than glad to buy the lady a glove. don't go to a baseball game if you don't expect to see baseballs, stay home. >> go to the after the show show "fox & friends," see you tomorrow. >> i'll be here. >> brenda: the downgrade shock that could rock the economy. credit rating agency moody slapping down 15 global banks including five major u.s. ones and it hits as we find out home ownership is falling, manufacturing is slowing and job creators are the not doing much hiring. so, do these down grades upgrade the chance of another recession? hi, everyone, i'm lori rothman in for brenda buttner and this is bulls and bears. the bulls and bears, gary b smith, tobin smith, jonas max ferris, along with kyle and this downgrade has you concerned? >> yes concerned. i think the markets already priced in this downgrade, in

my opinion, hence the reason the market was up a bit today. i've been saying since january that the market is going to have trouble and continued volatility going into the november election and i stick with that point. i believe that the banks have severe problems lending to small businesses is only going to continue to be a problem and they're going to need to look to other ways, the atm feeds increased or quarterly statements in order to keep solvent. >> i don't know, s & p downgraded the banks six months ago, this is more or less a downgrade on the entire financial industry, given what's going on in europe and the debt crisis there. >> i agree. to me, i agree with most of kyle's point, but this is kind of after the fact. basically moody's came out and said things are going to have trouble makes as much money as in the past. big deal, who the heck doesn't know that. the captain obvious to the rescue, but, kyle made the other good point that i do think that the economy's in trouble, basically, we spent

almost a trillion dollars in stimulus, we still have high unemployment. and it's not going anywhere, we have tax increases coming, if the bush tax credits expire. we've seen really, nothing good out of this economy and until people start to get back working, that's going to start everything. i don't see that levelling off or picking up anytime soon. that's what has me worried. >> just, the fed with the knockout punch with the assessment of growth and employment. toby, could this downgrade be the straw that breaks the camel's back? >> it could be, but maybe for different reasons. remember, the banks already aren't lending as much cash as they normally have and if you look at the actual numbers, small business lending actually is up quarter over quarter and we started to get to the points and with the down grades, they're he not getting the criteria, they've got to take the cash out of the piggy bank and for the the stuff they've been doing, what i think you're going to see happen thoi is see the regulators move the goal post

in so that they get extra time to absorb this, this is political. and right now, this is one thing that could take us down. >> aren't the banks caught between a rock and a hard place, they're under increased pressure to keep capital, keep the balance sheets steady and firm at the same time under pressure, jonas to keep lending and keep the growth engine moving along. >> it's an ironic dual mandate. if you lend money to losers, but you have to be conservative and hoard up cash. they should have downgraded this five years ago, the banks were the worst performing group almost anywhere, after this downgrade, nobody cares with moody's anymore, eight years later on this downgrade. the danger the the banks, could get reckless and get the describe going, people with little money down and buy real estate, start a business, how you get things going. you play it safe and only loan money triple-a credit.

>> don't need the money. >> and people refinancing with big credits not going to get us out of the slow growth economy. we want more mid 20's. >> gary b, interest rates are at historic lows right now and you're making it tougher for people, for banks to loan money. so much stricter now. >> exactly, the banks cannot operate under any kind of free market environment. they're so shackled right now. i mean, let the banks run free. let them take risk. what the problem is we have the darned too big to fail kind of thing and because we have that, and we also have all of these restrictions that jonas alluded to and lend to people. i couldn't refinance my mortgage and i'm-- >> come on, gary, let's not get ridiculous. >> okay. now, i swear to god, i could not. that's the problem with the system. if the banks were unshackled and allowed to fail, by the way being like they should have been in back in 2008.

we'd have a much stronger economy. >> and the other thing, david mercer, the financial industry is not signaling that the banks are at any risk of imploding. >> and more does it signal that the economy is going to implode as well. and we shouldn't be taking the recent downgrade as an indicator that you throw the baby out with the bath water. look, we've created 4.2 million private sector jobs, lets he not forget na, because we've created 435,000 manufacturing jobs and that's where i put my money and my bets on and we should be encouraging and raising the flag on that. not raising a white flag because the banks got a downgrade. let's pack our bags, the economy is going down the toilet. that's not the case, and now what i feel like? i feel like i'm john kasich governor of ohio or rick scott out of florida, championing all of the positive trends, yet, the romney campaign is

asking me to downplay those successes. and that's what it feels like. >> kyle, come on, weigh in. >> foe, listen, i think that the regulatory environment has increased dramaticalliment and unless as toby was alluding to, unless the shackles come off. this marketplace is going to stay exactly where it is today and it's going to tread along. the banks vis-a-vis-- >> come on, regulatory did not get in the way of 2 billion dollars and counting, losses at j.p. morgan. >> oh, come on. >> and, but, listen-- >> and go down this path. because i want to know how this is going to be in terms of mortgage rates, in terms of my banking fees, jonas, weigh in here, what do you think the down grade would all the matly mean at theen end of the day, a lot more bad news than good news, how does it sort out at the end. after the election. >> ultimately it's going to raise the cost of borrowing to

consumers, mortgages, et cetera are more expensive. right now ridiculously low levels, however, you've got to be a good credit risk to the bank. a lot of this, the banks lost the ability to pay back. and they'd rather gamble abroad and i think it's a better return on investment. you want to see, look, if banks are risky, people thought they wanted a few years ago, they need to make high risk loans to keep the economy going, it was higher risk than we thought about six years ago. >> lori, look, the banks-- gary's point. five years ago, that may have been a news flash. the issue here, more constraints come onto the banks when they just start getting going, are we going to nip them in the bud. it has nothing to do with 2 billion dollars lost by jp morgan. >> come on, you guys, it's not regulation, you just lost 2 billion dollars. >> yeah, but, rglation has nothing to do with making a bonus, i made one as recently

as yesterday, i should have been regulated. traders-- >> they lost a lot of credibility especially after the 2007 financial crisis, rating the subject mortgage-backed securities, triple-a. and the companies a downgrade last summer. how much credit do you give the ratings agencies and how quickly do we move past it, is this a problem on the banks? probably not, right? and so-- >> there was a, there's a lot of ratings wrong by the ratings agencies and more valuable than rating the bonds. it's questionable model anyway. >> i think what happens in the marketplace, the pendulum swings so, now it's the credit rating agencies are going to jump on the band wagon right away. got to go guys, thanks so much. coming up, blame america for all of europe's money problems. why this guy has neil and his gang fired up at the bottom of the hour.

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>> and good morning, everyone, we're live from america's news headquarters, i'm jamie colby. today, all eyes are on the weather radar, because a mainly storm is developing in the gulf of mexico. forkers are saying there's an 80% chance it could become a tropical depression, or a tropical storm debby within the next 48 hours, fourth named storm of the 2012 atlantic hurricane season and for now dealing with heavy rainfall. also, jerry sandusky, likely to spend the rest of his life in prison after being convicted of sexually abusing ten young boys over 15 years. sandusky was meetedimmediately n from the courthouse and revoking bail.

and lawyers say they plan to appeal. i'm jamie colby, great to have you here on the fox news channel. send you back to bulls and bears, get your headlines always at foxnews.com. >> bracing from the verdict. from washington to wall street, to main street. americans watching to see what the high court decides for the health care law next week. gary b, there are three scenarios here, but you say there's one in particular that would really cost taxpayers, what is it? >> it would be getting rid of the-- the individual mandate and leaving everything else. look, i'm not in favor of any way, shape or form of obamacare, i think the whole thing is unconstitutional. but, the whole point of the individual mandate is that everyone pays in. the reason that's important is that it makes sure that the people that the insurance companies have to take with the terminal illnesses are covered by this great pool of money. the problem is if you take away that pricing power, what

happens, if i have a terminal illness and decided the last minute, okay, now i'm going to get insurance, everyone that's already paid has to pay more, what's going to happen it's inevitable that costs are going up across the board for anyone that is paying for insurance right now. it would be absolutely horrible. >> david, your response? >> well, luckily, gary's not a constitutional lawyer or sitting on the supreme court, that's for sure and for a lot of people na do have pre-existing conditions, i'm sure that they're cheering he's sitting with us and not on the supreme court. but i do believe that we will see it held up. that means the individual mandate, and in large part, because of this. that is, newt gingrich, mitt romney, heritage foundation, everybody was for the individual mandate before obama was for it. and they're going to find out that the economics of insuring 30 million more people under coverage, which allows the costs to be spread over a larger population, will be the

defining notion that allows them to go ahead with the individual mandate and also, those very popular benefits, like preexisting conditions being covered, or children, or kids from 18 to 25, staying on their parent's insurance, having to go out on their own and not getting it. i think for those reasons, we're going to see a positive result come out in the supreme court, but if we don't, you'll see a lot of costs, to those that are currently covered. >> toby, you thoughts on whether or not the individual mandate stays or goes, how will that impact cost. let's talk about this. let's use this, the idea of guaranteeing issues, if the mandate goes away, but we still have to offer health insurance, and already previously ill, that's not health insurance, that's prepaid health care, and the service is not insurance. so if you look at new york, they dp to the community rating which is known as, everybody has the it at the same place, and life insurance you wouldn't do it. and auto insurance, and if you have access you pay more, you

pay more life insurance, to put this rate fixing into the system will take, just like new york, will be up 25% in premiums the very first year and it will double the next ten years, and-- >> and no one has doubted that, the law needs adjustment just like you mentioned in new york, but in boston, you don't see-- or in massachusetts you don't see that, you see the health care program working just fine in massachusetts. >> that's apples and oranges, apples and oranges. >> that's my point, that's my point. >> and let's talk-- >> and apples and apples, because the massachusetts plan, mitt romney works, because it has a mandate. insurance, there's the insurance. >> there's a lot of people, you don't like that-- and if you only have people that want a cost, then everybody's premiums go up 4, 500%, i don't care with that, all i care about is everybody in the country has insurance

and the few people that get sick are going to have the costs go up, and work marginally. >> costs have been going up already. last year's survey shows health care costs up in families, 9, 10%, i think that costs are going up regardless. >> there's no question, gary and toby, are 100% right. the government needs to get out of the way with respect to pricing power and obamacare is a disaster i believe the whole thing will be overturned. >> it will not kick in until 2014. don't decry it until it kicks in. >> it's the wrong solution, it will be overturned. >> what do you think, toby? >> yeah, look, we're just debating as if you're going to strike down, basically the one piece that makes the semi work and take that out and leave the expensive stuff, it's know the going to work. >> jonas, what do you think is going to happen. >> take it altogether and have it to work. >> the jalopy is headed for a crash. >> in terms of the supreme

court, kyle, that it strikes down the entire law? >> i think there's a strong likelihood that that takes place, actually based on research i've done and people i've talked to. >> gary b, from a market perspective, a lot of jockeying and health care, medical device makers, what do you think the market impact will be, will it have a broader implication. >> a, i guess we'll know monday, b, will it have a solution, i think the big companies in the whole health care, pharmaceutical, are going to do well either way. just because the population's getting older and there's a big market out there. it depends who is going to be paying for the bottom line. >> sure, thick. >> and if i could say quick. >> quickly last word. >> and obamacare going on with the pre-existing care and other elements that have been positive. >> okay. >> whether the supreme court knocks it down or not. >> got to go, guys. someone here says seeing this falling shows we need to start building this to keep our economy from doing this.

we connect, you decide. i knew it'd be tough on our retirement savings, especially in this economy. but with three kids, being home more really helped. man: so we went to fidelity. we talked about where we were and what we could do. we changed our plan and did something about our economy. now we know where to go for help if things change again. call or come in today to take control of your personal economy. get free one-on-one help from america's retirement leader.

>> coming up, you don't need to drill more? guess again, some here say why we need to drill more than

>> energy prices falling as the global economy is stalling. 80 bucks a barrel. falling nearly 30% in the last three mantz and that's driving down prices at the pump. some are saying that the drop in energy costs is keeping our economy from really tanking, one thing, what is it?

>> and when we got the extra semi and we've got surprises coming down, our economy has stayed in particularly, the super economy stayed afloat. one thing we have to do is keep upping the supply. demand is falling down because we're having smaller cars and semi is the key thing and anybody 0 doesn't recognize it, for the first time in the united states we have more oil in the world than less, as long as we have nor oil than supply it will stay down. >> jonas, what do you say to people, gosh, we don't need to drill for more supply and playing devil's advocate because the market circumstances is driving down prices. >> and filling up at sub $3 by the end of the summer if europe keeps going, that's the bottom line. in the longer run, what's the smart policy. drilling into a classic oil market and at $2 a barrel and you want to put money up for a

barrel, like russia does, a $100 barrel royalty and then supply coming on when the price is high, but not at $20 and natural gas is already in the toilet. the government owns all the oil in america, the private land is drill. and not give it away like the '90s. >> interesting point, jonas, what about this one, falling prices, and signals a weakening economy and what's the sweet spot for oil prices? >> oh, boy, that's a good question. i don't know, i guess the sweet spot will always be determined by the markets. i hate to be evasive. i don't know an exact number. i do know one thing, i have to answer jonas, i don't think that any goal should be for the government to make money. that is just raise the hair on the back of my neck when he said that. let the market determine. right now, there's a demand for oil, oil is a tax on every person, every industry, every company around the world and if the oil companies want to

drill. let them go drill for crying out loud. if they want to let them store the oil, store the oil. if they want to sell on the open market, the oil from the countries-- >> what about the-- what about the stuff anwar, what about the stuff off the coast and-- >> and are lower gas prices helping the economy? i want to know how it's helping me? i don't care about the government or the oil companies right now. >> 100%, more drilling, lower prices they need to readdress the issue of the keystone pipeline, by the way, let's not leave out the fact that the job markets will soar if we could put more people back to work as a result of more drilling. >> all right. quick comment from you, david. >> if i might say to those going on vacation and for the metro, spend, baby, spend. and we know now that drilling, baby, drilling, is not the end all-be all for either higher prices or lower prices. there's speculators, there's

the geopolitical situation or horizon, or other players in this. we're very happy to see the prices coming down and also proves, you know, you don't need a keystone pipeline. >> got to go. >> and we knew you were going to tell us that, david. a pleasure having you today. okay. you heard these guys tell you why you should be worried about the bank down grades. now shall the name that could have you profiting from it.

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>> and recording the health care, the winner over 30% over the next six months. >> kyle to you. >> defensive 3.9 dividend, liquid name and performs well. >> what's caught your eye, jonas. >> part of the stocks moving with every hiccup in europe. and 25% in a year, and not as much as the other stocks. >> okay, tobin.