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This past week's Bulls & Bears: Gary B. Smith, Exemplar Capital; Tobin Smith, ChangeWave Research; Eric Bolling, FOX Business News; Pat Dorsey, Morningstar.com; Matt McCall, Penn Financial Group and Marc Lamont Hill, PhD, Temple University.
Dow Has Best Weekly Gain in Five Years; Is the Worst Over?
Matt McCall: Yes! The worst is over! The fear and panic selling that we've seen over the past two weeks is near the market bottom. What will be key to a follow-through for this rally is liquidity, which there will be approximately $2 trillion hitting the markets in the coming year as the array of "bailouts" begin to hit the books. Combine that with the hording of cash by investors and funds and it will lead to a mass exodus back into the markets just as it left over the last few months. The bottom line is that there have been times when everyone gives up on the stock market, only to see it rebound from what appeared to be the end for stocks.
Tobin Smith: No the worst isn't over yet. The idea of a "severe recession" isn't priced into the market along with the global shock yet. We still have some more downside.
Gary B Smith: It's impossible to say. The indicator our fund uses shows not to not venture back into the market until the QQQQ closes (on high volume) above its 50 day moving average. Right now that's at about $44 and QQQQ closed Friday around $32. So we're a long way from getting a buy signal.
Eric Bolling: I think we may have hit the bottom. The world central banks coming to the rescue is a game changer.
Pat Dorsey: We've stepped back from the financial abyss, so the risk of total credit seize-up has receded considerably. That's good. But we're still in for a nasty economy for a while. Unclear how much of that is already discounted into the market.
Obama's Tax Plan for Wealthy Companies: Good or Bad for Jobs?
Gary B Smith: Raising taxes on corporations is a killer. Obama likes to beat up on the Exxons of the world, but that company alone employs over 87,000 people. It also supports thousands of other businesses, cities, jobs, etc. Raising taxes on corporations would basically kill our economy!
Marc Lamont Hill: If we were to increase taxes on corporations like Exxon, they would still continue to create jobs and generate business. But we would also be able to fund programs and create opportunities for the most vulnerable people in society.
Tobin Smith: If we lowered corporate tax rates to 15% like Ireland we would have Dow 12,000 right now. Obama wants to give tax credits for start up business. Well this just shows that he doesn't know much about business, because most start-ups on average don't bay taxes for about 5 years!
Government Bailouts Nearing $2 Trillion: Will They Bankrupt America?
Matt McCall: With nearly $2 trillion already set to be pumped into the markets through a plethora of stimulus packages, I do not believe $300 billion more that Nancy Pelosi is proposing, will have any affect on the real issue with the economy and stock market. Sending out checks to Americans was a band-aid on a compound fracture and the new proposal is even more ludicrous. The Democrats would like to give cash to ailing states that have mismanaged their budgets. That makes sense – let's give more money to the government that has already proven there are not fiscally responsible!
Marc Lamont Hill: People need food stamps, people need jobless benefits, and we all need infrastructure in states. We need these things and we have to do it. We can't have one plan for the rich and not for the poor!
Eric Bolling: I think we are spending our way out of this crisis. It’s stimulus or war. And we already have 2 wars so I think it has to be stimulus.
Pat Dorsey: We'd be more able to afford these emergency costs if the GOP-led Congress had not spent like drunken sailors. We had a surplus not too long ago.
Gary B Smith: If Congress doesn’t bankrupt America, they'll mismanage it and run it into the ground!
Tobin Smith: If don’t think they can bankrupt us when investors are willing to take one tenth of one percent yield on 30-day Treasury paper.
On Saturday, October 18, 2008, Neil Cavuto was joined by: Charles Payne, wstreet.com; Dagen McDowell, FOX Business Network; Adam Lashinsky, Fortune Magazine; and David Nelson, DC Nelson Asset Mgmt
Bottom Line: Obama's 'Spread the Wealth' Plan: Will It Help or Hurt the American Dream?
Joe the Plumber interview:
Neil Cavuto: Joe, you had argued when you cornered Barack Obama a couple of days back that his tax plan would keep someone like you from buying the very business that employs you. You didn’t call it a "Robin Hood" type of deal, but this sharing of the wealth would be counter-productive, right?
Joe Wurzelbacher: Well, I mean if you hike taxes on companies, it’s quite obvious that sometimes you have to cut expenses somewhere and a lot of times that falls on the employees. You have to get rid of one of them or you have to go down to part-time. Then, they don’t have benefits. It just keeps on sliding downhill. You don’t redistribute wealth to jump-start the economy or help people. You know, I’m not an expensive plumber or nothing. But, you give them a couple dollars more… that doesn’t mean they will be able to hire me. They will have to call a handyman. It doesn’t make a lot of sense to me.
Neil Cavuto: You were arguing with Senator Obama on this redistribution of wealth and he when responded, "we have to even things up." I'm paraphrasing…
Joe Wurzelbacher: OK.
Neil Cavuto: You were offended by that. Why?
Joe Wurzelbacher: It just goes against everything I was raised to believe in. You work for what you get, you know? You don’t work and then give it away. I mean, you can at your own discretion, but not at someone else’s discretion. It just bothers me to the core, to be quite honest. You don’t redistribute my hard work. That’s how I was raised… with a good work ethic. I worked my 10, 12 hours. Let somebody else step up and work their 10 – 12 hours if they want something bad enough. If they want to work 8 hours and take three breaks, then that’s up to them, you know? But, I want a little more for my family.
Neil Cavuto: My buddy Charles Payne says Joe the plumber is right – Obama’s plan to spread other people’s wealth around America would be a nightmare for the American Dream.
Charles Payne: Joe the plumber hit it right on the head. First of all, this whole notion that someone who makes or their business makes $250,000 is the same as a business making $25 million or $25 billion, is preposterous. We can’t lump them all together. The idea also that you can work 12 hours a day and your reward is that you must “spread the wealth”?! That goes beyond being audacious. That is outright killing the roots of our country. I don’t get it. I don’t get why they’d keep doing this. I am a small business owner. I am telling you right now it does not make sense that you would villainize these people. That is what has been happening all along in this campaign. "The rich have put us in this position." Who are the rich? You can’t equate an AIG executive who made $20 million a year with a guy who wants to buy a plumbing business that makes $270,000 a year.
Neil Cavuto: Is this why you have been moving all that money to Tahiti?
Charles Payne: Absolutely.
Neil Cavuto: What do you think of that idea?
Dagen McDowell: I actually agree with Charles. It’s not so much how much taxes will go up under Barack Obama… we’re only talking about 5%.
Charles Payne: In the beginning…
Dagen McDowell: That is the point. Where does it stop? It’s likely to work. You take money from wealthier people, and you give it to people who are going to spend it… You could get a boost in the economy. With a Democrat in the White House, possibly a Democratic Congress, where does it stop? If it works, it will keep going higher and higher and encompassing more and more people and that is something I hear over and over again. Where does it stop? People want to know the answer to that.
David Nelson: I think the fear-mongers are here in force. I think any rational concept of the American Dream is lost for a lot of Americans because they simply don’t get the chance to participate…
Neil Cavuto: How is that corrected by raising taxes on the wealthy?
David Nelson: Because the spread between the wealthy and the poor in this country has probably gotten to unsustainable levels. It’s not just for the Joe “The Plumbers” of the world. I saw the whole exchange. Don’t just watch the sound bite. Watch the entire tape. I thought Obama hit it right on the head. Charles, maybe we do need a Robin Hood right now to control this.
Charles Payne: Robin Hood?! We’re talking about people and business who make $300,000. They should not be attacked.
David Nelson: You make it sound like he’d be wiped out with a 3% tax.
Charles Payne: He’s going to be crushed!
David Nelson: He’s not going to be crushed. That is an exaggeration. That is a fear tactic.
Dagen McDowell: You would raise taxes in this environment? In this economic environment? You would do it right now?
Charles Payne: If we took all of Bill Gates' money, if we took all of it, does that change the circumstance of the guy who doesn’t have any job skills in this market?
David Nelson: You bring up a point. Most of the people sitting at this table will be paying higher taxes. And Joe the plumber is going to be paying higher taxes. But for a lot of people who are living on the edge, taxes are going to go down. That’s a fact.
Charles Payne: How can they go down?!
Neil Cavuto: All I know is if you thought it was difficult to get Joe “The Plumber” now, it’s going to be impossible to get him in the future.
Adam, what is your take on this? Is this a sign that the pendulum has indeed swung toward bigger government, higher taxes, redistribution of wealth, however you want to stamp this?
Adam Lashinsky: Yes Neil. Barack Obama made a politician’s tactical mistake in his conversation with Joe “The Plumber” by being honest. He never should have used the expression “spreading the wealth” around because that’s exactly what his is suggestion and it gets…
Neil Cavuto: I thought he was spreading something else… but go ahead.
Adam Lashinsky: We all know that the issue of inequality has become a troublesome one in the United States. That is a threat to the American Dream, Charles. That is a grievous threat to the American Dream.
Charles Payne: How is that inequality?! If someone busts their ass and works 12 hours a day, doesn’t take a vacation, sacrifices their family, and they finally reach the second rung in life, they go from $50,000, work their way up to $300,000, what’s the inequality about that? You success will be punished?
Adam Lashinsky: Charles, you’re changing the subject. They can do all those things. They will still be wealthy and successful. And they can still have a nice life for themselves.
Charles Payne: They won’t be wealthy. You won’t be wealthy. I am telling you. $400,000, $300,000… you won’t be wealthy. You give half of it to taxes.
David Nelson: It’s a lot better than $50,000, Charles.
Charles Payne: We earned it! Why are you going to take it away?
David Nelson: They aren’t taking all of it. The pendulum has swung so far to the right that now it has to go all the way to the left to focus on the center. It’s a political reality.
Dagen McDowell: The problem is the pendulum continues to swing…
David Nelson: … it will swing…
Dagen McDowell: And over years, you wind up with Kennedy. Do you remember? 91% tax rate cut, thankfully.
Head to Head: Gov’t Plan to Buy Banks: Will It Make Your Money Safer?
Neil Cavuto: This week – the government unveiling plans to buy up more banks to make them more secure and your money safer. But, will it?
Charles Payne: Your money will be safe, but it won’t make the nation’s economy safer. The idea that we are going to save every bank out there is absolutely nuts! I think we just have to look over at Japan and see what happened.
Neil Cavuto: They’re really trying to save the top nine banks, right? The point being if you shore up the big guys…
Charles Payne: This is what I don’t understand. We had a bailout for the middle class… and what the heck happened?? We gave all the money to the banks! Where did this go wrong? How come nobody in Congress is talking about this?
Neil Cavuto: Adam?
Adam Lashinsky: Well, they changed course, all right? They said they were wrong. They made an intelligent move. They are still going to do what the rescue plan envisioned, but they decided that making sure the biggest banks were secure was more important and more urgent. As for the small companies, the government is not going to buy out every bank that is in trouble. They are going to make money available to banks and they are going to decide whether or not to make those investments if the banks are good. They are not saying that they will not let the banks fail.
Dagen McDowell: Is your money safer? Absolutely! We saw what happened when the government didn’t step in. It was called Lehman Brothers. That one money market fund lost money and that is what caused the panic that led to the $700 billion rescue program.
Neil Cavuto: Are you saying if the government had rescued Lehman, this wouldn’t have happened?
Dagen McDowell: We would not have had the out of control spiral.
Neil Cavuto: It was spiraling ahead of Lehman.
Dagen McDowell: No way. That is what caused the dry-up in short-term lending.
Adam Lashinsky: Yeah, there was no breaking the buck in money-market.
Dagen McDowell: Maybe it would have been something else, but I do know that Lehman caused all of that panic.
David Nelson: I think Dagen’s absolutely right. If you don’t have confidence in your banking system, you don’t even have a financial system.
Neil Cavuto: You mean all this money and backing up loans…
David Nelson: No one likes this, but the alternatives are just too scary.
Neil Cavuto: It sounds like “House on Haunted Hill.” You don’t want to go down that upstairs hallway… All of a sudden you realize it’s a poorly made-up young woman dressed like an old woman holding a candle… and it’s stupid. The point is you put the fear of God into people and you do this or ___. So we do that and we still get ___. So what have we proven?
David Nelson: I’m telling you what I’m proving… I know during that time, I took all of our clients’ money out of money markets and we started putting it into T-Bills because the fear was just too high. Banks could have collapsed across the country and Lehman Brothers was the tip of the iceberg.
Dagen McDowell: Everybody’s focused on taxpayer money going into the banks. I’d rather it be our money than the money from China or the Middle East.
Charles Payne: How ironic though that the banks, the auto lenders, the credit card companies… when it’s time… when a person is behind on their bills, they say “Listen. Pony up. Give back the key or cut up the card.” As soon as they’re in trouble, it’s the taxpayer who has to bail them out. There is something sad about that.
David Nelson: It’s already happening. Those credit card companies are sending letters to millions of Americans and they are seeing their credit lines cut. People with a $5,000 credit line have overnight had their credit line cut down to $3,000.
Charles Payne: Isn’t that part of the cure? Weren’t people spending too much to being with?
David Nelson: Probably.
Dagen McDowell: We have to wean ourselves off of credit. We can’t do it all overnight.
Neil Cavuto: Adam, to the point of are we safer or are our financial systems safer had we not intervened, what do you think?
Adam Lashinsky: I think it’s absolutely true. It’s important for people to understand that their money is safe. If it is in an FDIC-insured account up to the limits… it’s very important that people be able to rest easy at night, especially Charles, the people who haven’t been overextended and who can afford their home. It’s tragic.
The Cost of Freedom: Nat’l Average for Gas Plunges to $3/Gallon: Will it Save Our Economy?
Neil Cavuto: It’s the bright spot in the gloomy downturn – gas prices! The national average is now about $3 a gallon. It’s down 31 days in a row and down more than $1 since hitting an all-time high just 3 months ago. But, is it enough to help get our economy moving in the right direction?
David Nelson: It certainly doesn’t hurt. It’s the one bright spot we can all point to out there. The good news of course is that gas prices are going down. The bad news, of course, is it’s going down for the wrong reasons.
Neil Cavuto: Can people make that connection?
David Nelson: Well, when I pull in, I’m happier! The other day, I said “fill ‘er up” instead of “$10 please.” I feel better and I can point to one fact. We manage the money for a family that owns a string of gas stations across the area and they’re seeing their business pick up. People are pulling in.
Neil Cavuto: Why have prices come down?
David Nelson: Supply and demand.
Neil Cavuto: Interesting.
Dagen McDowell: It will help, but it will not be some magic elixir to offset all the money that people have been squeezed out of. But, it will help. Keep in mind, gas prices are still higher than they were a year ago. They were $2.79 last year. We didn’t have record-high prices for very long. The price drop will put billions of dollars back into people’s hands… but I’d rather have a strong economy and high gas than a weaker economy and low gas.
Neil Cavuto: You want $10/gallon so you and your husband can have a scooter.
Charles Payne: It is good to be able to say “fill ‘er up” because for a while there, I was saying “stick ‘em up.” It is a sad consolation prize. We have lost 750,000 jobs this year. I do believe people are wise now to the presidential race. They understand what is going on with the economy. But, people are getting a false sense of security. They are running out to buy SUVs. Low gas prices might be the only thing that stops this holiday season from being the worst disaster ever.
Adam Lashinsky: Gas prices are not the primary cause of our financial crisis… so on the flipside, just because they’re going down does not mean they can bring us out of it.
Neil Cavuto: I think you guys underestimate and under-appreciate the resilience of the American consumer, who, I think, is looking at these lower gas prices and is looking around and saying you know, short of everything being radiated out there, it is not the end of the world.
More For Your Money: Buys of a Lifetime Stocks!
Neil Cavuto: When everyone is running scared, our gang says run for the buys of a lifetime!
Charles Payne: Massey Energy (MEE)
David Nelson: Hewlett-Packard (HPQ)
Adam Lashinsky: Nokia (NOK)
In Focus: Will Obama's 401(k) 'Cash Out' Plan Wipe Out Your Retirement?
Elizabeth MacDonald, FOX Business Network: Obama's plan is a terrible idea. He has you borrowing from your future to pay for what you want now. You also have to pay income taxes on the payout. This comes at a time when you have California congressmen suggesting that we should tax 401(k) plans more! This is a terrible idea.
Quentin Hardy, Silicon Valley bureau chief: Let's play current events. Auto sales were off 30 percent in September. The market sold off 700 points on Wednesday because of retails sales. Consumers are changing their behavior rapidly. This isn't about taking $10,000 out of their 401(k) to buy a flat screen TV. This is about taking out $10,000 because you only have 36 weeks of unemployment and it's running out and you have to save your house. You lose your house, you have job stresses, you have no money coming in. That is a bigger risk against your future than taking $10,000 out of your 401(k).
Victoria Barret, associate editor: This market could be very close to a bottom. You've got people like Warren Buffett who are saying it's time to buy U.S. equities. This is probably the worst time to be taking your money out of your 401(k). We've all looked at our 401(k)s recently and it's not pretty. If you put money into your 401(k) over time you'll benefit for the market ups and also suffer from the market downs. But ultimately this is a bad plan at the worst possible time.
Neil Weinberg, senior editor: It's a bad idea to take money out when the market has been trashed but it takes a lot of gall to say we can take out $1 trillion dollars to bailout our greedy banks and senior executives but we can't allow Americans to decide what they want to do with their own savings. I think that's the biggest form of Big Brother-ism you can imagine.
Mike Ozanian, national editor: I agree with Liz. We'd be encouraging people to speculate with their savings. You don't change the rules in the middle of the game.
John Rutledge: Forbes Contributor: This is a last minute effort by Obama to capture some votes. How can it be a bad idea to reduce a penalty for somebody to take their own money out of their own account? There should not be a penalty in the first place. Don't do it if you don't have to, prices are too low. But they have no business holding people's money ransom in the first place.
New Government Plan to Buy Up Banks: Proof America's Going Socialist?
John Rutledge: In a recent poll in China 55 percent of Chinese think America is becoming Socialists like they are. If the Chinese agree, who are we to argue with them on this point? I really think it's sad how quickly people give up their freedoms when we get scared.
Jack Gage, associate editor: Let's take a look at exactly what is government interference and what is not. Instructing the biggest mortgage lender in the U.S. to make risky loans is government interference. Protecting savings deposits by raising FDIC insurance is not. Preserving the ability of small businesses and consumers to get credit is not government interference.
Neil Weinberg: Over the past 8 years under a conservative government we have seen our taxes (state, local and federal) go to the highest level in history - 31 percent. The average American spends more on taxes than on clothing, food and housing combined. We've seen the largest entitlement increase over the past few years with this drug benefit from Medicare and Medicaid since Roosevelt. What we are seeing right now is a creeping Socialism.
Elizabeth MacDonald: It's dreadful that we're going through this identity crisis. I don't think we're going Socialist. This money doesn't come with strings attached. The government is not telling AIG how to use that money.
Mike Ozanian: You have to look at the long-term picture. Over the last 70 years the government budget has gone from 10 percent of GDP to 28 percent of GDP. The government is slowly taking over more and more of the economy. It's a long-term trend and it's only going to get worse.
Quentin Hardy: The real question is what works in times of crisis. Over the last few weeks the LIBOR rate tripled, the commercial paper market froze, businesses could not lend because banks were in such a crisis. The government got in, helped recapitalize. We have seen those markets revive. That was critical. In 1929 and 1933 the government did not intervene in the financial markets. That's one of the reasons the Dow fell 91 percent. In 1993 and '94 in Sweden the government did come in, helped recapitalize those banks and then sold them off for a profit. Which model do you like?
Obama and McCain Unveil New Housing Fix: Which Plan Will End the Financial Mess?
Evelyn Rusli, Forbes.com anchor: I have to give this one to Obama because McCain's plan just doesn't make fiscal sense. Under McCain the government would spend $300 billion on new mortgages which they would in turn replace that with government-backed, fixed-rate mortgages but at the current market price. That guarantees loses for the taxpayer and gives a get out of jail free card to predatory lenders and people who got in over their heads.
Mike Ozanian: I'm not crazy about either of these plans but at least McCain's plan goes to the heart of the problem. Obama's plan is nothing. Let's have a 90-day moratorium? Well guess what? Mortgage rates are going up. That's going to make it more expensive to fix down the line.
Quentin Hardy: After 90 days, like Obama's plan suggests, you get things sorted out. It takes you out of the panic mode. It's a better idea.
Jack Gage: Obama's plan is nothing. It's delaying the inevitable for 90 days – until after the election in November. This is a problem that will have to be addressed with a cash infusion. This is what consumers are going to need who are in over their heads.
Victoria Barret: Both plans don't offer good solutions and I think both plans would cause more problems. The problem with Obama's plan is that banks would be prevented from making new loans so it would gum up the system. And with McCain's plan you won't see investors going into this market for a long time. Both of them delay the market washout that needs to happen.
Obama's Tax Cuts for Folks Not Paying Income Tax: Is It Welfare?
Gary Kaltbaum, GaryK.com: It's all about welfare. It's what the government's going do for you. It is now no longer "we, the people," it's "we, the government." Let me be clear about something, these are not real tax cuts. It's the government telling you how to act and then they'll give you a little bit of money if you act in a certain way and the fact that people that pay no taxes get money back from the government is beyond the pale. It is complete redistribution of wealth from the job creators to the workers and it makes no sense and will kill the economy going forward.
Jonathan Hoenig, CapitalistPig Asset Management: I think Karl Max might have had a lot to do with it. That is essentially what progressive taxation is. Gary is right, it is bad economics but it is also immoral in my opinion. It is immoral to take money from people who have earned it and give it to people who have not. I'm sorry, those 5%, Barack Obama says just 5%. Those 5% earned that money. They have a right to it and they happen to be a very productive 5%...the 5% that already pays the vast majority of taxes in this country.
Cheryl Casone, FOX Business Network: Well, fair is a relative term at this point. That's the way our tax system is structured and what I don't understand is where the money is going to come from. I have listened to both candidates talk about their plans when do they think they are going get the money for more tax cuts for spending programs next year?
Jonas Max Ferris, MaxFunds.com: Raising taxes is not going to work either and it is not going to fly. It will hurt our economy. Again, it goes back to, you know, why not — you're pushing people to succeed in this country, do well, build businesses, make money. I'm thinking of Joe the plumber. I can't help myself right now. The guy had a great point. What are you doing to me? Leave my business alone. Is Joe the plumber considered wealthy in Barack Obama's mind? It's been a great debate this week.
Damon Vickers, Nine Points Capital Partners: I think we're looking at the new deal. In a lot of ways, we're playing around with a lot of the similarities we saw in 1929 in the post 1930's. You had a collapse of demand. We're seeing a collapse of demand rolling forward right now. (Not a good time to be raising taxes?) Well, the redistribution of wealth, the consumer has — their purchasing power is collapsing on a global basis so not only the US but other countries increasingly are going to have these programs of redistributing wealth and trying to get the consumer to spend to get the economy moving again. I agree with everything Jonathan and Gary said.
AIG Spending Bailout Bucks on Hunting Trips & Spa Vacation
Jonathan Hoenig: Companies make bad decisions all the time, right. And remember Enron field, remember new coke? What is made with private dollars, though, no one cares. I think the problem is now that the government owns a major insurance company, a mortgage company, we all have a very vested interest in seeing essentially how these companies are operated. We know the government can't run a railroad, a post office, school system, so the fact that now they're in the business of micromanaging the world's largest insurance company gives me great pause and great concern should most Americans.
Jonas Max Ferris: Somebody didn't read the AIG memo they were in trouble. It is interesting working there. I think the government will take money on the stock positions but they have to be careful to Jonathan's point, how much micromanagement they do of these businesses. They will make money sitting back okay these stocks. Let's not forget, AIG collapsed on its own without the government money. Don't blame the government for the free-market mistakes they made. Some of this is ridiculous and that money should go to share holders but don't over manage corporate America. It usually works.
Gary Kaltbaum: I think it tells you how boring the people are at AIG because if I get a vacation, I'm going to Maui. I am not chasing birds. Whenever government gives out money, there is never accountability and this comes down to my biggest problem with all these bailouts that are now happening. This $700 billion is now in the hands of people that ran Goldman Sachs, which is ground zero for all the leverage that caused all these problems. I want to know who is going to oversee all this spending and all this money? I have a big worry going forward with all this.
Cheryl Casone: Let's not let the facts get in the way here. This event was planned well in advance and it was for clients in Europe hence the pheasant hunting which none of us would ever do, come on. These corporate executives, they are not all evil. They are not smart, either. They should have cancelled it. They know it. America is upset. It's bad PR. It looks bad. They cancelled all the events going forward. They're figuring it out now.
Damon Vickers: Well, I know that. I'm sure they are highly stressed. Their stock price have fallen what, $80 down to three bucks. I guess maybe they'll come back all cheery and energized. It might be cheaper to give them a copy of the book "The Secret" but that didn't happen. I guess it's better than having them put a gun to their heads.
Palin Takes on ACORN Over Voter Fraud Allegations
Jonathan Hoenig: There is no question that there was pressure not only from lawmakers but from community groups like ACORN to give loans to bad creditors. Some of those loans were sold to Fannie and Freddie. In my opinion this is a lot of what has contributed to the mortgage meltdown. This is what happens when you mix politics with economics. You get decisions being made for the wrong reasons. The fact the government is heavily involved in the mortgage market I don't think is a very good sign. If you want to see housing rebound, if you want to see real estate rebound, we need to get groups like ACORN and the government in general out of housing, not further into it.
Damon Vickers: If the idea is to make homes more affordable for families, which it should. Families have a right — families do better when they have homes and that comfort and security. However, if it's about making housing more affordable, to the extent that the government gets involved, I think the situation gets worse. Get the government out of the housing industry. Let prices find their own level and houses, by default, will become more affordable for everyone.
Cheryl Casone: Look, let's go back in history. People want to talk about politics and housing. Remember Barney Frank? Barney frank was saying everybody should have a home, it's a right to have a home. We figure out it is not an American right to own a home. He missed his chance to fix Fannie and Freddie, you know. That's a perfect example.
Jonas Max Ferris: Barney frank should have never cooked up an idea for an ownership society. This notion that it's the poor that couldn't afford to buy a home that caused this problem is the same delusion. The sub prime wasn't contained the sub prime. If you look at mortgage numbers, the vast majority of mortgage lending that is reckless went to not sub prime lending, it was trillions to upper middle class, middle class people getting overextended mansions because they thought they couldn't go down. We have already written off more money that was made in sub prime loans over the last few years. That wasn't the only problem. They cracked first because they are a bad credit risk. All these companies, they thought this was the new credit card lending that they could make all kinds of money making these loans. A gun was not to their head. Lend that guy adjustable rate no interest mortgage so he could buy a home that just doubled in price. That is not what went down. That is ridiculous.
Gary Kaltbaum: Look, I think they were part of the problem but I think it's a small cog in the wheel. None of this happens without the blithering idiot Alan Greenspan who said subprime lending is terrific and said that the lenders will be able to credit score just fine because of their computers. Then you get all the bad lenders. This was just an orgy of crime going on between everybody. I think ACORN's small and I'm more worried with ACORN trying to steal an election about what they did with the housing at this time.
Historic Bargain Buys
Jonas Max Ferris: Dell (DELL)
Damon Vickers: Lennar Corp (LEN)
Gary Kaltbaum: Wal-Mart (WMT)
Jonathan Hoenig: Japanese Yen Trust (FXY)