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; Pat Dorsey, Morningstar.com; Stewart A. Alexander, Socialistparty-USA.org, and Faiz Shakir, AmericanProgress.org.
Dow's Best 4-Week Gain Since 1933 Despite Bad Economy; What's Going On?
Matt McCall, Penn Financial Group: I'm as bullish as can be. I think this is one of the great buying opportunities of a lifetime. Investors have realized over the past couple of weeks that we're not going into a depression. Thus, their outlook for the future is more positive and they're buying up stocks again. Many recent economic indicators show we may have bottomed out,
Gary B. Smith, Exemplar Capital: I think the economic fundamentals stink right now. But there's clearly a move going on right now, and investors are trying to get in on it--they don't want to miss out on it. I'm long right now because the market is showing it's much easier to go up than down under the current circumstances.
Tobin Smith, ChangeWave Research: There is a case to be made that the recession is at its trough. That's what the market is responding to right now. To a degree though, investors are also short-covering their investments. We still have to see the markets go higher if we're to know if investors are buying real stocks for real reasons.
Pat Dorsey, Morningstar.com: The fundamentals of the economy are not as good as some one month numbers would show you. What still really worries me is the credit markets. Loan-rates are still extremely high. In order for there to be a clear sign that the economy is recovering, those loan-rates need to come down. Until then, I'm not convinced we're out of the woods.
Protesters Bash Capitalism; Would We Be in "Dark Ages" Without It?
Tobin Smith: Europe would be in the dark ages without capitalism -- it's what rebuilt the continent after World War II. It's easy to kick the U.S. when it's down, but what a short memory on the part of the Europeans. The government taking control of businesses and dividing wealth amongst the people is no solution.
Stewart A. Alexander, Socialistparty-USA.org: Look at how much ordinary citizens have lost in terms of savings, income, jobs -- we're losing everything. It's time to give working people a break and right now the system is not giving them a break at all. The problem in this country is working people taking one step forward and two steps backward. Right now, workers are giving up all the gains they've made in the last 15 years.
Matt McCall: What about the 20-year boom that took place before this recession? Capitalism has created a tremendous amount of wealth and jobs. You can't condemn it based on an economic recession that's come after years of growth and development.
Gary B. Smith: The U.S. has been the greatest wealth creator in the history of mankind. Look at our country's standard of living in almost any income category compared to the rest of the world. Most poor people in this country own two cars, a color TV, a computer, and a telephone. The poor in this country are better off than the poor in any other country.
States Smacking Middle Class With Hidden Taxes; Are They Crazy?
Matt McCall: This is very counterproductive. The last thing to do in the middle of a recession is raise taxes. These taxes affect everybody, and the states are trying to sneak them in there without anybody noticing.
Faiz Shakir, AmericanProgress.org: President Obama has provided tax cuts for the middle class. If you're talking about tax increases on cigarettes, the revenues from that tax go to healthcare for children. States and President Obama are trying to pay for the services the government provides.
Tobin Smith: This is nothing more than a liberal wish list for to strengthen the nanny state. They'll raise taxes on items they don't want you purchasing, like cigarettes and alcohol, in an attempt to be social engineers. They're under the impression they know better than the consumer.
Gary B. Smith: States have two options--they can tax citizens or cut services. The problem is that if states want to cut services, they have to cut state workers, most of who are unionized. States will not take on the unions. It's easier for the state to soak citizens.
Pat Dorsey: No one gets elected by promising to cut services. States always overspend when times are good and never save money for a rainy day. If politicians don't do it this way, they don't get re-elected. They don't think long-term.
Matt McCall: North Korea threat is overblown! "EWY " up 50 percent in 1 year
Pat Dorsey: Deal of a lifetime for blue chips! "VIG " up 40 percent in 2 years
Gary B. Smith: Apple is fit for a queen! "AAPL " up 30 percent by Dec.
Tobin Smith: Michelle-O is new Jackie-O! "JCG " up 50 percent by Nov. elections
Cavuto on Business
This past week, Neil was joined by: 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 News; Adam Lashinsky, editor-at-large, Fortune Magazine.
House Passes Bill Giving Gov't Control Over More Workers' Pay: Are You Next?
Jack Welch, author, "Winning": If I'm an investor in a financial company, I want to see a return on my investment. By restricting the pay on top employees at U.S. based financial institutions, you give huge incentive for people to leave for foreign banks or hedge funds. Without that top talent in place, then a company's ability to make strong returns becomes more limited.
Ben Stein, author, "How to Ruin the United States of America": Financial companies have been begging for trouble the way they've been paying people over the years. But the idea of having some government employee regulate pay is ridiculous. This bill just puts a law around envy and says it's a public service.
Dagen McDowell, FOX Business Network: Congress isn't thinking of these businesses as companies we want to get our money back from. Instead, they're just out to hit employee pay. This can turn into a slippery slope though. It could lead to the government regulating companies that just do business with the government like defense contractors.
Charles Payne, WStreet.com: If the White House had its way, ultimately all big corporations would be controlled by the government. The administration is bent on closing wealth disparity in this country. A salary cap on the CEO means a cap on the ordinary worker too. It's wrong and scary.
Adam Lashinsky, editor-at-large, Fortune Magazine: Many people are outraged by these pay abuses. Salary caps will not extend to all corporations. I'm not saying government control over corporate salaries is a good thing. However, there are a lot more voters outraged about corporate salaries than business owners angry about government regulation of pay.
Why Anti-Capitalism Protesters Should Cheer Not Jeer G-20 Leaders!
Charles Payne: I'm not sure why people are protesting in Europe. President Obama and other world leaders agreed to pump hundreds of billions of dollars into the IMF. They agreed to conduct more stimulus spending.
Jack Welch: These people show up to every major global economic summit. They're just noise. The more attention you give them, the more they'll be around.
Dagen McDowell: The types of protestors to be concerned with are people like the hostage takers in France who took the executives of Caterpillar captive. The greater concern is whether behavior like this will drive out businesses from countries this takes place in.
Ben Stein: These are mentally ill people. This is not about politics or economics -- these people couldn't find their backsides when it comes to these issues.
Adam Lashinsky: We'll always have anarchists amongst us. There could be a valid protest against the U.S. for starting the mortgage crisis, but there isn't.
Union Calling for President Obama to Fire Bank of America's CEO: Good or Bad for the Economy?
Jack Welch: This issue really comes down to wanting to have more voting power and influence over Bank of America's activities. The BOA union donated a lot of money to the Democratic Party to gain access. We have a labor secretary that is very sympathetic to unions. There hasn't been one CEO of any financial institution receiving a bailout who has been fired. What has to happen is for boards to step up and get rid of ineffective management.
Ben Stein: This is nothing more than a union power grab. It violates so many constitutional rights, such as your right to expression and privacy, it's almost unbelievable. This is a slap not only to worker and the voter, but the U.S. Constitution. It's frightening.
Charles Payne: There's a huge battle brewing underneath all this involving unions. President Obama is already indebted to the unions. Card check is going to be pushed very hard.
Charles Payne: Burlington Northern (BNI )
Adam Lashinsky: American Water (AWK )
Ben Stein: Citigroup (C )
Forbes on FOX
On Saturday, April 4, 2009, David Asman was joined by Steve Forbes, Rich Karlgaard, Neil Weinberg, Mike Ozanian, Quentin Hardy, Victoria Barret, Jack Gage, Evelyn Rusli and Elizabeth MacDonald.
David Asman: Forget the anti-capitalism protestors, it's the world leaders who are bashing America's economic superpower that we should be worried about. They want to rein us in. But, some at Forbes say "Don't worry -- when this financial crisis ends, the U.S. will still be the world's No. 1 economy!" Are they right?
Rich Karlgaard: We're not only going to stay No. 1, we're already showing signs of economic recovery. We're going to have positive growth in the second quarter. Even if it's only 2 percent growth, given our size in the global economy, our 2 percent growth dwarfs China's 6 percent growth or anything coming out of Europe. We're still number one. People still want to start businesses here. I'm positive.
David Asman: Alright, well the next thing Rich is going to say is Obama is the greatest thing since sliced bread! What do you think, Mike?
Mike Ozanian: Yeah, gimme some of that Kool-Aid! We're the largest, but we're not going to be the best. We're not going to be the fasted growing. There's too much red tape, tax rates are too high, the Obama administration is owned by the teachers union and other municipal unions. He is forking over this economy to Europe and the unions. It's going to be terrible.
Elizabeth MacDonald: We better remain No. 1 for these countries' sakes. Two-thirds of the central banks' reserves are in U.S. dollars. What happened was a lot of the central banks around the world started printing money so they could buy our dollars on the cheap and keep their exports low. That's what China did. By the way, I don't see panicked investors racing to buy Rubles and Rupees. India, China, and Russia don't have the economic track record to support their own currency. I say the U.S. dollar is under pressure.
Evelyn Rusli: I don't think there's going to be a No. 1. I think the super power idea is obsolete. America will come through and we will be strong, but in the end, the global dynamic has shifted. And even though we might have the largest economy, that doesn't factor in that our influence has declined and that we're so inter-dependent on other countries.
Steve Forbes: Evelyn wasn't born in the 1970s when we last had this litany of maladjustment in America. The U.S. will still be number one. And the US will recover. Remember in the 70s, 14 years of inflation and horrible economic news. Then came Reagan. Eventually we will come back. We will be the most dynamic economy. And if this administration won't do it, the next one will.
Victoria Barret: I hope Steve is right. But, I have my doubts. You have Congress talking about regulating risk, regulating compensation. Those are massive shifts that could put us behind countries like China. What we've seen in this current crisis is that we are completely interrelated. You can't separate the U.S. economy from China's economy. They're "frenemies." We're dependent on each other. We may not like each other's policies, but we need each other.
David Asman: Forget the financial crisis and the housing meltdown. The biggest threat to the U.S. economy is the U.S. Congress?!
Steve Forbes: Oh c'mon. Congress is on a spending binge like we've never seen before. It's increasing taxes every chance it gets until popular opinion starts to push back, witch burnings like we haven't seen since Salem, and regulations galore! Congress is grandstanding, anti-capitalist, anti-commerce, you name it!
Quentin Hardy: I just love your set up, David. You said ignore the housing crisis and the Wall Street financial meltdown. That's sorta like saying the moon is a great place for a vacation, except for the no-atmosphere part.
David Asman: The point is which is worse? Which is really responsible for our economy being lousy? Is it the Congress or all the other things?
Quentin Hardy: Well, as I recall, this Congress didn't set us up for this particular disaster. It was the old Congress.
David Asman: Well, that Congress was a Democratic Congress.
Quentin Hardy: No, it was Republican for the majority of it. What you're seeing in Congress is standard, populist nonsense. The Senate curbs it. None of this is really getting out to the public or harming things in a bad way.
Rich Karlgaard: Well, people are familiar with Nancy Pelosi, but the way she runs the Congress is that she demands utter loyalty and in return she delegates a lot of authority to committee chairs. Now, who are these committee chairs? They are people like Barney Frank, Charlie Rangel, Henry Waxman, and David Obey, who may be the worst of the lot. Right now, we are really counting on moderates in the Senate to form a coalition to stop them.
David Asman: And Elizabeth, if you look at Fannie and Freddie, the damage that they alone have done, and the fact that Congress was not doing its job in oversight over these two institutions… you could make a case that Congress is to blame.
Elizabeth MacDonald: Yeah, Fannie and Freddie are sort of the economic equivalent to the oil refinery explosion. What was really striking, David, was when the government seized Fannie and Freddie last fall. Why did they do that? They were afraid that China, Russia, Japan, Europe, and the Middle East would stop buying US bonds. Fannie and Freddie were reckless. Congress was reckless. Congress got a lot of political donations from Freddie and Fannie. But, you still have to watch China and its moves with our treasuries.
Mike Ozanian: Congress is run by President Pelosi.
David Asman: Wait a minute. Wait a minute. You're saying is that she's more powerful than Obama?
Mike Ozanian: When it comes to legislation? Yes, absolutely. You think that stimulus bill was something President Obama wrote? No. President Pelosi pulled it out of her desk drawer. The biggest danger area is in trade. The last time we had a Depression in this country was because we went strong against free trade. That's what we're doing now with Mexico, we're doing it with Colombia, and other places. That's the great danger.
David Asman: But Neil, we don't yet have the kind of anti-trade measures they had during the Depression.
Neil Weinberg: No, we don't. And I don't think we will. I think Mike is wrong. These guys are the best representatives that we can elect to voice our populist frustrations that lobbyists can buy and pay for.
David Asman: These are the best we can elect?! If that's true, we are in deep trouble.
Neil Weinberg: David, the masses are the asses and we get the government that we represent. These are the people we elected. But, they don't have the power. The president does.
Forbes on FOX Debate
David Asman: Last weekend, President Obama fired GM's CEO to help get the automaker back on track. So he says. Well, this weekend, someone here says he should fire union chiefs to help get our economy back on track!
Jack Gage: Listen, Ron Gettelfinger, the head of the UAW, has only been there since 2002, but he's done an awful job. Talk about pay for performance, like what we like to say about executives… there is no accountability at the UAW right now. Union workers are not getting the best shake they can. Unions are going to have to take deeper concessions as a result of his delayed action. This is bad news going forward. He has to be held accountable.
Neil Weinberg: Oh I understand. Two wrongs make a right. What I'm saying is it's wrong to be firing CEOs and it's wrong for the government to muck up the unions as well. In addition, Gettelfinger is going to retire next year. So what's the big deal?
David Asman: Victoria, fire CEOs or union execs?
Victoria Barret: I agree that we shouldn't be in the business of either. But, the fact is we are. And you should go after Gettelfinger. For years he has said that America needs to avoid the race to low-cost labor. And look where we are. GM is on the brink of bankruptcy. Gettelfinger's made a lot of mistakes along the way and he should be held accountable.
Quentin Hardy: I don't really know what the problem with firing the guy was. We loaned the company billions of dollars. We acted like a shareholder. In our magazine, we champion private sector guys who go like that. We want a little accountability. Unfortunately, Gettelfinger hasn't borrowed billions of dollars from the U.S. government the way GM the company did. We don't have anywhere to go with the unions.
Steve Forbes: I don't want the government firing anyone. I don't want these commissars coming around because if they can do it to unions, they can come here and do it too. Enough of the Sovietism.
David Asman: Stocks that don't need a government bailout and will give YOU a bailout with big profits!
Evelyn Rusli: Bell Canada (BCE)
Jack Gage: Apollo Group (APOL)
Mike Ozanian: Northern Trust (NTRS)
Neil Weinberg: Berkshire Hathaway (BRK.B)
On April 4, 2009 on Cashin' In, Terry Kennan was joined by Tracey Byrnes, Wayne Rogers, Jonathon Hoenig, Jonas Max Ferris, John "Bradshaw" Layfield, Chris Kofinis and Connie Degroot.
Should We Be Outraged By Big Government Spending?
Jonathan Hoenig: The European G20 protesters are shameful. They're lawless, mindless hooligans that should be thrown in jail. As soon as you throw a rock you're no longer a protester; you're a hooligan. Americans aren't throwing rocks; they're "raising up" their voices they're having tea parties and rallies and blogging and twittering, they're scared and pissed about the growing government control. They say the "zillions" wasted on Wall Street and Main Street. A growing shift away from capitalism and they're scared to death; so am I.
Wayne Rogers: No, but every time they have one of these G20 conferences, the crazies comes out; we had them in Seattle -- every time there is one of these. A lot of these have to do with globalization. I don't know who these people are; I don't know if these people have ever read a book in their lives, it's hard to say. I don't know that we should be outraged, like you said there are tea parties -- if the taxes get to the point where they are so onerous, we will re-vote. And this is a beginning of a protest, yes and people will protest and rightfully so.
Chris Kofinis: Well, I think they should be showing their displeasure to the economic crisis that we inherited, but in terms of as displeasure toward the Obama administration, I don't see that coming any time soon if at all. The reality is if you look at the polling data the American people are very supportive of his agenda, as bold as it is, because they see it as a necessity. Now that doesn't diminish the fact that I think there is a real populist anger out there, but I think that populist anger is very targeted towards a lot of these executives and CEO's that a lot of the American people think built the system and were corrupt, and I think that's where I think all the populist anger is focused right now.
Tracey Byrnes: I don't know, I'm reading different polls it sounds like everyone's mad and they're sick and tired of their dollars being spent haphazardly. I think the way to do this is not to vote these guys in. I mean let's face it: every move they make between now and the election is all political, it's all about the next vote, because it's coming up soon. So don't vote these guys back. That's the biggest way we can show our protest against this administration.
Jonas Max Ferris: I'm not against a good pretest, but when they turn to vandals, like Jonathan said, I don't really think they are really protestors anymore. In fact a lot of these crazy protest groups, they don't make any sense nor do I think these are making any sense. There throwing rocks through bank windows. Those banks that were nationalized, they were bailed out, sort of like our banks, your deposit of money would have been destroyed if government did not bail out and step in and stop those banks. You would lose your money, is that what we really want, what are we protesting here? I think there's a lot of baseless anger against the government building and it is scary. I think it is true that the deficits are growing, we're spending too much money, but a lot people voted in more spending, let's not forget that and we've had higher taxes through most of this country's history, and we're not going to have protests just because the taxes went up.
GM Still May Go Bankrupt: Proof Bailouts Don't Work?
John Layfield: We should have never put them on life support; we knew this company was going into bankruptcy and it's not bankruptcy, it's reorganization, going into chapter 11, you're not going to lose anymore jobs than you would do by asking these unions for concessions anyway. It's the best thing in the world for them; we wasted 14 billion dollars of tax payer money by putting these guys on life support, when we knew we'd have to pull the plug some time this spring.
Wayne Rogers: I agree with JBL on that. The bankruptcy courts - that is the bankruptcy law, Chapter 11 under reorganization -- that's exactly what it's designed for, that's exactly why it's there. And all of this stuff, with all due respect Chris, when you say oh the alternative to these things, the economy is going in the toilet, everything's going to go upside down, no not necessarily, that's like people screaming fire in a crowded church, it doesn't necessarily going to happen that way. And the bankruptcy courts are there for reorganization purposes, that's exactly where they should be.
Chris Kofinis: Well, I don't know, I'm kind of torn about this. I'm not thrilled about giving billions of dollars to the auto makers but at the same time I realize you can't let an industry that represents directly and indirectly about 3 million jobs just completely collapse and go under. We got to do something to help them. Now the problem I have, is the rationalization if you're going to give 17 billion dollars to the auto makers but we're going to give $150 billion to AIG, you know I'm sorry I'm not going to get that wound up over the billions of dollars the automakers have been given. Do they need to make changes, absolutely, do they need to go in a new direction, of course.
Tracey Byrnes: This whole notion of saving an industry just because we're going to lose 3 million jobs makes no sense, that's the point; we're not going to lose these jobs, so it's a bunch of rhetoric and I actually think a lot of it had to do with payoff to the unions who got Obama in the office in the first place.
Jonas Max Ferris: Well maybe if GM issues some swaps, no one would care if they got all this bailout money. I would say this year, GM, President Obama's treating this auto company and their loans harsher than last year. I mean the stock tanked when he came out and said, we're cutting you loose, they fired the CEO, I mean I think they're being pretty tough. Now, is going to work, are they not going to go bankruptcy, I have very low barrier of success for this bailout working.
Jonathan Hoenig: The only one entitled to my money is me, okay. Not GM, not the banks, not dead-beat mothers, not welfare parents, it's me. And for the government to get in this position of picking winners and losers is untenable, that's why I've been against the bailouts from the start.
Will This Spring Decide If Homes and Economy Rebound This Year?
Connie Degroot: Well absolutely we're seeing a lot of sunshine in housing. The good news with housing is that there's good news. There's good numbers that were reported in February, but here's what's really important, if you look at when a lot of these people wrote offers to purchase these homes that closed in February, they were probably doing that in December. What was happening with the economy in December? A lot of people were scared; they didn't know what was going to happen, a doom and gloom. And the fact that so many people moved forward to purchase and a lot of these transactions were first time home buyers who are always taking a little more time and cautious, this is what's so exciting. The mentality is definitely changed and it's much better, so I predict better numbers in the next two or three months.
Wayne Rogers: I'm looking down here at some numbers here it says; unemployment is at 8.5 percent, manufacturing is now down to 40.8 percent. I don't know what numbers you're looking at; yes maybe every now and then there are some houses that are selling, but I don't see this as a turn around, no, not yet, we got some way to go.
Tracey Byrnes: Case Shiller for January saw a 19 percent drop in home prices from last year, we got Phoenix down 35 percent home prices year over year. Prices are going to continue to fall and that's why I personally don't think it's going to turn around; people are still waiting, everyone tries to call the bottom, even though it's not the right thing to do, everyone tries to call it. So you're going to have prices that continue to fall, and unfortunately to Wayne's point, you have jobs, people will continue to lose their jobs, probably through the rest of this year, whether there's a bargain beautiful house waiting for you, if you don't have a job, you can't go buy it.
Slam Dunk Stocks
Jonas' Pick: Templeton Emerging Markets Income Fund (TEI)
Wayne's Pick: Central European Distribution Corp. (CEDC)
Jonathan's Pick: The GAP Inc. (GPS)
JBL's Pick: Exxon Mobil Corp. (XOM)