This is a rush transcript from "Your World With Neil Cavuto," November 20, 2008. This copy may not be in its final form and may be updated.
NEIL CAVUTO, HOST: You know things are bad when, now, even the French say we are fried and our view of capitalism is full of crepe — the president of France now calling for his own economic summit in early January. Nicolas Sarkozy reportedly wants to tame the animal spirits of American capitalism.
What did you think? Was that — it was bad. All right. I'm sorry.
But he is determined to use this global crisis to do it.
Craig Smith says we asked for this. Craig is the CEO of Swiss America.
Well, Craig, I think you are right. I guess you are right. We provided the bad example. And away we go, right?
CRAIG SMITH, CEO, SWISS AMERICA TRADING CORPORATION: You bet, Neil.
And, by the way, I did not fly here on a private plane today, Neil.
SMITH: I drove by car.
SMITH: So, I want to make that clear right up front.
You're absolutely right, Neil. We deserve this. We deserve to be rebuked or rejected by the French. We have abandoned every free market principle that made this nation great. We have got Nancy Pelosi taking bankruptcy off the table, more government intervention. She wants to fix it, vs. the free markets.
And you have France, that has been literally running away from controlled markets, and privatizing businesses over there, and they wanted us to set an example. And we have set a lousy example, Neil. And, quite frankly, I do not think we are in a position to offer anybody leadership, when we have had such knee-jerk reactions and such inconsistent messages to the market that Mr. Paulson and Mr. Bernanke have sent. It has been ridiculous.
CAVUTO: But, you know, it's interesting, because you are quite right. Since Sarkozy took over, one of the first things he did was to sort of unshackle the markets and the economy and this — this entitlement sense that France has gone used to.
Unemployment has been ebbing down. It is still, you know, at close to 10 percent, higher than our own, for now.
CAVUTO: But he is going the way that would at least be a healthy capitalist development.
Having said that...
CAVUTO: Having said that, though, he is also in — in deep economic doo-doo.
So, what lessons can we learn? The jury is still out on who is going to come out ahead here. What do you make of it?
SMITH: Well, but why is he in the economic doo-doo, Neil?
They — 50 percent of their GDP goes to paying taxes. Eighteen-point- eight percent of ours goes to taxes. And I wrote about this in my piece at WorldNetDaily that will run tomorrow. The most dreaded words in the American language are: We are from the government, and we are here to help.
SMITH: And that is what we have done in the markets, and the markets have panicked and have run for cover.
CAVUTO: But they're panicking world over, Craig, right? I mean, there does seem to be this global trend, not in each and every country, but, where, well, I guess the government has got to do something. We have been — you know, what do you make of that?
SMITH: But, Neil, what do you expect, when the superpower, economic superpower of the world, America, is panicking?
I mean, we have the words like meltdown, collapse being used by our treasury secretary and our president, for Pete's sakes.
CAVUTO: Well, what would you have done, Craig?
CAVUTO: I mean, there is the argument, let them rip. In other words, the financial industry is in disarray. Don't rescue a one of them. Auto industry is in disarray. Don't rescue a one of them.
In other words, let markets be markets, brutal though they may be. Let them clean and flush themselves out.
SMITH: I agree to that to a certain extent, Neil.
But there are things, productive, that the government can do to make things better, like Mr. Rove just suggested. Why not cutting business taxes? Why not incentivizing? Why not change this ridiculous mark-to- market rule that assumes that anything that is on your book that is not functioning is worth zero? That is ridiculous.
Many of these loans, if they are held to maturity, Neil, are going to be just fine. Most people in my neighborhood are paying their mortgages. But we focus on the few that are not.
CAVUTO: Well, but, Craig, you are very rich.
SMITH: And we're throwing the baby out with the bathwater.
CAVUTO: Now, you are very rich, though.
CAVUTO: People in your neighborhood, they all exchange Grey Poupon. It's a whole different deal.
CAVUTO: But I know what you're saying. And I understand what you're saying.
But now we have an administration coming in that is going to be incentivized to give incentives, right, emboldened by Democratic majorities in the House and Senate, to — to throw a lot of money at this. Where are we going?
SMITH: But let me tell you something. I don't think — I don't think they are going to be able to, Neil.
And let me tell you something. I am not concerned about Mr. Obama raising taxes or lowering taxes for the middle class. I don't think he can do anything right now.
CAVUTO: Well, he can spend. They can print money, and he could spend. He could stimulate like it's nobody's business.
SMITH: But the banks won't lend the money, so how is he going to he do it? Throwing out helicopters to people standing in the streets catching it coming down out of the air?
CAVUTO: Don't give them any ideas.
SMITH: Yes, well, the helicopter, Bernanke, you know?
But I can tell you this, Neil. There are productive things we can do. And I have got to tell your listeners — or your viewers — excuse me — we will get through this, Neil — you know that, and I know that...
SMITH: ... if — if we cling to free market principles, believe in American capitalism, and say, we're Americans. We're going to get through this. We're going to go back to the ways we know that work.
And, yes, we're going to punish the wrongdoers, if you will.
SMITH: We're going to make sure we hold them to account. But we will get through this. And we have got to start talking positive, vs. thinking the end of the world is here, because it is not.
CAVUTO: Very well put.
You know, I was reading a great — revisiting a great biography on Ronald Reagan last night. And, right after the '87 crash, they were presenting to him all these ideas...
SMITH: That's right.
CAVUTO: ... how we can regulate the markets, how we can regulate chicanery, how we, you know, can clamp down on abuses.
He was presented about 50 of them, I am told. And the one thing he thought was not a bad idea were these program-trading curbs on Wall Street. And he said, that one, I like. And they said, well, what about the 49 others? He says, I don't like those.
And that was that.
SMITH: Hey, the uptick rule would have made a lot of sense...
CAVUTO: Yes. That was then. That was then. This is now.
Sometimes — you are right — the better part of valor is just calming the heck down.
Craig Smith, thank you, my friend. Good seeing you.
SMITH: Good — good being with you, Neil.
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