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.
Bulls & Bears
This past week's Bulls & Bears: Gary B. Smith, Exemplar Capital; Tobin Smith, ChangeWave Research; Eric Bolling, FOX Business News; Matt McCall, Penn Financial Group; and Mike Papantonio, radio talk show host.
Obama's Plan to Create 600,000 Government Jobs: Good or Bad for Job Market?
Eric Bolling, FOX Business Network: When has a stimulus package ever worked? Creating six hundred thousand new government jobs is basically one massive entitlement program. It'd be a bad idea for the government. Give Americans the opportunity to earn more money; don't just give it to them.
Tobin Smith, Chagewave Research: Most of these jobs are not going to be "government" jobs but government contractors, hired from the private sector. This is something you do when your back is against the wall. It'll spawn real jobs for real companies.
Mike Papantonio, radio talk show host: This plan helps improve the efficiency of the economy. The CIA, Department of Transportation, FDA, etc. are all stretched very thin. We need more government jobs. It's all entitlement to conservatives until they say we have to stop immigration and want to hire border patrol agents. They're all for that.
Matt McCall, Penn Financial Group: Look at the numbers here. Say you pay these 600,000 new government employees one hundred thousand a year — that's $60 billion. Who's paying for that? We are — the tax payers. It's a terrible idea.
Gary B. Smith, Exemplar Capital: A similar plan was implemented by FDR and it failed miserably. It barely budged the employment needle. You're taking money from the private sector over to the public sector. This should be an issue for the markets to decide, not government. It's an inefficient way to stimulate the economy.
Homebuilders Ask for $150 Billion 'Bailout': Should You Pay for It?
Gary B. Smith: I'm absolutely incredulous on this issue. The original TARP objective was to unclog the plumbing in terms of the credit crisis. We've moved so far away from that. It's now a bailout for anyone who may have made a bad decision.
Mike Papantonio: Home builders are basically asking for the government not to waste the next $350B in TARP money on the banking industry to free up credit. Instead, the home builders are asking the government to help put men to work and use piled up inventories to build new homes.
Matt McCall: We need to get rid of the inventory out there right now. Home builders had a boom for 10 years, and they got greedy like everybody else. They made bad business decisions, and don't deserve to get bailed out.
Eric Bolling: Don't send money to homebuilders. There's too much inventory out there already. Spending the money on mortgage mitigation would be a much better use of TARP money.
Tobin Smith: Failure takes the money from the people who make mistakes to the people who don't make mistakes. Giving money to home builders would be like giving a guy in AA a week's vacation in Las Vegas.
"Burris Circus" In Senate: Is Congress Wasting Your Money?
Matt McCall: Congress is a waste of money. They wait for trouble to come to them. They are not going out after the issues.
Mike Papantonio: Republican congresses have blown huge amounts of money on frivolous things every time they've been in power. It's not just a Democratic thing.
Gary B. Smith: We created this mess. Congress is good at one thing: gaining power. They're not interested in solving problems, but just saving their congressional seat.
Matt McCall: Retail is down, but not out! Urban Outfitters (URBN ) up 60 percent by Dec.
Tobin Smith: Cook up a recession special! Safeway (SWY ) up 30 percent by Nov.
Gary B. Smith: Be frugal & profit with Family Dollar Stores (FDO ): Up 30 percent in 1 year
Eric Bolling: ProShares UltraShort 20+ Yr ETF (TBT ) is a treasure chest! Up 50 percent by end of '09
Cavuto on Business
This past weekend, Neil welcomed: Jack Welch, author of "Winning"; Ben Stein, co-author of "How to Ruin the United States of America"; Charles Payne, WStreet.com, and Adam Lashinsky, editor-at-large, Fortune Magazine.
Obama Says "Only Government" Can Save Economy Now: Is He Right?
Jack Welch, author of "Winning": The government isn't the only solution, but it has to step in here and do something. It'll certainly need to play a part in getting us out of the economic crisis we're in. Hopefully it'll be a mix of tax cuts and stimulus. I'm all for that.
Charles Payne, WStreet.com: It's hard for everyone to accept this printing press solution. The mentality of government being the only solution sets us up badly down the road. We have to avoid draconian regulations of the private sector; that'll only make companies repatriate overseas.
Adam Lashinsky, editor-at-large, Fortune Magazine: We're getting a little carried away here. Obama's proposing corporate tax cuts, rewriting rules to let companies losing money to benefit on a tax basis and other measures to help stimulate business. Obama isn't saying government is the only solution. He's saying that government has to be the entity to kick start an economic recovery.
Ben Stein, co-author of "How to Ruin the United States of America": Big government is back with a vengeance. We have to further loosen monetary policy to solve this economic crisis. Mistakes in monetary policy have to be corrected by better monetary policy. Banks aren't lending. They have to receive solvency guarantees. If that takes place, they'll start lending again.
Exclusive One-on-One With Sen. John McCain
Banning Secret Ballots at Work: Good for Unions, Bad for Business?
Jack Welch: Banning secret ballots would be horrible for U.S. businesses' ability to be globally competitive. How many union companies become competitive and win? The number is small. Productivity is the key to our nation's wealth, and you lose productivity with union work rules. Additionally, banning a secret ballot goes against one of the fundamental principles of the country.
Ben Stein: Banning the secret ballot is un-American, coercive, and opposed to the basic principles of decency and individual dignity of the worker. It would be a body blow to democratic principles. Unions kill jobs, they don't create them.
Adam Lashinsky: I'm no fan of eliminating the secret ballot for union membership. But the question that must be asked is do we want to make it more difficult or less difficult for workers to organize and form unions? The balance has been swinging in favor of management. Now the pendulum may swing back in favor of workers.
Inside Jack's Head: Should "Profitable" Companies Not Lay Off Workers Right Now?
Jack Welch: Businesses and economies are dynamic. A certain shock like the one we've had takes out retail, newspapers, banks, etc. They go from profitable to non-profitable. We have to allocate resources to different industries and products. Companies must readjust to changing market conditions. These companies have to prepare for tomorrow, and many haven't yet.
Forbes on FOX
On Saturday, Jan. 10, 2009, David Asman was joined by Steve Forbes, Rich Karlgaard, Jack Gage, Mike Ozanian, Neil Weinberg, John Rutledge, Quentin Hardy, Evelyn Rusli, Mike Maiello, and Elizabeth MacDonald.
David Asman: President-elect Barack Obama promising tax breaks to help most American families… even though millions of them don't pay income taxes. That's why some at Forbes warn Obama's plan will only lead America to be a welfare nation. But who's right?
Jack Gage: It's welfare. And if it sounds familiar, it's because this is what we heard on the campaign trail. It's exactly what he promised. It's a one-time gain in corporate accounting called an extraordinary event. It does nothing for the continuing operations of the business. That's exactly what it is here – it's welfare, a handout, it's buying votes.
David Asman: Neil, welfare or tax cut?
Neil Weinberg: Jack is saying this is a one-time event? I don't think so. It's spread out over a couple of years and it's largely going to help people who have low incomes. They are the people who spend the money – that's where we want the tax cuts to go.
David Asman: Steve, what do you say?
Steve Forbes: Whatever you call it – it's not going to do much for the economy. If you want to do real things for the economy, you cut tax rates – so people know they're permanent. It's sort of like a cup of tea versus Red Bull.
Rich Karlgaard: It's dangerous for democracy, David. This plan will take a majority of voters and take them off the income tax rolls. It's always been the government's job to rob Peter to pay Paul – you'll always have the support of Paul when you do that. The Peters better hire a good tax lawyer, that's all I'm saying.
David Asman: Alright – we'll we don't have Peter or Paul, but we do have Quentin! Quentin, is it a tax cut or welfare?
Quentin Hardy: I think it's a mark of how far we've fallen as a country that we can just bad-mouth welfare. I mean welfare is about helping the poor. Welfare gets a bad rap because it sometimes creates multi-generational dependency. But, this is not about that! Look, the average American household collectively lost $13 trillion in the 4th quarter. Half-a-million jobs lost in December. The average American household now pays more in interest than it does for food. People need help! It has to be broad. It has to be diverse. This is a good idea.
Elizabeth MacDonald: I don't think it's welfare. I think it's a tax cut. The lower and middle class do pay local and state taxes, Social Security tax… by the way, Reagan expanded the earned income tax credit in 1986. What we're talking about is helping the lower to middle classes. They need help with college tuition. These are the people who will actually spend the money and not save it.
Forbes on FOX Debate
David Asman: GM and Chrysler spending millions on this week's college bowl games and the Detroit auto show. These are the same auto companies that just took 4-billion dollars each – of your tax money.
Is this how you want your hard-earned money spent?
Mike Ozanian: Yes! Sports advertising is a great investment for auto companies. They need to advertise to increase their sales. And look – the foreign companies spend a lot of money advertising on sports. We don't want to put the US companies at a disadvantage.
David Asman: Look at me. This is my jaw dropping! I can't believe you're saying you're happy with taxpayer money being spent this way.
Mike Ozanian: If we're giving it to them anyway – then yes!
Elizabeth MacDonald: I don't know if I would buy a Buick just because Joe College pennant quarterback is tossing a football in a stadium just because I see the ad up there.
Elizabeth MacDonald: Anyway – what I find really problematic is that GMAC will not disclose how much they're spending on the Bowl Games at a time when their pockets are bulging with our taxpayer money! There's always that fight between whether we're becoming more socialistic or should taxpayers have a right to know. I think at a very minimum, taxpayers have a right to know.
David Asman: Rich, what do you think? Spending money on Bowl Games and auto shows?
Rich Karlgaard: Well, I hate bailouts on principal, but my one exception is advertising. I'm a total believer in advertiser bailouts.
Rich Karlgaard: But seriously, these guys need to market and sell. What do people expect? Auto sales are way down, what do they expect from the bailout. Marketing and sales are a critical component to what these guys do.
David Asman: Mike Maiello, even if you're against bailouts, if you're going to have it – you might as well spend it on advertising?
Mike Maiello: I'm really annoyed with this. About a decade ago, people complained about the National Endowment for the Arts using taxpayer money to support art that some people found offensive… this is exactly the same thing! I mean if GMAC wants to support obscene art, I'm all for it. But, I'm not a football fan. Why do I have to pay for that?
David Asman: Quentin, let's leave obscene art alone for a minute and let's get back to the bowl games and auto shows. Is that a good use of money?
Quentin Hardy: Absolutely! We didn't give them money so they'd need more later; we gave them money so they can build and sell more cars. The automakers have a lot of inventory. What do you think they're going to do? Put it on Craigslist?
Quentin Hardy: I don't think these people are stupid. They need to sell their cars! You go out and you advertise. Sports gets a lot of attention, it's a good place to advertise. People who watch sports tend to buy cars!
Steve Forbes: The automakers can't back out of their commitments. The bowl game deals get signed years in advance. As far as the auto show – if you don't show and tell, you don't grow and sell. You gotta get the message out there.
Forbes on FOX
David Asman: New reports out showing more and more Americans are spending less and saving more in these tough economic times. But as American hoard away their cash, are they only making it harder for America's economy to bounce back? Evelyn – save it or spend it?
Evelyn Rusli: Save it! Not to sound too parental, but this country needs to relearn the value of the dollar. The current crisis has taught us anything, you need to save more. Spending is what got us into this crisis… buying McMansions, putting up debt, taking out loans we couldn't afford… that's what really brought on this crisis. If we save more, that will put this country on a stronger footing. Just to give you an idea – over the last three years, our savings rate has wavered between 0 – 1 percent. That's troubling.
David Asman: So Jack, the thing to do is to save your cash?
Jack Gage: Listen, Ev's argument is a great one in kitchen economics, but when you start to zoom back from that, our economy is built around spending. Without it, we'd be Japan. Spending will get us out of this – creating jobs, having the ability to spend.
David Asman: Yeah, but spending and borrowing to spend is part of what got us into this mess…
John Rutledge: The fact is as an individual, you're responsible for your family and not for the economy. Credit crunches suck. Bankers have no sense of humor. This is not a time to run out of cash. You need to harbor your cash now. Plus, you'll be able to take advantage of all these discounts and blowouts and sale prices. But don't run out of cash!
Neil Weinberg: You need to spend the money. Look, Democrats, Republicans, economists – everyone says we need to spend. Right now is when you get bargains! You don't buy at the top in the stock market. You don't buy at the top at the mall either. If you have some money, you need to take advantage and spend when things are cheap.
David Asman: Steve, we need a tie breaker.
Steve Forbes: Spend on retail bargains and spend/invest in the stock market. Everyone thinks the market sucks. This is the time to get in. In the next four years, you'll have more money to spend from the capital gains.
David Asman: We're back! With the best funds that'll bring you steady returns in these unsteady times.
Mike Ozanian: T Rowe Price Capital Appreciation Fund (PRWCX )
Evelyn Rusli: Loomis Sayles Bond Retail (LSBRX )
John Rutledge: iShares Dow Jones US Healthcare (IYH )
Mike Maiello: Legg Mason Value Trust (LMVTX )
Obama Warns Economy May Never Rebound W/Out Stimulus: Is He Right?
John Bradshaw Layfield, Layfield Energy: Yeah, but screaming in a crowded theater for a stimulus package nobody wants, for President-elect Obama saying only the government can do this. Only the government can run up a 10 trillion dollar debt, they can't balance their balance sheets, how can they tell us to run a business.
Tracy Byrnes, FOX Business Network: One of the smartest guys I know from the floor says it's liking going to the doctor after the holidays and him saying you put on 20 pounds and now you're going to die. No, you're not going to die, we have to cut back on our overindulgence and to say that the world is falling apart because of all this is crazy and what's interesting to me is that the smartest people I know think this stimulus plan is ridiculous.
Jonas Max Ferris, MaxFunds.com: You're going to need to have a stimulus plan, which is going to lower future prosperity. I was a little bit shocked by Obama actually because I kind of what bush has been doing, scaring us into spending money multiple times now with Bush and Obama, so much for the hope message now it's you're going to have a depression if you don't spend the money the way I say almost as ridiculous as some of the stuff we have done in the past. We're going to have a bad recession, the question is how bad a recession do you want to have and how much future prosperity do you want to take from it. That's what happens when you bail yourself from a problem now. Borrowing from future boom times. That's how it goes down.
Wayne Rogers, Rogers & Co: I don't understand why when you say he's panicking people, no, I don't see that at all. You've got an excess of a 7 percent unemployment rate, it's the highest we've had in 24, 25 years, the evidence speaks for itself. He's only trying to get the Congress off their tushys to do something about it. He's not doing anything any worse, in fact, he's much less than what Paulson did when he ran down there, screamed at the Congress with two and a half pages got to give me 700 billion dollars. He's at least rational about it.
Jonathan Hoenig, CapitalistPig Asset Management: That's what Paulson said, Paulson said we've got to do something, we've been saying that since we bailed out Bear Stearns. Let the economy reach equilibrium, you don't do that by shoring money out to automakers or porn stars or 20 billion dollars we have nothing to show for the stimulus, the intervention, the bailout.
Forget Obama's Stimulus Package: Do We Need an Income Tax Holiday?
Jonas Max Ferris: A long-term income tax cut is probably one of the best things you can do after dealing with the housing market directly. It needs to be long long-term. A small cut over a year or two, the reason for that, people will feel comfortable financing big ticket items, mortgages, and the taxes in the main— that's what we need, I need it's deficit spending, but we don't have much of a choice. Cutting income tax is stimulating consumption. What we need now is people to buy stuff, expensive stuff like cars and homes and the best way to do that is to increase the after tax paycheck for a long period of time, so they think they can finance more stuff. The best way to do that is not giving dead beats money, it's income tax they're work.
Wayne Rogers: I think this is an airhead suggestion. When they passed out the last stimulus, people didn't spend it they saved it. This guy is saying, hey, you're going to take an income tax vacation here for a couple of months, are you going to spend this money? Are they going to spend it on things? He says automatically they're going to spend it, not going to happen.
Tracy Byrnes: Short-term fixes for a long-term problem. Cut the corporate tax rate and then you'll start to see the economy pick up. Allow the bush tax cuts to continue, capital gains tax, dividend tax, keep that stuff going, we need long-term fixes, this short-term, you know, what I'm going to staffer myself for the weekend and five pounds later on Monday does not work, trust me I've been there.
Jonathan Hoenig: Well, incentivizing production is the way to go. I agree with Tracy and others, I don't think it's — you know, investors capitalists think long-term, a short-term fix doesn't do anything, but incentivizing production which of course is the income tax, it doesn't matter if they spend what we want them to do is invest it. Right now, we have a culture at that basically incentivizes need, you bail it out on taxpayers. We don't want to incentivize growth, cutting the tax would do that.
John Bradshaw Layfield: Ridiculous, you've got to incentivize growth and business, what Wayne talked about is accountability. Look, Barack Obama can be Albert Einstein and I certainly hope test, but he's surrounded by crooks on Capitol Hill. The crooks that surrounded the last few presidents. That's why we've got a 10 trillion dollar deficit. Instead of an income tax holiday, Obama says no more earmarks, we are not going to steal from you on the one bill. How about Congress has no earmarks, Congress has fiscal responsibility and take a break and balance their checkbook for a change and help our dollar.
Porn Industry Seeking $5 Billion Bailout Bucks: Should They Get It?
Mary Carey, adult film star: You know, right now with the hurting economy, DVD sales are down 22 percent and a lot of companies are halting production and not producing new DVDs, this is not a small industry — it brings in over $13 billion a year and pays over 36 million in taxes and also employs over 12,000 people in the state of California alone. I think that we need to keep it going. You know, especially with the crisis going on and people are probably very depressed, all the movies is a way for somebody to cheer themselves up and also I think it's a great sexual release for a lot of people out there and I know that whenever I'm feeling a little sad or you know, low on money, there's nothing better than putting on a good porn and cheering myself up.
Wayne Rogers: Yeah, putting aside the moral issues here, I'm all for this. I think this is a terrific idea, and I'll tell you why. It's something that Congress can understand, it's something they are, if you'll forgive the expression, intimately familiar with, something they really know. There is a universal thing you don't have to worry about accountability because it appeals to everyone and the only problem I see with this is the possible medical one, you know, you could have some sexual diseases or something, but we could appoint a Secretary for Sex, you know.
Jonathan Hoenig: You could easily make the argument that porn is a lot more innovative than the big three. Take a look at Debby does Dallas 1978 versus the '07 Vivid remake. I mean, it's really— and look at Mary's work, I thought “Ginormous Jugs” was outstanding film and “Busted Beauties Number Six” was an outstanding piece of work — so, you know, honor to have you here.
Tracy Byrnes: I actually am confused by the fact that the industry is down at all. If you're trapped in your house, you can't afford a car, can't go out to eat. What's left to do, but would you think that people would stay at home and watch some TV! Exactly, I'm surprised it's down at all, quite frankly.
John Bradshaw Layfield: If Elliot Spitzer liked porn better than prostitutes, he'd still be Governor right now so maybe we do have a point here.
Jonas Max Ferris: You know, if you structured a bailout properly in all seriousness, you wouldn't have to make the decisions on who deserves a bailout. If the bailout was onerous enough and the government took a stake in the company they wouldn't want the money unless they were on the last legs. And maybe if they got out of Larry Flynt's empire.
What stock do you think will benefit from Obama's stimulus plan?
WAYNE ROGERS: Vulcan Materials Company (VMC)
JONATHAN HOENIG: iPath DJ AIG Platinum ETN (PGM)
JONAS MAX FERRIS: PowerShares WilderHill Clean Energy (PBW)