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; Joe Battipaglia, Stifel Nicolaus; Meme Roth, National Action Against Obesity.
Trading Pit: Omaha Mall Shooting: Why It Won’t Scare America!
A tragic shooting at a mall in Omaha, Nebraska leaving America shaken - especially as the holiday shopping season kicks into high gear. Many fear the shooting will hurt sales and the economy. But do Americans scare that easily?
Gary B. Smith: No we don’t! Maybe if you lived in Omaha you might give pause to shopping at a mall, which is a normal reaction. But we saw something similar to this with the horrible tragedy at Virginia Tech. And after that event, applications to the school were up after the shooting. So if an event like that can’t stop people from going to Virginia Tech, then the shooting in Omaha will not stop people from shopping at malls.
Tobin Smith: We’ve unfortunately -- over the past seven or eight years -- had to talk about a lot of these kinds of events on our program. And the one thing we have learned is that we are not going to let insane people change our lifestyle.
Joe Battipaglia: This shows us that Americans are heroes. This also shows us that in the future (at a place like a mall), people will be more aware and will maybe go to the authorities more readily if they see someone suspicious.
Scott Bleier: What this event shows us is that women will still shop for handbags and men will still shop for electronics: that is the fact of the matter, especially when it is a disturbed person doing it. If this were a terrorist attack, we would have a different situation. And while people will never really admit to not wanting to go to the mall, this could help the online business model grow.
Pat Dorsey: On the margins some people might do more online shopping as opposed to traveling to a mall for shopping. But if that happens, there is no real economic loss. There is a psychological effect called the “vividness bias” where people tend to overweigh these kinds of events that are reported on in the news. But these events are very infrequent.
McDonald’s Giving Free Food for Good Grades: Smart Plan?
Get good grades and get a free Happy Meal! That’s the deal in a Florida County that is allowing McDonald’s to advertise on its report cards. And if the kids do well, they can receive free food.
Smart plan from the fast food giant?
Gary B. Smith: There is one problem with this segment: Meme has never eaten at a McDonald’s before! I love this promotion, and here is the reason: kids are going to go to McDonald’s anyway! Not to mention the fact that they do have some healthy food there. If my kids had this promotion when they were elementary school, they definitely would have had better grades!
Meme Roth: This is a great marketing idea, but it is unfortunately inappropriate and exploitative of children. It is a parent’s right to decide what a child gets for a reward in terms of doing well in school; it should not be Ronald McDonald!
Joe Battipaglia: There is nothing wrong with this, as there is a meritocracy in America up and down the food chain (so to speak). And children should be confronted with a system of receiving rewards if they do well.
Tobin Smith: First off – what incentive is there to getting a tasteless hamburger! This makes McDonald’s look like a drug dealer outside the schoolyard. And really the best incentive is cash!
A surprise 50th birthday party for our own Tobin Smith! The crew antes up with stock presents for the birthday boy. Will Tobin keep the gifts or send ‘em back?
Gary B Smith: Intel (INTC )
Pat Dorsey: F5 Networks (FFIV )
Joe Battipaglia: eBay (EBAY )
Scott Bleier: Tesoro Corporation (TSO )
Tobin Smith’s prediction: Protect yourself against ID theft and make some money; buy American Express (AXP )
Pat Dorsey’s prediction: Wire yourself some cash; Western Union (WU ) up 50 percent in two years
Gary B Smith’s prediction: Fed cuts interest rates by 1/2 point and the S&P 500 tanks! Buy UltraShort S&P 500 ProShares (SDS )
Scott Bleier’s prediction: Housing bear market continues until 2013
Joe Battipaglia’s prediction: Oil down to $60/barrel; airlines soar! Continental (CAL ) up 20 percent by summer
On Saturday, December 8, 2007, Cheryl Casone was joined by Ben Stein, “The Real Stars” author; Tracy Byrnes, FOX Business Network; Adam Lashinsky, Fortune Magazine; Mike Norman, Contrarian Update Founder; and Pat Powell, Powell Financial Group.
Bottom Line: Dems’ War on Credit: Dangerous to America and Economy?
Cheryl Casone: This week, Dems in Congress attacked credit card companies for everything from hiking interest rates to giving plastic to anyone with a pulse. Let’s get the “Bottom Line.” Mike, are the politicians over-reacting?
Mike Norman: Politicians over-reacting?! Never…
Mike Norman: I think they are. And I think they may be a problem. Alexander Hamilton once said, “Credit is the lifeblood of any economy.” What we call money in a modern economy is largely credit. It is bank loans. Once you start meddling in the affairs of companies that create credit, you’re really run the risk of crimping the economy. Making credit less available to people and businesses who need it is a terrible thing to do.
Cheryl Casone: Tracy, $900 billion in debt. What do you think?
Tracy Byrnes: I’ll tell ya – part of the reason why we got into this subprime mess is because people stopped paying their credit card bills. At the same time, if you take out a credit card, read the fine print, take responsibility, and make the minimum payments. Quite frankly, I think people should pay their bills off monthly. Be responsible! It’s your credit. It’s your credit score. I do not think Congress should get involved.
Cheryl Casone: Ben, they always say read the fine print. Shouldn’t people be doing exactly that?
Ben Stein: Well, I must say… that age 63, I can’t read the fine print…
Ben Stein: I’m a huge fan of credit cards. I think credit cards are one of God’s gifts to the whole world. If you pay them off every month, they’re an amazingly convenient way to shop. I just recommend strongly that people pay it back every month because the credit card companies have the power to change the terms any way they wish. They are merciless. Don’t give them a chance to do it. Use the credit cards for your good, not for their good. Use your credit card, but pay it off right away.
Cheryl Casone: Adam, if you use it the right way, you can get miles and other perks…
Adam Lashinsky: Yeah, that’s true. Look, I don’t have any founding fathers to quote…
Adam Lashinsky: I think that if became slightly more difficult to get a credit card, if borrowing become a little more difficult, it wouldn’t be the end of the world in this country. On the one hand, as Tracy points out, people are just abusing their credit cards. But on the other, the credit card companies are abusing their own customers. They’ll give a credit card to a four year old!
Tracy Byrnes: My son got his first when he was two.
Adam Lashinsky: Oh! Well, congratulations!
Cheryl Casone: She’s very proud… as you can see.
Adam Lashinsky: So I have no sympathy for the credit card companies facing new regulation or new legislations from Congress. You’re right, Mike: They’re being politicians, so they’re going to try to get in everybody’s business. But, they might actually help out in this situation!
Cheryl Casone: Well, and not to defend the “big, bad credit card companies,” but they can raise the interest rate if people’s credit scores drop. It says so in the fine print.
Pat Powell: You know, normally I would agree with everybody at this table, but not this time. You heard the stories before Congress… people telling how they, without defaulting or being behind on a payment, are having their interest rates jacked up as much as 30 percent. Do you know how you can ruin your credit rating? You can open a new account. And do you know how else you can ruin your credit rating? You can close an account! No matter what you do… they get you coming and they get you going.
Pat Powell: When you get hit with a 30 percent interest rate, you go from being totally able to manage your debt to drowning in debt. Congress has this one right! It’s got traction and it’s going to be an issue in ’08.
Mike Norman: Ben said it right: We don’t want to get into a type of situation where they charge an exorbitant amount.
Pat Powell: Thirty percent isn’t exorbitant?
Mike Norman: Well, I’m sayin’! Maybe there should be a limit. Look. Let’s understand one thing. I agree with Ben. Credit cards are wonderful. Credit is freely available. There’s an enormous amount of capital floating around in the global financial system.
Pat Powell: Whoa, whoa, whoa…
Mike Norman: People have access. This is a wonderful thing!
Pat Powell: It’s available because in 2005 they changed the banking law.
Cheryl Casone: Consumer spending is two-thirds of our economy… and a big part of that is credit.
Ben Stein: I couldn’t agree more. There’s no question about it. But we don’t need to have usury. We don’t need to have banks making up for their screw-ups on the backs of consumers. We don’t need to have the enormous severance packages they pay their executives on the backs of consumers. Usury laws are not a bad idea.
Cheryl Casone: But Ben, you’re not worried about the affect on the banks? This seems like regulation to me…
Ben Stein: It is regulation. Regulation isn’t a bad thing. I mean, it’s non-sense that regulation is a bad thing.
Pat Powell: Ben is right.
Ben Stein: Wait a second. Adam Smith, the father of the theory of free market economics said, “Regulation is often needed.” I couldn’t agree more.
Tracy Byrnes: Cheryl, these credit card companies are arguably doing you a favor. When I go buy a pair of shoes I can’t afford… Visa allows me to take them home! And it’s my choice if I want to lapse into that 30 percent interest rate debt. I should have paid in cash.
Pat Powell: I’m not arguing the point about how responsible YOU are, but there are tens of millions of people who are drowning in debt. They are people whose kids are not going to be able to afford college.
Tracy Byrnes: C’mon! Pat, whose fault is that?
Pat Powell: Credit card companies write all the rules. They change them in the middle of the game. They’ve got the “little guy” under their thumb and they will not let them up.
Adam Lashinsky: Cheryl, look. There’s a higher level point here. You alluded to it when we started this conversation: Are Americans in too much debt? The answer is yes. So the question is why. And the answer to that one is because it was so easy to get into debt!
Cheryl Casone: So wait, Adam…
Adam Lashinsky: There’s one role Congress can play and that is to provide a bully pulpit to remind people that they need to behave more responsibly.
Cheryl Casone: So are we saying that nobody in America pays their credit cards off or on time? I mean c’mon.
Mike Norman: Ben invokes Adam Smith… Ben, what about free market capitalism? I mean, it’s a function of the supply of credit and the demand for credit. If individuals want to take on the credit, whether it’s for taking raising their standard of living or investing, shouldn’t that be up to the marketplace?
Ben Stein: It should be up to the borrowers. But I would like to know, all you smart people on the panel, can you tell us all the terms of your credit cards? I have a graduate education from Yale in economics. I was valedictorian of my class at Yale law school. I have no f-ing clue what my credit terms are!!
Cheryl Casone: Neil allows this kind of language in the morning?!
Pat Powell: Ben, you’re absolutely right. The average guy can’t read his credit card. He doesn’t know what he’s getting in to. The credit card companies change the rules in the middle of the game, and that’s when people start drowning.
Tracy Byrnes: Back in March, the Democrats proposed more transparency in your credit card bills. I think that’s important. When you make your minimum, how long is it going to take you to pay it off?
Head to Head: “Golden Compass” Criticism: Is America Rejecting Hollywood’s “Agenda”?
Cheryl Casone: Nicole Kidman’s “The Golden Compass” opening this weekend despite protests from religious groups. They call it anti-religion and predict it’ll bomb just like a slew of recent anti-war films. Is all this a sign that America’s rejecting Hollywood’s left-leaning agenda? It’s time to go “Head to Head.” Ben, you know Hollywood. I defer to you.
Ben Stein: Listen, nobody knows Hollywood. It’s like knowing hell.
Ben Stein: Anyway, I have not seen this movie. I wanted to see it, but I could not get in. I looked at the trailer over and over again. It looks like it’s a wonderful movie. I love, love, love Nicole Kidman. But, the movie just squished together “Harry Potter” and the “Lion, the Witch, and the Wardrobe.” But, that’s not the point. Hollywood is profoundly anti-religious. Hollywood is profoundly anti-God. This is a God-fearing country. I think people who try to mock and belittle God are going to come up losers. This is a country that was founded on religious principles. Without God in America, there is no America.
Cheryl Casone: Tracy, one of the things about this film is they took a lot of the religious undertones out of it. The book series is really what the Catholic groups are upset about. Would you take your kids to go see it?
Tracy Byrnes: Well, my kids go to Catholic school and a letter got sent home that said, “Do not take your kids to go see the movie.”
Cheryl Casone: Really?
Tracy Byrnes: Well, mine are little. Probably too small for this movie. But, the movie still portrays the church as evil, this powerful thing that is very evil. It’s atheist in many ways. I think that we are looking for family values. If we weren’t, we wouldn’t have things like “High School Musical” or “Enchantment” doing really, really well.
Cheryl Casone: Mike, look at “The DaVinci Code.” With all the protests, it still made a lot of money.
Mike Norman: Well, that’s the thing. Ben says Hollywood is anti-religious. And he’s probably right to some extent. But Hollywood is very much bottom line-focused.
Adam Lashinsky: Pro-money!
Mike Norman: Exactly. If this theme doesn’t work, they’ll stop it. Just like that slew of movies that were anti-military, anti-US.
Tracy Byrnes: Did you go see them?
Mike Norman: I didn’t go see them because I had no interest in seeing them.
Cheryl Casone: And none of them did well.
Mike Norman: And a lot of Americans didn’t go see them, either!
Cheryl Casone: I don’t know, Adam. A lot of people don’t seem to want to watch anything anti-war. They don’t want to get depressed. I think people are going for the feel-good thing this year.
Adam Lashinsky: I guess. I think the economy is tough and the war situation isn’t good. Look, I’m going to make a very patriotic statement here: The great thing about America is that people can make a movie and people can criticize it. We can protest, and nobody gets hurt. It’s wonderful! But, Hollywood will make any movie that will make money.
Ben Stein: That’s not true. Sir, that’s not even remotely true. I’ve worked in Hollywood now for 31 years. There’s a very definite bias against God, against religions, against small-town values, against the military, against business. That is what Hollywood is. If they have the choice between two movies with equal box office potential, they’ll pick the one that slams God, slams religion.
Mike Norman: But Ben, you’re talking about ones with equal box office prospects. The ones that aren’t going to make money aren’t going to be continued. Hollywood’s bottom line-oriented. Ben, you’ve been in Hollywood for a long time!
Ben Stein: Excuse me, Mr. Ace Golfer. They don’t know what’s going to be a box office hit. Do you think they’d spend all these tens and hundreds of millions of dollars on a movie that wasn’t going to sell? They don’t know. They have no clue.
Pat Powell: I think America’s a cacophony of conflicting ideas: Left/right, religious/atheist. I think Hollywood has its own agenda. If the movie is well-written and has characters we care about, people will go see “The Golden Compass” even if it has atheist undertones. Hollywood has proven it can do that. We may have to go back a little bit, but do you remember “The China Syndrome”? Very left-wing movie, and yet we all went to go see it.
Cheryl Casone: Ben, I have to ask you. Does Hollywood view itself as the anti-thing to all America? It seems like it will do anything to stir the pot.
Ben Stein: Yes, they think of themselves as the “revolutionary proletarian” even if they’re going to work in a Mercedes or limousines or have yachts, you name it. They think of themselves as the revolutionaries fighting the pigs and power-structure.
Tracy Byrnes: “Alvin and the Chipmunks” wouldn’t be coming back if we weren’t craving family values and movies that we can all go see together. And that’s why “Shrek III” has done so well.
Adam Lashinsky: But we’ve always craved that.
More for Your Money: The Hottest $tocks for Ice-Cold Weather!
Cheryl Casone: The hottest stocks to own this winter. It’s time to get “More for Your Money.”
Ben Stein: iShares MSCI EAFE Index (EFA)
*Ben owns shares of this fund.
Mike Norman: JP Morgan (JPM)
*Mike owns shares of this stock.
Pat Powell: Chevron (CVX)
*Pat owns shares of this stock.
Adam Lashinsky: Hewlett-Packard (HPQ )
FOX on the Spot
Mike Norman: S&P 500 is a Steal! “SPY ” Jumps 15 percent in 2008.
Adam Lashinsky: Don't be Afraid to Shop; "JWN " Proves America is Brave!
Pat Powell: As People Clean Up Their Credit, Clean Up with “FIC ”
Tracy Byrnes: Told Ya So! More Airlines Goes Wireless Like JetBlue
Ben Stein: Merry Christmas to All Our Military Families!
Cheryl Casone: You Need the FOX Business Network!
In Focus: Recession Talk In D.C.: A Political Lie?
John Rutledge, Forbes contributor: You have to separate reality from rhetoric in this situation. We’re in the election season and it’s all lies now, for both parties. There’s no recession, and it’s very difficult to make a recession in today’s economy because so many of our jobs are in the service sector. Recessions happen from inventories piling up. GDP is stable, the housing crisis will go away, and the biggest risk we have of a recession is not now, but will come later, and it’s tax hikes.
Quentin Hardy, Silicon Valley bureau chief: Well, Hillary’s line about savings and the rich/poor gap is incoherent but that doesn’t mean there’s nothing to worry about. What I’m most worried about is John thinking we’ve somehow escaped the bounds of history and that there’s no more downturn. Look, Bernanke is worried about the housing sector so he’s going to make cuts next week despite this fantastic productivity number. They’re worried about some financial congregation that spreads across the economy and slows down growth. It’s a real worry.
Elizabeth MacDonald, FOX Business Network: Yea we’re in an election year but it’s not like you have to get the nail gun out and shut the door. The wheels are not coming off the country, or the economy. We are blowing our circuits in the housing and financial services sector but I think Bernanke did say it right. He said we’re operating on different gears, the economy is shifting and operating on different gears.
Mike Ozanian, national editor: We’re already in a recession, an Ozanian recession. Corporate profits, before tax, were down $52 billion last quarter, we have this massive government bailout which is going to cost taxpayers hundreds of millions of dollars. The unemployment rate, still low, is itching up. And worst of all, prices are rising. It’s not 1929, like Hillary is saying, it’s 1978.
Bill Baldwin, editor: Never believe perpetual doomsayers. Remember that guy from “The Great Depression of 1990”, the bestseller. It never happened. He came back with “The Great Depression of 2000” and it never happened. You know what his latest forecast is? Politicians are going to become more honest.
Poppy Harlow, Forbes.com anchor: The Democrats have a legitimate concern here. If we’re not in a recession, then we’re headed full steam into one. Home foreclosures are at an all-time high, lenders are closing left and right and credit is all but dried up. The worst part of it, the government is bailing people out. That’s not a long-term solution.
Global Warming Vote: Proof That Congress Is Out of Touch With America?
Mike Ozanian: By the time Congress even understands what causes climate change, hell will have frozen over. The only three things Congress should try and do are; cut taxes, kill terrorists and cut spending. That’s it.
Neil Weinberg, senior editor: I think Mike is totally wrong. To all the right-wingers who say wait untill all the evidence is in, I say: Iraq. You wait until all the evidence is in and then it’s too late for probe for a threat. You have to act early and you have to act decisively. That’s what Americans want. You may not agree but there are a lot of Americans who are represented by Congress and feel that there is global warming.
Elizabeth MacDonald: I’ve actually been thinking a lot about this. I don’t mind that they have hearings about global warming. I think it is an issue and I think it’s happening. But when are they going to have a hearing for out of control spending, instead of a hearing on steroids or fat in ice cream? Why don’t they fire the bums? I mean it’s been outrageous of how these people have been spending our tax dollars!
Lea Goldman, senior editor: I know it may be hard to believe but Congress can walk and chew gum at the same time. They can deal with pressing issues and they can deal with long term issues. Americans want them to take on the issue of global warming, you want to know why? Because Americans know it has a relationship with our reliance on foreign oil supply. They understand that it has a direct impact on their daily expenses. The price of fish is going up, the ski season will be shorter this year….you see the effects of global warming on a daily basis.
Victoria Barret, associate editor: This is such an easy issue to deal with when it comes to politicians. It’s like giving candy out, everyone loves candy. And if you vote against it, it’s like poisoning children. It’s just a PR move as far as I see it. It’s really an easy issue to go after in a year where they have been nailed over not going after important issues like immigration and social security. Meanwhile, I think they should be looking at housing and out of control spending.
Mark Tatge, contributing editor: It’s easy to go after Congress and say they’re doing a bad job, but I think Congress should be patted on the back here. For once they’re trying to do something right and everyone is bashing them. So why not give Congress some credit? Certainly the Bush administration is not going to step in and admit there is a global warming problem going on out there. So I say give one to Congress!
Flipside: Push to Make Santa Thinner: Bad for the Economy!
Mark Tatge: If you’ve learned anything over the last years, when it comes to hedge funds, the super rich, tax cuts, it’s that gluttony is good. So why shouldn’t Santa be allowed to stay fat? I think it’s a very good thing for the economy. I think the Surgeon General is an idiot. I think Santa should be allowed to get fatter because that would spur shoppers to spend more. We all look a little plump. And what’s wrong with being fat? A hundred to two hundred years ago, being fat was a sign of wealth and was desirable.
Quentin Hardy: I speak to you as a former fat boy so massive props to Santa. Starting off as a mere, Nordic folktale, he has built a global brand for himself. He sells toys to millions of children and employs half of China as far as we can tell. He’s not about wooden toys and reindeer action figures. He’s about naughty lingerie and X BOX 360. He’s a modern guy! The modern CEO is a religious skier, washboard abs type of guy. If Santa wants his pay package, he has to skinny down.
Lea Goldman: Thankfully no one listens to the Surgeon General and this plan is absurd and everyone knows it. From what I can tell Santa comes around once a year and he’s jolly. I don’t see an increase in sales of red velvet blazers or men walking around in white beards. He has no effect on people’s consumption when it comes to obesity. Let’s him get a pass.
Victoria Barret: Well he’s a figure of the imagination for lots of children. Santa, although he never was this svelt guy, was never as obese as he is now. It was in 1931 when Coca-Cola commissioned an artist to draw his rendition of Santa. That’s when he put on all these pounds. So I think we should go back to the pre-1930s Santa.
John Rutledge: I think the Surgeon General is an idiot, and a big, fat one. He should do his day job and save us from issues like bird flu, herpes and Hillary. Yes he’s fat, but he’s fictional! Next they’re going to come out with a carrot figure on Sesame Street. I love Santa. Leave him alone, or else!
Informer: Best Stocks Under $10!
Evelyn Rusli, Forbes.com markets reporter: Advanced Micro Devices (AMD)
Mike Ozanian: Sonus Networks (SONS)
Victoria Barret: Sirius Satellite Radio (SIRI)
Bill Baldwin: Alcatel – Lucent (ALU)
Our Cashin’ In crew this week: Dagen McDowell, FOX Business Network; Wayne Rogers, Wayne Rogers & Co; Jonathan Hoenig, CapitalistPig Asset Management; Jonas Max Ferris, MaxFunds.com; and Leigh Gallagher, Fortune Magazine.
Dems’ Bigger Housing Plan: Would It Cause A Housing Crash?
Democrats coming out swinging at the White House’s free market fix for struggling subprime homeowners. They want the government to step in with a bigger plan to cover more people, but would that make the housing market worse?
Jonathan: Any government involvement in housing, whether it is the Bush plan or the Democrats’ plan will make the market worse. It will make the housing market worse, it will weaken the economy, and will really prolong the crisis. Everyone is feeling the consequences of this: the banks, the lender, and the investors. Why not the borrowers? I hate to break it to you, but if you can’t afford your mortgage, you can’t afford your house. What makes these people think they are deserving of any bailout? I just don’t understand.
Wayne: We can have a period where borrowers and lenders can get back together and start this process again. I don’t think 90 days or 5 years is the answer. Give the borrower a year to make a down payment, come in and do what an ordinary borrower does.
Jonathan: Wayne, does the government have a role in that?
Wayne: Yes. Fannie Mae, Freddie Mac, and all these government sponsored who are buying these loans have a big position to lose in this as well. There should be this renegotiation period. If the borrower doesn’t take care of it, then he should suffer.
Dagen: Jonathan, the Bush solution, a treasury-brokered deal to freeze interest rates on some subprime mortgages, is a lot better solution than what we’re hearing from Democrats and from those in Congress. We’re talking about judges getting more power to re-work loans in court and the ability to sue Wall Street firms for the types of loans that are being made. It is voluntary. There is no government money changing hands right now. As Wayne said, the government is already involved, like with the Federal Housing Administration.
Leigh: The borrowers are already suffering if you look at the 2 million foreclosure applications that are forecast for next year. The one thing about this plan that is universally true is that it is very limiting and affecting what Barclay’s says is going to be about 12 percent of subprime borrowers. It might not prevent the economy from tipping into a recession. We have real problems on our hands for next year.
Jonas: None of these plans are perfect. The government built the housing bubble with tax deductions, Fannie Mae, 30-year mortgages, and the whole system. It’s going to have to be the government to let the air out of this one. All these plans are bad. The Bush plan is the best of the worst so far. The reality is they have to let the air out slowly or we will have a lot of homes hitting the market, which will hurt everyone.
Jonathan: The market needs to correct. The federal government thinks it can stand in the way? It‘s just as ludicrous as me being able to sell my Cisco to the government at $60 a share when the stock’s at $20 a share.
Dagen: I will agree with you on that. These people could get a 5 year freeze on some of these loans, get refinancing, but we still do not know how many of these homeowners are going to default or enter foreclosure. It’s just delaying the day of finding out and delaying the real housing collapse.
Big Personal Debt: Time to Stop Christmas Shopping?
Still paying off your credit card for Christmas gifts you bought last year? Millions of Americans are. Is it time to just stop all the Christmas shopping?
Leigh: I hate being the Scrooge, but I don’t think I’m being that much of Scrooge here. We are such a consumer nation. Before anyone mentioned subprime, we were addicted to our credit cards. Credit card debt is at a record high. What’s wrong with paring down, now that so many people are facing higher mortgage costs? Give experiences. I bake cookies for my grandmother every year. She loves it. You can still celebrate the holidays without buying into every single marketing tactic and overspending, which is what we have a tendency to do.
Dagen: Trouble is people are turning to their credit cards because they can’t take money out of their homes. They used to use the home equity lines to pay off their credit cards during the bubble days. I agree with Leigh, but ultimately the whole country needs to be financially healthy in the long run. Save more, spend less.
Wayne: Bah humbug! If you cut out all this Christmas spending, all the retailers who have depended on it will be hurting big time. You can spend some more at Christmastime. Everybody gives gifts. Why are you going to kill the economy? I applaud the fact that you want to save, but Christmas is a time when we can spend money and have a little joy in the household.
Jonathan: Some people are probably cutting back, but I think many people already spend within their means. Shopping at Christmas is very American: the capitalism, the materialist culture on Christmas. Walk down Michigan Avenue here in Chicago, which is full of toys and gifts and great food.
Dagen: It’s called window shopping. You can take in all that spirit and spread it around, but not have to spend and spread your credit cards down Michigan Avenue.
Jonas: If people spent 5-10 percent less on their Christmas shopping, the Dow would be at 8,000 come January. I’m not kidding. We would be in a depression, not a recession. It would be good to pay off debt, but right now incomes are ok for the consumer.
“Stay Married To Save The Planet!” Have the “Greenies” Lost It?
A lot of news out there about wild things people should to do “help the environment.” People are being told to stay married, not have children, and Jewish people being asked to light one less candle every night of Hanukkah. Is this all just proof the “greens” are going nuts?
Jonathan: The “greens” don’t care. These stories are out there, but they epitomize the “green” philosophy, which is basically to sacrifice man’s happiness to nature at every opportunity. To the environmental movement, who cares that you’re burning a candle to celebrate your holiday? They care more about the spotted owl than about man’s happiness on earth.
Jonas: This isn’t as crazy as it sounds. Yeah, these stories are a little out there, but the “greens” are making more sense than the politicians. Ultimately, it is our own behavior that is destructing the environment. Most policy is angled at companies, but really it’s our own decisions about what we buy and how we act. So, we should point the camera at ourselves.
Jonathan: You’re blind to this movement. The green movement isn’t trying to convince us to use energy-efficient LED lights, they are lobbying Congress to join Kyoto and pass all these crazy emissions standards that hurt man’s life.
Jonas: All the government regulations that you hate, aren’t they all aimed at corporations? When does the public, the voter, get a penalty for doing something?
Jonathan: Lighting a candle? For having a baby? Open your ears.
Jonas: You prefer environmental policy against the corporations rather than the people who actually create the pollution, buy the SUVs, etc.?
Jonathan: I don’t think there’s anything wrong with buying an SUV or having a child, or getting divorced. I value man’s life on earth, not the prairie dog, not the oak tree. It’s man’s life that we should be protecting. This concern that everything we do impacts nature…guess what, I’m a part of nature too.
Jonas: There are decisions that we all make that make a big difference. If we all change our behavior just a little bit, the environment will be better.
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Jonas: Limited Brands (LTD ) (Friday’s Close: $20.81)
Leigh: Abercrombie & Fitch (ANF ) (Friday’s Close: $82.61)
Jonathan: Sally Beauty Holdings (SBH ) (Friday’s Close: $10.70)
Wayne: Double-Take Software (DBTK ) (Friday’s Close: $24.00)