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.
IN FOCUS: PRICES KEEP RISING…WILL THE JOB MARKET KEEP FALLING?
VICTORIA BARRET: The data is in and we are certainly seeing higher prices and acceleration in higher prices. This is bad news for two reasons- it’s one more unpredictable force in the economy that is going to make business owners scared and unlikely to hire. They’re just going to pull back and take really conservative strategies on hiring. Secondly, it shows that our government, and the fed in particular, we’re just limited on what they can do to start growth. And that’s going to be a clamp on everything and certainly jobs- so, its unfortunate news.
STEVE FORBES: Inflation doesn’t necessarily kill jobs; it absolutely distorts the job market. It creates false jobs- hurts productive investments. False jobs, in agoing in areas like extra energy- energy prices are high, but that’s a false price. We saw that in the 1970’s, then in the 1980’s, you had a huge clamp down, they had to sell off assets. So you create false jobs- and you hurt jobs in productive industries and future industries, we should've learned that from the 70’s and here we go doing it again.
RICH KARLGAARD: I think we have a classic prescription here for stag-flation. You have producer priced inflation, but consumers are not getting wage hikes to keep up with that. The producers are unable to pass these higher production costs on to consumers, and that’s stagnating everything- and that’s a tragic situation. We’ll work our way out of it, I think energy prices are going to come down, a little bit of a lift, but its still a big headwind, when we don’t need a headwind.
MIKE OZANIAN: I think it all starts with the weak dollar. What that's preventing companies from investing in plant, equipment, factories and things that actually create jobs. The high price level is a symptom, not a cause, the cause is the weak dollar and that’s what's killing the job growth in this country right now.
MORGAN BRENNAN: There are increased prices and whether the weak dollar is the cause or not- we are seeing these effects in the jobs market. I mean, you had McDonald’s and Clorox that reported expected earnings reports that were lower this year, and then you also had Campbell’s Soup, which is laying off 10% of their worldwide employees including 130 people in New Jersey. And you had Heinz that's closing factories and laying off as much as 1000 employees. Rising costs might not be the only factor involved, but it's definitely a factor.
QUENTIN HARDY: You’re looking at the July prices, you know, prices went down in June, when it comes to this you have to take a slightly long term view. Even right-wing icon Milton Friedman liked the kind of gradual inflation. It was healthy for an economy. It indicates demand, and demand is the problem. If you see prices go up a little bit, it’s not a bad thing. Now, the markets are going down- but that’s linked to the world financial crisis of 2008, which we’re still getting over. And whoever’s in charge could easily be a decade long workout. We’re lucky we haven’t had a depression, if there's modest demand causing this, it sounds strange but, I’m actually a little happy about this.
IS THE GREEN AGENDA BANKRUPTING OUR ECONOMY?
STEVE FORBES: We’ve had decades of subsidies for green fuels. They make up 1% of electrical generation today. The same time President Obama announcing half a billion dollars of loans to solar companies in India. These are money losers. We have a green fuel – it's called natural gas. We’ve got plenty of it here in the U.S. without subsidies.
QUENTIN HARDY: Evergreen Solar is a 10 year old company so the government funds don’t have a lot to do with its overall lifespan, and it’s going into Chapter 11 reorganization in order to stay in the business and make solar chips and not solar panels – the kind of reorganization you see in every other kind of industry. The green agenda isn’t the problem, the oil agenda is the problem. They pay a 9% effective tax rate, most pay 25%. They get billions even though they’re an established industry. Here we’re talking about an early industry. And the government funded the oil industry in its early stage too. We go to extreme lengths to extract oil. It's not a healthy policy. We have to do something else and a little bit of assistance at an early stage is not a crime.
RICH KARLGAARD: Solar does not have the Moore’s Law gains, where its getting twice as good every 2 years that the semiconductor industry did. Our natural gas reserves are huge, it’s a clean energy, and it would provide working class jobs which we desperately need in this country.
MORGAN BRENNAN: Ethanol is a mess, solar is an industry that’s been artificially propped up and has no demand behind it. But when you talk about the $510m that Obama is pledging to biofuels that aren’t corn ethanol based, that have a steady consumer in the U.S. military, I don’t think that’s a bad investment.
MIKE OZANIAN: These “green” investments are doing a lot of damage to the economy. Whenever Washington makes business decisions instead of the private sector, you’re hurting the economy, because decisions are being made on politics and the Washington agenda, rather than on businesses producing things that consumers actually want. It’s a misallocation of resources.
BILL BALDWIN: I think biodiesels are a cheap thrill. If we want to go after something big, look at all the redundant government agencies that operate at the expense of each other. Half a billion dollars is nothing!
SHOULD THE GOVERNMENT BE FEEDING KIDS WHO CAN AFFORD THEIR OWN MEALS?
MIKE OZANIAN: This is a bad idea. These government subsidies will increase the cost of education. If you want to make kids feel better, give them a better education!
QUNETIN HARDY: If people have a stigma against those who get a free lunch, then give them all a free lunch. From a business perspective, look at Google. They give out free lunch because the time and effort and expense of employing cashiers turned out not to be worth it. If 40% of students are on vouchers, and cashiers have to process them, it may be cheaper and faster to eliminate them and give out a free lunch.
STEVE FORBES: That money should be used for school choice or for money in the classroom. We don’t have all the money in the world. Feed those who need it, but feeding the mind is more important than feeind kids who already can pay for it.
BILL BALDWIN: I’m worried about incentives. One of the disincentives to work is, if you work too hard, or earn any money, your kids benefits get taken away. Let’s have a program where you’re not penalized for working. I want the parents of those kids to get low wage jobs without worrying they’ll lose their kids free lunch.
VICTORIA BARRET: Poor kids know they are poor. Giving them a free lunch isn’t going to convince them otherwise and it isn’t doing them any favors. It takes away funds from things like a better classroom. Let’s focus there and pull these kids out of poverty, rather than make them feel better about being in it.
STABLE STOCKS IN AN UNSTABLE MARKET
MORGAN BRENNAN: LTC Properties (LTC)
BILL BALDWIN: Intuit (INTU)