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.
PRESIDENT OBAMA AND CONGRESS FOCUSED ON PAYROLL TAX CUTS: SHOULD THEIR MAIN FOCUS BE ON OUR GROWING DEBT?
TRACY BYRNES: Cheryl, the debt. I mean, look, dear God look at what's going on in Europe right now. This payroll tax cut is a joke. It is short term; it just hurts social security; it certainly doesn't create jobs, and by God, it is not helping our deficit at all. Move on from the short-term fixes that, all you're doing is trying to garner votes come election time. Be done with that already. Look long-term; the debt is going to kill us.
JONATHAN HOENIG: It is a negative Cheryl, although as I understand it, the payroll tax cut isn't actually really a cut. It is another redistribution from the rich and it comes from that fixed-pie fallacy that central planning grows wealth and it's government's responsibility to redistribute as they see fit as Tracy pointed out. It's ineffective, it's short-lived, it doesn't work, and it's ultimately destructive because it perpetuates these bankrupt entitlements like social security. The President and our leaders should be looking to cut them, not extend them and prolong them even more than they already are.
SALLY KOHN: Look, a lot of things hurt Europe and one of the things that hurt Europe was a struggling economy. Look, long-term of course and even in the medium-term we have to get our debt under control, but we know and businesses know that in the short-term, they need consumer-demand. They need spending; they need middle-class people to have money in their pockets, and what I don't understand is why we think it's okay to raise the debt to give more tax cuts to millionaires and billionaires, but we somehow can't justify giving tax breaks to working class people.
WAYNE ROGERS: I don't think you have to have an either, or. I don't get this, you know, this fight about how you've got to have tax cuts. It's more interesting that Congress has got the constraint ultimately on cutting. You know that. So, that's a given. I mean, otherwise we're going to end up like Greece. We know that, so you've got to do that. The significant thing that you have to do here is that while you're doing one or debating one, you've got to do the other. You can't take your eye off of it. So, I think that Sally has a point. If you do it now that's fine; that's an immediate; that's something that happens immediately, but in the long-term, if you don't cut, you're dead.
JOHN LAYFIELD: I think it could yes, but you're not talking about a job creation event. There's no job creation event on the horizon anywhere in this country because we have no long-term plans; no long-term tax plan; the deficit plan - the commission did not work. We have no long-term energy plan. We're the only developed country in the world without a developed energy plan. So you have this debt that we've started redistributing, just as Jonathan said, since the 1960s of taking social security and saying okay, we will fund that later. Our unfunded liabilities are much greater than the 15 trillion dollars we have right now that is our actual debt. This is going to kill us, and at some point, we have to have a day of reckoning.
CHINA COURT TELLS APPLE THEY CAN'T CALL THE IPAD 'IPAD'
JOHN LAYFIELD: Well, because people don't want to invest in the Chinese companies. Look at what happened with LDK Solar when they just flat lied about the inventory they had. You look at Sino-Forest and John Paulson losing so many billions of dollars by the fact that they just simply lied about their balance sheet. You look at all these Chinese, reverse-mergers. These companies, there is no cause and effect. You look at a balance sheet. You don't know if money is actually money that's there or if they're just flat, telling something that is false so that they can raise their stock price and there is no cause and effect. Nobody in China is going to jail over this. Nobody in China is going to court over this. The copyright is the exact same thing. People are looking at China right now and not wanting to invest because of its government and because there is no cause and effect and they're going to invest in places like the United States.
WAYNE ROGERS: By the way, it's been going on in the United States also for decades. It goes on everywhere for decades. There are trademarks - you can go down and look at the court - there are trademark disputes going on all the time. As a matter of fact, I'm involved in one right now, right here in the United States. It doesn't have to do so much with that. People are going to go to the lowest possible place, where it's the cheapest way that I can make the best product for the cheapest price wherever that may be in the world, and I'll put up with the cost of the trademark disputes. I'll put up with the cost of a trademark dispute, because that's a cost of doing business. I grant you what John says, you don't want to do that, you don't want to have to go there if you don't have to, but you'll accept that if the tradeoff is that I can make a product better and cheaper.
JONATHAN HOENIG: Well there is no dispute. China is a communist country, Wayne. They make the rules. There are no property rights unlike, say an American company or an American enterprise, where at least as you pointed out, here you get a hearing. In China, literally they make up the rules as they go along. It's a brutal, destructive society Cheryl. It's why I don't invest in China. As JBL pointed out, you simply cannot trust that the government will actually work to protect people's capitalist rights; they're property rights, not only physical property, but their intellectual property as well. I think it's a deathtrap for investors.
TRACY BYRNES: It's a risk and reward equation right? You risk the fact that Altria, Nike, experienced counterfeit products being sold out there, but the reward, to Wayne's point, is it is cheap labor; it is easy to get a product out and pushed out to the market. The problem though is, there are no audited, financial statements like Sino-Forest like John just mentioned. So you run the risk. You better do your due diligence if you're going to do business out there. Otherwise, it is a communist country. They could what the heck they want.
SALLY KOHN: I mean look, what I think is exciting about this conversation is that for once, we are looking at China as a warning sign for what not to do, as opposed to an example of how we can sort of join them in the global race to the bottom. Look, the United States needs to be competitive in the world economy. Not by, as Wayne seems to be suggesting, lowering wages, lowering standards for workers, allowing companies to pollute our water and our air, but instead we should be leading the race to the top and creating an economy that not only is attractive to businesses, but oh, I don't know, help some American families actually get back on their feet and build our economy for the future.
'OCCUPIERS' TO MOVE PEOPLE INTO FORECLOSED HOMES: WILL THIS HURT HOUSING RECOVERY?
JONATHAN HOENIG: Well, it closes the door on any, I don't know, civility; any peace, Cheryl. Truly I'm sorry might is not right. All these occupiers are, are literally professional trespassers. They're gangs of bandana-wearing thugs barging into, whether it's banks, or restaurants, or in this case homes that they do not own. They have no right to be there. It's ludicrous and it's also dangerous because it paves the way, as it's been pointed out, for daily sorts of occupations that we see in Europe every day. Only it's not just signs; it's Molotov cocktails.
TRACY BYRNES: Cheryl, I've said this before I will say it again. I am so sick of these people. Go home already. Look Cheryl, the hypocrisy is out of control because they want to get people back into homes and yet, if I go look at a home and there's Occupy Wall-Streeters in them, I'm going somewhere else. I'm certainly not interested in buying that home anymore. They have got to stop this. They're just going to end up hurting that which they think they're helping.
SALLY KOHN: No, they're going to help it. I mean, look, let's be clear. In neighborhoods like East New York, which has the highest foreclosure rate in New York City, one in six homes is boarded up. These homes are going blighted. There was a study in Los Angeles that found that homeowners who still owned their homes and paying their mortgages were losing 78 billion dollars in the value of their homes because of those bank-owned, foreclosed homes that weren't being maintained. The Occupiers are helping move homeless people into empty homes of which we now have a record, because incidentally we bailed out Wall Street and let them cover their mistakes, but we aren't helping homeowners stay in their homes.
WAYNE ROGERS: No, I think an occupy dwelling is better than an unoccupied dwelling in any neighborhood, whether it's occupied by somebody illegally or legally and Jonathan is only raising a legal question. I think the economic question here is whether or not this home is going to decrease in value because somebody is in it and it does not necessarily decrease in value because somebody is in it. In a lot of cases people fix these houses up. I'm not saying they should be doing it. That's a legal question again, but the economic result of this is, some of those homes are going to be better.
JOHN LAYFIELD: Just the fact that putting a squatter in a house you say is better for the house, I disagree. Look, this has nothing to do with the Wall Street bailout. This has nothing to do with the rich. Everybody wants to turn this into something political, this is not. This is basic economics. Homeownership should be around 64 percent in this country. It was falsely inflated to around 70 percent. I've actually talked to bankers who put loan tax forces together to go out and find people that they would loan money to, that they knew did not have the means and would not pay them back, and until this reverts back to somewhere around 64 or 65 percent homeownership, we're going to continue to have this inventory out there and housing is going to be depressed and so is construction jobs.
WHAT DO I NEED TO KNOW?
TRACY BYRNES: Heck, even the hackers got into Facebook founder's face page. C'mon, be careful when you get out there. Watch your personal finances. Nothing's really safe.
JONATHAN HOENIG: While you're following me on Twitter, you might also want to check out IACI, Cheryl. That's Interactive Corp. Now, I don't like it just because Chelsea Clinton joined the board, but they've got a host of consumer related companies right now. Names like match.com, collegehumor.com, seniorpeoplemeet.com. I haven't been on that one yet. Strong stock; don't fight the tape.
WAYNE ROGERS: Well, I like Ford Motor Company. Ford Motor Company is one of the few companies that did not take government money; taxpayer money. GM and Chrysler; both of them went bankrupt and both of them took it. Ford's a good buy. They are paying a dividend for the first time in five years. It's terrific.
JOHN LAYFIELD: Buffet's $2 billion investment in the Topaz project is great for solar. First Solar is the way to play it.