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; Leslie Marshall, radio talk show host.
Best Stimulus Plan for Economy: Do Nothing?
Tobin Smith, Changewave Capital: The federal government should do nothing. The government has conducted a trillion dollars worth of deficit spending, spent on nanny state and other useless programs. Let the market do its job.
Leslie Marshall, radio talk show host: The Senate is going to make major changes to the stimulus package. The economy is taking hit after hit. What are we going to do? We can't just stand around and do nothing. Even one of Reagan's great financial advisors, Paul Volcker, is saying we need a stimulus package.
Matt McCall, Penn Financial Group: Let stock market numbers speak for themselves. They went down and continued to do so as the stimulus package was coming together in Congress. It tells me the market doesn't want the stimulus package. The market right now looks terrible, but at least there's nowhere to go really but up. It's too late to throw money at the problem.
Gary B. Smith, Exemplar Capital: I agree that we have to do something—cut taxes. Not some silly little $500 or $1000 dollar rebate or money to food stamps. The tactics Obama is trying to employ will only make the recession worse. Give me one example where a stimulus package has worked. They never have, and it won't work this time.
Eric Bolling, FOX Business Network: What people have to hope for is that Republicans in the Senate stand up and vote against the stimulus package, mark it up, and then send it back to the house. Over time, people are going to start realizing how little this stimulus package will actually help. Reagan cutting taxes across the board helped spark years of economic growth. Congress should start looking toward measures that work.
President Obama Gets Tough on Automakers: Are Tax Hikes Next?
Gary B. Smith: Tax hikes are the next logical step for the Obama administration. Obama is JFK without the wit and all the cockiness. After we spend trillions of dollars in bailouts and stimulus, then the Obama administration is going to say we have a huge deficit and we need more money. For anyone paying taxes, their rates are going to go up.
Leslie Marshall: Obama raising emissions standards on the American auto companies isn't just good for the environment, but something that will be best for the auto industry in the long term and ultimately help create jobs. In terms of tax increases, if we have to raise them on the rich in order to save the American middle class, then that's what we have to do.
Eric Bolling: The new emissions standards will be the nail in the coffin for the American automakers. Obama is going to kill the auto industry.
Tobin Smith: Most the Democrats elected to Congress or those serving in the White House have never owned or run a business. They've never been successful in the private sector. Their feeling is that the "haves" have too much. Democrats view this as an opportunity to take that money away from the people they view as rich and greedy and give it to people who they think need it.
Matt McCall: The only real way to stimulate the economy long term is through tax cuts, especially lowering corporate tax rates. Taking money from the rich and redistributing it to the poor will only get us into bigger trouble than we are now.
Congress Members Getting $93K More in Petty Cash
Eric Bolling: I couldn't believe this when I read it. These congressional members get all made up and come out on TV saying how we need to cut back, be prudent, no Wall Street bonuses, and then they give themselves more money to spend.
Matt McCall: President Obama and Congress come out railing against Wall Street for taking bonuses or auto executives taking corporate jets, and then this. We're in a recession. They do exactly the opposite from what they say others should be doing.
Leslie Marshall: We should at least wait five minutes before we judge Congressional members getting extra spending money. Remember, both Democrats and Republicans agreed to this. We have to find out what the money is going to and what it's being used for. If it's being used to help their constituencies, then obviously that's not so bad.
Gary B. Smith: We shouldn't expect anything less from politicians. The only way to get rid of behavior like this is to get rid of Congress. Unfortunately, I think we're way past that point. Congressional members are interested in two things, shoveling as much pork as possible into their constituencies, and getting re-elected.
Tobin Smith: The Post Office has announced it's going to stop delivery on Saturday to save money. Why don't we have the Congressmen deliver the mail to us on Saturdays? That way, they'll actually earn that extra $93K we're giving them to spend.
Stock Super Bowl
Matt McCall: Aqua America (WTR)
Gary B. Smith: Microchip (MCHP)
Tobin Smith: Hershey (HSY)
Eric Bolling: United States Steel (X)
Cavuto on Business
This past week, Neil welcomed: Jack Welch, author of "Winning"; Ben Stein, author of "How to Ruin the United States of America"; Charles Payne, WStreet.com; Dagen McDowell, FOX Business Network; and Adam Lashinsky, Fortune Magazine.
Adding Government Jobs: Good or Bad Move for Economy?
Jack Welch: Let's hope this first package is in fact round one. Hopefully we have a long way to go (to fix the package) and that President Obama will be good to his word for bipartisanship and that republicans will stand up and be counted and get a bill that doesn't look like this in the end. This bill is just awful.
Ben Stein: A lot of government jobs are disappearing actually at the state and county level. Not a huge amount, not like the auto industry, and the services they provide need to be done. This is not really a stimulus bill. This is the Democratic Party rewarding the party faithful billions of dollars. This is a strict party line bill in which the groups that lined up behind Obama are getting paid off by the rest of us. It is not so much an economic stimulus bill much as a stimulus bill.
Charles Payne: The stimulus package won't help the people. People with good educations are going to be getting these jobs, but the people at the bottom of the rung still need a job or a check. The package is not really stimulus, and it is not what the people thought they were going to get.
Dagen McDowell: None of us like this bill, but it will create jobs. Will it create three or four million jobs? No. Government is really the only entity that hasn't been firing people recently. So it is a little bit circular. But if you want to create jobs, the government is the way to do it. It is hard to get private industry to go out there and hire. It is tough to come up with exactly the right thing.
Unions Threatening Massive Strikes During Financial Crisis: Dangerous for the Economy?
Jack Welch: I think President Obama and the Democrats won because they've transferred $400 billion to $ 450 billion through the labor unions. Yesterday we had three orders signed to make it easier for unions to do business with the federal government. Hopefully we are going to stop the big one coming at us, the Employee Free Choice Act. These things Obama is doing now will give billions more to the unions.
Ben Stein: There were a lot of strikes during the Great Depression; they were a disastrously bad move. Unions do not create jobs, they kill jobs. The Employee Free Choice Act is anti-American, anti-freedom, and anti-privacy and does nothing for development.
Charles Payne: Unions aren't fighting against child workers or unfair work conditions. What they are really doing is trying to extract more money out of companies that don't have it.
Dagen McDowell: The ranks of union workers last year, even with all the layoffs, rose the most since 1983—as long as the government has been keeping records on this. Being in a union once, I hated it. If you work hard, forget you. If you haven't been here that long, you're not moving up. It breeds inefficiency, no productivity and it locks out people who might want to work in an industry.
Adam Lashinsky: The reason union membership went up last year is union membership in government jobs went up. The private sector is laying people off and the government isn't. That is why the overall percentage rose. Labor unions represent about 8 percent of private sector workers; more or less a nonentity.
Inside Jack's Head: Do We Need $2 Trillion Bank Bailout?
Jack Welch: I like the commercial paper and money market guarantees. I like the interest rate drop by the Fed and the liquidity that is being pumped into the system. The facts are, if you don't have a functioning financial system, you don't have an economy. We can get ourselves grounded and have an economy. But we also cannot solve the economic crisis by starving the economy of money and lending.
Charles Payne: Tetra Tech (TTEK )
Adam Lashinksy: Dodge & Cox Stock (DODGX )
Ben Stein: iShares MSCI EAFE Index (EFA )
Forbes on FOX
On Saturday, January 31, 2009, David Asman was joined by Victoria Barret, Mike Ozanian, Neil Weinberg, John Rutledge, Quentin Hardy, Jack Gage, Mike Maiello, John Dobosz, Bob Lenzner, Lacey Rose, Josh Lipton, and Elizabeth MacDonald.
David Asman: Job losses mount and union membership soars! So why are unions still pushing to end secret ballots at the workplace?
Mike Ozanian: This bill should be called the anti-free choice, pro-slavery bill. It's bad for the economy, bad for jobs, and bad for consumers. It would essentially allow unions to bully people into joining them.
David Asman: Would it eliminate the secret balloting?
Mike Ozanian: Essentially, yes.
David Asman: Quentin, what do you think?
Quentin Hardy: Oh, I'm not too sure about that. But for sure, we need a pundit math act because what happened last year was a modest percentage increase in union membership after 25 years of declines with a broadly increased population at that time, which means of course at some time you're going to get a bump up. But anyway...
Certain special interests have spent $100 million advertising against this. Even someone as open-minded as Mike should know this is about letting the workers choose between the secret ballot or check card. The chamber of commerce's big problem is most workers don't like the NLRB standard. They report twice as much coercion. Earlier in the week, Obama signs a bill saying management has to put up signs saying people can join a union or not. Under Bush, they said you cannot join a union. Now, which is fair?
David Asman: The public sector unions have increased because the government is the only entity hiring in this environment…
Jack Gage: Absolutely, I have to disagree with what Quentin said about the uptick. Job losses are the mother's milk of union membership. It rises when people are scared about their jobs.
David Asman: What about the new rule… good or bad?
Jack Gage: Absolutely awful. Card check and the like – are a way to bully workers into joining the union. It is bad news. Listen. Adam Smith said workers have no more a right than management has a right to organize and keep wages down. It should be illegal to force them into a situation where they are capable of being coerced and influenced.
David Asman: Will there be coercion if it is passed?
Neil Weinberg: There will be, but there has been coercion by big business, too. We have had this situation where the rich have gotten richer and the poor have gotten poorer. Now what we're trying to do is get a little bit of equilibrium. If you make it easier for unions to organize, maybe that will give people health care, maybe that will give people better wages, and maybe it will close this income gap.
David Asman: I love Neil. He is honest. He said "Yes, there will be coercion, but it will equalize things." What do you think?
John Rutledge: I am tired of people fighting each other. Banning secret ballots? That is a terrible idea. This is a Gestapo tactic. America is about individual freedoms, not about coercion or public ballots. I have lived in places where they don't have secret ballots. I've lived in Cold War Berlin, China, the Persian Gulf… trust me… you don't want to go there.
David Asman: It is not the American way we are used to.
Elizabeth MacDonald: I think John is absolutely right. There is coercion, intimidation and inflammatory rhetoric on both sides of the aisle. Talk about the pundit polling act – how about AFL-CIO special assistant John Sweeney saying union surveys show nearly 60 million people would join a union if there was no fear and intimidation. That's about half the workforce. Who did they poll?
Mike Ozanian: Let's be honest here. The reason why Barack Obama is so for this bill is because the unions lined the pockets of his campaign. This is a way to pay back those who supported his presidency. That's all it is.
Forbes on FOX Debate
David Asman: Freezing mortgage rates at 4 percent for two whole years. It's a brand new plan from Senate Republicans. They say it'll save homeowners $500 a month while saving the housing market.
Jack Gage: This is a bad idea. The GOP's heart is in the right place, as opposed to the Democrats who want to spend $900 billion without accountability. The problem with this is… it's price fixing. You can't arbitrarily set the rate lower than it actually is in the free market. The Fed has made some progress here in buying Treasuries… that are driving down the price of the 30 year fixed mortgage to 5.1 percent. So that's progress. The free market is working.
David Asman: Bob, I've seen price fixing all over the world and it never seems to work. Is that what this is?
Bob Lenzner: I don't think it is. We have guaranteed $600 billion of commercial paper, $300 billion of Citigroup debt, $139 billion of GE debt…. The key to stopping this meltdown is to stabilize home prices. Whatever can be done to stabilize home prices should be done because that will also affect the radioactive assets on the balance sheets of these banks that have to be taken out. I think this could be a key lever in stopping the meltdown of home prices and the meltdown in the financial market.
David Asman: If you're looking to get to the cause of this problem, you want to help the housing market.
Elizabeth MacDonald: What we're talking about is ¾ of loans in this country were financed by securitization.
David Asman: That means turning the mortgage into a stock…
Elizabeth MacDonald: Right – turn it into a bond. That money comes back to banks and they lend more. If you do price-fixing, what will happen is investors will look to the 10-year or longer-term Treasury yields and those yields will go up. Why are the yields going up? Because there is so much competitiveness for the yields. They have to bring in more money because they are about to put $2 trillion or $3 trillion of new money into the economy.
David Asman: Hold on. I want to bring it back to basics. Will this help the housing market?
Neil Weinberg: Yes, this will help the housing market. This will put a floor under the housing market this year. What will it do in the long-term? Lending money because it made us feel good, or it increasing home ownership, or whatever… is how we got into the problem. This will just kick the can down the road. This year, it will help. Two or three years from now, we may have a whole other problem.
David Asman: Victoria, short-term solution?
Victoria Barret: That's right. You don't fight a disease with more of the disease. And that's exactly what you'd be doing. Cheap money is what got us into this in the first place because it sets artificial prices. We should be helping current homeowners, especially people who could afford their homes a few months ago but got laid off. That is the current wave or future wave of foreclosures we should be targeting. We shouldn't be creating artificial prices.
David Asman: Is it going to help or hurt?
John Dobosz: It's going to help the housing market. All of these bonds that were created are not performing. If we can get people to save more money and put more people up for home ownership… it will help.
David Asman: Senate Democrats about to make STD prevention spending in the House look like chump change. $400 million is the new price tag… and Quentin Hardy says that is money well-spent on the economy!
Quentin Hardy: Well David… what is this? This is like 1/13th of one percent of the total spending bill and we are mocking it. It's our bridge to nowhere. Come on! We think this is amusing to talk about because these deadly diseases are transmitted through our sex organs and not by sneezing or some other means. You forgot to mention that tuberculosis is also inside this bill. These are deadly diseases and anyone in public health will tell you that prevention is much cheaper than cure and treatment. You will save on work hours. You will serve the underserved areas of the inner city. That is what this seems to be targeted at. You will have higher worker productivity because workers will be away less. The fact of the matter is this is a cheaper, better idea.
David Asman: John Rutledge, I was going to say what does this have to do with stimulus, but what does this have to do with jobs?
John Rutledge: This is all about stimulus. That is the whole topic. This thing won't do anything for growth. But, the real issue is this isn't about the size of the money. Cut the money in half and send it to my personal checking account. In that case, Quentin will be in favor of it also. The idea here is that stimulating the economy is about jobs. I actually own a small interest in a condom company and it's a great investment. And I appreciate your support for my cash flow. But, this kind of stuff shows spending is totally out of hand.
David Asman: This is hard to defend…
Mike Maiello: Actually, no it's not. I would not see the argument that health care spending is not part of economic spending in general. We know rising health care costs have hurt our economy.
David Asman: How does it create jobs?
Mike Maiello: Anything that takes health care expenditures out of the private sector is going to help.
David Asman: So kind of an inverse way of creating jobs?
Lacey Rose: The provision itself… it's not a matter of whether or not that has any merit. It's its placement. It has no business being in an economic stimulus bill. This is a bill that is explicitly designed to jumpstart the economy and create jobs. I don't see how a push for condoms and sex ed is going to be the big fix.
Josh Lipton: I've listened carefully. I still don't see the connection between STD prevention and job creation. It goes to all the spending we are talking about… whether it's Amtrak, the National Endowment for the Arts… this is not an economic stimulus package.
David Asman: Let's give Quentin a chance… what is the connection?
Quentin Hardy: I will try it again. Deploy health care workers to the inner cities, save on labor costs to management, save on health costs to management. They can put capital elsewhere. Net growth! This is no bridge to nowhere.
John Rutledge: This will face stiff opposition in the Senate.
David Asman: The 2009 Super Bowl winner AND the stock that's going to win this year too:
Jack Gage: U.S. Airways (LCC ) and Cardinals win
Victoria Barret: Heinz (HNZ ) and Steelers win
Mike Ozanian: Pepsico (PEP ) and Cardinals win
Robert Lenzner: Vanguard Intermediate Investment Bond Fund (BIV ) and Steelers win
Time to Tell Bailed-Out Companies: Lay Off the Layoffs?
Wayne Rogers, Rogers & Co: If the Obama administration is suggesting that we have to get jobs, that we are going to provide jobs, and that was his constant mantra going forward, then I don't understand how you can turnaround and award somebody for laying off jobs. It is your tax money, my tax money. Everybody's tax money is going to some guy who is laying off jobs? And he is supposed to be creating jobs. That makes absolutely no sense whatsoever.
Jonathan Hoenig, CapitalistPig Asset Management: Job destruction is a normal part of a functioning economy. If not, we would all be working on a farm somewhere. You have a tremendous amount of bailouts now because you have economic decisions being made for political reasons. The problem is not the layoffs or bonuses, it is the bailouts themselves. Until that stops, the economy is in peril.
Mark Brenner, director, Labor Notes: I think the layoffs obvious. You can't look at the bailout to the financial industry and put it there. Nobody cared about slicing and dicing the auto industry when they were putting money there. The public sector is getting to get a tremendous amount of money in the federal government in the coming months.
Tracy Byrnes, FOX Business Network: We are preserving jobs, and the people aren't working. They are standing on production lines to do nothing. So to keep them on the payroll for Floyd Landis Topic reasons doesn't help the company's bottom line. The problem with the tarp is they didn't put restrictions on the money. They should have said don't go laying people off.
Jonas Max Ferris, MaxFunds.com: They probably would be laying off 10 times as many people. The real core issue here is do you want strings or not. The government is making distressed investments. Unfortunately it is shifting more towards if we give you money, we don't like this, paint the building a different color. Are they making this investment or using it as a conduit of employment, which is essentially what it is going to become.
John Bradshaw Layfield, Layfield Energy: The auto industry needs to downsize. This rag that Mark writes for is being supported by these guys…the unions. They are proud of the fact that they write books on how to picket. Unions have destroyed this great American industry. They almost destroyed baseball. Defending them just because you want to keep your living that you have is ridiculous.
Can We Afford Fighting 'Climate Crisis' During Financial Crisis?
Jonathan Hoenig: He has a tougher sell now. It is now 30 below across the country and gas has fallen from $4 to $2. It is a tougher sell. Greenies are going to have a problem with industry, carbon, emissions no matter what the macroeconomic climate is. The whole thing is man's super efficiency to nature.
John Bradshaw Layfield: I think it is a huge positive because it can create jobs. I agree with Jonathan on the carbon cap and trade. All that does is hurt business. If you are building a smart grid, because what we are going to have to do because the electric car is going to blow up the grid. It will be done by private enterprise and that is great for the economy.
Tracy Byrnes: We shouldn't be so short-sighted. Oil will go back up again. Just because it is down doesn't mean you table a project. We need to continue to think environmentally even though it is cold here in New York and gas happens to be cheap right now.
Jonas Max Ferris: I'm surprised how little they have pushed it with this giant spending bill. I think Al Gore is right. If you are going to spend all this money to stimulate the economy, why not use that as a spring board into this new energy future they want to build. They are spending $1 trillion on asphalt, potholes, and S.T.D. stuff. Very little of it is to do with energy and stimulus. If you are going to spend money on the economy, let's move to a new energy future so we don't have these problems again down the road.
Wayne Rogers: Nobody has mentioned the 800-pound gorilla in the room and that is national security. We are feeding petrol dictators by making ourselves continually dependent on oil. We are setting up Chavez and others. There is an exceptional thing here called national security that you have to pay attention to, and we have to wean ourselves off of oil for that reason, if that reason alone. Forget the planet, for that reason alone.
Bad Economy Being Blamed for California Man Killing His Family
Michelle Malkin, syndicated columnist: It is a horrific case, but compounded by people in the media and application who have this impulse to turn these tragedies into convenient data points that fit their prefabricated indicated narrative. The narrative being forced on the public is somehow this is the economy's fault and not the individual's fault. There is also an impression that is left in much of the coverage, Terry, that the man and his wife lost their jobs as a result of the recession and the downturn, when it is very clear from his own words in his suicide note and from what his former employer has told us, that these problems had nothing to do with that downturn, that in fact these were grave employment and personnel problems that he seemed to have brought upon himself.
Reportedly, he and his wife lied to their employer about their income and circumstances in order to get discounted health care. Unfortunately, you've got mainstream media outlets like the New York Times and ABC News that want to dehumanize use the — dehumanize the tragic scenario and turn it into a case study of how this is hurting people. You could see from the suicide note this was a very troubled man.
I think the media ought not to be turning this man into the victim. The victims are those five beautiful innocent children who were murdered by a very selfish father who decided to take their lives rather than deal with the problems that it seems to me he brought upon himself.
Forget betting on the Super Bowl — we're telling our viewers the "Super Stock" to buy instead:
JONAS MAX FERRIS: Sun Microsystems (JAVA)
WAYNE ROGERS: Senior Housing Prop. Trust (SNH)
JONATHAN HOENIG: PowerShares DB Precious Metals Fd (DBP)
JBL: Pfizer (PFE)