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STOCKS SOARING AROUND THE GLOBE ON HOPES OF MORE STIMULS FROM THE FED AND OTHER CENTRAL BANKS, AND MORE BAILOUTS IN EU; BUT IS MORE STIMULUS/SPENDNIG THE WORST THING FOR THE MARKETS AND ECONOMY IN THE LONG RUN?
MIKE OZANIAN: Stimulus is what killed the recovery. Investment in plant and equipment has shrunk in 2 consecutive quarters in this country. Go back to 2010, when Vice President Biden said that any month now we are going to start creating between 250,000 and 500,000 jobs per month. Since then, we have created on average 188,000 jobs. Back then, President Obama said that the economy was going to grow at 3.8 percent in 2011. Guess what? He was off by more than 50 percent. It only grew 1.5 percent since then.
MARK TATGE: No, but part of it is that we haven't stimulated the economy enough. Look at the original bailouts that occurred and we should have put double or triple that amount into the economy. Largely what we have done here is that we avoided a great depression here. If we had put more money into the economy, I think the economy would be growing a lot faster.
ELIZABETH MACDONALD: If this worked, the Soviet Union would still exist and Greece would be a superpower. Here's the issue, even the president of Estonia is saying look we went in the other direction, we did austerity, we did smart spending, we did smart cutting of our government and look what happened in our economy, we are up by 4 percent in Estonia and unemployment is down. Even Ben Bernanke is saying, look I can't stimulate anymore. It's hurting savers in this country facing microscopic deposit rates.
RICK UNGAR: I was watching last week tapings and all of you were talking about how the most important thing is that we have jobs and we have jobs now. Don't you know that this week the University of Chicago business school releases their survey of economists and what do those economists say? 93 percent agreed that not only did the stimulus save an enormous number of jobs but it saved us from a much worse economy. That's better than 4/5 dentists. Of course the stimulus made a difference, and Mark is right, we needed more.
VICTORIA BARRET: I looked at something earlier this week that said economists can't agree because the funky thing about stimulus is that you apply multipliers, you do all these odd gimmicky things to figure out if it worked. The bottom line is that American people are probably smarter. They know that if you do stimulus, if you pump money into the system we pay for it later. Hard working Americans pay for it later either in the form of higher taxes, or you are just punishing savers. The money they have in the bank isn't what it used to be. Stimulus is not the answer here.
MORGAN BRENNAN: I think this is a case of woulda, shoulda, coulda. Bernanke did come out this week and did allude to the fact that some of the cuts we have coming later could run the risk of another recession. I think we could be kicking the can down the road by continuing to spend or adding more stimulus, or arguing about stimulus. I think we need it. I've seen reports in the past few months saying that stimulus was effective; up through 2010 it did maintain 3.3 million jobs.
SHOULD EMPLOYERS BE ABLE TO HAVE "TERM LIMITS" FOR EMPLOYEES?
ELIZABETH MACDONALD: CEOs have term limits, it's called mandatory retirement, people in right to work states have term limits. This is basically working on a contract basis. I am worried that this will hurt the older workers who could get pushed out. Look a lot of people across the economy have to labor into this. This is a fallacy of the federal government, that you have a job for life when you don't. This is one of the reasons why we are 15 trillion in the hole.
RICK UNGAR: I think these casinos are dealing themselves a poor poker hand. I can't think of a better way to lose your best employees, the people you want to keep than to tell them up front -- you have no job security here. What's going to happen the minute a competing casino comes after those people, they are out the door. This casino is going to be left with the people they would rather not have that they are going to get rid of in 6 years because all the good ones will have gone unless they have been promoted to management. They can do it if they want, I don't think they are doing themselves any favors.
JOHN TAMNY: I would add that the Revel employees are lucky that they are being offered a term. In a market economy most of us go day to day and if we are stop producing, we are going to be fired that day. At least they are being offered a set time so that they can improve themselves. All Revel is doing is institutionalizing what's already true. If you don't produce, you're gone. That's how market economies work. If you don't like it we can be far less dynamic and make much less money.
VICTORIA BARRET: I think they have the right to do it, I don't think it is the best business practice. You are going to attract the wrong kind of employees and you are going to lose your best employees. Let the market forces go at work here. I have a feeling that Revel is going to realize that this wasn't a great policy.
MORGAN BRENNAN: I whole heartily agree with this. Why not? I think in a sense you may detract some qualified workers who is applying for positions. I think this is a great idea, heck politicians have term limits thankfully. As EMAC mentioned, so does executives so I say why not?
MARK TATGE: Look we already have this kind of thing out there already. It's called contract labor. Term limits on employees. Somebody comes in, they do their job, and their term ends. What's the effect of that? People are less loyal to their employer, they don't work as hard, and they are always looking for their next job. There is no sort of compact between labor and management and people don't really care about where they work. This is going to hurt productivity; it's going to hurt the overall organization. You cut people's pay and benefits; you cut their ability to work and their willingness to work.
Biden: My wife and Michelle Obama wouldn't have had a chance in life without government help
VICTORIA BARRET: I think what Biden is missing is history. The fact that this is a different America than his parents America, or his grandparents America. 50 years ago, 87 percent of Americans paid income tax. Now its 49 percent. Over the last 45 years we have eleven fold increase in entitlement spending and only a threefold in GDP. It is a different America, it has happened over time and now we need to address it.
MARK TATGE: I think we have an entitlement nation but it's an entitlement nation for corporations. We give big tax breaks to corporations, big subsidies. We give away our mineral rights; we allow them to pollute the environment. So it's not for the individual, it's for the corporation. Everything exists for the corporation, not for the individual in America.
MIKE OZANIAN: Mark's right, President Obama's friend Jeff Immelt at GE who advises the president gets huge tax breaks at GE. I think where this entitlement increase really hurts us is in our purchasing power. What we can buy with each dollar we earn and the value of the dollar index has gone from $1.20 in 1968 when entitlements really started to explode down to 80 today so it's had huge decline and that's something that all households feel.
MORGAN BRENNAN: I'd say it's not quite that bad. Here's why- We are coming out of a horrible economic down turn and we have had record high poverty rates which is part of the reason we are seeing more spending where social issues are concerned from the government. We are not quite an entitlement nation yet compared to other developed countries. There was a report last year that we were ranked 25 out of the top 34 in entitlement spending. I would say that if the CBO report that just came out, Medicare for example, will double over the next 5 years, if that happens, I would say we will become an entitlement nation.
ELIZABETH MACDONALD: I think Morgan's 34 countries; I think 27 of them are in Europe. Here's the issue-I agree with Vicky, we are an entitlement nation right now. I don't like the way the country is going. I feel like we are in a bit of an identity crisis in this country. It is going to get worse after the President's health reform kicks in because then you are going to see healthcare spending by the government double to about 10 percent of GDP and 1 out of 10 dollars going towards healthcare spending; social security will eat it up also interest on the debt. Not a lot to spend on roads and highways.
STOCKS REBOUNDING AFTER SELLOFF
MORGAN BRENNAN: SILVER WHEATON (SLW)
52-WEEK HIGH: $42.50
52-WEEK LOW: $22.94
ELIZABETH MACDONALD: GENERAL ELECTRIC (GE)
52-WEEK HIGH: $21.00
52-WEEK LOW: $14.02
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