my simple model is low tax rates to promote growth, jobs and falling unemployment with king dollar to stop inflation. i'm worried washington has this story completely backward. i prefer to be optimistic. i love this bullish stock market rally. i also want to be honest with you, i think a lot of policies are going in the complete wrong direction in washington. first up this evening, to cnbc's hampton pearson. he'll give us the full report on mr. bernanke. hampton. >> reporter: good evening. fed chairman ben bernanke says unemployment is slowly on the mend but unemployment is a trouble spot. >> the recent decline of unemployment has slowed significantly and tentative signs of stable zachlgts the labor market however has continued to weaken. >> reporter: bernanke also told lawmakers the central bank will keep the fed funds rate at a

record low amount for an extended period and they have an exit strategy for unwinding its stimulus. we have been paying attention to issues related to the exit strategy and are confident we have the necessary tools to implement that strategy when appropriate. >> yes, bernanke says the fed is ready to take on the role of the regulator. but they clashed on the insurance giant aig and opposition lawmakerses called for more audits of fed action. >> is that your position, that this bill, if it were to be passed, would interfere directly with setting interest rates? >> if we were to raise interest rates at a meeting and someone in the congress didn't like it, said i want the gao to audit that decision, wouldn't that be viewed as finks? >> the chairman also indicated the fed has no plans to give up

any of its consumer protection turf, something some of that power would go to a new consumer protection agency under the obama administration blueprint for regulatory reform. >> thanks very much. is the fed up to the task and is it time for a policy audit. >> my next guest says, yesiree. here's former presidential candidate and texas congressman, ron paul. congressman, thank you ever so much for coming back on. >> thank you, larry. good to be with you. >> i thought it was a whitewash today of bernanke. i was especially keen to get your somewhat critical views. first off, ben bernanke says he and the fed averted a global and u.s. financial collapse. what do you say to that? >> well, i would say that the mess we have today is nothing to brag about. we've gone through a lot of pain and suffering and we haven't even paid for this, we created all this new money, run up this deficit, our national debt going up to $2 trillion. if he think he's averted a

crisis, i think he made the crisis that much bigger and will be that much worse. people now are starting to talk about correctly about the problem in commercial properties. when that shoe falls, what's he going to do n quadruple the money supply? then you should be concerned about the value of the dollar. >> before you get to your audit bill, mr. bernanke says again in the hearing you attended today he has the tools and wisdom to develop an exit strategy to prevent inflation. he also says that it's not going to happen soon. there's nothing imminent and he has no plans, as far as the eye can see, we'll stay with this easy money policy. your thought on that. does he have the tools and wisdom or overstay his easy money welcome? >> he has the tools because he has the ability to turn off the money machine and stop the inflation. whether or not he has wisdom, it isn't he that lacks wisdom but every individual who might run the federal reserve does not

have the wisdom, they are central economic planners through monetary policy. it's not achievable. you want the markets to set rate in catholicipitalism, the cost y is very important as supply and demand is in the rest of the marketplace. they're interfering with it. he can't be smart enough to know that if you get somebody new, they're not going to be smart enough either. it's a deepl flawed system, deeply flawed from my viewpoint, to encourage the congress to spend. they talk a little bit about deficits. there's no real concern expressed here in the congress about spending. they talk glibly about another trillion medical program could cost two or three trillion and they don't have the money and deficits are crashing and why the deficit is exploding. >> they say president obama is going to be the greatest bonds salesman in the history of america.

does that force the fed to do something about the debt. maybe liquidity says there's something to it. >> did you see the article in this journal he would not monetize the deficit. he recognized to me the have this $300 billion program of buying treasury bills and bonds. what is that if that's not monetizing the debt. he claims he has the tools and wisdom to turn the money machine off and have an exit strategy. what if you have rising prices, i know you, larry, i first got to know you in the '70s, what if we had rising prices and weak economy, what if that were to come back, would he have the wisdom to know when to raise interest rates and exit strategy when the economy is still weak? that's a possibility. we don't know exactly how this will transpire. i think that's a real possibility. >> you have 274 co-sponsors for your idea to have a government accounting audit of the fed, including the fed's policy.

tell us briefly about that. mr. bernanke, of course, opposes it. >> he strongly opposes it. he talks about transparency. he's for transparency except for certain things he doesn't want to be transparent. there are just a few things that are sacred. that is what he does with the discount window and the monetary policy. what he does with international agreements. is there one example given recently the federal reserve, not under bernanke, a federal reserve chairman went to the imf and insisted the imf pay off loans to the bank and pay the interest. it's that kind of mischief that goes on, they can have agreements with other government, central bank, international banking, financial organization, dealing with trillions of dollars and the american people don't know what's going on and the congress until recent really didn't care. during this crisis now fortunately from what i've been trying to, do we're getting more attention because i think people

are recognizing how important it is. >> isn't it congress with the old humphrey hawkins act, passed back in 1978, create a dual mandate, said get inflation down, keep prices stable on the one hand, keep the unemployment low on the other hand. are those conflicting? in terms of an audit, don't you need to repeal humphrey hawkins and give the fed a clear mandate to stabilize the currency, value of money and prevent inflation. >> i don't think that would be a bad idea. i think the audit could lead to something like that. first, we want to know what they've been doing. those are impossible mandates, full employment, they haven't done very well there. they want stable prices. stable prices of money, back in the '70s, we had interest rates of 21%, not less than 1. it's a total failure, they give us inflation, recessions, give us financial crisis, given us a depression and nobody says, hey, what's going on here. this is the first time the american people -- i spoke to a

bunch of high school kids and they're ecstatic about the issue of the federal reserve. i just can't believe it. young people and a lot of others are waking up to the fact -- yet the establishment, when it comes to a few at the "wall street journal" and other financial institution, they come down real hard, no, we don't want any transparency about this. this might raise interest rates if they knew what we were doing. >> that's the argument. bernanke says you're going to stop their independence and you're saying the public has a right to know. is that the way you're framing this. >> that's right. independence to them and secresscy. my bill doesn't do anything to take over monetary policy. i don't want congress to manage monetary policy. i'm looking for something different than that bernanke, in that clip you just played, he says, oh, yeah, they do one thing and the next day we order the gao and you get an audit? that's not the way the gao works. you could put a provision we

want to review the thing. you can't even review some of these decisions for a year or something like that. we do deserve to know, if they give goldman sachs $10 billion for some reason down the road, through the discount window, we have a right and a moral obligation to figure out what he's doing and when and why. >> if you go down the road a year or two, isn't the real problem going to be, like in 2000, bernanke and the fed, even the constitutional fed, they're targeting the unemployment rate and they're not going to tighten interest rights to stop inflation, the congress doesn't want them to stop inflation, the unions, business establishment, even the banks? isn't that what he is up against? isn't he going to target unemployment and overstay easy money. >> that's exactly right. i accused him of a policy deliberately wanting to inflate because the real deficit goes down when you inflate. you de value your currency by 10% a-10 trillion national debt

goes down to $9 trillion in real value. you have to get rid of debt when you get bogged down like this. we're not going to pate off. governments are liquidated by paying it off with bad money. >> is your bill going to pass, sir. >> not easily, because the establishment is very very determined. something will pass, we will get something but i'm not predicting we will get everything we need to mon -- you know, to monitor what the fed is doing. >> congressman ron paul, we appreciate it very much. thank you. coming up, the winning streak tanks continues. apple and yahoo beat the st. and mr. 14,000. we have one who says we'll beat 14,000 in two years and another who say, the first one is nuts. no new taxes in california, folks. stay with us.

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stocks still very bullish today. actually, in the last half hour of trading, stocks took victory out of the jaws of defeat. let's get a rundown from rebecca jarvis at earnings. rebecca, how did you swing this?

>> i got lucky today. so did a lot of companies. what they're making in lack of sales there, making up in cost cutting and trickling bottom down, enough to keep things positive. caterpillar you see today started out to be upsigned the early morning activity. i don't know how to work this but will do my best. started upside in the early morning activity. glitle hit in terms of what took place throughout the earlier session, after they got on that conference call, things got weaker but did offer strong guidance. a lot of leeway. lot of range. on that conference call, they said sad times are still tough, things are still tough. the interesting thing plays into what you've been talking about, where caterpillar's sales did not deteriorate is asia. and a number of stocks a number of folks paying attention to today, didn't get that benefit

kater p caterpillar got, but utx see things stabilizing, the rate of decline in orders is stabilizing. but the knock on the diversified manufacturer, orders still below expectations and cut guidance and ended the session lower. dupont and coke came out bottom heavy and missed on the top line. merck ended the recession to the upside. this telestrator is not working with me. at least the stocks were working with investors, merck ended up on top and bottom line and investors were favorable. the regional banks very much in focus, they stumbled today. weak reports from regions financial and zions. that is a question for some smaller players that play into

the community sorry. other big story, cit got their 3 billion from bondholders but the small business lender says they now need $7 billion and bankruptcy is not off the table. the company started off the session halted, the stock was halted, as soon as it was open, it fell 24%, down in the after market trade, starbucks very important in the after market trade. we'll get to that. it's one of those earnings stories managed to beat, you see there, it was up 10% right after they said they're basically managing the recession properly. that coffee clash with mcdonald's, coming out on top. most sales complete and they started to see a pickup in sales. they started to see things getting better throughout that quarter. it wasn't great on sales but it got better and improved

throughout the quarter. i'm learning your telestrator, larry. >> it took me five years to figure it out. you're at a disadvantage because they don't have the right stuff on the side. youtube, united technology. i don't want to name his name. how can he run the company, in the "new york post" in a vicious divorce proceeding, he has wives and girlfriends, everything, how can he run a company? >> a lot of people are looking at the "new york post" just like you scratching their head and investors are not favorable on the earnings story. like caterpillar, said they're stabilizing, investors not treating them as favorably. >> somewhat more an lalytically >> imagine that. >> cit has a lot of middle sized companies may still go into bankruptcy, that's not a done deal. we thought it was and reported it, like the whole world and the model may not work. >> it may not work.

here's an interesting take on that i heard from art on the floor of the nyc, if it goes into bankruptcy, that will be the first test of this too big to fail whether or not it plays a role. if they've been deemed not too big to fail by the fdic, if they actually do fail and we see the follow through, we'll have an answer whether something is not too big to fail. >> absolutely. free market capitalism. i just don't want it to screw up the market. let's move to the market stuff. yahoo, starbucks, jim goldman. jimmy, give me good news for a change. no bad divorces, just profits. >> profits, profits, we'll leave the divorce to the new york thing. good evening, larry, we will begin with apple, big beads on

the top and bottom lines, the best non-holiday quarter in apple's history, eclipsing ipod revenue. they are extending gains tonight, 2.6 million max sold at a whopping 36.3% profit margin, those are the two surprising reports and guidance doesn't appear as conservative as it normally is. apple is cracking the enterprise market big time with iphone disclosing 20% of fortune 500 companies have bought 10,000 or more iphones. a deal in china with apple and the iphone still might be a year away. yahoo promising long term market expansion and the company says it's happening with the way it's performing thus far, nothing new about a deal with

microsoft although numbers prove a deal is more necessary than before, carol bart starting to turn numbers around and they need results on the bottom line. >> we've been saying that about yahoo for years, in fact microsoft for years, you said they're light, yahoo is light. why would anybody buy yahoo? i just don't get it. >> you have to remember yahoo is a lot more than search, messenger and mails and sports and entertainment. >> news and information but how do you get paid? >> yes. that's the key. you have to expand that reach, get marketing behind it, get a big war chest. that's what microsoft brings to the party not to mention new search algorithms the two are trying to get together on. i think adale -- it used to be, why would two weak players pose a threat to google, now, they're strengthening and a deal would

make sense. i wouldn't be surprised if a deal was announced sooner than later. yahoo seems to need microsoft less than microsoft needs yahoo. >> apple is doing better, great stuff. who's running apple now? >> steve jobs. i got to tell you, larry, even when he was on medical leave, i would be hard-pressed to find a fact out there that says steve jobs wasn't running apple, even in his absence. don't be fooled. tim cook played a great presence, but the two of them firmly in control. think that's what investors want to see. up next a roaring bull who sees 14,000 dow on the horizon versus a crouching bear who sees a phony or faux rally. no new taxes for california. read my lips. and drill drill drill off the coast of santa barbara. the liberals are screaming.

we're coming back, more fed, more stocks, even a good day for bonds. please stay with us. access to favorite courses

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i just want to follow-up, i can't help myself. i will throw this to dan fitzpatrick. i don't know if you ever read the "new york post," this guy running ut, george david is his name, is embroiled in the most incredible. everyday in the "new york post," he gets a full page or two, the ex-wife a swedish model, girlfriends around, flying here and flying there, how the hell can this guy run a company? i want to rant a little about george david, i've been waiting for people to pull the plug on him. they report ut like this was a normal ceo. it's not. >> i wouldn't want him running my company but i'd like to be invited to his christmas parties. >> yeah, they're fabulous. >> i'm getting a dennis kozlowski moment here. i can't speak to his ability to run the company. way out of my league. a publicly trade company, why do you need a problem like that?

there has to be a ton of people just as qualified to run my company. i wouldn't want my ceo on the front page of the paper everyday. >> i'm surprised. this is a society story butles a business story. let's not get hung up on this. ned, you're our super 14,000 bull. bernanke earnings, good numbers coming out, bottom line stuff, not top line but help is on the way. >> my main case is ten years previously we had a miserable market. i feel virtually everything we're seeing at the moment and second, allocation strategies, equities portfolios have declined dramatically in the last ten years. people are really scared. that's what you need at bottoms and markets and that's what you need as priority to get this market higher. earnings are falling apart. apple is a great example, ibm of companies that have been able to on rate in the most miserable economic period i've seen since

1974, the liquidity out there is phenomenal. you know that as well as i do. >> phenomenal as far as the eye can see. didn't ben bernanke today say do not expect any change in zero interest rates, not maybe in my lifetime but as far as the eye can see. he doesn't give a darn about my king dollar. he wouldn't give me the time of day on king dollar. he wouldn't give the back of his hand on king dollars, he will target the unemployment rate, for the short run, based on inflati inflation, great for stocks, more money, more liquidity, more stocks. >> more liquidity, more stocks. and people are still so scared, hiding in three month money and six month money with no return at all. i met many people who said, where can i invest my money but i want a higher return. when you stop to look at everything else, i call this a regression back to the mean.

we had a great period from 1982 to 1999. this is a catch-up for the miserable market the last ten years. >> catch-up maybe. i want to get to dan fitzpatrick before i do that, health care, steny hoyer, democratic majority leader in the house said, nope, not before the august recess, i'm just thinking, nope maybe not even after the august recess. i know merck reported very good earnings today. health care was hot. i wondered if there was a connection as the nationalized health care bill goes down. is it safe to buy these drug stocks, health stock, hmo stocks? >> it's political risk but that's what's driving it now. >> congrats to the health guy that spoke to power. he said this health care bill will add a trillion in cost. this is a budget buster.

that man stopped the health care plan, just by saying that. that one guy, that one brave voice. they'll come back and try again. i don't think they'll do it until after the recess, as you said. this strategy of putting out the budget outlook, delaying, saying the dog ate my homework, the budget outlook won't be ready, let's go ahead and vote on -- >> the dog ate my homework. they're all kind of waiting on that. don fitzpatrick, why is ned riley's 14,000 wrong? it's funny because you're asking primarily the technician. fundamentals do matter. we've had two bubbles, the equity bubble and real estate bubble. i'm not really seeing the third bubble anywhere. ultimately, i agree with all this liquidity, how will we get $750 billion in commercial real estate loans restructured, refinanced when there's no

lenders. ultimately, that stuff does matter. there's so much real estate that's under water, you will javy can'tcies, i'm wondering where the jobs are. >> are you saying a bank story, the banks are not -- looks like so much improvement with banks. tell me where you're -- >> the issue with the banks, first, love goldman sachs, i don't care if it does run the country, i want to belong. commercial real estate has no equity there in. with all this de-lever averaginde-lever -- de leveraging, this shunning of risk there are no lenders willing to loan on a piece of commercial real estate upside down. >> on the way out, you all are coming back, dan may be right, how does that affect technology or commodity stocks? i don't see the connection. >> i don't either. the story i have is an international global one,

commercial real estate. i do believe and you're right, mr. fitzpatrick there, will be problems in commercial real estate. let's take it back six months ago, the world was coming to an end. apo apocolypse now, the credit markets froze up and we got through that with good leadership of bernanke and i'm making king of paulson for the last ten years, he's the guy that started it, did the right thing. people shouldn't be critical of him. he's my hero. >> even a banker can make money at a zero interest rate. i want to come back after this phenomenal rally, the seventh straight day, maybe time to take some profits. how much confidence do you have in the future, what about washington policy and are profits going to continue to rise? a lot more to talk about. i have to look at this whole story about california, no new

taxes, read my lips. a terrific story, taxpayers, 10, unions, 0, and drill drill drill, and my friend from the "wall street journal" may tell us why california might be leading the nation, no new taxes. we'll go to break and give you nice charts to tell a bullish story. this is the kudlow report. we'll be right back. i never thought it could happen to me...

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bullish stocks but for how long? we have jerry, and ned riley. jerry, bonds did very well today. this is an interesting sideline. treasuries rallied, our own rick santelli said it's because bernanke made a very strong statement, pressuring congress to get their fiscal exit strategy. let's listen to bernanke on fiscal nymphomania. >> nevertheless, even as important steps have been taken to address the recession and steps to financial stability, maintaining the confidence of the public requires the markets

begin planning now forest storeration of fiscal balance. >> i have my doubts about this restoration of fiscal balance. but closed at 13.7%, ral blade 13 basis points, a big move. why are the bonds applaud iing n bernanke, yipptido. >> nothing says that more than ben bernanke. >> i was hoping he would use that term. >> i'd love him to use that term. >> he was playing the role of schoolteacher and scolding them on deficit spending and maybe congress is saying, enough already. i don't think it will work, i think bernanke lives under the illusion his going along with the administration makes him a trusted advisor and he will be reappointed next year. i think it's an illusion. >> they say it's an 170% chance

he will get appointed. >> i almost never go against that but i am. >> did ben bernanke have a lot to do with the stock market? >> no, a lot to do with the bond market. i'd like to see secret squirrel be the chairman. we will see the same transparency. not working for me. >> ned is on this cook, having himself a heck of a summer rally. why is he wrong. >> you're not putting me against an amateur. i see a rally but a lot of links busted. a jobless recovery, ultimately, fundamentals have to drive stock prices. we need consumption. we have 70% of gdp driven by consumption yet we're talking about a jobless recovery. the folks that consume are those folks without jobs. ultimately there, has to be some transition. until, larry, i know you agree with me on this, until we start

talking about cutting taxes and cut it on all the greedy rich folks who happen to employ everybody who's jobless. >> rich people have been the hardest hit in this recession like all downturns. there's facts on that. ned, favorite investment, go ahead. >> i still like the 4 qs, larry, tops on my list. done well this year and i still think it's going to be the leader next year. i don't believe -- >> you've got -- let's look at this. tech is up. i will use the nasdaq is up 51%, s&p 500 tech sector, about the same. a huge net. would you advise an investors watching the show to go in now, let's say they've been in cash or bank account, you say now is the time even after this gigantic 50% move in tech, is now the time to buy tech. >> i said it on your show in february, march and april, the q

was substantially lower. i see tremendous growth potential, the one area that hasek lha hasek cha has secular growth to it. you take global growth, emerging markets doing better and rebuilding infrastructure throughout the world, tech has to come out tops of your list. they're cheap, cheap, cheap. >> and china, asia. >> you closed 8916 on the dow. does it get to 10,000 in this rally? >> in this rally, no, ultimately, i agree, we're talking bearish economy. for stocks, ultimately, they go higher. i agree with ned, i would be scaling into technology right now, not piling in. if you're in the sideline, you're not in the game. >> great stuff. gentlemen, i appreciate it, jerry boyer, dan fitzpatrick.

a new new taxes budget deal with a little drill drill drill in santa barbara on the side. now, let's check in and see what you're working on. >> it's official. where should you put your money now? one reason markets are up? the obama health care plan, it's dead. last week, the pias anti-profit liberals, the poor, they are a lot better off than you guys realize out there. >> health care stocks up because the health care bill is down today, dennis. have a great show. see you after the break. read my lips, no new taxes in california. please stay with us. oof!

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state leadership is looking to close the hole with $15 billion in cuts, the rest pushing some costs into the next fiscal year or forcing local governments to lend the state $2 billion. tonight, the sheriff is calling that revenue robbery and the county board of supervisors is threatening to sue them if they tried to force them to lend money that will be repaid eventually and telling our sue her rare ras, lawsuits are inevitable. >> in these times we've had deficits every few months, it's not uncommon for lawsuits. when we make cuts to health and human service, there's typically lawsuits. we had to move forward because you know california is running out of cash. we've been issuing ious the last search weeks. we really had no choice. >> there may be more trouble brewing, most state police forced to take three days off a month without pay the next year may give their unions the

authorization to take a strike vote. still not a done deal. the legislature has to vote on this possibly thursday. in a little more than an hour, sue will be joining and anchoring a special. thank you. let's bring in tsteve moore auth author. who's the big winner? >> jane has the best job at cnbc, i love being in california. any time you want to change jobs, i'm happy to do it. >> well, we'll see what happens to my tax bill. >> this was a big victory for arnold schwarzenegger. i've been tough on the terminator in the past there. have been many arnold schwarzeneggers as he has been governor the last six years. he was tightfisted, hard-nosed in these budget negotiations. you know what, jane is right, he didn't get everything he wanted, there are still big budget problems in california but this is a big deal. >> i think you're both wrong. steve moore, you gave the wrong answer, you strike out.

the big winner is the taxpayer. >> yes. >> the governor ator was going to spend his rear end and tax his rear end until the taxpayers voted no in those budget initiatives a couple months ago. now, look what's happening. it shows you what a taxpayer revolt can do! >> i wrote that in the editorial that will be in the paper tomorrow or thursday. that's exactly right. the taxpayers revolted back in may. in this budget, jane, i think is a as a result of that result by those people who went to the polls. >> absolutely. i agreement the problem, larry, i may be back up here in six months with another crisis because some of this solution is based on certain assumptions about the economy and improving and every assumption they have made so far has missed the mark. >> hang on. we'll come back with both of you. another surprise, we're all going out with jane to watch off short drilling off the coast of

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all right. i'm going to start calling it the california miracle, the new leading edge of politics, we

have jane welsh, the greatest reporter in the history of california and also works for cnbc. and look at this, the taxpayers have spoken. this could be cutting edge political stuff. i want to surmise and get your answer to my surmise, as obama and his crowd take one look at this california tax revolt, at the root of this no new tax deal, would this spell the death of obama's nationalized high tax health care package as well. >> it's funny you should say that. i talked to arnold today about this budget he was selling me on it. he said, steve, you know, it's not california, sacramento that has the budget problem, it's washington d.c. that has to get its budget under control. it really is true, i think california, look, we all know california has always been a lead indicator where the country is going. >> right. >> i think that tax revolt that happened in may reverberating throughout that state is an indication the public all over the country is not in favor of

high taxes. the main thing arnold accomplished was he got the budget cuts and not a dime of new taxes in that budget. >> i know. but i don't want to give him that much credit. >> give the guy credit. >> jane wells, i don't like any of these "politico"s, i've learned to distrust them. this guy saw the result of those california ballot initiatives, which were very very clear, jane. the message was sent. this is a bottom up thing. steve moore is doing the old "politico" personality story. this is a bottom up story, i want to know if we're going to get to the bottom of the santa barbara bay to drill for offshore oil, part of this budget deal. >> that really would be a california miracle. according to the "l.a. times," there is something in this about drilling off santa barbara. they were first talking about it a year ago when oil was high. when oil prices fell again, it went right off the table.

the california oil commissioner is very very powerful. i would be surprised. it's more than likely they will raise taxes than drill in california. i was going to say, about taxes, even though the state is not raising tax, if they force local governments to lend them money, they can by law, those local governments can go out and try provide that money or borrow against it or those local governments may have to raise taxes. in the end, it's possible we'll have higher taxes. >> they'll be thrown out of office, too. steve, i will give you one more chance to redefine this story and get away from schwarzenegger, and understand it's the taxpayers driving this. is the next step going to be a 6% flat tax rate for california? >> very good, larry. that's exactly where this state is heading. they have a tax commission and supposed to report by the end of

august. i think there's a consensus emerging on that panel, republicans and democrats, that state cannot survive with 12% income tax and people leaving for nevada and texas. i want to add to drill drill drill. jane, i really think the only way out of this crisis is for californians to realize, if they want to raise the revenues to pay for all these social programs, they have $8 billion of revenues they can tap by developing their own resources right offshore. at some point, liberals have to decide in california, do they want all these social programs or are they not going to drill to get the money to pay for it. >> jane, before you answer, let me weigh in. i think the liberals in california got mugged by this high tax threat. i don't think they're so liberal out there. my surmise. >> larry and steve, if we don't change the tax system now based on the tax situation when the tax commission reports at the end of august, we will never change it. the opportunity is riper than ever for democrats to agree to tax reform.

>> flat tax for california! >> you are so totally on the money, i can't begin. your analysis is so fresh, unbelievable. and steve more, stop talking with those politicians. stay tuned for this special report on cnbc, "california in crisis." you can catch me on the call at 11:00

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so when the moment is right, you can be ready. folks, the tide is turning in california against new taxes and that same tide may be turning in washington d.c. think of it, cal is the leading indicator, add to that, drill drill drill, maybe a flat tax in california, oh, my gosh, now, if mr. ben bernanke would just give me king dollar, i could get really bullish. you know what, free market catholici capitalism this is best path to prosperity. "cnbc reports" with my pal dennis kneale. >> hello. thank you very much. "cnbc reports" right now. >> tonight on "cnbc reports." charge! the bull run rolls on. the dow scoring late gains finishing the day up 67 points.

nasdaq up ten straight days. key earnings, new numbers and new reason for optimism. we have you covered. something is lurking out there that could take the market down like a great shark on a slow and wounded sea. new tax, health care, increased spending. tonight, why he -- >> what i have to remind people of is that doing nothing doesn't mean you just keep what you have. doing nothing means that you're going to lose what you have. >> reporter: sounds so similar to her. >> we cannot go on the way we have been going. >> reporter: why dennis thinks ben bernanke saved his job today. this is "cnbc reports" and it all starts right now. >> good evening. i'm dennis kneale. sell-off? what sell-off, scotts went unagain today. all three major index, despite a torrid rise of 8% in trading before the day. the markets are saying something

profound here what i've been saying since june 25th. this recession is over. i'm right and the doomsayers and bitter bloggers are plain wrong. let's look in the real deal with dennis kneale. the stocks had risen 700 points in only six days of trading up to today. july 14th, right up to today. nice 9.4%. that's almost a 10% gain. i was surprised the dow creeped up another 68 points to 8915. that leaves it to within 5% of the 9,000 mark. 14,000 in october, 2007. it's too de pressing to think about what happened all the way down here. now, look how far back up we are comi