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.
This past week’s Bulls & Bears: Gary B. Smith, Exemplar Capital managing partner; Tobin Smith, ChangeWave Research editor; Scott Bleier, HybridInvestors.com president; Bob Froehlich, DWS Scudder chairman of investor strategy; Cheryl Casone, FOX Business correspondent and host of “FOX Business Now” on Yahoo! Finance; Gary Kaltbaum, Kaltbaum & Associates president
Trading Pit: Wall Street Worried Top Dem Wants to Dismantle Homeland Security
New terror plots uncovered this week. The target: Fort Dix here in America and a separate threat against Americans in Germany.
These threats coming to light the very same week Senator Chuck Schumer, D-NY, says we should get rid of the Department of Homeland Security.
Wall Street was the target on 9/11. Homeland Security was created because of 9/11. Is dismantling this department a concern on Wall and Broad?
GARY B: Wall Street is concerned about Chuck Schumer. He’s like the nutty uncle that always comes around, and just won’t go home! The Department of Homeland Security is not as efficient as it could be, but then again what branch or part of government is? The department was created because different agencies weren’t talking to each other. We’re fighting a war and need the Department of Homeland Security because it’s our all-important coordinated central command.
TOBIN: This is the one time you’ll ever get me to agree with Chuck Schumer. The fact of the matter is the Department of Homeland Security isn’t put together. They don’t have their own offices, they’re in different locations, and are on different computer systems. People in the agencies are mad as hell because the department is not together. So to say that we’re going to take apart the Department is a misnomer because it’s not together in the first place!
GARY K: I don’t know what Chuck Schumer is thinking! I go with results! The bottom line is that we have not been attacked since 9-11 and I am sure that the Department of Homeland Security has prevented attacks. Since taking Congress, the Democrats haven’t put through any plans to try and dismantle the department. This is just another example of Schumer getting bored and going after something. Wall Street is not going to be happy with his plan. We need to leave things alone when they are working.
CHERYL: Anytime companies merge, there is an overlap of people doing same job. This is what has happened with the Department of Homeland Security. They have to start making some cuts and run it more like a business. They can make it work and they’re all in it for the same goal: to make America safe! However, there are too many people doing the same thing.
BOB: If Chuck Schumer really thinks there’s a problem, why would he air it publicly? If he thinks the program should be dismantled, in essence, he’s letting terrorists around the world know that he thinks we’re not doing things right. So if terrorists do want to act, he’s giving them a road map. What he said is extremely political and way out of line! Every government agency can be run more efficiently, but this is not the way to do it.
SCOTT: The Department of Homeland Security is a work in progress, but the alternative is much worse. Schumer wants less government, but the alternative is a bunch of different agencies doing what one agency does. It may be fragmented right now, but if you break it up, it will only create more government, more inefficiency, and more waste. What we need is better management.
Will Health Care Decide 2008 Election?
Is America’s choice for president in 2008 going to come down to who believes we should have socialized medicine in America…and who doesn't?
GARY B: The candidate most in favor of nationalized health care will be the loser. Americans don’t want socialized health care; we just want cheap, affordable health care. We want to buy health care a-la-carte, like how we buy groceries at the supermarket. But this doesn’t mean that the government should take it over! To make something efficient and effective you don’t hand it over to the government, which has proven over centuries to be extremely inefficient. It just doesn’t make any sense.
BOB: Health care is an important issue, but it’s just one of them. It’s not going to resonate as much as creating jobs, international trade, and the tax code. There are just a lot of other issues that are much more important to people’s bottom line than health care.
CHERYL: I disagree! Health care will be the deciding factor in the upcoming presidential election. Health care in such disarray that it’s awful. This is why companies like Wal- Mart are coming in and making drug stores within its stores. You get your head of lettuce, your get the prescription for your ear infection, and you’re out the door.
TOBIN: The market will provide the solution for this problem. If you have to wait too long for your health care service, you will go to Wal-Mart. This whole idea of socialized medicine is going to blow up in the Democrats face. If you look at Bill and Hillary Clintons try, it told us one thing: it sounds good for about the first five seconds!
GARY K: As far as I’m concerned, health care is about fifth on the list. If someone wants to come out with Fidel Castro and Hugo Chavez health care, they’re going to lose. The first four issues are going to be Iraq, Iraq, Iraq, and Iraq! It’s what caused the Republicans to lose in 2006. If we are still in the situation in Iraq late in 2008, the Republicans are dead meat.
SCOTT: Health care is definitely in the top ten, but it’s nowhere near the top of the list! Iraq is number one. The economy is number two. Health care and socialized medicine is a boondoggle. Privatizing health care is the best solution.
Paris Hilton has been a naughty, naughty girl. But some say jail will make her hotter than ever! Our guys picked stocks that are even naughtier and hotter.
Bob's Prediction: Dow's red hot pace slows down but we hit 14K by end of 2007
Gary B's Prediction: Gas prices & Exxon Mobil keep soaring! XOM up 25% by 2008
Tobin's Prediction: No Flowers! Buy your Mom SanDisk (SNDK); gains 40% by next Mother's Day
Gary K's Prediction: Croc (CROX) is no crock! Stock gains 50% by Halloween
Scott's Prediction: Viva La France! CGG Veritas (CGV) up 40% in 1 year
Neil Cavuto was joined by Ben Stein, author of “Yes, You Can Get a Financial Life”; Laura Schwartz, Democratic strategist; Tracy Byrnes, NY Post Business Writer; Rebecca Gomez, FOX Business Correspondent; Jack Welch, “Winning: The Answers” author, and Charles Payne, wstreet.com. By the way, Charles has a new book out. It’s called “Be Smart, Act Fast, Get Rich.”
Bottom Line: Financial $torm?
Neil Cavuto: Last week, one of the worst tornadoes in US history blew through Kansas. This week, different parts of the country were dealing with draught-driven fires or rain-fed floods or a tropical storm. It’s been a big year for stocks, but will fires, floods, tornadoes, and hurricanes blow away the bull market?
Jack Welch: No, I don’t think so, Neil. I don’t think those by themselves will do it. We had terrible hurricanes in 2004 and 2005. The economy just blew through them. These things are terrible regionally for the people involved, and they do displace the economy. But eventually the spending to restore the conditions helps to keep the economy going. So I don’t think storms, unless we have a pandemic situation, will be a problem.
Ben Stein: Well, the economy is so unbelievably big, Neil that even though you see the tremendous looking fires and floods, they’re tiny compared to the size of the economy. As Jack said, the storms are terrible for the people involved in them, but the storms effect are tiny in terms of a $13 trillion economy. We have many things slowing down the economy: housing, the trade gap, huge amount of money wasted on the war in Iraq. The fires and the floods aren’t going to do it.
Neil Cavuto: Rebecca, you’re not so sure?
Rebecca Gomez: Well, look at the markets. We have to separate the economy as a whole and the market day-by-day. The market is greatly influenced by retail sales, consumer confidence, and oil prices. Take Hurricane Katrina for example when the oil reserves were affected. For the markets on a day-to-day basis, these storms will have an affect and they will stop the bull run for just a few days. If you look at some of these numbers, it’s actually beneficial because you see all this rebuilding.
Neil Cavuto: You know, Tracy, the other night I was having a dream about Al Gore.
Neil Cavuto: Careful! Careful. It’s not what you think!
Neil Cavuto: And I began to think… if he is right, and we are in a situation, not a pandemic, but a situation where we have a lot more hurricanes, a lot more tornadoes, a lot more fires, then is it a factor?
Tracy Byrnes: I think then you’ll just find more people who figure out how to make more money off it all. I mean, as it is, people will figure out how to make money off the floods, and money off the hurricanes. It just happens to be the American way. The biggest thing we have to worry about is consumer confidence. You know, I love how retailers blame low sales on things like “It snowed, so no one got out…” or “It was warm, so no one got out.” But as long as the consumer is still going, things will be ok at the end.
Neil Cavuto: All I know is that Nor'easter did not affect my wife one bit. Charles, what do you think about that? Not my Al Gore dream…
Charles Payne: You know, I don’t buy that Al Gore-thing. The thing you will notice is, for instance Katrina was number three in terms of intensity. All these other very expensive storms that we’ve had over the most recent years haven’t really been that intense. We’re just more vulnerable. But, I agree with probably everyone at this table: These storms will actually create opportunities. And outside of the human toll, you’ll find communities that need infrastructure rebuilding and job retraining. The net is actually a plus.
Laura Schwartz: Well, Al Gore came to be in a dream last night and said that the environment has a great impact on the economy. A third of the economy is weather-driven. You have small towns that are wiped out, businesses that are diminished. You got retailers that want to get goods and services into the cities, but they can’t because the roads are still blocked. If you look at the impact locally, it’s got to transcend nationally.
Ben Stein: That’s nonsense! Laura, you’re beautiful. But it doesn’t. You’re talking about tiny magnitudes. That town in Kansas is a town of about 1500. This is a country of 300-million. It’s a tragedy for the people it hits. But you’re talking about infinitesimal, tiny needles in a haystack. This economy is gigantic.
Laura Schwartz: Corporations have to look at mitigation in the future because right now we know, whether you believe in global warming or not, the weather is getting more severe. And with the hurricane season starting three weeks early, we’ve got to look at the facts. And, I believe locally transcends nationally. How can consumer confidence be up in these areas when we can’t get goods and services to people who need them?
Ben Stein: You’re dreaming. Everybody on this show is dreaming today, I guess. These incidents are tragic for the people who are in them. But, they’re just the tiniest pinpricks in the hide of a gigantic elephant.
Neil Cavuto: Well Ben, you might be right.
Ben Stein: I might be right??
Neil Cavuto: Don’t get flippant with me. In all seriousness, Jack, we did see All-State essentially pull out of the affected areas in Florida. Other insurance companies will likely do the same. Do you see more of that happening?
Jack Welch: Of course. Rates will go up in affected areas. But Neil, the reconstruction is an enormous business. And Ben is 100% right. In a $13-trillion economy, these regional hits, as awful as they are to the people involved, just don’t have a big impact.
Tracy Byrnes: To their point, we worry about the effect if something hits the Gulf or if we have another terrorist attack in this country.
Ben Stein: A terrorist attack is not weather.
Charles Payne: Just to piggyback on what Ben’s saying, let’s remember the Chicago fire. That wiped out one of the largest cities in America at that time. We’ve seen it with small towns and large towns: America bounces back. Obviously, the human toll is tragic, but, from an economic point of view, these storms actually help us.
Rebecca Gomez: But, Laura does have some point with that trickle-down effect. Just look at Wal-Mart. Wal-Mart is always affected when these communities are impacted by natural disasters. It raises agricultural prices for everyone.
Ben Stein: Oh no, no no. Wal-Mart has thousands of stores.
Rebecca Gomez: Thank you, Ben. I allowed you to speak. Give me my two seconds here.
Ben Stein: But what you’re saying is just incredible. Wal-Mart has thousands of stores. You’re talking about the affect on two or three stores.
Rebecca Gomez: The CEO told Neil that gas prices are the number one threat to his bottom line. And if people cannot get gas, as what happened in Hurricane Katrina…
Ben Stein: We’re not talking about gas prices. What about weather?
Neil Cavuto: Her point was that if weather does affect capacity, gas prices go up. Ok, you all argue your points very well, and blessedly, it’s time for a commercial.
Head to Head: Illegal$ & Terror?
Neil Cavuto: Three of the Fort Dix terror-plotters got here illegally. Think about that. Do we need to spend more to get a grip on illegal immigration to protect America and our economy? Charles, what do you think?
Charles Payne: Yeah, absolutely. Better immigration policies and border control are the best things we can do. Eventually, the greatest threat is going to be a rogue nation lobbing a nuke at us. Listen, these people came across the border. They settled amongst us. They smiled. Why not stop them at the border? Why let them get this far?
Ben Stein: I totally agree. Money spent on controlling illegals in this country is money well spent. We are not a nation if we do not have enforceable borders. It’s that simple. The idea that anyone can walk across an unprotected stretch of border and do anything he or she pleases once he gets here, unless the FBI happens to catch him by sheer luck, is terrifying.
Jack Welch: Well, that’s for sure. But I also think we need to spend more money on intelligence. Look, these guys were caught because a citizen talked to a local cop who talked to the FBI. Don’t forget, these three brothers had 50 arrests and there was no coordination between our agencies, so nobody caught them! We have the perfect intelligence system when a citizen tells a local organization that tells the Feds and we get them. If we don’t do that, we can spend all the money on the border we want, but we gotta find out what those who sneak through are doing.
Rebecca Gomez: If you look at some of the background on this, they came across in Texas in 1984. And it’s still just as easy to cross thru that border now. Really, we haven’t done a lot.
Neil Cavuto: The parents presumably smuggled these guys in, right?
Rebecca Gomez: Well, we don’t know exactly how or at least they haven’t told us exactly how they got in, whether they swam or ran.
Neil Cavuto: Well, some of them would have been toddlers at that time. They didn’t orchestrate that on their own.
Rebecca Gomez: Right. Or if it wasn’t their parents, maybe it was paid smugglers, maybe coyotes. My point is if it was that easy then, and it’s still easy now, we have not done enough.
Neil Cavuto: See what worries me Tracy is we keep dodging these bullets. But, one of these times we’re not going to be so lucky.
Tracy Byrnes: That’s why I agree with Jack. We need to jack up, excuse the pun, the intelligence factor around here. Keep in mind the 9/11 terrorists had passports and student visas, so we can control the borders all we want. We’re still letting these people in. And they were here legally. I mean, just look at the pizza delivery guy. All he did was deliver pizzas and surveyed the base. He had surveillance around the clock. He knew that base inside and out because we let him. We should not be allowing people like this on our bases.
Neil Cavuto: Laura, there’s a move among Democrats to sort of scale down, largely in sync with the President’s roughshod approach to illegal immigration. And I’m wondering if events like what transpired this week give it a pause.
Laura Schwartz: I think it will bolster the argument when Congress starts to look again at the McCain-Kennedy bill that failed last year. The bill approaches immigration by strengthening the border with biometric design, doubling our border patrol, and having smarter technology along the border. Because really, cracking down on illegal immigration will not be the end-all to the terrorism problem in this country or this world. But, I think it should be part of a concerted effort with national intelligence. Great Britain announced this week that its Home Office is going to have a separate entity for counter-terrorism and immigration. The two go hand in hand. And we have to address both because yes, we have a border in common, but once they’re here, we gotta find ‘em.
Ben Stein: God help us if we’re relying on bureaucrats.
Inside Jack's Head: CEO v$ Baseball Players: Who’s Worth the Millions?
Neil Cavuto: CEO pay has been under the spotlight recently. But when ballplayers, like Roger Clemens, get eye-popping deals in this case $28 million, there’s really little backlash. It’s time to go inside Jack’s head. Jack, I want to run through the top five baseball player salaries, starting with Roger Clemens. He’s at 28 million. And you have some of your fellow New York Yankees… Alex Rodriguez, Jason Giambi, Derek Jeter. A lot of money is paid out to these guys, and no one bemoans it. I personally bemoan Manny Ramirez getting $17 million, but that’s just me. What do you make of it?
Jack Welch: Well, I think it’s very clear. The Yankees were in trouble with pitching. So they paid $28 million. The Red Sox have a good pitching staff going right now, knock on wood, so they didn’t need Clemens. It’s free market. The reason why people don’t bitch about it is because they feel that their fans can see the ERA, the batting average. The players have a short lifespan. And fans want winners. So it’s very clear why the fans don’t complain about the money.
Neil Cavuto: Well, sometimes I don’t see that same standard apply to CEO pay.
Jack Welch: Oh sure you do.
Neil Cavuto: Well no. I think by and large, you’re right. But, I’m saying with a lot of the top salaries we’re looking at here… Steve Jobs at $646 million… Ray Irani at $321 million… Those are particularly eye-popping. And people look at that and say, “Hey, night and day.” What do you say?
Jack Welch: Jobs and Diller were founders. They built their companies in many ways. Jobs then detoured for a while, but he came back and rescued it. In the end, you’re talking about a 10-year accumulation of options and the numbers look big. I had a big salary for a long time, and my employees didn’t complain. My shareholders didn’t complain. It’s ok if you’re performing. The facts are when you don’t perform people see it, and rightly so, as unfair. I mean if guys are getting laid off at the factory, plants are getting closed, and some jerk’s still getting a big fat salary because the board fell asleep, then that’s ridiculous!
Neil Cavuto: But Jack, frankly you deserved your pay. I said that when I worked for you. And I say that now that I don’t because you delivered performance.
Jack Welch: Well, I’m not talking about me. But in general…
Neil Cavuto: No, no. You got some heat for that. But others get a lot of money, including some of your former lieutenants who went on to run their own companies with stock results and earnings results that didn’t live up to the pay hike. Is that fair?
Jack Welch: Look, a lot of these things are a result of severance deals.
Neil Cavuto: You’re right. You’re right.
Jack Welch: If a CEO didn’t do a job, didn’t have a CEO-in-waiting, then the company has to go out and buy somebody. And in order for somebody to come, they get big fat contracts. I think the other thing is, when you saw the big salaries on Wall Street this year, no one complained about that because they delivered performance and the employees got a lot of dough, too.
Neil Cavuto: By the way, none of this applies to anchor salaries. There is no pay-for-performance there.
FOX on the Spot
Jack Welch: Obama's Done! Hillary Will Be Democratic Nominee
Laura Schwartz: Pope does more for Brownback than strategists
Tracy Byrnes: Hey GOP, 10 million single moms can't hear you!
Rebecca Gomez: Got Milk Money? Dairy Prices Skyrocket!
Charles Payne: Companies Go Green! Buy Clean Harbors (CLHB)
Ben Stein: The Best gift for your Graduate? A Variable Annuity!
Neil Cavuto: Class of ’07 enters best job market in US history!
In Focus: Fort Dix Terror Plot: Time to Spend More on Domestic Spying?
Steve Forbes, Editor-in-Chief: It’s better to spy than to die. I think this shows that we need to infiltrate because they have the intention of annihilating us. And in terms of concerns about civil liberties, if you’re out to do harm we should know about it. We’re not arresting people. We’re just making sure you’re not doing anything wrong.
Quentin Hardy, Silicon Valley Bureau Chief: There were 6 guys and 2 informers already infiltrated them for 14 months. They pushed the guys into making a plan. The plan was to go into a heavily armed U.S. military base that we know because one of them delivered pizza there. Then the informers push guns on them and they get busted. On their own hook these guys could do nothing. It’s not enough to sign over your civil liberties.
Jim Michaels, Editorial Vice President: All the guys doing this stuff are amateurs. We know where the problems are and we should spy on any suspected people and the hell with political correctness.
Victoria Barret, Associate Editor: Jim is suggesting profiling, but I’m not sure who you profile in this case. How do you create a profile for nutty, young men?
Elizabeth MacDonald, Senior Editor: I do think that we live in a bubble. I think the FBI and law enforcement have been great at busting up terror plots that we don’t know about here on our soil. There are cells among us that we need to track down. We need to give the FBI guys a raise. They’re doing a great job.
John Rutledge, Forbes Contributor: America is a special place. We have freedoms and liberties here. These guys aren’t going to blow us up. These 6 guys in the Poconos are not a great risk to America. We should celebrate our freedom, not take it away.
Flipside: Rich People Like Paris Hilton Should Not Go To Jail!
Mark Tatge, Chicago Bureau Chief: I have a real problem with putting these people in jail. Not because they don’t deserve it. But what’s the point? In jail we’re going to have to pay to feed them, clothe them and guard them. We need to get away from this puritan tradition that by putting these guys in jail we’re serving some kind of need, unless they’re some kind of violent offender. Let’s make these people hurt! Let’s take a percentage of their net income and fine them! I’m talking big fines like $5-$10 million!
Steve Forbes: If you want to make them pay for their time in jail by writing a check, fine. But they should serve the jail time. If you do the crime then do the time. Remember she was a drunk driver. She could have killed somebody! She’s done this before. This is serious stuff.
Rich Karlgaard, Publisher: This is serious, but it was a misdemeanor. We’re always asking government to be more innovative and why not try an experiment at the misdemeanor and local level and give Paris Hilton a choice. 45 days in jail or a fine that is prorated on her net worth and income.
Michele Steele, Forbes.com Reporter: Paris Hilton not going to jail?! How is paying a fine punishment for a rich person? Going to jail and being away from the paparazzi - that’s real punishment!
Victoria Barret: A fundamental premise of Democracy is that law is enforced equally. What is equal to us all? Time. One day means the same to me as it means to you and everyone else. A dollar does not mean the same thing to Paris Hilton as it does to me.
Mike Ozanian, Senior Editor: The government has been trying to throw money at society’s problems for years. It’s nothing but a big waste. It doesn’t do a damn thing. If you really want to help Paris and help protect people who could be killed by a drunk driver then she should serve jail time.
Flipside: France Saves America’s Economy and Dooms the Dems
Jim Michaels: The French election shows that there is a worldwide trend against Socialism and against a protective state. Sarkozy is going to have a lot of problems. They are going to burn cars and they are going to riot. The fact is the French are fed up with the welfare states and the unemployment it creates. This is happening all over the world. The Labor party came to power in Britain by moving to the right. India has turned from Socialism.
Mike Ozanian: I don’t think this means anything for the U.S. It’s in the French DNA to smoke cigarettes and not work. Capitalism is in our DNA. You wait until they try and get some flexibility, the trade unions are going to kill them.
Michele Steele: This is huge, even in France. I was there in 2001 and 2002 when they voted for Chirac and most of them held their noses when they went to the voting booths to vote for him again. So the fact that they are electing someone from his party again is nothing less than earth shattering.
Quentin Hardy: Did you think that we were actually in threat of being Socialists? The kids these days work harder than we did when we were young.
Steve Forbes: Sarkozy isn’t going to have an impact on our economy unless he does something really radical like bringing in a flat tax. If a western European country does that we’re going to do that and that’s going to have a profound impact on the rest of the world.
Informer: Merger Prediction$
Rich Karlgaard: Sybase (SY)
Victoria Barret: Omniture (OMTR)
Elizabeth Macdonald: Bristol-Myers Squibb (BMY)
John Rutledge: Alltel (AT)
Our Cashin’ In crew this week: Wayne Rogers, Wayne Rogers & Co; Jonathan Hoenig, CapitalistPig Asset Management; Jonas Max Ferris, MaxFunds.com; Dagen McDowell, FOX Business News; Dave Nelson, DC Nelson Asset Management; Leigh Gallagher, Fortune Magazine; and Jason Mattera, Young America’s Foundation
The 'Real' Culprits When It Comes to Rising Gas Prices?
Jason: Democrats are to blame for rising gas prices. They have blocked efforts to drill in certain parts of Alaska, such as ANWR, the Artic National Wildlife Refuge. They haven’t allowed us to build an oil refinery in 36 years, won’t allow us to drill off the coast of Florida, and stop every attempt to slash the federal tax on gasoline. Democrats have themselves to blame. America should hold their feet to the fire, not President Bush.
Wayne: That’s a mild exaggeration about not being able to build refineries in over 30 years. We do have a lot of oil out there. It’s not a question of oil; it’s a question of getting refined products, meaning gasoline. If we could build refineries, we would solve the problem immediately.
Jonathan: Everyone is whining for no good reason. Gas is cheap. People feel a sense of entitlement. Just because gas was $1.15/gallon 20 or 30 years ago, doesn’t mean it should be that same price now. Prices for everything have gone up. When adjusted for inflation, gas is still cheap. If you really want to point a finger, point it at the environmentalists of which both parties are now a part. The environmentalists are the ones who want to prohibit any type of exploration. The bigger the green movement gets the higher gas prices are going to go.
Dagen: We all just need to look in the mirror if we want to know why gas prices are so high. It’s the American driver. We drive big cars and we’re driving more that ever before. Demand for gas is hitting records. We have to figure out a way to consume less gasoline and that has nothing to do with whether you are a Democrat or a Republican.
Dave: This is just political rhetoric that is designed to get an emotional response out of voters. All of these solutions out there are part of the solution, which is what we should be working towards. The Democrats are really fighting against the tide of the American public.
Jonas: This issue is only a crisis for some who got used to it being cheaper and built a whole life around it. Republicans are to blame because they put ANWR together.
Dave: We are not going to support candidates that place caribou and reindeer above energy independence and our national security.
Dagen: It is also consumption & demand. A senate committee this week passed raising the Corporate Average Fuel Economy (CAFE) standard, which would cut how much fuel American made cars use.
Jonathan: That only makes cars more expensive for those who like to drive. If people want to conserve, they will drive less. So far, even with gas at $3/gallon, people haven’t changed their driving habits. This is a political issue.
Jonas: Doesn’t history come into play? We’re only talking about drilling offshore because we have drilled all the oil out of the contiguous United States in the last 100 years. There hasn’t been any environmental protection of all this oil we have drilled. California used to be the biggest oil exporter until we drilled it all out.
Dave: Now we potentially have 16 billion barrels available on our soil. Are we to ignore that? We can either do it domestically or we can ship the money out of the country to Chavez.
Dagen: Unless we stop using so much gasoline in this country, Dave, we will suck that up in a few years!
Dave: Of course we have to conserve; nobody is suggesting we don’t. The oil is there and we need it. Put it in that context to the American public and then ask them what they want to do.
'President Obama': Market Hero or Villain?
If Barack Obama were elected president, he would like to eliminate some of Bush’s tax cuts, hike the minimum wage, support companies that make “greener” cars, and nationalize health care. With this economic plan, would Wall Street look at a “President Obama” as a hero or villain?
Jonathan: I am open to what Barack Obama has to say. I visited his website, but didn’t find anything on his policies in regards to the economy and taxes. From that, it’s hard to know exactly where he stands on these issues. He’s for eliminating tax cuts, especially on the wealthy, raising the minimum wage, limiting CEO pay, and national health care. For someone like me who believes in capitalism, there’s not a lot to get behind.
Leigh: If you dig a little deeper, there actually are some pro-market things he is proposing. Obama has really been criticized for being all inspiration and no policy. If you look, he is proposing tax breaks for companies that have 90% of their employment and production in the U.S. and 5% mandatory contribution to multi-employer affordable retirement accounts that will deal with the social security problem. There are some of his ideas that I like. Even with health care, he is more moderate.
Wayne: Jonathan is on to something in that none of Obama’s plans are exact yet. He’s talking in generalities and we just don’t know yet. All politicians tend to do that. It’s hard to know what they stand for. Not one candidate yet knows how they will implement their plans and how they will get the money to pay for it. Ultimately, that will have to be dealt with.
Dagen: It’s the uncertainty about Barack Obama’s thoughts on the economy that could rattle the market in the interim simply because he doesn’t have a long track record and people are trying to piece it together. The market is uncertain of that.
Jonas: It’s too early to be specific. John Edwards has been more specific than most. Obama has been big at uniting, but pretty light on policy specifics. If he wants to get rid of Bush’s tax cuts in order to reduce the deficit, that’s ok. However, if he is just going to increase government spending right along with that, that’s not good for Wall Street.
Shifting Money From the War On Terror to 'Study' Global Warming
Shifting money for satellites used to spy on our enemies in order to spend more cash on global warming research. This is the idea behind some new legislation in the House of Representatives. Is this a good idea?
Jonathan: This is a disgrace! We have a very real enemy in militant Islam and it’s stronger than ever. We also have North Korea and Iran nuking themselves up and we are worried about a glacier melting. This is an embarrassment to the notion of national self-interest and a government that is supposed to be protecting us from real enemies, instead of those that are imaginary.
Leigh: We can fight both terror and global warming. We don’t have to choose one or the other. It’s not as if people are saying, “Let’s stop fighting terrorism.” There are many tools for that. Instead, the idea is, “Let’s take this high tech tool and use it for this very big problem instead of this other very big problem.” I truthfully don’t think a satellite is going to see someone running into the New York City subway with a bomb.
Dagen: Climate change does go hand in hand with national security. Eleven former top military leaders just put out a report that warned of the consequences for national security. Two years down the road we could end up fighting for water in unstable areas like the Middle East. It could become even more unstable and then we can’t separate the two.
Jonas: I don’t want to cut our spy program. It’s the most cost effective use of any defense or War on Terror. It’s certainly better than building nuclear submarines and sending troops around the globe. I would increase the spying because that’s how we fight terrorism. We already know there’s global warming. How much more research do you need and want to pay for with an emissions tax or something?
Wayne: I don’t believe any of this. Are politicians capable of spending? We don’t know where any of it goes. Plus, politicians waste a lot of it anyway. To say that they are going to take money away from one thing and put it into fighting global warming is crazy.
Best Bets: $tocks for Mom
Dave: Continental (CAL) (Friday’s Close: $38.14.)
Wayne: America Movil (AMX) (Friday’s Close: $55.31.)
Jonathan: CurrencyShares Mexican Peso (FXM) (Friday’s Close: $92.70)