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; Pat Dorsey, Morningstar.com director of stock research; Scott Bleier, HybridInvestors.com president; Tobin Smith, ChangeWave Research editor; John "Bradshaw" Layfield, WWE superstar and Northeast Securities senior vice president, and Marc Lamont Hill, Temple University professor.
Trading Pit: Dems' 'Mother Of All Tax Hikes': Bull Market Killer?
The Democrats rolling out what they're calling "the mother of all tax reforms". A plan some say would "hike" taxes by a trillion bucks. Would that kill our bull market?
Bradshaw: Absolutely. The reason why these people are in politics is because they can't make it in business. What they're doing is horrible. I started up a business recently, the tax increase would hit me directly-I won't be able to hire as many people as I would like to because of it. It's killing incentive for small business owners. It is insane!
Gary B.: The rich are primarily entrepreneurs and small business owners. The type of people driving the American economy is the small business owner that eventually becomes the large business owner. These are the people that will get hit the hardest, and that will hurt the market.
Marc: This isn't targeted to people who make over $200,000 it's really targeted to people making over $500,000. Over ninety-one million people will receive a tax decrease from this. Essentially, this will stimulate the economy because the middle class will now be able to spend more. Those small business owners will now have more free money.
Tobin: Ten percent of Americans pay roughly eighty percent of all the taxes. The point is: they are the discretionary spenders. In this bill Charlie Rangel also wants to tax an additional $110 billion on oil, at a time where we have ninety-dollar barrel oil.
Scott: If taxes go up on individuals, we're still going to work, spend money, and send our kids to school. But if you raise taxes on investment, it will send people running for the door, and out of the market to lock in a lower capitol gains. It will definitely affect the market; it will also affect risk taking, capitol formation, and everything that creates jobs.
Pat: Wall Street doesn't care. It's not going to kill the bull market in anyway shape or form. Right now, what's affecting the market more than anything is housing prices and consumer spending. Anything that goes into action here wouldn't happen for a year or more, and simply won't affect things.
California Wildfire Relief: Big Busine$$ to the Re$cue
Tobin: The best of America does come out in these types of catastrophes! This is the best of all America including the Corporate America.
Gary B.: Some may say that these companies and corporations are greedy and self-serving. But here's the beautiful thing: that greediness to spread its name is helping a lot of people. It helps people, it helps them, and it works for the community.
Pat: Motive doesn't matter at all. Companies are neither good nor bad. It's simply a mechanism for efficiently organizing resources, that's all a company really is. Some are helping for altruistic reasons not expecting to get anything back from it. Some are doing it to spread its good name for good public relations.
Scott: The one thing about American corporations is they get in there faster, and with no strings attached. You can't buy that kind of PR. It's good for everybody! Good for businesses and good for the people that need help.
Bradshaw: Corporate America is not getting enough positive attention over what they do. Look at what they did with Hurricane Katrina and the Tsunami in Asia. America is one of the greatest places in the world and one of the most generous.
Chartman: The Chartman's Four Best Stocks!
NuVasive, Inc. (NUVA )
JDA Software Group Inc. (JDAS )
Merck & Co. Inc. (MRK )
UAL Corporation (UAUA )
Gary B's prediction: Bears get trampled by tech: QQQQ up another 20 percent by end of year
Pat's prediction: Whole Foods wins food fight with FTC; WFMI soars 50 percent in 2 years
Bradshaw's prediction: Airlines Takeoff this winter! AMR up 40 percent by March
Scott's prediction: Gear up for winter! Columbia Sportswear (COLM ) up over 40 percent in 1 year
Tobin's prediction: Microsoft lifts Facebook Stake! MSFT up 20 percent by spring
Neil Cavuto was joined by Ben Stein, "The Real Stars…" author; Charles Payne, wstreet.com; Tracy Byrnes, FOX Business Network; Ben Ferguson, The Ben Ferguson Show; and Leigh Gallagher, Fortune Magazine.
Bottom Line: SoCal Fires: Should Taxpayers Pay for People to Rebuild in the Same Hot Spot?
Neil Cavuto: Ashes. That's all that's left of hundreds of homes and businesses in southern California. As Federal aid pours in, the question is should your tax dollars help rebuild in the same hot spot?
Ben Stein: Absolutely not. I mean, if people assume the risk of living in a high-fire zone, that's their problem. I live in a super, super high-fire zone. I would not dream for a moment that the ordinary taxi driver or industrial worker should have to bail me out if my house burns down. People assume the risk; they can insure against it. And that's it. It shouldn't be the taxpayers' problem.
Neil Cavuto: So Ben, I assume when you bought the house, you had to have an insurance policy that would cover fire?
Ben Stein: We do indeed. There's one issued by the state of California. You can buy it; it's not cheap. But on the other hand, if you want to live there… you should live there! I, contrary to your endless joking, am not rich, but even a middle class person could afford to live here if you get insurance. And if you buy a multi-million dollar house, you can afford a multi-million dollar insurance policy. It's ridiculous to have the ordinary citizen subsidizing the rich.
Neil Cavuto: But, you just said some in the middle class can't buy where you are… so you are rich!
Ben Stein: No, that's not what I said. On my street they can buy.
Neil Cavuto: Alright. I love Ben.
Neil Cavuto: Charles, what do you think about that?
Charles Payne: I agree with Ben 100 percent.
Neil Cavuto: I wanna go to his house. I wanna check it out.
Charles Payne: Oh boy! The good thing about Ben's house is you can fly a plane in to it… it's that big probably.
Ben Stein: No, it is not. It's very small.
Neil Cavuto: Don't worry… the IRS doesn't watch this show, Ben.
Charles Payne: I agree with Ben. The bottom line is these are very wealthy people and they knew the risk when they moved there. I think a lot of folks want to compare this to Katrina. There was a lot of public outcry and public support. With that situation though, we were talking about a lot of very, very poor people. Americans did the right thing when they stepped up. But here, I don't know if we should help.
Tracy Byrnes: Well, I don't think that's fair. Just because they're rich we can't help them? As Ben just said, the middle class lives there, too. I'm not sure what Ben's definition of middle class is though. But, nevertheless, we helped in Katrina and we should help these people. Also, we should do better a better job of preventing this. It seems so odd that this happens over and over again and these poor people lose their homes over and over again. Ben, why does this keep happening?
Ben Stein: Because it's incredibly beautiful there! You can drive a short distance from LA and be in a spot where you look out on the ocean and smell the beautiful ocean breezes, and if there's a disaster every 5 or 10 years, you assume the risk. It's an incredibly beautiful place to live.
Neil Cavuto: He's right about that. It's very beautiful. But, you pay for where you live?
Ben Stein: Exactly.
Leigh Gallagher: I agree. And we shouldn't be prioritizing rich versus poor. Federal money is there for a reason. This is a natural disaster. I think this money should support rebuilding efforts. I also think property taxes should go up.
Charles Payne: Why are you raising taxes?
Leigh Gallagher: Because people are choosing to live in a high-risk area. In many ways, this is a product of overdevelopment.
Neil Cavuto: Don't they already pay through the nose?
Leigh Gallagher: It's actually a low-tax area. They've resisted tax increases over the years. But, it's sorta like when you pay more to live in an area that has a great school district for the kids. Same thing.
Neil Cavuto: Well, then it's their responsibility, not yours.
Leigh Gallagher: Exactly. But if I lived there, I wouldn't object to paying a little more.
Neil Cavuto: The longer you've been here, the more you're sounding like Ronald Reagan.
Neil Cavuto: Ben Ferguson, what do you think of that?
Ben Ferguson: Well, what's the first thing you do when you buy a car? You buy insurance. What's the first thing you do when you buy a house? You buy insurance. If you can't get insurance for the place you want to live, that's your fault, not the taxpayers'! If you want to build a beautiful house in a high-risk area and no one will insure you, that's a risk you're willing to take as a homeowner. It's not my responsibility or anyone else's to rebuild your house because you have a great view and no one will insure you.
Leigh Gallagher: But what about people who chose to live in New Orleans? How is that any different? You think those people don't deserve any aid?
Ben Stein: The rich are supposed to help the poor! The poor are not supposed to help the rich. Where on Earth does this idea come from that the poor are supposed to help the rich of this country? Where does that idea come from?
Ben Ferguson: Look at New Orleans for a second. If you can't get insurance to rebuild in New Orleans, why should I keep building you a new house every time another hurricane comes through? The bottom line is at some point you need to take responsibility as a homeowner to say this is a bad investment.
Neil Cavuto: Ben Ferguson, be a little careful here. I think Ben Stein is right on this. People who were in New Orleans… it's not like they were stooges who kept rebuilding in the same area. It was a millennial event. And they got screwed.
Ben Ferguson: And we should help them out.
Ben Stein: They're poor people.
Ben Ferguson: But, when you have wildfires like you're talking about in California, we shouldn't have to rebuild. New Orleans gets flooded every 5 or 10 years, we shouldn't have to keep rebuilding.
Ben Stein: It does not. It gets flooded every thousand years.
Tracy Byrnes: Yeah, but Ben the problem is the insurance companies.
Ben Ferguson: And the wildfires you're talking about happened in 2003, 2000, and 1999.
Tracy Byrnes: The insurance companies don't want to insure these poor people any more. They only want to insure people who live in safe areas with trees that don't go up in flames. It's not fair to these people.
Neil Cavuto: Well, that's not true. If you're willing to pay a high premium…
Tracy Byrnes: Some companies don't even offer it.
Neil Cavuto: I'm told a lot of them have jacked up premiums. They're outlandish, but for people who live in the area, it's part of the package.
Leigh Gallagher: In California in particular, the claim-payout rate over the past couple of years has been very low. So the insurance companies actually have a lot of money to deal with this. I think we're going to see some sort of scheistiness. I think we're going to see some people claim that they can't pay…
Neil Cavuto: We haven't seen that yet. Give them the benefit of the doubt. You are a jaded young lady.
Neil Cavuto: So Charles, what are you saying happens next?
Charles Payne: I think most people are going to come back and 99 percent are going to rebuild. The taxpayers shouldn't foot the bill. A lot of corporations have stepped up. The rich folks can handle this. They knew the risks they were taking. And, they're going to come back!
Head to Head: The Mother of All Tax 'Hikes': American Dream Killer?
Neil Cavuto: The Democrats showing off their "Mother of All Tax Reforms" this week. Part of the plan would hike taxes on people making $150,000 a year. Someone here says if you do that, you'll kill the American Dream for everyone… no matter how much you make. It's time to go "Head to Head."
Ben Ferguson: I like Charlie Rangel; he gave me another excuse on why I don't want to get married right now because I'm going to get taxed even more if I get married. So thank you for that! But, the reality is this is a terrible thing for the middle class. $150,000 is not rich. $200,000 for a couple is not rich. And the worst part about the tax deal is if they get rid of the Bush tax cuts like they said they're going to do, it's a 9 percent tax increase for people making $150,000 a year. How can you live the American Dream when every time you get a raise, the government's taking more of your money away?
Neil Cavuto: One of the things Rangel has said is the vast majority of people would be okay under his plan. I think he said 90 million people benefit.
Tracy Byrnes: But, I think he's missing the big picture point. The rich are the people who employ just about everybody else in the world. So if you tax them, they have less money to spend, less money to invest, less money to expand their businesses, and that trickles down. Not to mention, you say you're raising taxes by a trillion dollars? That does something to the psyche.
Neil Cavuto: Leigh Gallagher, not one prominent Democratic candidate is trashing this. Not one. So obviously it has wide-spread support.
Leigh Gallagher: I think the thing that's going to be approved on both sides of the aisle is getting rid of the Alternative Minimum Tax, which everybody agrees is just flawed. It was designed for about 100 households back in the 60s and 70s.
Neil Cavuto: It was actually designed for Ben Stein…
Leigh Gallagher: It was designed for people who weren't paying taxes. But now, 90 percent of people who pay it make anywhere from $100,000 to $200,000.
Neil Cavuto: So make them stick it to the rich?
Leigh Gallagher: The AMT should be called the ATM because we're addicted to it.
Neil Cavuto: So you like the plan?
Leigh Gallagher: No, I don't like the plan, but it's complicated to get rid of the AMT. We're talking about $900 billion over the next 10 years.
Neil Cavuto: I don't understand a word of what you just said, but you sounded brilliant.
Neil Cavuto: So Charles, what does this all mean?
Charles Payne: Here's the problem. It's divisive. The AMT was designed to go after the rich guys.
Leigh Gallagher: But it doesn't.
Charles Payne: No, but it did. And it created a virus we can't cure. It's like the blob. It's eating all of us and we can't cure it. So what's the solution? Throw another virus at it. Separate the rich from the poor, the black from the white. That's what the Democrats keep coming up with: Plans that separate America. It's not going to work.
Neil Cavuto: Ben Stein?
Ben Stein: (LAUGHTER) I hardly know where to begin. This is like a non-sense factory. Look, if the American Dream is dependent on keeping taxes low on the rich, it's a pretty pathetic dream. There's no shortage of capital in this country. There's an overflowing amount of capital. There's more capital than people know what to do with. The Democratic idea of removing the AMT is a wonderful idea. Rangel is a responsible guy. If they raise taxes on people who make more than $150,000 - $200,000… I agree… those people are no where near remotely rich… but we gotta get the money from somewhere. The rich are called rich because they're rich!
Charles Payne: Here's the problem with the whole thing: You start out at $200,000, then $100,000. By the end of the day, the definition of rich is going to be something like $80,000. People have to be careful.
Ben Ferguson: This is vote-buying.
Ben Stein: How do you know that, Charles? Maybe the definition will be $500,000.
Charles Payne: It's going to come down lower and lower.
Neil Cavuto: Ben Ferguson, I do want to bring this up with you. And with all due respect to Ben Stein, last year at this time, many of the now-Democratic presidential candidates were saying $1 million made you rich. Then, when John Edwards was talking about raising taxes, he was talking about people making $500,000 or more. Then, Hillary Clinton said $250,000 was a good start. So there is something to what Charles Payne is saying. That figure gets lower and lower and lower.
Ben Ferguson: Well, I think they've looked at the reality of where their voters are. They've realized a lot of people who vote for them make less than $200,000 as a couple and less than $150,000 as an individual. And those are the people the Dems are going to represent. If they can give a huge tax break to people making less than $150,000, that secures them the White House, the House, and the Senate.
More For Your Money: Stocks the Pros Own!
Neil Cavuto: Ever wonder what our market rock stars have in their rock-solid investment accounts? Well, wonder no more! They're about to tell you what makes them so rich so you can get "More for Your Money."
Leigh: Cisco (CSCO)
* Leigh owns shares of this stock
Ben: Cohen & Steers Quality Income Realty Fund (RQI)
* Ben owns shares of this fund
Charles: Valero (VLO)
* Charles owns shares of this stock
FOX on the SPOT
Tracy Byrnes: Real Halloween scare: Sexy costumes are out of control!
Charles Payne: Oil will hit $150; Buy Transocean (RIG )
Ben Stein: Oil Companies are vital to America; Senators need to back off!
Ben F: U.S. attacks Iran soon; sanctions are not working
Neil Cavuto: More tax hikes coming! Rangel set the ball in motion
In Focus: White House Re$ponds to Wildfire$: Good News for GOP and Economy?
Rich Karlgaard, publisher: The Republican brand is badly tarnished. I know a lot of Republicans who are now calling themselves Conservatives, Libertarians, Independents and they're refusing to call themselves Republicans. But now you look at the Iraq War and it's turning around. There were no US deaths last week. There's also the great response by Governor Schwarzenegger out in California this week. I think a lot of Conservatives are going to come out and call themselves Republicans, which will be great for the economy in my opinion. Everything is about brands in this country and what we're seeing here is the Republican brand being tarnished and they need to come back. Governor Schwarzenegger endorsing the President this week is very good for the brand.
Lea Goldman, senior editor: I had the opportunity to spend this week out in Los Angeles for business so I was in the backyard of this tragedy. The headlines out there aren't about Bush's quick response, not to say that it isn't appreciated. But it's about how the community came together and how locally they worked very efficiently in getting a quick response. This is not a boon for President Bush in any way. It's going to take more than just a pair of eyes declaring a disaster area, which everyone knows it is, to refurbish his image.
Victoria Barret, associate editor: I grew up in San Diego and have a lot of family down there so I was glued to the television all week watching the coverage. The response was great on the local, state and federal levels. This is a turning point in the Bush administration. You not only got his response to the fires and Schwarzenegger's approval of him, but you also got Iraq turning around, our deficit is shrinking, and the economy is helped by a better real estate market so I personally think Bush looks like the comeback kid here. The effect of the fires will not be going away anytime soon. There will be a reconstruction process for years.
Steve Forbes, editor-in-chief: The GOP candidate is going to have to establish their credentials on their own and can not get elected by saying this is a third term for Bush. They have to make an image of their own and Bush has a long way to go before people are going to want to be on his side. The bottom line is the President has a long way to go before he's known as someone who people want to be around. It's going to take a long time for the things that he's doing now to have an effect of people's opinion of him.
Mike Ozanian, national editor: I think the liberal media kept putting out this myth that Republicans and President Bush did not like poor people, which is why they were so late in responding to Katrina. This shows that most of what happened in Louisiana was the fault of the state. Look how well California dealt with this tragedy. Louisiana has been a welfare state over the past 50 years and that economic policy is the same thing that Hillary Clinton wants. So that has to help Bush and the Republicans.
Quentin Hardy, Silicon Valley bureau chief: I hate what I'm seeing here. Bush did go out and say, "See what happens when you have a go-to Governor" comparing it to Katrina. But that's not going to work because the insurance loss here in CA is about a billion dollars. Katrina caused about 42 billion in damages. That's like 3 percent of what Katrina was and the fires are almost put out. Katrina lasted for months and the state government didn't help at all. Then Bush comes in with choppers and money but in people's minds it's not going to last. Bush is identified with war and Iraq. And if you look at Giuliani and Romney and they talk about Iran, torture, and the war things. They won't last either. I'm not undermining the damage done here, but it will go away much easier then the aftermath of Hurricane Katrina.
Flipside: Homeowners Declaring Bankruptcy: Good News for the Housing Market!
Rich Karlgaard: If you look at a person like Donald Trump, when Trump goes bankrupt, all he's done is initiate discussion and negotiations with the bank. I don't see why homeowners can't do the same thing. The quicker we start the negotiation process, the easier it is to avoid this problem and the quicker the economy can rebound. We're more than half way through this crisis as Countrywide's forecast for the upcoming quarter shows. The worst case scenario that I have seen is there will be about $150 billion in losses here. Now that sounds like a big number but over two years that amounts to a little over 0.5 percent of the annual GDP. So you always have to put into context that we have a 13 trillion dollar GDP that's in good shape and it will do well with this problem.
Quentin Hardy: Trump has so much money, he practically owns the bank. The little guy doesn't have that advantage. I'm glad that Rich sees a podium around here somewhere but let's take a look at this week's road apples. New home sales and existing home sales are really low, Merrill Lynch with 8 billion dollars in losses for mortgages. There are more road apples to follow.
Neil Weinberg, senior editor: We're not anywhere near the bottom yet. A lot of people bought these houses assuming prices would go up and they took these short term rates figuring they could get a cheaper mortgage later on. The whole game has changed now. The quicker we get people out of homes they can't afford, the quicker we'll solve this problem.
Steve Forbes: I think this forces banks to finally sit down and start negotiating. Countrywide announced that instead of upping the teaser rates of 16,000 mortgages which would force people into bankruptcy, they are now going to make those loans permanent. So there are institutions which have to take the losses and realize the sooner they do it and work this out, the better it will be for the economy. Some homeowners will lose out but the real losers will be the lenders and that's how it should be. Once the market knows what the actual loses are and they start taking prices down like Merrill Lynch did, we will recover from this.
Elizabeth MacDonald, FOX Business Network: Listen to the guys who work at Clayton Homes, which is owned by the very conservative Berkshire-Hathaway. They haven't been touched by this crisis. Why? They're saying teaser rates should be outlawed and default rates are actually higher at 40 percent. This is not over till it's over.
Lea Goldman: The rise of bankruptcies, which has turned into a trend, does nothing to bridge the oversupply and the diminished demand. It's a supply and demand issue and it's going to get worse. This is going to overpower the new cycle going into the holiday season, consumers are going to be spooked, its going to effect retail, and have a ripple effect that you're going to see spread across the market.
Debate: A$$ault on Halloween: A$$ault on Economy?
Josh Lipton, Forbes.com staff writer: Well the critics are right, Halloween promotes paganism and greed! What can be more American? It also promotes a lot of consumer spending. Americans are expected to spend more money this year than last year giving retailers a huge boost which is a great reason to celebrate.
Elizabeth MacDonald: $5 billion is a drop in the bucket. It's not even a rounding number in our 13 trillion dollar economy. But I am troubled by 5 year olds walking around dressed up like Freddy Kruger. I hear what Christians are saying. I'm not saying take the candy corn and treats away. But we're seeing how Hollywood is trying to put an "R" rating on movies showing smoking. How about putting an X rating on all the violent movies coming out? I'm not a Halloween hater, I love dressing up every year. I'm talking about something different though. I do think there's a problem with Hollywood and what they're putting out in the marketplace. You can't sensor things out because of the First Amendment but what you can do is refuse to watch it and cause a sales drop at the box office.
Quentin Hardy: I hate the people dressed up as clowns with the razors coming out of their necks and the hobos with their faces ripped apart but I hate it more when the spirits of the country are dampened more. If people want to go crazy and do this stuff, let them. Let's not be a nation of cowards and kill joys.
Steve Forbes: I worry about the other 364 days. If people want to go on a binge just for one day out of the year, fine. And the Halloween haters are not going to win unless they tie Halloween to global warming.
Victoria Barret: This is a long running tradition and the Halloween haters are such a small minority. How can you hate Halloween? Kids in costumes, candy. It's a great Holiday. I think we're giving these people too much room to play. I blame us, the media, let's just go with it and not pay attention to the people who have something to say about it.
Informer: Halloween Stock Treats
Evelyn Rusli, Forbes.com reporter: Tiffany & Co (TIF)
Neil Weinberg: Monster Worldwide (MNST)
Mike Ozanian: Tootsie Roll (TR)
Josh Lipton: Brown-Forman (BF.B)
Our Cashin' In crew this week: Wayne Rogers, Wayne Rogers & Co; Dagen McDowell, Fox Business Network; Jonathan Hoenig, CapitalistPig Asset Management; Jonas Max Ferris, MaxFunds.com; and Ann Lee, Financial Journalist
Costly California Wildfires: Are Environmentalists to Blame?
Southern California wildfires scorching the state with over $2 billion worth of damage and now many are blaming the environmentalists! Is their fight against clearing brush and trees from the hot spots the "major" hot spot?
Jonathan: The fires are a terrible act of nature, but this wild brush is like tinder and makes it worse. Cutting it down can save human lives and property and keeps the fire from spreading. Cutting it down is also what the environmentalists are against. The "greens" value the plant life more than they value the animal life. The fact that a lot of this brush was not cleared out made the fires worse.
Ann: Pointing fingers at the environmentalists is going way out on a limb. This was a perfect storm of lots of high winds, houses being built too close together, and some plants contributing to the flying embers. Americans love to point fingers and not take responsibility for what is going on. I don't think that's the proper thing to do at this point.
Jonathan: There are groups set up to protest the cutting down of this brush that grows. That's what the environmental movement is. It's not about finding solutions, it's about preserving nature at all costs.
Dagen: The green movement did not cause or fuel the more than dozen fires out there. That's absurd. The real issue is should people be rebuilding in these areas that are prone to fire and in the path of the Santa Ana winds?
Wayne: Jonathan, you couldn't be more wrong. All the environmentalists are not devils that you're looking out to get. There are plenty of environmentalists who don't want anything like this to happen. Plenty of people in the Environmental Defense League are looking for solutions. The biggest problem here is the county government that does not understand and recognize what areas should be built in and what areas should not be built in. It should designate the dangerous areas beforehand and make them off limits to building homes.
Jonas: Southern California is a volatile place to live with mudslides, earthquakes, etc. People love to live there. It's dangerous, and there's not much you can do about it because it's natural. People build homes in those areas and don't mind the risk because there are upsides to living there.
Dagen: The bigger problem is paying for the cleanup efforts. In flood-prone areas, there are national flood insurance programs. The taxpayer dollars truly are subsidized in the insurance for people in flood-prone areas. The homes destroyed in the fires will be covered by insurance debt the homeowners pay for. Our taxpayer dollars do go in to help fight these fires and federal money does go there, but the bigger problem is not fires on the west coast, but floods in other parts of the country.
Ann: The root of the problem is really global warming. California has suffered from a drought there, so that helped fuel the fires. However, there have also been problems all over the country. Many major fires have been burning all over the place and drought conditions are partly to blame.
Jonathan: Forest fires are a fact of nature. That environmental policy makes it worse. It's 2007 and we have all the technology to live in places that were previously dangerous. If it starts with cutting away all this brush, it really is like tinder and that's what the "greens" are against.
Jonas: There really is no environmental movement that is preventing maintaining forests.
Wayne: We've had periods in the past where we were warmer than we are today. It's not global warming that is causing this. We are building in areas we have not built before. The insurance companies could be someone who controls this by saying they won't insure people who build in those areas. That would stop it.
Dems' Housing "Fix": Boom or Bust For Economy?
A top House Democrat unleashed a new plan for high-risk homeowners that will give them the right to sue the company that loaned them the money. What would this mean for America's economy?
Jonathan: I don't understand it, Terry. For years, lawmakers chastised business for not making capital available to low income folks to buy homes. Now, billions of dollars has been made available and now you blame the lender? It's the borrower who hasn't paid it back. The borrower should not be bailed out because they need to feel the reality of the circumstance they got into.
Dagen: I agree. If you give people the right to sue a Wall Street firm or a lender because they were given a loan that they realistically couldn't pay back, the subprime loan market will dry up and people will not be able to get mortgages. I want to know what lawmakers will say when that happens.
Wayne: There's a lot to what Jonathan is saying. All these lawmakers have talked about the importance of home ownership and if you cut that off, then those people have no chance at making this type of investment. If the lender has done something improper, there are ways to address that without having to make new laws.
Ann: We need something in place to act as a deterrent to stop this from happening again. It's too costly for the government to hire more regulators in this area. Giving people the right to sue would take away the accusation that Wall Street has a moral hazard.
Jonathan: They are suing for what? They are suing someone for giving them a loan.
Ann: Many subprime borrowers were taken advantage of by these brokers and didn't necessarily understand what they were signing. If the brokers were held accountable to their lending practices, this bubble could have been stopped in the first place.
Jonas: If you didn't put any money down, it's not a huge deterrent. Rep. Barney Frank was smart and some of his issues in the bill are good. I'm not sure if suing is the right way to go about it, but these lawmakers are trying to treat the mortgage industry like the brokerage industry. You can sue investment banks for selling an IPO that was under questionable circumstances. The fact that these mortgage brokers were largely unregulated throughout the last few years hasn't helped the problem. I don't think it was predatory lending that was going on. People were buying inflated homes with all these loans they didn't understand.
Dagen: Where is the personal responsibility?
Jonas: I don't think people understand the concept of a loan that grows a principal as you are making payments. I think the government should have stepped in and that type of a loan is not suitable.
Dagen: If you don't understand it, then don't take out the mortgage.
Jonas: The mortgage brokers weren't going to explain that because they are on commission.
Dagen: National licensing might not be a bad idea then.
Wayne: Banks are regulated. Banks are not necessarily making these loans. Maybe mortgage brokers should be regulated too to the same extent.
Proof Obesity Is Great For America's Bottom Line!
Weight loss drug Alli has sold a whopping 2 million starter kits since June 15th. Its maker, GlaxoSmithKline is making a ton of money, but it's not the only one cashing in on America's battle with the bulge. The total weight loss market should reach nearly $60 billion this year! Is obesity actually great for our bottom line?
Jonathan: I don't think obesity or starvation are good for our bottom line. People being able to make choices for their health is a good thing, whether that means popping a pill or using the treadmill. I'm just thankful for all the drug companies that have made these miraculous achievements possible. 100 years ago something like this would have been impossible.
Ann: 100 years ago we would not have been eating all the high fat fast food. If people were informed on what is in the food, they may make different choices.
Jonathan: Go to any McDonald's and there's a board with all the nutritional information or check out the website. It's not like they are hiding it.
Ann: For instance, when people use a lot of ketchup on their French fries, they may not realize that ketchup has a lot of high fructose corn syrup, which is a contributor to weight gain. Food manufacturers put in cheaper ingredients that contribute to obesity.
Jonas: The weight loss industry is a huge market and is a symptom of a very bountiful economy. Obesity is a bad symptom and does drag down productivity. It's not good for the economy, even though these companies do make a lot of money.
Wayne: There's only so much regulation you can have. People know what they are eating and that it might make them fat.
Ann: I agree that people should have choice, just informed choices.
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