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.
Job Market Struggling as June Employment Report Disappoints
Charles Payne: If government was better than the private sector, communist Russia would be the most powerful nation in the world. Any government official, let alone the Vice President of the United States, to suggest that he has this little faith in the American citizens, really all they do is go out and knock ambition, integrate success, and they say let us handle it. It's ridiculous. And, by the way, I thought the audience was a Stepford audience.
Adam Lashinsky: I understand your point, but I don't agree at all. I listened to what he said, I read what he said, all of what he said by the way. I think first of all, this is politics. He's hitting the private equity crowd, he's hitting Mitt Romney. I don't agree with all the criticisms of private equity, but what he's saying about these "so-called job creators," that's true. They are interested in doing what is right for their investors. Sometimes that helps create jobs in the U.S.; sometimes it doesn't. That's a political point.
Charlie Gasparino: It's more than sometimes, Adam. You know it's more than sometimes. Are you telling me in all your research, you have found that private equity is a net job killer, not a net job creator. They create more jobs than they kill, don't they? Adam, we've been covering this stuff for a long time and it's a pretty simple question: do they create jobs or do they kill jobs? Based on my research, they create a lot more jobs.
Dagen McDowell: I disagree on the point that Adam had that this is just political. This is not. It is an economic policy of this White House. The government knows better that elected officials know better than people who work and run private companies. Our percent of national debt now, as of the percentage held by the public, at the end of the year will be 70 percent. In 2008, it was 40 percent. So where is that money going? Not to create jobs, because we still have an unemployment rate of 8.2 percent-.1 percentage points lower than where it was in February 2009, which was 8.3 percent.
More Cities Filing for Bankruptcy Amid Soaring Debt
Charles Payne: It's the worst case scenario, but it is a good thing. Because ultimately this is the only way to break up a lot of these obligations that were made by both sides of the aisle. You just can't base pensions off of people retiring at 50, double dipping, you think you'll make eight percent a year. It's completely outlandish. Some of these towns have no police. They're telling the people, "listen, unless it's an in progress crime, don't call us."
Charlie Gasparino: Municipal bankruptcy is a really really messy process. I've covered a lot of them. I actually covered Orange County. This is not good. I don't think these places should be going into bankruptcy. You do have a choice, you can negotiate with the unions. Well there has got to be ways before you just hit the bankruptcy button and start stiffing your bond holders. Let me tell you something, the minute you default on your debt, they don't come back New York city is still paying for the fact that it stiffed bond holders, I think they were short-term notes, back in 1976 or '77. They're still paying for that in terms of higher yield and lower bond rating.
Dagen McDowell: The situation of municipalities is looking awesome and I'll tell you why. Number one: California municipal bonds, long bonds there were the best performing category of muni bonds there-better than the national average for muni bonds. Number two: those voter referendums in San Diego and San Jose cutting government pensions, that's great news. Voters are beginning to act, we have new government account standards that are going into play, where these municipalities, these localities are going to have to more accurately account for the short-falls in their pensions. People are going to wake up when they see those higher numbers. All of this is good news.
Adam Lashinsky: There should be a stigma. They screwed up and it's also a good reminder to investors that just because it's a municipality, or a state, or a country, doesn't mean that it is a safe investment. That's why there is a yield associated with it. There is a risk and I happen to agree with Charles and Dagen. Charles made a wonderful case for the General Motors controlled bankruptcy, by the way. That's exactly the way bankruptcy is supposed to work.
Nine Big Banks Submit "Living Wills" to Federal Regulators
Charlie Gasparino: I'm not nervous, this is just bologna. Let's be honest here. There are six big banks in the U.S. that control something like 60 percent of assets, I think that's globally. I believe that it is impossible to create an orderly wind down of Citi Group, which has $800B of customer deposits that are insured. J.P. Morgan has $1T of customer deposits.
Charles Payne: I'm nervous, but I'm probably more angry, to be quite honest with you. We did the tarp thing, and you know, we keep hearing how great it was and still here we are. These same banks are only larger and only more threatening to our economy. They're not lending, they're still opaque, they're still marketing some of their assets to what ever they think the value should be. I don't feel like we've done anything, any traction. If anything, this has gotten closer to our throats.
Adam Lashinsky: I agree that too big to fail still exists, but I'll go ahead and play Reagan optimist here in that this is good. They're exposing their plans, and they're saying, "this is what we would do," and now we get to pick it apart.
Dagen McDowell: It is not worth anything because in a financial crisis, number one, we'll never see the next one coming. Number two, there are no willing buyers for any of these assets in a crisis situation. We bailed them out before, they're going to expect a bailout again. I don't care what Dodd Frank says.
Health Care Winners
Charles Payne: Genesco (GCO)
Adam Lashinsky: Fastena (FAST)