Higher Energy Prices OK Because Profits Go to U. S. Companies
Reported by Marie Therese - October 9, 2005
Yesterday FOX News' Cashin' In show started off with FOX Business Analyst Dagen McDowell announcing the following: "As Americans we might be addicted to spending ... but we're not gonna OD on debt. Not to sound insensitive, but ... if you look at the top half of Americans above the median income, those people have fixed rate mortgages, they have paid off their credit card debt and those are the people who account for the vast majority of consumer spending in this country, so it's not gonna kill the economy. It's gonna hurt a little bit. Not kill it."
McDowell didn't get a lot of support for her elitist economic views from host Terry Keenan and most of the panelists on this week's show. It would seem that FOX News knows that their viewing audience - especially in the midwest - falls into the category of consumer that Dagen McDowell dismissed as unessential to the functioning of the economy.
Contrary to the tone of the financial shows a year ago, the outlook yesterday was decidedly gloomy. There were references to recession, correction and - heavens above! - the crash of 1929. Judging by what was said, if I had any money in the stock market (which I don't), I'd take it out, convert it to gold and stash it under my mattress.
Here are some of the more interesting comments:
Mike Norman (Economic Contrarian Update): Credit card spending "as a percentage of disposable income has stayed relatively modest. The biggest chunk for every household is the mortgage payment and that has gone up, as a percent, to an all-time high."
Adam Lashinsky (Fortune Magazine): "The issue isn't so much gas [credit] cards as it is cards. ... it's not the average consumer, it's the consumer on the margin, and those consumers are gonna be a problem, the less affluent people. ... [T]he one sector we're overlooking here are the banks. They're the ones who lend recklessly by, you know, basically sending out a card to Mickey Mouse and to everybody's pet dog."
Jonas Max Ferris (Maxfunds.com): "The Great Depression started partially because of massive lay-away borrowing from consumers, but as far as them spending more money on gasoline, the problem is that they're not spending less on other things. It's OK if gas prices go up and people cut back on other spending. But, look at Wal-Mart, look at Target this week. People are still spending there, so they're just letting this go into leverage, all this extra cost. They're not cutting back in other spending. THAT is dangerous!"
Wayne Rogers (Wayne Rogers & CO.): "Well I don't think everything is OK. You know, for years in this country we have promoted, you know, wild use of credit. ... And the problem is there is a whole culture here of people who have lived on credit, who have never had to actually pay for anything! By the way, nobody ever pays off their house mortgage."
Jonathan Koenig (capitalistpig.com): "Well, gold looks good ... I know no one wants to talk about it, but to me that was really the shining asset this week. You know, Katrina opened my eyes. Most people are stretched way too thin. If you can't go two weeks without cashing a paycheck - you know, I think there's a lot of those stories out there, unfortunately. That makes me real nervous."
Joanthan Max Ferris made the most outrageous statement of the show when he noted that record high home heating bills are just fine, "because a lot of those profits go to U. S. companies. As long as you don't buy the flat screen TV because you're paying more on the home heating oil and that money would have gone to South Korea, that's OK. But it's their not cutting back. That's the problem in the equation. They're getting overleveraged."
Dagen McDowell (FOX News): "And all that nervousness ... about the heating bills comin' up this winter, about gas prices, it's already factored into the stock market, so we're ready for a rally here."
COMMENT
Don't you just love the way all of these Wall Street types speak of the great unwashed "THEY" whose financial behavior scares them? Talk about "elitism"!
Now that George Bush's profligate spending has set the stage so that inflation is poised to go through the roof and the economy's about to come to a screeching halt, FOX News analysts decide it's time for people to STOP spending.
Flip-flop. Flip-flop. Flip-flop.
