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NEW FEARS SOARING PRICES ARE KEEPING COMPANIES FROM HIRING
VICTORIA BARRET: I think if it isn't already, it will. And you know, sometimes your best insight to the economy is right in front of your face. I've been hearing a lot of moms lately complain about rising prices at places like Costco, not talking Whole Foods; we're talking Target and Costco on basic items. And what they will say is, "I'm spending more on food, which means I'm spending less on other things". And that will affect jobs, because companies in those other buckets of spending are not going to get the spending, and then they'll have to scale back, stop hiring, and maybe even do more layoffs.
MIKE OZANIAN: Inflation always lowers your standard of living, but look, in the late 60's we had very high inflation (over 5 percent), but unemployment was very low. And, just two years ago we had high unemployment and low inflation, so I'm not a big believer on a direct relationship between the two.
STEVE FORBES: Ultimately, inflation is a job killer. It's already hurt the recovery, that's why this is a jobless recovery- the worst in American history from a severe recession. It's going to hurt in the future because it sends private capital from this country to Asia, which hurts job creation here. So, you can have spurts of prosperity with inflation, but the trend line is down- it's bad.
MORGAN BRENNAN: Inflation could hurt job growth, but just how far these costs rise and just how much it effects the job market has yet to be seen. We should not forget the fact that we have had natural disasters this year, like the earthquake in Japan. We've had unrest in the Middle East that have pushed commodities prices up, gas prices are already coming down off those April highs, we're seeing record numbers of crops being planted this year- so it really remains to be seen how this is going to effect cost, and how that's going to effect the job market. You have companies like Ford, Abercrombie & Fitch, and McDonald's that are lowering their expectations- but, they're not laying off yet.
RICH KARLGAARD: On the one hand you have rising commodity prices, which means businesses have to spend more on steel, meaning there is less money to hire people to make the cars. And, the second thing is that everything that this administration is doing is hiking the cost of labor. The National Labor Relations Board and its war on Boeing, you have Obamacare, all of these are driving up the cost of the incremental employee. So, we are going to see a hiring freeze, and unemployment is going to get worse.
ELIZABETH MACDONALD: Even though the Federal Reserve is saying, "Yes, reflating assets is a good way to go", who ever said that inflation was a good way to solve fiscal and monetary problems? Let's bring it back to basics. Inflation has wiped out the rebate checks; it wiped out the payroll checks from food and energy prices going up. Let's go through the companies cutting jobs because of inflation: Ford, Heinz, Kimberly-Clark, Proctor & Gamble, Clorox, those are the companies we are seeing so far. And we're seeing companies raising prices because of input costs going up. This is all about which companies have pricing power.
REPORT: MORE DOCTORS LEAVING PRIVATE PRACTICE FOR BIG HOSPITALS
STEVE FORBES: This new health care law has put in massive new regulations precisely to drive out single practitioners. Why would the government do that? Because single practitioners are much harder to regulate than if you herd them into large organizations. This is a medical version of collectivization, like the Soviet Union used to do with farmers, put them in big organizations so you can control them. That means less good care; also it is contributing to a massive shortage of physicians. So you're going to have fewer physicians in larger organizations- bad all the way around.
ELIZABETH MACDONALD: I think it was a trend that's already taken place before health reform, but health reform is just aggravating it. We do face a shortage of possibly 120,000 doctors, and that's a really bad thing. But, doctors are doing it too because they want to cut costs, they have their own fights with insurance companies; they get 3,000 faxes a day in the average doctor's office. And, ironically, doctors are the worst at providing their own insurance for their own employees. If they merge, they get better cost control, better technology, and better advancements in their own care.
RICH KARLGAARD: Talk to any doctor in their 50's and 60's, and they will tell you two things. One: they're going to retire earlier then they thought because its too much hassle, and two: is that they're encouraging their kids not to become physicians- that used to be one of the American dreams. So, we're headed towards a major doctor shortage. We already have a shortage due to litigation in OBGYN, and now we're going to see it across the board.
MORGAN BRENNAN: The new health care law is definitely accelerating this trend of doctors moving to hospitals, but I can tell you that my step-father is one of the statistics of this trend- and it's been going on before Obamacare. The main culprits have been health insurance companies and malpractice insurance. And I can tell you that this is actually going to improve the quality of care and lower the cost, especially for those doctors, because hospitals have a lot more bargaining power when it comes to insurance companies and getting pay outs for jobs done, and the doctors can actually focus on the care being given to the patients.
DENNIS KNEALE: Since when do we think that bigger means more efficient? When Morgan just said, "Oh yeah, that will help them build the government better when you merge into big groups", but small entrepreneurs work better than big huge giant companies- and with health care it's the same.
REPORT: OBAMA'S CAMPAIGN DONORS LANDING GOVERNMENT JOBS, CONTRACTS
MIKE OZANIAN: The Obama administration has done more to improve the image of Richard Nixon of any administration since ‘tricky Dick' resigned. The Obama administration is paid to play on steroids, and our republic is in jeopardy.
MORGAN BRENNAN: Is this an abuse of power and money? It most definitely is, but you just mentioned Halliburton, he's not the first nor will he be the last president. There was the Bush administration's incestuous relationship with Halliburton, there is also President Clinton's last minute pardon of Marc Rich, the commodities trader-turned-fugitive, after his wife donated millions of dollars to the democratic party. It's a rotten practice, unfortunately, I don't think it's going anywhere.
DENNIS KNEALE: Who got elected promising change above all? I'm so peeved at this president. And you want to see a sweetheart deal and incestuous relationship? Look at Obama's relationship with unions. They represent 6 percent of the private workers in this country, and unions just don't have a seat at the table of the Obama administration, they sleep at the foot of the president's bed! They dominate the NLRB, that labor relations board, they've got a member on that TARP oversight board, even though unions don't represent bank workers. They are out of control; it is Obama's fault, because the unions elected him.
VICTORIA BARRET: What we are talking about here are these bundlers- people who went out, and raised a lot of money. We're talking $500,000 for the Obama campaign, and it turns out 80 percent of them got top spots in the administration. Now, look, that's actually more than Bush, shame on Obama for bringing all this rhetoric about bringing change to Washington, its more of the same. But, I don't think it's necessarily bad. Here's why: you can't do an ‘American Idol' style casting call for administrative positions. And, if someone raised half a million dollars, they're probably pretty talented. It's a filter. It's a way of looking at someone and going, "Gee, you know what? They did something."
STEVE FORBES: The ultimate change in Washington D.C., yes, patronage is putrid, but the real killer of the economy is bloated bureaucracy, binge spending, uncertainty on taxes, massive new regulations, that's where Washington gets more power, that means more corruption, and it's an un-virtuous cycle. We have to reduce government, that's the best way to get out of this patronage.
COMPANIES MAKING MONEY NOW THAT WILL MAKE YOU MONEY TOO
ELIZABETH MACDONALD: Van Eck Rare Earths Fund (REMX)
MORGAN BRENNAN: Wendy's/Arby's Group (WEN)
DENNIS KNEALE: Kraft Foods (KFT)