forward and the business outlook and when they see that their government that oversees them is not going to be in their pockets everyday and have to worry every day, they're apt to hire more. It is about perception. It is about if I own a business, can I spend a little bit more money on employers are not worried about someone coming after me. I think this is a great idea and I'd love it to go national.
Jonathan Hoenig: Cheryl listen we all have an interest in seeing justice served. Not just the winner in any court case. I mean it's one of the reasons why the courts are part of our constitution. In fact, in a criminal case we give the defendants an attorney if he can't afford one. I think the real issue is Cheryl, you keep calling these frivolous lawsuits, that's why we have a whole judicial department. The problem is the culture, not the legislation. We need to work in my opinion, through appointments; through elections to change that judicial culture so that when somebody spills a coffee on themselves, the case gets laughed out of court, not awarded a multi-billion dollar settlement.
WE'RE PAYING MORE JUST ABOUT EVERYTHING, BUT OUR HOMES ARE "WORTH LESS"
Tracy Byrnes: Look, get the government the heck out of everything. Stop offering incentives you stupid first time homebuyers tax credit. Look at your property taxes. They keep going up meanwhile the value of your house keeps going down. They made a mess of the mortgage market. You can't get a loan to save your life and as soon as they stop printing money, the cost of milk and cheese will go down and then you could feed your family again. Get the government out.
Gary Kaltbaum: First off, I just want to stay on Tracy's good side. I completely blame the Fed. This weak dollar policy has made commodities soar, whether it's oil or sugar or anything else. If they raised interest rates just a wee bit, the dollar would start rallying, commodities would come down, and maybe the savers who are getting zero percent on their income would get a little money on their money markets which would help them out. This is a vicious cycle caused by them.
Wayne Rogers: Yes, it's not only happening, the FDIC is encouraging it. As we all have said, community banks are 80 percent of most job creation in the United States. I know for a fact that the Federal Government, through the FDIC, is keeping community banks from making home loans, from encouraging people. So you've got a small businessman, comes into the bank, you've been doing business with him for a long time, he wants to build a new home. You can't make that loan because of your concentration in real estate so they won't let you do it, but even though real estate might be the business that is in that community and creates jobs. It's a terrible thing. The Feds have been intimidated by the Congress and the Congress in their stupidity has done so through the new Federal Banking Act. It's just terrible.
Krystal Ball: Well it's been really challenging. Part of the problem is, you're looking at a situation where yes, oil is going up, gas is going up, clothing, food, those things are going up, but core inflation is still under the fed target of two percent. So what is driving these other commodities up is the cost of oil and there is actually something the Federal Government could and should do about that in the Dodd-Frank Financial Reform Bill, the CFTC was given the power to curb excessive speculation, which adds about 30 dollars on to the cost of a barrel of oil. That would be an easy thing to do to bring commodities down. If you want to combat high oil prices, that's the way to do it.
Jonathan Hoenig: That's part of the problem here. High oil prices, low home prices. What we want guys are accurate prices; non-subsidized prices. That's been the problem with housing as Tracy pointed out now for well over a decade. Government fueled the boom on the way up; they've prolonged the downturn. Help for Homeowners; all the programs Cheryl pointed out have prolonged the crisis. It's made the crisis worse and more expensive.
AIRLINES SEE HUGE JUMP IN REVENUE FROM ADD-ON FEES
Wayne Rogers: Well, they've allowed the airlines to consolidate and get bigger and bigger and they have less in competition, and as a consequence the airlines are going to take whatever money they can and add it on wherever they can. If the rates are regulated then they're going to get it from somewhere else, and as long as you've allowed them to dominate certain flights and travel areas, they're going to make a monopoly out of it so you don't have a challenge. Smaller airlines coming into the market like Jet Blue, Air Tran, Vision, or some of these other airlines that have been able to compete, buy lower prices. You get lower prices by competition, not by government regulation.
Jonathan Hoenig: First of all, I think Wayne is a whiner. I think people are whiners and the fact of the matter is, even with the $50 a bag cost to travel now, a ticket still averages 450 bucks. That's down from 650 in the late '70s. The problem is that air travel was never really regulated as Wayne pointed out. The government controls everything from how many flights a day and airplane can make, how long the crew can work. Every element of it, not to mention security, is dominated by the government. That's why people are choosing NetJets all the private forms of transport.
Tracy Byrnes: Well just put it all in one price. I'm sick of paying six dollars for a cookie every time my kids are hungry because they're trying to make money up six ways till Tuesday.
Krystal Ball: Well, you know the thing is there is an argument for lowering taxes, but the problem is we subsidize already the airline industry so much. We pay for air traffic control; we pay for airports; we pay for transport to the airports. So yeah, it's appropriate. I don't want our security privatized personally. I think it's appropriate for the airlines industry to pay some of those costs through increased taxes.
Gary Kaltbaum: The airlines have had a terrible business model. They had to do something different. Of course they found out something they can do. They're going to charge for bathrooms real soon, but bottom line is this is an excuse to take care of those fees and bottom line is $60 per every $300 you spend on airlines is now the government and it's a pain in the rear.
WHAT DO I NEED TO KNOW?
Tracy Byrnes: Cheryl, the "greenies" are now taking away your firework display out in San Diego they're saying the debris hurts the sea animals; it pollutes. They want environmental laws passed. You watch. They're going to try and get this across the country. Say goodbye to Fourth of July.
Wayne Rogers: I don't think anybody will ever say goodbye to the Fourth of July. It means too much to this country. I know it's a defensive play in this market, but IWO that's Russell 200 ishares. In six months it will be higher than it is today. I own it. I think it's a good buy and I have confidence that the recovery will continue.
Gary Kaltbaum: Amazingly, Moody says if we don't raise more debt, they're going to lower the ratings. No dummies! It's the other way around. You raise more debt; that's the bad news and if they do lower ratings, cost of capital for this country's gone up and it's going to plunge us deeper into the economic morass we're in already.
Jonathan Hoenig: A recent study said one third of users actually use their smart phone before getting out of bed in the morning. Check out IST for a play on Telecom.