David Stockman: Twitter IPO Overpromises, Just Like Obamacare

Thursday, 07 Nov 2013 05:54 PM

By Greg Richter

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Twitter's share price closed 72 percent above its initial opening price on Thursday, but former Reagan Budget Director David Stockman wasn't impressed.

Appearing on Fox News Channel's "Your World with Neil Cavuto," Stockman compared the company to Obamacare, saying both are promising more than they can deliver.

Twitter may be a great company, he said, but it's priced at 50 times revenue. That proves that "Wall Street is a casino inhabited by day traders and robots who are on the drug the Fed is feeding," Stockman said.

Editor's Note: Should ObamaCare Be Defunded? Vote in Urgent National Poll

Cavuto pointed out that he could have said the same thing about Amazon.com or eBay at one time. Stockman agreed, but noted that for every Amazon and eBay there are 10 online companies that didn't survive.

Time will tell, he said, if Twitter can join Amazon and eBay, which actually get revenue from selling products. Twitter, a microblogging service, does sell some "promoted tweets," but otherwise appears to have no income.

Stockman said both Wall Street and Washington are failing,

The Fed has put a prop under everything, he said, "and it's giving the same wrong signals to traders as it is to Washington."

The flawed HealthCare.gov website, which is a portal for people who buy their own insurance, is just an indicator of the overall healthcare reform law, he said.

"This is not a matter of yes-men telling Obama the wrong thing," he told Cavuto. "This is a matter of bad ideas, of fundamentally flawed design that's wrecking our whole health system."

Washington is headed toward a massive fiscal blowup in that same way that the Fed and Wall Street are heading toward another massive bubble, Stockman warned.

"It's all part of the same Keynesian idea that our salvation comes from the Beltway, that the state can make everybody richer," he said.

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