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.
DISAPPOINTING JOBS REPORT SPARKS NEW ECONOMIC FEARS
Jim LaCamp: I think it is getting worse. You have got consumer incomes that have flat lined over the past several months. Consumer spending has flat lined. Then we look at manufacturing reports out of Dallas and Chicago. Also the ISM number, it all suggests that this economy was firing on maybe five cylinders just three months ago is now firing on just two or three cylinders. Beyond that we have political uncertainty. We have this fiscal cliff that leaves a lot of employers really worried about what is ahead. When you're really worried about what's ahead, that means no jobs.
David Mercer: It's a very good trend and I'm glad you pointed it out. After having had 25 months of private sector job growth and creation is why we shouldn't let one month, while disappointing albeit, we should take it more as a warning rather than letting the 25 months be overshadowed by the one month. We need to address the turnaround and making it permanent. We need to act on the Presidents' job bill from September when he first put it forth. We need to help states prevent further firings of teachers, firefighters and the like, and we need to try, as the President was today to get us in a mode where we were helping veterans find jobs that are coming back from Iraq and Afghanistan.
Tobin Smith: First off David, a little economics thing. Seven months of declining unemployment is actually a little more than just a blip. It is actually a trend. The reason it's happening is purely simple. We have an economy that is running out of steam because job creation in this economy is not from government, it's from the private sector. The job machine has always been from the private sector. And the private sector has said, given all the things that they have to look at and deal with, including-on top of it-a government that is going to fall off a cliff.
Gary B Smith: Let me break it down into two things, first of all I'm a little bearish. I kinda agree with Jim's viewpoints, for all the things he iterated, I'll add in that the government, regardless of what David said, has done a horrible job of holding this economy together. Not that they should be managing the economy but what they have been doing has been the wrong thing. So, I'm bearish on the economy. That's a different question whether I'm bullish or bearish on the stock market. I always think that the market gets ahead of itself. It immediately goes from feeling' pretty good to Armageddon-Everything will end tomorrow. Italy, Greece, Spain and ten other countries, they are all leaving, they are all going to form a separate union. That's why I think it is time to buy rather than sell, although I am skeptical about the economy. I think its already being priced into it.
Jonas Max Ferris: I think we are going to flat line, and that's better than going down, and I think that there is a reason why. There are drags in the economy-the rest of the world is slowing down. It is a drag, we have to export to those countries as well, and that's hurting, and state and local governments are shrinking as well. That's going to make unemployment rates high for a long time. It's also going to hurt GDP for a long time. However, unlike Europe and unlike that-it's not a permanent problem by the way on a local level-we have got this underlying economy that has got strength, we have got a tech sector that is very robust and growing and is offsetting the losses in construction. Other economies do not have that, all the great companies in the last decade had been created here pretty much, and that will keep our head above water probably out of recession, and it's not going to be off to the races with everyone else going to the toilet but I think we will be able to flat line and I think our stock market will continue to outperform foreign markets even on the way down it will fall less basically.
WISCONSIN RECALL VOTE FIRST MAJOR TEST FOR SPENDING CUTS
Tobin Smith: This is a blueprint for success, and to deny that is as irrational as anything you would see. You at home want this to win. You want to vote for America-you want to vote for a reasonable economic plan that is proven to work. Not an "I think it's going to work, maybe it going to work" but its working. To kick this guy out is a preamble to November and I don't want to go down that path.
David Mercer: I think it's totally a fake a fabricated story or antidote because its got nothing to do with reality in what Wisconsin is going through. They are ranked 50th among all states in terms of the recovery. All other states; Ohio, Michigan, whatever, are seeing an uptake and Wisconsin is at the bottom and unless you're looking to be a part of the race to the bottom I don't see Wisconsin as being a model going forward and I think he is going to suffer for it next Tuesday.
Gary B Smith: Job numbers are up, you said it right Brenda in the beginning, tax revenue is up, personal income is up. David is right, Wisconsin ranks 50th but Toby pointed out that they ranked 50th before he started. So what you have to do, the same argument that David and the left would make for Obama is what is happening with the trend, and the trend is turning around in all the metrics that matter. So what the real question here is, what we are really deciding here is free market versus manage economy. Governor Walker is basically opposed by unions. What the unions want is a managed economy-it works better for them. What Governor Walker wants is more of a free market. What's happened with this freer market? As we pointed out 30 seconds ago all the metrics are staring to point in the free markets favor.
Jonas Max Ferris: First of all every state in the union pretty much has a better employment picture and tax revenue and personal income picture than it did two years ago. It's not just Ohio. These movements away from union workers and blue collar workers. Its going on in New York too by democrats like Cuomo don't want to overdo it in the short run. What they are thinking about is cutting benefits for over-benefited public workers for the government which need to be cut but not in a sluggish economy like right now.
Jim: LaCamp: There is never a good time. The politicians are never going to say now is a good time to cut benefits. "Hey, the economy is good, let's cut benefits." When was the last time you heard that? I think Gary's point is right, this is about free markets versus managed economy. This is about harsh realities in a tough economy versus the smoke and mirrors of populist politics. I don't even know why they are having a recall in the first place. The metrics are getting better.
NEW REPORT SHOWS SMALL BUSINESSES SHUNNING HEALTH CARE TAX CREDITS
Gary B. Smith: Once again, the government doesn't understand business. They just don't understand the free market. Why do small businesses not want this, basically free, money? Because, in many cases, it costs more for them to hire an accountant to figure it out than the tax credit they get. Not only that, but the rules to get it are so onerous. You have to have ten or fewer employees and they have to average making less than $25,000. I'm not sure your local coffee shop would even qualify. I'm actually surprised that the numbers that have taken the credit is as high as it is.
Tobin Smith: Most people I know that have run a small business have disregarded this because it's so complex it makes no sense. Also, to get this tax credit you are going to spend money that you can get a much better return elsewhere. I don't care if it was not advertised or communicated well. It's an insane law and it shows exactly how insane the whole 2,800 pages is and people are going to disregard the entire 2,800 pages.
Jonas Max Ferris: Everyone is acting like they're mad that it's not more lucrative and more costly to taxpayers. Your local coffee bar is probably a Starbucks or Dunkin Donuts. They don't qualify for the tax credit, nor should they because it would cost ten times as much to taxpayers. Very few businesses qualify for this, which means it will cost taxpayers less than they think.
Jim LaCamp: There are so many clauses in this that indicate that the crafters of this thing don't understand small businesses. Most of my clients are small businesses. They are family-oriented. They are run by families. You're disqualifying all of them. It's written by someone up in Washington that just doesn't understand the nuances of owning a small business. You have to hire an accountant or lawyer, which you pretty much already have to do anyway because of the complicated tax code to do that anyway.
David Mercer: I think these numbers indicate that promoting it and getting the word out, which is why I'm glad we're covering this subject. I'd prefer a more encouraging or positive take away, which is to say to small businesses that are listening now, go get your tax credit. Be competitive because others are getting it. Why leave that cost savings on the table, especially when your costs per insured employee is 18 percent more than what a larger firm gets. Get in the game. Don't take our word for it. Go investigate and get that tax credit.
PREDICTIONS
Gary B. Smith: Exxon (XOM) up 20 percent by December
Tobin Smith: Allstate (ALL) up 20 percent by January
Jonas Max Ferris: Fidelity Select Air Transportation (FSAIX) up 25 percent in one year
Jim LaCamp: SPDR Gold Shares (GLD) up 15 percent in one year
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