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Bulls & Bears: 8/11/12

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    President Obama touts auto industry bailouts

  • Duration 19:46
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Touting bailouts President Obama getting slammed by critics for saying best.

The American auto in -- trip has come roaring back and here.

The -- of the same thing with manufacturing jobs.

Not just in the auto industry but in every industry.

Government help.

All manufacturing industries will that jumpstart the economy or jolted even more hi everyone I'm Brenda -- this is Bulls and Bears let's yeah.

-- apples and bears this week care -- Smith Tobin Smith Jonas Max Ferris.

Along with the macro portfolio advisors -- champ and former senior official in the Obama administration.

Evans people welcome everybody else -- -- meet the president right.

Well I'm I'm I'm gonna go the opposite had hot this line as you might imagine you know just just a few thoughts -- -- On -- GM Malone you know he counts that as its success GM.

Is a job creator they created 151000 jobs in -- -- since the bail out they've cut 31000.

Jobs here.

He elects to say that GM's number one -- GE GM is number one because there's a little thing called the tsunami.

In hope that affected Toyota Toyota will soon be back.

To number one shortly you know the whole idea of targeting you targeting industries to save.

Is silly you know we didn't go out and save the railroads -- go out and save the steel industry we didn't go out and -- that video rental industry.

This is what happens when you have a free market capitalism industry dies and that's good so that money can go into building the next apple or Google.

Or whatever that the president clearly doesn't understand economics this is a political ploy as usual.

Well -- that's an interesting point because basically he is choosing.

One industry over others it may be time for that industry to -- is that I think that you find brought with us you know I -- actually.

Look at -- a crisis and it's a real depression and there's no capital and a business that would do okay in normal -- fails you can make the case from the government and a lot of foreign governments and keeping those businesses alive through the rough times.

But to extend those sorts of benefits and support when it's not in that kind of an and they can borrow money from the prime markets -- money.

That story is supporting losers and essentially gave money to -- -- -- companies I will say for the record -- you can't take a train anywhere without the government they did sort of -- -- regard.

Commuter rail all over it and tried everything so.

It's not like there isn't a purpose the -- what really surprises I just don't feel that there's a point where now the governor wants directed -- they should talk about.

Maybe going to -- stopping foreign governments from supporting their industry so much it making it more competitive Lleyton Plainfield and.

Giving his support to our company's -- do you think that we should use GM as a model and -- and prop up other industries and other manufacturing industry.

Of course I think what we -- with General Motors makes all the sense in the world.

We saved over a million jobs and if we look at Detroit before and after it made a huge difference in terms of the impact.

The companies a more streamlined better be able to compete on a global basis.

More importantly the ideas that are out there.

Really can help the working hand in hand between governing business has probably the only member on the panel let's run a manufacturing business I know what it takes -- be successful.

And I think that the ideas of having tax credits that will help -- aren't deep tax credits capital investment tax credits and workforce training can help manufacturing.

It doesn't pick winners it helps all manufacturing which is good for the country that helps unemployment -- the deficit helps the middle class helped make him take hot.

I don't know where it gives information where you talk about EU would they don't pick winners.

They pixel Lander and -- that wasn't a winner.

But they've made a lot of bad decisions including Amtrak I can't believe what I'm hearing here -- the -- Jim and Linda really began out of business.

We began -- yeah you know it you'll have -- right now what I'd like to do is it in -- face and then look at the idea of propping.

Up manufacturing industries Toby good or bad idea for the economy as it is right now.

Well it it's a very bad idea and I'll tell you -- -- little -- let's stay with GM for a second using -- -- a -- -- -- We spent we taxpayers -- borrowed 60000.

-- colors a job.

To quote unquote saved jobs where we have hit a very well established -- bankruptcy system and grant and I will say that in in October of 2008 there maybe was not the debtor in possession.

Financing available and I can understand doing -- -- But you know we have fourteen different plants in a country that we're working fabulously well making models making money making -- There was 1% -- plants or GM the ones and and Michigan the ones that are union law.

They could've gone to -- a bankruptcy case is structured bankruptcy and brought new jobs to other parts of the country as well as survived and the idea that we would spend 60000.

Dollars.

Up a borrowed money to quote unquote -- industries is ludicrous and applies and you know we're never gonna -- where prosperity.

And let's not forget definitely industries aren't asking for bailout why did talk about bailing out all these industries when they're not even asking for bailout and where's the money gonna come from he can't take money.

From the successful partner the economy and people are propping up.

Failing parts of the economy like the -- government does over and over again it GM is such a great deal for taxpayers.

That they claim where's my refund check because we haven't received any money back in the government -- 35 billion dollars.

Well now I'm now you can't manufacture you disagreed are asking our.

Quote unquote bailouts they wouldn't use that word but they are asking for help and -- you think that that's that's a good idea.

Yeah I think -- -- -- manufacturing industries losers is really a slap in the face of all American companies and workers and the owners of those companies.

He's a hard working people who do a great job building and selling products are around interest rates and -- -- -- North -- how to block it effectively across the world.

We want effectively compete with companies around the world who are getting it.

If tax breaks in Europe and China have for our government to help and lend a hand and help our industries is -- how government works hand in hand working with manufacturing industries.

But it's good for America.

But that's not the look that good example for his example is the go -- it put fifty billion dollars in actually more than 90000 dollars adopt -- And to take that model and now replicate that across our economy how could that possibly be lending a hand that's -- that's lending -- -- they aren't a good governor bill.

But -- take that you're taking out of context what he's talking about is using the concept of working hand in hand and developing good strategies to help grow our Manuel like any -- because I did that.

I just well.

I'll let that be business it's called creative destruction and were using Europe as an example our you know watching -- -- headlines at -- Europe.

Then that whole economy at the hole is falling apart.

Well to be fair Germany has a very successful -- actually base and is supporting all of your -- so I mean are you leaking go in that direction I might fear.

Is that you know this country's -- work in agriculture and doesn't anymore.

You don't wanna support industry that we might just not do we might be leaders in technology forever and not in manufacturing I don't know.

And you distort the market if you do it during good times again I'm not saying in a short -- in a crisis.

It would have been really got a -- gym and all those jobs during a recession but today we'll see who makes a better cars long -- I.

Yet -- drawn a line and and Gary Kubiak and I started blogs -- again I guess that well hole on that have a targeting at choosing.

Well exactly -- what we could've done that many times as as an example we used to make the bulk of the televisions.

Right over here you know with companies like RCA and -- tell what happened was the Japanese made them better.

More efficient and cheaper cost somewhat like -- what look at the loss of jobs I agree there was loss of jobs and that.

What's habit to the economy as a whole it was a benefit because people spend.

Less on TV's because they were able to spend less on TVs they are able to take that that savings and spending in other industries around the net effect is actually to stimulate employment -- if we kept.

-- with these dinosaurs yes we have people what but not as many people employed big big change targeted industries that the government and did the corporation an average terms this partnership would target -- -- I'm Patricia effective industries were not.

Porsche to be heard Avant and here's what we're talking about artificially supporting these industries that would be viable here if we had met the support that's a different story that's not throwing money W does not a kid that's nice gentleman OK sorry -- that's that you.

Last word.

Thanks all right coming Nomar Mickey Mouse and around Disney CEO telling -- -- want magic bullet.

To help get Americans back to work right now.

It has -- of them don't -- wondering -- -- waiting for that's the bottom of the hour but up here first.

Think the prices at that check -- -- -- and the gas pump are high now.

Just wait than you were rock report on those pop sports by the drought.

Just might burn up your -- Americans bracing for more price spikes the the agricultural department releasing a disastrous.

Crop report from the midwest routes.

Corn and soybean production and -- adding that double digits.

Now food manufacturing warning higher consumer prices well there on the way.

And with 40% of corn going into ethanol gas pump prices soaring nearly fifteen cents just this week.

-- -- again.

It's bad and it's worse than people think as you said it -- -- a lot of things corn goes in our gasoline now.

It goes an army of course when we feed the cattle and hogs that we -- it goes all throughout the economy and it's not just corn prices soybean price of lot of food prices are out.

Beyond that it doesn't stop there we have education costs that are -- brands that are up medical costs that are up insurance that's up.

So it.

Consumers are getting hit really hard by inflation despite.

What the government -- official statistics say and I think it's gonna crap retail sales to a further degree.

They're already flat lining and guess what retail sales are precursor to job to -- don't have people coming in the front door you're not gonna hire somebody take care of him so -- I think it is gonna have an impact on our economy in the second half.

-- -- -- you're laughing so that tells me what you might think I'm laughing because it went -- with all -- respected Jimmy says I got kids that like the prices are up across the bar -- -- -- up.

And I look at this does things that -- saying.

Inflation and you know yeah -- -- here.

Is now Latin one point 7%.

Some think -- well.

Yeah our stress and everything is and -- -- Not so you don't have -- -- -- -- -- I guess there are any Florida and -- -- well.

We have -- you have to let me finish please I understand the argument up yeah.

Yeah but -- all those are phony.

But that's the only thing we can I mean the Bureau of Labor Statistics puts together put together typical basket of what people -- they don't just by -- corn based products -- -- Surging -- spike doctors don't.

4%.

Year over year you know they they -- yes -- you talk about what an article up about one and a half percent for crying out loud so you can either save the no we can't believe in -- physics or you can say yeah that's what we don't want -- -- -- one point 7% that's what I look at that's what I think I don't think it wasn't happy when you look at talk about well.

This is like Groundhog Day right we had this conversation before look at -- there's there's a bigger issue which is out when when -- in the economic cycle on the up part of the cycle.

Then the quote unquote inflation the higher prices from food court.

Would be out of Zora and it would be passed along -- the growth of other things higher incomes higher job levels in a lower unemployment.

But we're not at that point the the -- -- so critical is that because we are at this stall speed in the economy.

Now this is adding you know another two -- some sort of the camel's back here.

And and I am afraid that if you look at the every -- -- in the middle class person hasn't raised more money is not earning more money when you got another three or 4%.

That it acts -- it was an economy just goes someplace else it goes so goes the oil at and you don't.

You don't that doesn't -- that way for you doesn't.

Yeah I think it -- -- brings up a much bigger point which is when we have a natural disaster like this he really hearkens back to the people that wanna take -- chainsaw.

-- government spending.

When you have a natural disaster the government provides a social safety net and we look at programs like -- snap program the food stamp program.

We didn't have -- in a -- like there's millions of Americans will go hungry.

If we didn't have the Forest Service there wouldn't be people to fight fires and -- businesses and so they are people that wanna go and use a -- and cut the federal budget means.

Discussing -- going on in congress right now against the agriculture budget.

Now is not the time to use -- -- the -- -- absolutely critical programs that so many Americans rely on in this I don't.

I don't get into a million do you think -- don't know -- that Avant.

I think prices will go up but I think they'll come back down and I think it's a relative minor cases small bump in the road okay.

That the issue here though the Jonas if the drought gets worse could that threatened global prices.

Yet if it did turn out were in this super cycle of heat for whatever reason and we have this for like the next five years yet there's going to be serious problems that's not just prices going up because there's more demand like we -- that's going on and gas and that's -- a bad thing is -- the economy's turning around.

But he's he's a price of more all food going up because -- -- grow food that's a crisis or cause a recession but not the other one.

I wasn't offset these increases was -- the highest wage growth this year in the first six months -- that we've seen since 07 so.

That average income going up exceeds how much more years -- on gas and food even with the drought situation so.

As long as wages are going up of these prices it is really not an issue for the average person.

If wages we're going -- -- -- in this will be much harder on your budget but if you're making more money than you -- six months ago -- -- -- the -- quite honestly tell -- exactly you brought it up -- not apply it to where the overall -- -- crawl around pretty -- divvy it up -- all the overall wage increase has -- actually the -- and not at the of the -- -- -- -- -- just gone -- faster than the average price this year -- last six months I believe it has so that would counter that argument if.

The regular and other you have anger you know what's going on right now which is that the commodities traders and hedge funds managers are driving up speculation even more -- my drive prices up.

All right okay -- that's all other discussion we'll get -- -- at some other time but thank you so much are right the economy going by giving workers.

At least three weeks after paid vacation.

Former labor secretary says that'll work that someone -- says.

He's right.

Yeah he is a stimulus plan workers might like but wouldn't work.

A mandate for all Americans to get at least three weeks of paid vacation right now must get to.

President Clinton's former labor secretary Robert -- says this will help get our economy back on track and Jonas says.

Some but -- -- us.

This is a toppled because it sounds ridiculous on on the surface and there's like an and I will also lowered the unemployment rate has yet to fill these jobs that you have these people on -- leave so.

In theory would do that that's not the reason to do -- the other reason to do it may be.

Is some countries like Germany would -- very good financial shape compared to us right now have more paid occasionally do.

Other countries like Japan and even less paid vacation and we do and their economies have been include a thirty year depression at this point.

So it might work we -- a quiet for a few years it in a period of -- unemployment.

To see what happens and then have expired today and then I'll analyze the numbers we'll see what goes on.

-- his life is a vacation Gary V.

I've shown -- must be part European yeah I.

Thought that we want to be so much like -- are people like giant -- Thought another great European strategy.

Of it -- -- but.

First -- for many reasons this is silly but the but the first apartments is worst got to come from you know people like outsourcing.

Are you don't just have a plan for weeks break case you -- like the money just -- bring down from the trees.

Complex I.

Industries are gonna by momentarily.

I try to -- -- sufficient that they are now it's just silly none of these mandated.

Hokey things from central and hang around well knowing -- -- -- -- -- manufacturing company did you give them three weeks.

-- to the point here if it's a health and wellness of your employees and healthier employees who have improved productivity and we impact your bottom line.

-- rice is on to the idea which is we should care about our employees care about their health and wellness and ultimately that is good for business the idea of three make their case may be by the right tactic but ultimately healthier employees are good -- our business have -- -- to treat employees like cogs in the wheel this whole.

I didn't -- -- you -- -- take your employees to build a company and that's how companies successful it's the president but it's all -- -- that make a company successful.

I tell me what what the student to your small business.

Ha well I would put me out eighteen people times should probably put about 275.

To 350.

Thousand dollars cash money it would not -- it might does not want.

-- -- I mean I don't know where this cum by -- economics comes from but it typically in a free market if people are not treated very well they'll go to another job guess what right now we're not in deposition so we wouldn't I there's a lot of things we shouldn't -- nice to do whenever there's no I don't want -- -- -- -- like preexisting medical conditions can go ahead.

What lot of weight while we give 52 weeks paid vacation I mean really.

Like -- 600 dollar projects that we gave me 2009 and given 3000 dollar -- if that's the map if that's the way it -- look what this is gonna do is take a small business and there are again people he's gonna hire -- right or it's gonna take a slightly bigger business and he's gonna say you know what.

If -- an applicant John Smith from the party if you're I think -- planet is about I don't don't give them three.

It's -- -- they're -- about health and wellness is not.

About how did not help us think about people Carolina boy their own healthy and well in this Philadelphia flipped -- -- -- -- -- of happiness a.

Okay go ahead yet ten seconds then.

I think the employees that health and -- this isn't being sarcastic about employees at -- if you care about your employees you'll help and work with them a wellness programs.

That were ultimately be good -- business.

Thanks -- and thank you Evan for joining us we appreciate it.

And we talked about the devastating drought.

Now get the name that can help save the farmers and help you pay for the price spikes at the same time.

Britain and give -- -- -- -- I had fertilizers gonna help farmers -- plant.

And help consumers by the end the -- I think up point 5%.

Well okay Gary be your prediction.

Amazon to your back to school shopping there -- up 50% over the next few years and -- what -- day.

Not it was a drop from the take -- time to speculate among the alternative energy bubble hasn't.

30% a year -- -- tell me this and housing and his bottom -- comes up 125% by the end.

-- -- I think and have been the London.

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