Cavuto on Business

Another Nail in Capitalism's Coffin?

European bailout sparks global stock rally

 

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STOCKS RALLY AS CAPATIALISTS CHEER ANOTHER BAILOUT PLAN

Charles Payne: We know that the stock market, even though it knows better, loves this kind of stuff. The market loves a rally and the market is short term. I'd say short term, they're looking from here to the next minute. There was some good news this week too-the GDP numbers. I call this rally the dirty finger nails rally. It started three weeks ago, Parker-Hannifin had great numbers, Caterpillar had great numbers, Norfolk Southern had great numbers. Good things that tell you our economy didn't go into a double dip. Yes, the bailouts, obviously Wall Street loves them. We all know Wall Street loves them. But there are good elements to the rally too.

Charlie Gasparino: There was a technical reason why the market did so well this week. There was a lot of short covering going on. People were betting that the market was going to fall. There was some mildly positive GDP report. The street hits the button, they short cover. We should point out that stock traders are notoriously stupid and short sighted. The hit buttons on headlines.

Kristin Bentz: Everybody is breaking out the champagne corks here, but they were supposed to rally and the Greek economy was going to back, but these people don't exactly look like they're ready to work.

Stephane Fitch: In this case, I think it's great news. I understand the cynicism about government, but I don't think you're a bad capitalist if you are happy that government solved some of its problems. This was Europe bailing out Greece. This wasn't them bailing out private banks.

DEMOCRATS PUSHING BANKRUPTCY AS AN OPTION TO HELP HOMEOWNERS

Charles Payne: It's a bad move. We can see where this is going. I don't think the President cares about the lenders, to be quite frank with you. He's taking these steps and saying that we are ultimately going to forgive principle. If Fannie Mae controls five million mortgages we're going to forgive principle and if you make less than $70,000 or $80,000 and you bought a house that's worth $400,000 that's all you owe right now. I wouldn't be surprised to see it come as a Hail Mary.

Charlie Gasparino: It's moral hazard again to keep bailing out homeowners. Why did the mortgage, housing crisis occur? Because people said if I could get a loan with this guy that will screw up the paperwork and I can't afford it, I'm still going to take the home. That's moral hazard.

Kristin Bentz: The problem with all of these deals that Obama is proposing is that no one really has skin in the game. You need to have something for the lender and the borrower-sort of equity sharing arrangement. So far, no one really cares. They'll just go bankrupt.

Stephane Fitch: It is troubling that none of the solutions that either side has proposed has never dealt in any large way with about fifty million American homes that are under water right now. I think the Obama plans are not really making a difference. We are just allowing it to fix itself. That's probably the right choice. You do a little bit for the guys who are hurting the worst.

IBM REPLACING ITS 60-YEAR OLDER CEO WITH A YOUNGER EXECUTIVE

Charles Payne: This might go back to the last presidential election where John McCain was psyched out of using his experience, psyched out of using his wisdom, psyched out of using all that and trying to play the game of outsider. It's been coming for a long time. I think there is something to this.

Charlie Gasparino: There's something to be said for having people be there for a while. This woman is 54, so she'll be there for six years. Merril Lynch's CEO pick, Thaine...one of the reasons they picked him is because he was young and he was going to be there for a while. Well, if he were there any longer, Merril Lynch would have been out of business because he was the absolute worst CEO they've ever had.

Kristin Bentz: I think a lot of people are going to be forced to work longer, but I talked to so many companies out there that are young and fresh and that need wisdom and need a rabbi. I think it's all performance based and not a number. It's about how you perform for your shareholders.

Stephane Fitch: I think we have far too many vibrant baby boomers - teachers, cops, firefighters - retiring at 55. What a terrible waste when we send a message to these folks that their career is over at 55, 60 or 65. A lot of these people have a lot more to give. It's unfortunate.

CEOS OVER 60 DELIVERING STOCK RETURNS FOR THE AGES

Charles Payne: Joy Global (JOYG)

Stephane Fitch: Marriott (MAR)

Kristin Bentz: Fed Ex (FDX)