Neil Cavuto was joined by Gregg Hymowitz, founder of Entrust Capital; Jim Rogers, president of JimRogers.com; Ben Stein, economist; Meredith Whitney, FOX Business News Contributor; Lewis Black, actor/comedian; John Talbott, author of The Coming Crash in the Housing Market.

More Money and Troops to Iraq?

Neil Cavuto: Should America commit even more money and resources to Iraq (search) to win the peace there and help our economy and market here? Gregg how bad would it be for America and our markets if we just cut and run from Iraq?

Gregg Hymowitz: I think it would be awful for America if we left, not so much for the market. I think the market is focused on earnings. We need to commit more money and possibly more troops, but under a multinational umbrella. If we left now, we'd leave as big losers.

Jim Rogers: But if we leave later we'll be even bigger losers. Or we'll be bogged down and be there forever. They say they're spending $4 billion a month but it's probably much more than that. It's time to come home and let Iraq take care of itself.

Gregg Hymowitz: The problem is that we haven't won the battle and we should've never declared that the war was over. The battle is still going on. We're losing lives there every single day.

Lewis Black: The next time we have a war we should have the discussion that we're having now, before the war. This is the first war in my lifetime where we're discussing now what we should've been discussing before the war.

Ben Stein: It's an absolute nightmare over there but these bombs are being made by a few people. I don't think it's any indication of a prolonged insurgency there. But if we pulled out and let the Baathist or al Qaeda take over it would be a foreign policy catastrophe.

Neil Cavuto: I was talking to some World War II veterans not too long ago who reminded me that U.S. soldiers were getting picked off for years when we were rebuilding Germany and Japan. Is our history and our sense of vision so short-sighted that we forget that we have been here and done this?

Gregg Hymowitz: I think the problem is there doesn't seem to be a coherent strategy.

Neil Cavuto: People were saying that about Japan and Germany after World War II.

Gregg Hymowitz: Iraq is now a hotbed for Islamic fundamentalists and terrorists. As they see more Americans on their own land, that could ferment more terrorism. And that could ultimately effect the U.S. economy.

Jim Rogers: In 2002, a survey showed that America was the most popular country among young Muslims around the world. Now we're the most hated.

Ben Stein: Jim, with all due respect, some Muslims were dancing in the streets and burning the American flag right after 9-11.

Lewis Black: Right after 9-11, we had the whole world behind us, but now we've blown our credibility with just about everyone on this planet.

Ben Stein: I disagree. We got rid of a genocidal regime. And every time I see a story where they've dug up the graves of children buried alive with their toys in their hands, I am extremely proud to be part of a country that stopped that.

More for Your Money

Neil Cavuto: Is a vote for Arnold a vote to get more for your money? Schwarzenegger is on top of the latest poll, but it seems someone is doing a different poll every few days with very different results. That said, Meredith, is a vote for Arnold a vote for stocks?

Meredith Whitney: I think it's great in terms of what he's focused on, granted he hasn't had so much of strategy or policy so far. But it's cost cuts and revenue stimulus, which is what every company is working on right now.

Gregg Hymowitz: It's a bad thing when he says one thing, and then his other statements contradict what he just said. Half of California's budget is education and medical costs. He says he isn't going to touch education and he can't do much with the medical costs, so basically the more he talks the more it seems he's going to lose. If I was his campaign manager, I would say don't say an absolute thing. His poll numbers are basically an anti-Davis vote.

Lewis Black: I think this is certainly the best thing that has happened for comics since Ventura ran for governor. It's unbelievable to watch someone like him run. Just because a guy looks good on camera and can speak in public doesn't mean you nominate him.

Jim Rogers: Even if he wins, he can't ,and really nobody can, sort out the mess California is in. If someone says California is going to recover and things are going to go well, I'm going to sell home builder stocks like Lennar (L) because they should get a short term boost then fall. I am currently short Lennar.

Gregg Hymowitz: If Schwarzenegger wins and the economy in California improves, I would buy Metro-Goldwyn-Mayer (MGM). Why? Because they are the producers of the Terminator movie. And I see millions of Terminator dollars being sold through out the country and a resurgence in his movies because he solved the biggest problem in California.

Meredith Whitney: I take a really cautious move on this. As you said Neil, the polls change everyday. I think it's the broadcasting stocks that benefit from this, so Sinclair Broadcast (SBGI) and Univision Communication (UVN) are good buys. They will benefit from advertising dollars from political candidates running in the recall race, as well as from ad dollars for next year's presidential election and next years Olympic Games.

Ben Stein: Arnold is an intelligent man and he's got intelligent people around him. He has as much chance of solving the budget problem as anyone else. If he does, and somebody will, then California tax free bonds (short to medium term) are a buy.

Head to Head

Neil Cavuto: Will rising mortgage rates ruin the housing market? John Talbott thinks so. He is so pessimistic on the housing market, that he authored a book called The Coming Crash in the Housing Market. John, why the doom and gloom?

John Talbott: The doom and gloom came from the fact that if rates went down further, we'd enter a deflationary spiral or if rates had to increased it would cut off the money supply for home buyers. And that's what we're seeing now-- rates increased, and it will put a lot more pressure on new home buyers who showed up at the bank and found out they qualified for a lot less money than they thought.

Neil Cavuto: We're no longer at 45 year lows and rates. We're closer to 35 to 40 year lows. That's not the end of the world.

John Talbott: No it's not but treasuries are up 1.4 percent, and that's dramatic for a one month increase. We're looking at $500 billion deficits.

Neil Cavuto: But I also see demand far exceeding supply in many areas. I see more people coming into this market wanting to buy homes then there are homes available.

John Talbott: Home builders are building homes as fast as they can because I think they see the same thing I do, which is a housing bubble.

Neil Cavuto: They still trade at a vast discount to the market. Just looking at their multiples today, companies like Centex (CTX), Pulte (), D.R. Horton (DHI) are trading at single digits while the S.P. 500 is trading at three or four times that.

John Talbott: In a cyclical industry, when you get to their peak earnings their multiples look very small. You're welcome to try and buy companies at their peak earnings, but it's a very difficult business to try.

Neil Cavuto: I think the market is making your kind of damning indictment on these stocks and the fact that their multiples are so low. The street is consistently saying what you're saying, which is this can't last forever. And here we go.

John Talbott: I think these rates will stay at these levels and this stock prices are attractive. But if the rates kick up 1 percent or so, I think that will be enough of a damper on the borrowing capacity of these buyers.

Neil Cavuto: But one could argue that that backup in rates ignites an economic activity which again is reflected in the backup in rates. More people are out in the market, more people get jobs. You just don't see it that way?

John Talbott: If you look at TIPS securities, which are treasury inflation adjusted securities, their real rates of interest haven't moved at all.

FOX on the Spot

Meredith: Dollar strengthens which will hurt multi-national companies that benefited from weak dollar last quarter. Avoid stocks like American Express (AXP), Coke (KO) and Procter & Gamble (PG).

Ben: Economy & Iraq get better! Media attacks Arnold.

Gregg: Bustamante upsets Arnold in CA Governor race.

Jim: Gray Davis resigns recall vote called off.

Lewis Black: Arnold wins but Yosemite Sam beats him in four years.

Neil: Strong computer sales-- anecdotally I'm seeing them everywhere. Back to school sales look strong and will help technology going into the Fall!