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REPORT: IRAN PRES QUESTIONS U.S. POWER OVER MASSIVE $16 TRILLION DEBT
BEN STEIN: Well, he's as nutty as a fruit cake. But on this particular instance-he's right. I mean, our national debt is so large-it is a national security threat. The reason it is a national security threat is one, it makes us look stupid. Two, it makes us look as if we can't control our own destiny. Three, at some point it's going to require us to cut our defense spending. We've got to pull ourselves together and act like statesmen about it. I mean, it has gone on way too long. This is just ridiculous.
DAGEN McDOWELL: If we don't heed to this warning, I don't know what it will take. As a nation, I don't think-and I've said this all along-I don't think it will happen until Americans feel real pain in some way. Whether it's significant higher interest rates or double digit inflation-which we had in the 70s and the 1980s-maybe that's when we will decide to actually do something about this. I don't what it's going to take. Maybe it's going to take us not being able to defend ourselves. Maybe it will take some sort of national security crisis where we just don't have the money to protect the nation at some point.
CHARLIE GASPARINO: Listen, I don't think there's much that this guy says that makes sense. The bottom line is we are still the tallest midget in the room when it comes to buying debt. As long as that is maintained-and it's going to be maintained for a while-there's going to be no institutional pressure from the markets for us to change. Of course we've got the Fiscal Cliff coming up which is mandated by law if they don't come to a deal-you get massive cuts. Unless the markets change, there's going to be no outside pressure for us to change.
STEPHANE FITCH: I don't think we should be taking any tips from this guy. Iran's currency is down 30 percent against the dollar since Obama got to office. The unemployment rate among young Iranians is one in four. The Financial Times reported this summer that one in nine checks that gets written in Iran bounces. I mean, their four extra reserves are drying up thanks to the sanctions. I'll tell you, I just hope he's not watching this show and getting any good business advice. The sooner that economy collapses the better.
"BLACK MONDAY" ANNIVERSARY SPARKING NEW MARKET CONCERNS
CHARLIE GASPARINO: I remember when that happened. I was at the University of Missouri trying to figure out what it all meant. What was interesting is that back then, we were worrying about the deficit and we had something called Gramm Rudman Hollings I believe that was suppose to cure the deficit. It didn't cure the deficit. Bill Clinton came into office and whatever the cuts they did never worked. When Clinton came into office, guess what he did-he raised taxes. Did that really cure the deficit? If you look at the numbers, it didn't. Guess what did kill the deficit - economic growth. When we have these discussions about raising taxes and cutting; the one thing we're light on is the fact that when you grow the economy-the deficit often takes care of itself.
BEN STEIN: The crash of 87 was not really based on macroeconomic phenomenon it was a microeconomic phenomenon. Portfolio insurance, if I may say so while you guys were in elementary school, had a small drop and they sold the future. Whatever the trigger was, it was portfolio insurance. The market recovered very quickly and there was no economic crash.
DAGEN McDOWELL: That crash 25 years ago was a stock event. That was an equity event. What we have now with the bubble in bonds and particularly in treasuries and how dangerously expensive they are and what could happen is much more gray potentially because we're 16 trillion dollars in debt. So people start dropping bombs, look out below.
STEPHANE FITCH: Well listen, I agree that very low interest rates are unjustified. I also agree that it's a real problem. I think the problem though and the scary thing is that it'll hang around for the next five to ten years. And a lot of older Americans who are invested in treasuries are actually going to miss out on a lot of income. They should be moving out of those gently into better investments.
"FISCAL CLIFF" FEARS MOUNT AS PRESIDENT'S VETO SURFACES
BEN STEIN: We don't know what the effects are going to be. But I wouldn't say that it would be good, I mean, tax increase, gigantic spending cuts and extreme uncertainty about the future are not good things for a fragile economy. It's a disgrace that the President and congress can't work together. If it's Mr. Romney, I think they will be able to work it out.
DAGEN McDOWELL: He's backed off this sort of comment before and extended the Bush tax cuts two years ago. Can we blame both sides though for not getting their acts together? These tax cuts were designed in the first place because they didn't want to do the hard math a pay for them. Now we just keep moving it down the road.
CHARLIE GASPARINO: I agree with this. This is Obama's way of dealing with the deficit. I really think if he gets in there, particularly if the Democrats pick up seats in the Senate, he will be emboldened, he will hold his line, and this is the way he's going to say alright, I'm done. You don't want to raise taxes on the rich, let's deal with the deficit this way. By the way, we'll have a recession for about a year and then things might look better.
STEPHANE FITCH: I think there will be a better shot at tax changes under a republican. But unfortunately, they won't be that helpful. We need a bipartisan agreement. By the way, the best evidence is that everybody is calling this thing a cliff. They're not calling it a Fiscal candy bar. There will be a deal.
LISTEN TO BEN: VANGUARD (VTI), POWER SHARES EXCHANGE (SPLY), SPDR S&P DIVIDEND (SDY)
BEN STEIN: Well the first one is one that I've talked a lot about-VTI-which is a very broad worldwide stock index from Vanguard. The next one is SPLV, which is a low volatility index fund-very very low volatility. We found that low volatility stocks tend to do well. And lastly, SDY, which is a high dividend stock. We found that high dividend stocks tend to do well over long periods of time. It's better than just ordinary regular index funds.
STEPHANE FITCH: God bless Ben because he's very responsible. They fact is, people are tuning in for cool stock picks. And you can learn a lot from owing individual stocks and it's a good time to own them now if you are young. Essentially, he's telling people to buy stuff they already own. I mean, if you own large mutual funds you own the market already and that's my complaint.