tv The Kudlow Report CNBC July 18, 2013 7:00pm-8:01pm EDT
not that good tonight. or whether it be just the kind of -- just incredible tech tonic shift that has made it to the margins are farther apart. that's what went on tonight and yesterday. there's a bull market somewhere. i'm jim cramer and i will see you tomorrow! . welcome to the "kudlow repor report". we begin tonight with breaking news. detroit files for bankruptcy. it's the biggest municipal bankruptcy in u.s. history. cnbc's scott cohn joins us with the details. >> america's fourth largest city once upon a time. today the population is less than half. today the motor city is the symbol of urban blight. the case has implications
forever local government, for orgd labor, for the municipal bond market. but governor snyder says in the end there was no other viable option. >> many people may say this is the lowest point this detroit's history. but if we weren't to do this, the way i view it detroit would continue going downhill oig. and so isn't is it time to say let's stop. >> governor rick scott had appointed kevin orr a financial manager who you'll hear from in a moment to detroit with the fiscal mess and orr had tried for weeks to head off today's filing trying to negotiate agreements with the city's creditors including bond holders and municipal pensioner, but to no avail. today's filing begin as three month process where a federal judge decides if the city is eligible for chapter 9 bankruptcy. if the judge agrees, the process could take years and could set precedence across the country. today dave bing called the filing difficult but a process that could in the end make
citizens better off. the white house says it is closely monitoring the situation. >> many thanks to scott cohn. we appreciate it. let's get raight to our special guest, detroit's emergency manager kevin orr. you and i spoke a few months ago back last winter. i think we have a clip from it. hang on. if all the union contracts, let's start there. >> not necessarily. your own city new york as well as philadelphia came through a restructuring. they at any time have to file for bankruptcy. pittsburgh and baltimore had financial cries see and -- >> but mr. orr, i was -- >> i don't know if you have to break them. you have to look at them and do an analysis of what needs to be adjusted. >> all right. so that was our conversation then. and all i'm saying is that i know you went through what you had to go through and i appreciate it very, very much. i also appreciate your coming on
the show tonight. i know you're very, very busy. >> thank you. >> let me just ask you, sir, why did you file today? >> well, i've been saying even back then that i came with a sincere olive branch, we wanted to have negotiations with our stakeholders, find a way to do it consensually. but if we can't, we'll use every tool available to us to get at the crushing debt so we can start restoring services to the citizens and create a path to sustain ability. unfortunately, it got to a point where we have to make difficult decisions given the time frames that i have to work with and giving the work, a lot of work, that needs to be done. and that's when we decided that it was time to move forward. >> the detroit free press is reporting that you made a deal today with two creditor, bank of america and ubs for debtor in possession financing to keep the city open. i want to ask you if that is the case, a, and, b, if you can tell
us about that, and, c, was that what drove you today to actually make the formal bankruptcy filing. >> well, i'll stay away from whether or not there was a deal regarding debt tore in possession financing. but we have been negotiating to free up cash flow and release some liens these are security interests in some cases so that we have the kind of cash flow we need to start immediately restoring services. we're negotiating with other creditors and we'll negotiate with other stakeholders to get to a point if we can where we can reach resolution with anybody who is willing to come in. so the reality is there is progress being made, but we had to draw the line somewhere. >> i understand that. i just want to go through again. they're reporting $344 million swap with $255 million for debtor in possession financing and it would give detroit access to $11 million a month in casino revenues just to keep the basic services open i'm assuming fire, police, things of that sort. is that the case?
>> sure. it's the case that we have an agreement in principal to get to our casino revenue and relieve some of our secure debt. that is the case. >> thank you for that. now let's go through it. you have 30 to 90 days in this bankruptcy court. do you know which judge it's going to be? who will make the determination? >> we don't. unlike a lot of other cases where there is a blind draw in the case of chapter 9 #, the chief judge for the circuit makes the assignment to the judge and we don't know who our judge will be yet. so we're going to find that out hopefully in the next day or so. and then the 30 to 90 days you're talking about is generally the eligibility analysis is that we'll go through and we believe very strongly that all the negotiations were in good faith and the insole vensz city of the city have meat that standard. so we're prepared to go forward. >> kevin, let me ask a couple other things. you're very experienced and highly regarded in bankruptcy or financial -- >> you're very kind. >> and you have great reputation. there is a rumor, though, that
at the last minute, it might have been last week, i can't confirm that, but that you did speak to the white house, did you talk to presidential adviser valerie jarrett about some kind of bailout and you were turned down. can you confirm or deny that rumor? >> no, i can't confirm or deny that rumor. >> so are you saying you did not talk to ms. jarrett? >> i can't confirm or deny that rumor. all i'm saying is we reached out to a number of different people. but we have to solve this problem on our own. this is a problem it that has been more than 60 years in the making. there is $18 billion of debtt t been more than 60 years in the making. there is $18 billion of debt thn more than 60 years in the making. there is $18 billion of debttha more than 60 years in the making. there is $18 billion of debt total. even if we took $200 million a year out of a $1 billion budget which we can't do, it would take 68 years to pay off that debt. even just $11 billion in unsecured debt is almost 52 years. i'd be dead. we can't wait any longer. >> detroit is a formerler great and proud city. there is no two ways about that.
the heartland of america. when you look back on this as you have immersed yourself in these financial discussions, what is it that brought this city down? was it in fact the united auto workers, was it the municipal unions? somebody tell me you got 30 odd some municipal unions. was it the public unions and the private union that brought detroit down? >> no, i still think detroit is a great and proud city. i mean, if you come to detroit, and i invite the you you to do downtown we're 97% leased. we have a number of great institution and patron and matrons that support the city. our foundation community has been strong in the city. so i feel very strongly and have a great deal of affinity for detroit. the thing we have to get away from is the crushing debt. and there are enough books and reports and analysis about what bro brought decision to the decision
and some of the corruption that it had to deal with. but i'm looking for a path so it can continue to get back to the great city that it still is and thrive. >> let me ask one more and i'll let you go. last evening we had a discussion about unsecured lenders, municipal bond holders, which i favor by the way. they should be unsecured in a situation like this. but the argument was that you tried to make a deal for 10 or 20 cents on the dollar for the bond holders, for the pension holders. did anybody take that deal, did anybody say let's step up to the plate and help detroit, you can give a kudo to anybody? >> well, let me say this. i think in the coming days and weeks we may be able to publish some of the settlements we're working on even as we speak. and i mean even this afternoon. the other thing about that is one of the benefits of bankruptcy is generally there two types of creditors. those that are secured and in our proposal our june 14th
proposal, we said we'll pay our secured debt. we'll do than about but we also said for those that are unsecured, we'll treat you with the same treatment you would get in a bankruptcy forum because that's what the law dictates. and i recognize all the discussion about the inherent cuff naovenant involved, but th reality is that's against the stark reality of the market place and you get the benefit of the bargain that you went into. we hope to have more deals to come in and we some that we hope that even in this process we can get to. >> you can be sure that the federal or whatever bankruptcy judge is not going to be any easier and in all likelihood will be much tougher than you'll be. and that the governor will be. so maybe you can make some of those deals ahead of time. anyway, kevin orr, thank you for coming back on the show. i wish you all the best of luck to make detroit again. >> thank you so much.
let's talk to doc thompson. he's the morning host on the blaze radio network. brian wesbury is chief economist. and steve is the senior fellow it at the man hats tan institute. doc, what did you just hear? when i asked him why today, was it because you got some financing to go on, did you buy into that? >> of course not. he's running an hiding. he's doing what has to be done.. he's doing what has to be done.. he's doing what has to be done.. he's doing what has to be done. detroit will have a possibility of coming out of this by going through the bankruptcy. unlike new york, cleveland, some of the other, they went through it usually for a specific reason. detroit's problems are so plentiful this is just step number one. beyond in, then they have to rebuild the city. where will they get the tax base? all of the positive things he talked about, where are they going to get the money. >> my idea, simple supply side idea from our late former mentor jack kemp. make detroit a tax-free
enterprise zone. make the whole place a tax-free enterprise zone and at least for a couple years and then pay the taxes later. steve, how did detroit get to where it is today? >> well, they have had a lot of economic decline obviously and a lot of bad management before they had actual corruption going back 30 years. but here's the thing, larry. the really startling thing about this is despite the fact that what they have is a very poor economy, what is eventually sinking them are enormous retirement costs. retirement costs constitute about 40% to 50% of their debt. and that is something that other american cities everyone without the poor economy of detroit still have and are confronting. it's a very troubling situation. >> and those keepers of the unfunded liabilities would not make a deal going into that. i mean that's a key reason why they had to file for bankruptcy. they would not make the 10 cents
on the dollar deal. >> because, larry, they have been encouraged by people like -- cases like in stockton, california, where they think they will get a better deal. >> well, at least valerie jarrett didn't give them any help, all ththough i could not confirmation of that phone call. all right, brian wewestbury, wh do you make of this whole story? restructure and get the dam oink thing right. lower the taxes. you're a supply side. why can't detroit become a great city again? >> it can maybe in the long run, but the simple answer is just politics. it got so bogged down in who was getting a piece of the pie and having the ppie divided up by t political power and the thinking
or belief that somehow the endless trough, this niagara falls of revenue would never end and we could just tax it away, it finally ends up breaking down. and they reached that breaking point. by the way, i'm a little worried if detroit becomes an enterprise zone, tax free zone, that's going to suck resources out of chicago. and chicago and illinois are really clee to tclose to the brinking point. >> what a pity. illinois, this governor you've got, quinn, he keeps jacking up tax rates. >> exactly. >> that's the whole point. michigan and detroit ought to suck it out. we want competition among the states. competition among the states. >> i am all for that competition. i'm not saying i'm not. but we're following the same path. it's just that detroit fell off -- i don't even know how to describe it. i don't know if any of us do. that point where will is no return. where all of a sudden the
taxpayers are leaving and the people that believe they're going to benefit are staying. and in the end math wins. mr. orr is clearly a competent articulate really sharp guy. math wins. in the end you cannot pay people money that you do not have. and so in the end that's what happened to detroit. math won. >> we used to call it the worker's paradise because it had everything. it had every conceivable benefit from the uaw and all these municipal government unions. doc, is there a hero here, is there a semihero here, is there a leader here? >> snyder and orr a little bit. he's done pretty well. despite all of the attacks that he's just racist and what not, he's done pretty well. he's doing the right thing. there is a problem with cities all across the country. we understand that it's time to grow when you have a bigger tax base and we want libraries answer all this stuff. with you most people don't
understand that when that tax base shrinks, you have to have a shrink plan. and right now general motors is alive, but detroit is dead. so those jobs have not come back and they're not coming back. it's time for cities to have shrink plans. that's okay. >> steve, they can shrink the liability. they can shrink the pensions. they should shrink the health care benefits. but i have to believe there is value in detroit. i read about these houses in detroit, i know they're not in quote/unquote great neighborhoods, but i don't know what a great neighborhood is in detroit these days that's cheap. the land is cheap, the homes are cheap, the downtown is probably cheap. you have the makings of a free market sxlik recoveconomic reco. >> except despite the situation, it has the highest per capita tax rates in all of michigan. so it's actually not competitive right now believe it or not. in addition to that they don't have good public order there. they're struggling to get good public order.
but businesses and citizens don't want to locate in places where that's an issue. >> well, we'll send rudy giuliani up and fix that whole situation. >> by the way, a great neighborhood in detroit is farmington, the suburbs. >> and larry, one more quick point. there is a great point made. the companies in michigan, in detroit, coming businedoing bus the world, they're still doing okay. and this is the same thing true in greece, italy and spain. the private companies are doing okay. it's the governments that are collapsing. >> they should make detroit into an speaker prize zone. thanks, gentlemen. another record high close for the dow. but watch out, folks. after the bell, we had earnings news that could challenge the entire rally. and i myself, i think this market is getting pretty pricey. later on the show, president obama makes a big push for obamacare. and the white house reunites
some of its re-election team for an all-out campaign for the new health care law. but how can you sell a lemon that nobody really wants to buy. don't forget, folk, free market capitalism is the best path to prosperity. it ain't obamacare and it ain't detroit. we're searching for a free market model tonight. e-mail me or tweet me if you can. i need help. i'm larry kudlow. we'll be right back. vo: traveling you definitely end up meeting a lot more people but a friend under water is something completely different. i met a turtle friend today so, you don't get that very often. it seemed like it was more than happy to have us in his home. so beautiful. avo: more travel. more options. more personal.
welcome back to the "kudlow report". historic day on wall street. dow and s&p 500 closing at new all-time his. but earnings reports from a couple of tech giants could derail or maybe delay the rally. let'srtha coombs for all the detail. >> shares of microsoft sinking 5% after a big miss. nearly a dime below expectations with revenues of $19.9 billion. make microsoft has stumbled big related to price cuts on the device. sales from every division all
coming up short of estimates. the company blaming the weak pc environment with new cfo saying on the conference call they're seeing the same thing in the current quarter. google tumbling, as well, reporting second quarter earnings of more than a dollar below estimates and a big miss on the top line, as well. revenues rose 18%, but cost of acquiring subscribers rose 16% and while pay clicks were up 23% from a year ago, the amount of charge per click fell 6% year over year. but take a look at chipotle. shares jumping 4% after hours. earnings on both the top and bottom line with same store sales up 5.5% ahead of estimates, as well. and for burrito lover, chipotle says it has no plans to raise prices for now. >> you're the best of the best. thanks very much. let's welcome our ace investment panel. market analyst warren meyers,
steve weiss and dave goldman. steve, what's microsoft and google going to do to the market tomorrow? >> we've seen it with google before so i don't know that it will do a lot before obviously it will take nasdaq down. it's buyer beware. however when you throw in community health which was down big, as well, people may rethink the resetting of expectations low enough to be. so i think we're doom for -- >> i know the banks reported pretty darn good. i get that. and that's great and they're making loans. abo but my score sheet, intel missed. >> and microsoft was not a stock that should have been trading like momentum stock. it's where people went to get exposure to the market and once
it started moving about 31, 32, everybody says this is a changed company. it's still the same company that it was. intel is still the same company that it was. google missed big. they have done it before. and it recovers. i'm still positive on the market, though. it doesn't deter me. >> long run i'm positive on the market. long run i'm almost always positive on the market. short run, warren, i think you're just way too optimistic. i was reading your notes. not just because of these earnings misses, but you're staring down the barrel of a federal reserve gun that is going to go off. just deal with it. i don't care what -- bernanke was just massaging everybody the last couple days. you're on the verge of a major change in monitor policy that is going to raise interest rates. it will reduce the federal reserve cash. and eventually in the short term rates will go up, too. long term rates going up, short term rates going up.
less cash in the market and the earnings are not spectacular. do you you want to hide, take some defensive attitude? >> i'll put to you this way. i was on a couple weeks ago when it looked like the world was coming to an end and what happened? nothing. i said i thought the market was misinterpreting the bernanke comments and i think i was right on that. i think there has been no change in policy as far as what -- >> i think they're dying to change policy and i think bernanke said that and people weren't listening to him. he said we don't want to have these risks in the bond market. we've done too much. and can i just make this point, we'll come back in a minute, i a know you're a super bear, david. you saw the unemployment claims come down by 20,000. much more than people expected. if you run 200,000 new jobs nonfarm payrolls more or less per month, i'm telling you, the fed will tighten on that news and that's going to be like a hand fitting right into a cloak.
>> do you think they will tighten or taper? >> tape are equals tighten. >> i disagree. >> bernanke has conned you.are . >> i disagree. >> bernanke has conned you.re e. >> i disagree. >> bernanke has conned you. equ. >> i disagree. >> bernanke has conned you. >> i think ultimately it makes no difference. >> if you're the head waiter in the best restaurant in new york city and i'm slipping you $50 every time i come in and all of a sudden i slip you only $10, you gist lost. that's called a tightening. and that's basically what he's going to do. that's just the beginning. and that little tightening will drive up long term rates again. not the end of the world. i'm just saying this market i think is not putting that serious thing into context. we'll come back. we have the detroit thing so we have to cut it short. everybody stay right where you are. much more to talk about. you won't believe how bearish david is tonight. i'm saying keep your eyes open
let's continue with our investment panel. warren meyers, steve weiss, dave goldman. dave, now you're on. >> the rally has been led by government depended sectors. you have the financials that learned how to game quantitative easing and health square that learned how to game obamacare. tech is getting murdered because
it's a lousy economy. >> that's just wrong. when interest rates are zero or close to it, you're not gaining quantitative easing. it's hurting you. >> the way the sector -- you're completely wrong about that because the single biggest increase in earnings first half of the year was driven by the mortgage boom which was driven by the federal reserve. the interest margins are a different issue. so this is a mortgage driven market. but you have -- excuse me. let me finish. you have a lousy economy. my view is 1% gdp growth. >> that's all, 1%. >> that's where consumption is growing. 2% nominal growth. lower revenues for the s&p 500 for the second quarter in a row. i predict. and huge gains for health care and financials. >> why is there such a disconnect, though, serious question, between the job creation which may not be to my liking but it's something, and the gdp? the gdp will come out next week
second quarter gdp, it will be a lousy number. half a percent. the job creation pattern has picked up. >> job creation is shifting out of full-time employment to part-time employment to avoid the perspective costs of obamacare. it's a bad development, into the good development. the broader measures of unemployment are going up. you have a lot of part-time work in low paid sectors. >> would you sell the stock market right you now? >> i would be a seller, but i would be a buyer of certain kinds of things. reads are interesting because long term yields won't go up. i still like energy and the better managed mlps. i think there are sectors to be in, but the economically exposed stuff i would be a several of and the financials, that is unsustainable. >> do you play golf? >> never played. >> i play golf. you play golf.
and on the scorecard, there is only room for a number. if i bet somebody, i get paid based upon that number. there is no room on the scorecard for how i got there. so i can par a hole just by being purely lucky. so you can say we went up because of the fed this or that, we can take -- >> the question, is it going to be sustainable, no. the banks are heavily exposed to regulatory risk. they will have to put up a lot more capital. they gamed a qe policy and they can't game it any longer. >> i have confidence earnings will grow, corporate models are spring loaded. if you get the slightest uptick in the market, you'll see earnings go through the roof. they have never been more lean, never had more cash to spend. the u.s. is the default market in the world bar none. it will stay that way for a while. >> so real quick, warren, at this point right now with these all-time highs, are you still a
buyer? >> i'm still a buyer. i agree with steve. >> and what's your favorite sector? >> i think you have to ride the financial group right now. they're so strong and they haven't even begun. >> that you think rk thank you,. appreciate it. now, president obama goes in to full campaign swing for obamacare. there is a huge labor revolt going on. there is also a youth revolt going on. there is no infrastructure. and a price tag that will be ast astronomic astronomical. obamacare up next. a-a-a. f-f-f-f-f-f-f. lac-lac-lac. he's an actor who's known for his voice. but his accident took that away. thankfully, he's got aflac. they're gonna give him cash to help pay his bills so he can just focus on getting better.
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you'll see competition in ways that we haven't even before. insurance companies will compete for your business. and in states that are working hard to make sure that this law delivers for their people, we're seeing that consumers are getting a hint of how much money they're potentially going to save because of this law. in states like california, oregon, washington, new competition, new choices, market forces are pushing costs down. >> that is the top line message of president obama's new
obamacare pr push today. but what i really think the president was trying to do is to use a small insurance company rebate to sucker people into his program. you know what, he about to got to tell them that there's a 2% to 3% sales tax on those very same insurance policies that will cost consumers $8 billion next year. so i think there's a little problem there. let's talk about this. joining us now, dr. william grace, founder of grace encoal gi and assistant professor of clinical medicine at new york medical college. and republican pollster john mclaughlin. this is a campaign style effort. we'll see much more of it. he was talking about a few hundred bucks per family. is this going to work for him? >> no. he's not running against mitt romney. this time he's running against people who know what he's telling them is not true. in may 49% disapprove of
obamaca obamacare. you have people saying it will make it worse rather than better. and it will cost more where almost half the voters are telling him they will end up paying more. so they already know it's making them pay more. it's making medical services worse. and it's just not going to work. so they're running this obama style campaign to tell people something that they know is not true. >> and bill grace, i want to raise another point. it is political, but it's also quite substantive. and that is the stipulation that you can work 30 hours a week, but if you work more than 30 hours a week, you have to go into the obamacare plan. you have to go into the mandate. now, big labor like james hoffa, big shots in the labor department, are furious at this. first of all, they won't be able to keep their cadillac insurance plans that were funded as subsidies from taft harley. that's gone. that means the rank and file have to go out into the obama care plan or one of these
exchanges. second of all, they're working less because nobody wants to work them 30 hours a week. and third of all, the unions are saying they can't get me health care, what do i need the union for. so they have a revolt of the union base. >> numbers don't add up. what they're trying to do is take expensive doctors and except sif hospit expensive hospitals and medicines and layer on top of that the big about your raock case of the federal government and then give that to everybody. >> do you believe premie yums will come down? >> no, health care inflation will continue to go up because it has the same intrinsic falsehood. today's well proven health care inflation forms. for instance, in three words, this is bad for america and bad for the american economy. one, skin. two, tort.
three, facility. skin in the game. the consumer does not have skin in the game. and people will continue to make very bad health care choices. and then try to correct that with other people's money to bail them out. two, there is no tort reform. the trial lawyers elected obama. >> frivolous lawsuits. >> and with the lower reimbursement we have today for physicians and the high risks this they will continue to take all the ancillary cases. >> a great point. i know the republican party on a daily basis votes to appeal obamacare and they did again to repeal the individual mandate. i'm glad they want to repeal the individual mandate. but why doesn't the gop go back to some of the basics? an individual family ought to be able to buy health care on a pretax basis like a business. or give them the tax credit, let them shop for the best plan, let them go interstate if they want
to, let them have more medical savings accounts. why doesn't the gop pose those constructive alternatives to what is amounting to a state run system? >> they do and they have and there's lots of bills where they voted for those kinsd of things but the interesting part right now is president obama and him going to this campaign today, it's all about trying to win the 2014 elections. and they really nailed it when they said we came to this mandate on business because we have to raise money for them. let's put it of on untit off une election. and as dr. grace said, premiums are going pup p i saw my doctor today and he told me his premiums went to $56,000 a year. we havehave built in network of people telling us you go to see your doctor, he's telling you this is horrible and people know on a daily basis the premiums are going up, they aren't getting the hours at work. >> dr. grace, on the premiums
going occupy, t uup going up, the president makes the case that you have four different options for the insurance exchanges and that creates competition to hold down costs. what is your response to what the president says? >> i don't think so because as you know they probably have tried to discount the health savings account which i think is the most effective way of getting patients to reduce the health care inflation that we have. when the patients have skin in the game, i was able to reduce for my eight proceed es temploy of my annual health care budget for them by 80% by going to a high deductible health safvings account. and they love that 2500 that they save every year and roll it over. and there will be a lot of thin, fit, healthy individuals who are also going to be rich and some fat unfit people who will be poor and unhealthy. >> is there a division here between those doctors that practice medicine especially at hospitals and those doctors that have their own private practice? >> there is a big problem there.
>> the last week i've been to both i might add. >> i understand that. >> is there like a division? >> this is the worst thing is that the third item was facility. there is a pressure of overreimbursing a hospital based facility. and they have huge marketing budgets. you know the ads hear on tv. and they are transferring the care that used to be highly efficient and cheap into a very high expensive 300%, 400% more. >> i'd like to talk more but we're flat out of time. we appreciate it. now folk, hedge fund john paulson's bullish comments about housing yesterday are still a very hot topic 24 hours after he made them at the cnbc delivering alpha event. is mr. paulson right? should you not only buy one home but think about buying a second one? we'll begin our great real estate debate up next. and this will be your premium right here.
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has oats that can help lower cholesterol? and it tastes good? sure does! wow. it's the honey, it makes it taste so... well, would you look at the time... what's the rush? be happy. be healthy. sgli i think the best thing for an individual investor if they don't own a home is to buy a home. and if they own a home and it has extra cash, not a bad idea to think about owning a second home, as well.
>> all right. that was hedge fund manager john paulson yesterday speaking exclusively at cnbc's delivering alpha conference. his bullish housing call has gone viral. so is housing actually the best investment out there? let's talk. here now robert mctier and mark fleming. mark, is housing the best investment? >> i don't know if it's the best, but certainly booming. things are good. prices a pric prices are rising. still highly affordable. so it's a good investment. >> let's say long term, 50 years for example, which asset class performs better? is it stocks or is it homes? >> stocks. >> how much? >> robert shiller famously has shown that housing in the long run really doesn't beat inflation whereas stocks have,
so you would do better owning stocks. but it also provides shelter which is very important. >> robert, i grant you shelter, but if stocks perform better than homes, this idea that you come in and buy one house and then buy a second house, what do you think of it? i don't really understand paulson's motives here. >> well, it's a good time to buy houses. prices are down. and affordability is up. i agree with him on houses. i'm not so sure about the second one, but at first one, at least you get to live in your investment. >> so you're both saying, i don't want to put words in your mouth, stocks outperform a home. i agree with putting a roof over your head, but what paulson did yesterday was a little misleading, was he not? robert, was he not? >> well, i don't know. he also said a lot about gold and inflation.
and i thought he was much more wrong on that than he was on real estate. >> the first time is definitely a clear one. the second one maybe that money would be better long run in the stock market. >> mark, give me your own assessment of the housing market right now. >> it's great. we have been referring to as a buyer and seller's market. sellers are doing well. houses are flying off the shelves. multiple offers. but it's also still a good time to buy. it's highly affordable. and what we do know is with rising rates and rising price, it will only become less affordable. so both a seller's market and buyer's market at the moment. >> so housing rally that i'll call it has a good couple years shelf life. is that fair? >> yeah, we expect house price goet to outcompete inflation for another year or so and then get down to longer run trend in 2015. >> when will the fed begin to tighten up and rate raises? and how about mortgage rates affect housing?
>> it's going to tighten in a second derivative later this year i think. it will ease up on the rate of ease by the end of the year. but money will still be very loose. money will still be very easy. and i think the market understands that better now. >> last one real quick. if we go up another 100 basis points on the mortgage rate, i'm saying round numbers we've gone up 100, we go up a second 100, real quick, bob, how much does that hurt housing? >> i think it might help housing a little bit for rates to continue going up. people that are sitting on the fence will jump off the fence. >> great stuff. gentlemen, thanks very much. we appreciate it. now, funny thing happened on the way to the war on coal. coal sector stocks have surged lately. maybe investors realize we need coal and the power it generates. especially during a heat wave like this. ceo of the nation's largest coal producer is about to join us to talk about it. please stick around. meet the nr of the quicken loans family:
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skcoal stocked surges on increased power demand. in fact coal generated 0% of u.s. domestic power in just the first four months of this year. u.s. domestic power in just the first four months of this year. so why is the white house waging a war on this vital american resource in who better to ask than gregory boyce.
is there a war on coal? >> i'm not crazy about the military terms, but i would really characterize it as a battle with coal but a war on the american rate payer and a war on the 3.5 billion people across the globe who have no access to electricity or adequate access to electricity. they're the ones that will really suffer if we try and eliminate coal from the mix. i think this administration has got their policies completely wrong. we need to be focusing on economic development, economic activity, driving gdp growth and not focusing on how we take coal out of the election trricity mi. >> the argument being made from presidential speech and new epa director is that they changed the standards so now the possibility exists that not only the future coal industry is
going to be extinct, but the current coal industry will be extinct because those regulations can't be met. is that the case? >> what they're talking about working on is what's called the new source performance standards which would affect new coal fire generation. to the extent that the existing fleet is modified or updated, then they would have to meet those standards. but if they remain as they are, then they would not have to meet those standards. so it's a bit of a misnomer to say that it's going to eliminate the existing fleet. the important thing, larry, is we've had an experiment in europe for ten years trying to reduce coal and increase renewables. and we see exactly what that experiment has done. europe is in a depression. they have no hopes of pulling out of it. they have spent 600 billion
euros euro euros on subsidizing energy. they're not competitive. spain has 27% unemployment. for evergreen job they created in spain, 2.2 jobs went out on the street. the gillard government was thrown out because they tried to put in place take carbon tax and renewable energy targets that were unsustainable. they now have the highest electricity rates in the entire developed world. she's gone. >> same thing will happen to us. both the production and the demand for coal in china as i understand it is huge. now, let me just get this right. if china is producing coal and india is producing coal, and other people are producing coal, they're throwing the emissions out there, why do we have to take the wrap here in the united states? >> we don't have to. now, larry, i'm not saying that we shouldn't continue to use better technology, improve the
efficiency of coal fired generating facilities. we believe in all of the above when it comes to energy supply for this country and for the globe. but you're exactly right. we're looking at a billion people that are going to be urbanized over the next 30 years. they are all going to need steel, they will all need electricity. and coal is going to have to be the back bone. it's why coal today has been the fastest growing fuel in the world. we're at the highest level of supply of energy in the last 50 years. and over the next five years, it's projected that coal will be the number one fuel source in the world. >> greg boyce, how does peabody survive this? >> well, we've reshaped our portfolio to have both a competitive u.s. platform which competes with natural gas and is operating fully at today's levels. and we've also moved our platform to australia where we have manageable coal and thermal
coal supplying china, india, korea, taiwan, japan, even europe. germany and spain both have vastly increased their demand for coal because their experiment didn't work. >> i have to leave it there. thank you very much, mr. greg boyce. we appreciate your time, sir. that's it for this evening's show. thanks for watching as always. got a lot more free market economic work to do. i'm larry kudlow. we'll see you tomorrow night. wi drive a ford fusion. who is healthier, you or your car? i would say my car. probably the car. cause as you get older you start breaking down. i love my car. i want to take care of it. i have a bad wheel - i must say. my car is running quite well. keep your car healthy with the works. $29.95 or less after $10 mail-in rebate
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>> narrator: in this episode of "american greed: the fugitives"... they were the heady, get-rich-quick days of the dot-com boom. >> promising internet riches was the way to get into somebody's wallet. >> narrator: among the companies that raises millions -- an online-video start-up with a famous pitchman who exudes trust. >> i'm sure you've heard of it. it's called the "internet." >> narrator: but the website is a sham. its only purpose is bilking investors of millions, and when the feds come knocking, one of the men who's allegedly running the scheme heads to sea. but first, street criminals turn to white-collar crime. >> this is the first time that i