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.
PENSION COSTS TARGETED AS CITIES CONSIDER BANKRUPTCY
VICTORIA BARRET: They are a big problem, because the unions here are staggering. California counties alone, you're talking about 136 billion in unfunded liabilities and you know the unions are in the business of preserving unions, so politically they will make certain tweaks to pension plans and get great headlines for it but these are simply tweaks, when you talk about introducing things like 401k plans to public sector employees and that would have long term positive implications and fix a lot of problems. The pensions won't do it. They will put up a nasty fight and that's because 401ks would put them out of business.
RICK UNGER: You know it's really interesting, you call them tweaks when it's to somebody else's income and what their deal is, not so much when it's your own. Look, here's what nobody wants to focus on, Los Angeles, California, the public union sat down with the mayor worked out a very fair modification to their deal, put the city back on the right footing. Lexington, Kentucky, last week they reached a deal. Dave Bing, up in Detroit, the mayor of Detroit he has sat down with the public unions what you're seeing all across the country is public unions responding to the crisis and more than willing to sit down and do something about it, but it makes for better politics to pretend they don't want to do anything about it, that they are just greedy, that they are just fat and that they don't care. It's not true, evidence show's it's not true.
MIKE OZANIAN: Yea, they only do it when they absolutely have to. In 2009, that was really the key point in time that was when public employee unions' members outnumbered private employee members for the first time. Here's the system's problem; the union members buy the politicians by supporting their campaign it's who they sit across from and do these negotiations. The politicians are the ones who signed up for these lofty pensions and health care benefits because they are going to be long gone and out of office, David. By the time these contracts come up and the people hardest hit are retirees because years down the road the higher property taxes kick in, they can't afford it, so the unions go down.
MORGAN BRENNAN: Yeah, I wholeheartedly agree with that statement, which is why you can't just point your finger in one direction at the unions causing bankruptcy around cities. Lawmakers have a huge part to play in this and Stockton, California is an example. You know, during the housing boom, we saw lawmakers over-budget; over-spend expecting higher property tax revenues that never came because the housing bust came. What I'm saying is it's lawmakers and the unions and we are seeing unions sit down and starting to negotiate in many cities. Detroit was just mentioned, Miami, Jacksonville; we're even seeing this in Connecticut right now.
ELIZABETH MACDONALD: Well I think that Mike's right and the government unions are in bed with the politicians, which is like putting the cat among the pigeons, but here's the issue. I mean, there are only four states that can really cover their pension obligations. The government workers are basically paid by taxpayers; our state and local property taxes and the like. So, you know they're flooded with red ink right now. If they were to not do the eight percent, guaranteed return that these government workers are promised, and put it down to five percent, you would see California, Illinois and New Jersey really tipping into the red. They're making these false promises. Because you work for the government, you're not guaranteed promised benefits for life. I believe yes, people like cops, firemen, teachers; yes fund them, but these other jobs that they can do in the private sector? No, you shouldn't be promised anything.
JOHN TAMNY: I tend to agree with Mike. Public sector unions aren't bankrupting cities, but politicians, to a man decry greed because they constantly try to allocate to themselves; a greater ability to have mandates over us and spend money and unions are just a symptom of this. So, if we want to rein in unions, we must rein in the ability of politicians to apportion themselves more and more of our money.
MORE DEMOCRATS CALLING TO TAP OIL RESERVE AS GAS PRICES SOAR
MIKE OZANIAN: No David and it usually doesn't work because the main reason why gasoline prices are high is because our counterfeiter in chief, Timothy Geithner, who runs the treasury keep printing all this funny money. If you wanted to see gas prices and oil prices go down, there's very good analysis by Michael Pinto that says if you make the dollar stronger by raising short-term interest rates one percentage point, the value of oil will go down by $25 a barrel and gas prices will follow. Make the U.S. dollar stronger.
RICK UNGAR: You know, I think it's more about the threat of using these oil reserves and I'll tell you why. You know, Mike makes a great point about the dollar and I buy into that, but you know what else would help? If we could get these oil speculators a little bit more under control because they are contributing 20 dollars to the price of every barrel of oil. The only way to do that, the only tool we have in the box is to convince them that we are prepared to fight it by letting loose the strategic oil reserves.
ELIZABETH MACDONALD: No, drill baby drill would send a more powerful message to the speculators and the Middle East then draw baby draw. I mean this is called the strategic petroleum reserve, not the politically-tactical petroleum reserve and so Mike is right. We saw it under George W. after Katrina. Gas was at 2.93; it still was at 2.93 a year later. Also, same story under Clinton when he did it; under George H.W. when he did it. The issue is, and even the Democrats admit it, there's no supply issue; that's not the problem. It's fear, it's Iran and it's the Strait of Hormuz.
DENNIS KNEALE: Set aside fuel guys, it's supposed to be to make sure that we'll have gasoline for tanks if we go to war and to release oil from that because oh by golly, people are upset at the pumps, is just a bad idea and only politicians would think of it. Last week I believe it was, demand for gasoline is down seven percent from a year ago. What reduces demand is higher prices. If you pull a bunch of oil out of there to keep prices low it won't work, number one, and number two you need prices to be higher and that will get us to cut back.
MORGAN BRENNAN: No I don't think it would work. I think this would be very short-sighted; short-term. Maybe it would bring the prices down a little bit. We saw this last year when oil was released onto the market prices at the pump came down for about two weeks and then they went back up to over the prices were at before the announcement even came. This is a very short-term aid whenever it happens.
JOHN TAMNY: This is a politicized waste of time. Oil is expensive because the dollar is cheap, but I would say let's sell every barrel out of the strategic petroleum reserve because it serves no purpose. We could be at war or we could be at peace; every oil-producing nation in the world could embargo us; it would still consume their oil as though it bubbled up in West Texas. To have an STP is to ignore basic economics.
FLIPSIDE: FOUR-YEAR COLLEGE DEGREE IS A BAD INVESTMENT
KAI FALKENBERG: Look, it's only good if you're trying to improve your alcohol tolerance. If you're trying to get a good investment on your return it's not for you. I mean, only the top tier schools are offering a million dollar returns. Most people are not getting that kind of bang for their buck. The bottom tier schools are offering investments on returns of just 50 thousand dollars and one of those schools is just not worth it.
RICK UNGAR: Yeah, and I can't believe we've reached a time where we're talking about a college education based on return-of-investment. Folks, it's not all about money. Not everybody should go to college, but we don't have to overdramatize this in the way that Rick Santorum did. If college is something that you want, we should be a country where it should become available. If trade school's what you want, that's what you should do, but this over-the-top response is foolish.
ELIZABETH MACDONALD: I think we're in a tuition bubble. I think American families are getting slammed by these fat-cat academics who think they're Donald Trump Mini-Me's running hotel empires or you know, with five-star cafeterias, or Henry Kravis's sitting on their college-endowments and here's what I think; Bill Gates, Michael Dell, Richard Branson never graduated from college and also I like the model from Finland, Germany and Sweden. Go to trade schools. Go for apprenticeships in a trade rather than expensive colleges.
DENNIS KNEALE: And we just rattled of the names of some of the most talented, most amazingly brilliant people in the entire world, right? But for regular folks like me, college is an answer. The fact is, the unemployment rate over eight percent for the nation; only four percent for people with a college degree. Over your entire career, you will earn one million dollars more with a college degree than without.
VICTORIA BARRET: You don't and yet we're in a society that somehow says a college degree means success. Rick said earlier, you shouldn't go to college if that isn't a good fit for you, but we're in a society, and Rich Karlgaard isn't here so I'm going to channel something he said in a recent column that I thought was so right, was that somehow being a waiter with a college degree in history is a better outcome, we think societally, than being a plumber. There is something wrong with that. We need to put pride back into trades.
INFORMER: STOCKS TO HELP YOU REFILL YOUR WALLET
MORGAN BRENNAN: United Health Care group - they're riding the health care boom. They've just acquired two more Florida plants and analysts like them as well.
DENNIS KNEALE: Chemical Mining Company of Chile - Where 21 cents of every dollar goes to the bottom line and it's a good fertilizer play and a lithium battery play.
ELIZABETH MACDONALD: Powershares QQQ trust - it's an exchange traded fund and it's a way to get a good shot at companies like Apple, Google, Microsoft; also cheap, with a very low expense ratio.