• With: Steve Forbes, Mike Ozanian, Stephane Fitch, Quentin Hardy, Kai Falkenberg, Elizabeth MacDonald

    In Focus: Obama Administration Considering New Mortgage Fee to Help Housing Market; Is That the Right or Wrong Type of Help?


    PRESIDENT BARACK OBAMA: A $1.5 billion fund for housing…

    OBAMA: Help out-of-work homeowners…

    OBAMA: Government can stop preventable foreclosures…

    OBAMA: We need to strengthen our housing market.


    DAVID ASMAN: Despite the government spending hundreds of billions to give housing a lift, the housing market is still sinking. New home sales at an all-time low. Pre-owned home sales have a record drop as well. All the while mortgage rates plunge to another all-time low. Some here say it's all because the White House won't get out of the housing market. Are they right? Hi everybody! I'm David Asman. Welcome to Forbes on Fox! Let's go in focus with Steve Forbes, Lizzie Macdonald, Mike Ozanian, Quentin Hardy, and Stephane Fitch. So Steve, it's because the government is in the housing market? That's why it's doing so poorly?

    STEVE FORBES: It is David. Whether it's the temporary subsidies and the like that gives temporary hype, or trying to save homeowners and ending up sinking them, the government, David, can't clean even its own house. How it is supposed to help other people with their houses? They can't make distinctions between those who have real equity in their homes, or those who should be renters instead of homeowners. So instead of letting the markets clear and letting the markets get back on its feet and allow mobility so people can go move and find jobs, the market remains stagnant.

    QUENTIN HARDY: Well the fundamental problem is the housing market. That was the center of the subprime crisis which led to the financial crisis. In the interest of being fair and balanced, your teaser probably should have pointed out that most of those government supports have run out and housing prices have declined because they are not artificially supported anymore. Should the government have been in there in the first place? Housing prices would have fallen farther and faster [with] a bigger shock to the system. That would have been a free market result. And maybe the government should get out of there and let housing prices fall 30 or 40 percent. But in that case we should probably also get rid of the mortgage tax interest deduction for the middle class and have an absolutely free market and let the housing prices fall 50 percent.

    MIKE OZANIAN: [The government is] hurting it, David, and the main reason why it's hurting it is because it's hurt the overall economy. Housing prices will rise when the economy improves and incomes improve. This program, all the stimulus money from the Obama administration, has done nothing but hurt the economy primarily through inflation, through higher commodity prices, through a weaker dollar. This is what's hurt the economy and this is why the inventory of unsold homes is now at 12 and a half months where it was only at 9 and a half months before the government stimulus.

    STEPHANE FITCH: I think the government does have a role to play. I think Quentin is right. If we hadn't had the government involvement, it would have been even worse. By the way, it's been awful, so we can't really credit the government for any wins here. My idea is help the little guy who is dangling by his fingernails, not by trying to keep him supported at the edge of the cliff… how about getting his 9 or 10 neighbors to give him a little bit of a hand, have them buy his house out of foreclosure and lease it back to him? Offer those folks, people who are well-off or middle class and not hurting with their house, a tax break. I think let Americans help Americans. Let the little guys who are doing okay bail out the guys who have really fallen off the cliff.

    ELIZABETH MacDONALD: I think the answer is you get the banks to knock down the principal owed on these bubble-era reckless loans. They should never have expected those principal payments, first and foremost. Lou Ranieri, a big Wall Street-er, is now doing that with his fund. But to say that the housing supports from the government have gone away when we still have Fannie and Freddie, the Thelma and Louise of housing, driving the taxpayer over a cliff to paraphrase Pat Buchanan… That's the real issue here, how do you dismantle those two? So yes, there's been a lot of artificial starts thrown into the housing market when Australia, Denmark, other European countries never had as much of a government intrusion into their housing market.


    Does America Need the Post Office?

    DAVID ASMAN: Post Office union workers delivering a loud message this week. Do not cut our hours or our pay. Even though the Postal Service is losing billions of dollars and owes the government billions. And Oz – you say to forget cuts, shut down the Post Office all together?

    MIKE OZANIAN: David, the Post Office should be abolished immediately. A few weekends ago I was waiting on line to mail something, a long line, and all of a sudden the woman behind the counter says, "You know what? I have to take a break. It's time for my 10 minute break." The line shuts down. Everybody has to stand there. It's completely inefficient. Its work rules are arcane. It should be abolished today.

    STEPHANE FITCH: America needs the Post Office, warts and all. You know we forget how much people in little towns, like Clifton, Maine, where my family happens to own a small home, depend on their Post Office. FedEx and UPS won't deliver there, not cheaply anyway. Beware of people who call for the abolishment of the Post Office, these are people who get Thai food delivered to their house 3 times a week and check their Blackberry every 5 minutes during dinner conversation. They're rude.

    STEVE FORBES: If you don't want to abolish as some countries have done, allow competition or privatization where it has to compete with everybody else. A number of countries have done it, the Netherlands and Germany have privatized it, Britain, New Zealand, Sweden and others have removed the monopoly. And guess what? Service improves. Competition does that. Why shouldn't we do that here? Let the people determine whether they want to go to the Post Office or not.

    DAVID ASMAN: Emac, what about those faraway places that Stephane was talking about? FedEx and UPS won't deliver to unless you pay a very high premium.

    ELIZABETH MacDONALD: Yeah, the LA Times asked UPS just that and they said they would not deliver to those unprofitable, rural areas of the country. So the issue is, how do you get those areas served? I hear what you're saying, privatizing works, but the privatization worked in those countries only if there was price controls, price caps. That's what happened in the UK, in Sweden, and in New Zealand. So the issue is the U.S. Post Office has more offices than McDonalds and Walmart combined. Maybe do a mixture of a privatization and a public model.

    DAVID ASMAN: On the other hand Kai, everybody knows what Mike Ozanian is talking about. We've all waited in line and seen these guys reading their novels under the counter and taking their time. It'd be great if they had that UPS efficiency, right?

    KAI FALKENBERG: On top of that, they want to close the Post Office on Saturdays and yet increase rates. Why should we be subsidizing that? And there hasn't always been a monopoly. If you look back in the first hundred years of this country, letter carriers were private; they were independent contractors. There was no monopoly; that's what we should go back to. We should allow competition. And these countries that Steve mentioned have been able to do it successfully.

    QUENTIN HARDY: I think the Post Office absolutely outperforms FedEx and UPS on the basis of cost per delivery. That's why Forbes magazine is delivered by the United States Postal Service and not by FedEx or UPS. If they want to actually have service go up, maybe we ought to get used to a buck a stamp and Saturday closings. But really they're an incredible bargain relative to the size across which they're distributing the mail. This is a big country.


    Flipside: Government Should Provide Gastric Bypass/Lapbands For All Americans Who Need It to Save on Health Care Costs

    DAVID ASMAN: The government pays for a lot of things these days. But fat reduction? I kid you not. South Carolina has a new plan to pick up the entire tab for gastric bypass surgeries for some state workers. It costs $24,000 a pop. But Kai, you say this plan could actually save taxpayers money and we should do it nationally?

    KAI FALKENBERG: Definitely. These procedures are highly-effective procedures. The studies show that the insurers recoup their cost within two years. Some of the patients are cured of their diabetes within days of leaving the hospital. There's tremendous cost savings here.

    DAVID ASMAN: So Steve, eventually it saves taxpayers money?

    STEVE FORBES: Well, I love that word… "eventually." David, where the real surgery is needed is not on obese people, it's on obese government. Let's start with that. And in terms of the government encouraging these kinds of operations, you know what is going to happen? You're going to have a run on them. These are very delicate operations. There are going to be a lot of botched operations. That'll lead to malpractice lawsuits. David, we should go to free markets on this. Let people decide if they want to do it, instead of politicians.

    DAVID ASMAN: Stephane, should the government be in this?

    STEPHANE FITCH: I think so. I mean if doctors and patients get together and they really decide this is the best thing, I think in some cases, some states should be offering it and maybe getting matching funds from the federal government. I obviously rather see people exercising and spending the $24,000 that these surgeries cost on better food, but you know, in some cases this makes sense.

    DAVID ASMAN: In some cases. But Emac, you know how these things have a tendency to spread like your waistline, you know?

    ELIZABETH MacDONALD: Yeah, that's true, David. And also in South Carolina in 2001 and 2004, they wouldn't do these surgeries because they said they were not cost effective and basically very risky. And I think that the studies have shown that they are cost-effective in some cases, but not all, not overall. So really, what bureaucrat is going to be monitoring these people who go through these surgeries to prove that they were cost-effective? That really doesn't happen after the fact.

    DAVID ASMAN: You know Emac brings up a great point Mike, which is that there's all these spinoffs from these government programs that sound great from the beginning… but eventually you need a whole bureaucracy to take care of what they create.

    MIKE OZANIAN: Well, beyond that, the first thing I would do if this became national law is I would go out and buy stock in companies that make ice cream, apple pie, and all of that stuff because I think we'd have a whole country full of people trying to get fat because they know the government would then pay for their operation. At least, I'd get fat.