cnbc. i'm becky quick along with joe kernen and carl quintanilla. >> we should mention this time yesterday, we said joe is not in because he was out dining and dancing. oh, is that why -- >> but that was a planned day off. it wasn't like he woke up hung over and said i can't make it in, guys, right? we want to make it absolutely clear. >> i heard from viewers, hey, had a big night, huh? you can't make it into work. you really ought to get that problem under control. >> what? >> yeah. >> we said you had dinner the night before. >> this is not to say that i wasn't hung of, but -- >> honestly, if we go out after 7:00 -- >> it was all planned. i would not have planned the wild and crazy dinner, strip club and -- >> all i said was you went to dinner. >> well, viewers are writing in, you should get that under

control for your family. get it under control. >> you went out to dinner for your wife. >> yeah. thank you. >> and you had a lot of fun. glad to have you packed today. the latest results are out from america's wealth survey. steve liesman, as promised, joined us with a look at the results. you said they were going to be surprising. >> yeah, they are surprising. joe, are you all right? do you need some aspirin? i'll talk quietly. >> thank you. surprising results, america is in a foul mood on the economy heading into the christmas season, but with plans to spend substantially more this year than last year. that is correct. according to our poll of 800 americans from across the country, americans plan to spend $778 on average this year. that would be a 10.5% gain over a year ago. but it's almost entirely driven by the wealthy.

most other surveys show america's plan to reduce their spending this year. but the cnbc survey has outperformed both the national retail federation and discover over the last two years, including last year when the cnbc called for $774 of spending, within one dollar of the actual reported by the nrf. cnbc finds it will be a christmas worthy of a dickens nov novel. those with incomes better than $100,000 plan to spending womaning $1,852 this christmas, up 54% from a year ago. those making less than $30,000 plan to decrease their depending by 15%. >> the wealthy this year are feeling a little better because the stock market has run up, the depreciating worry has trailed off. a year ago at this time, we didn't know what we were looking

at. we were looking into the abyss and people were not spending because they didn't know the next thing that would happen. >> if you make $50,000 or less or not at all in the market, you plan to decrease your spending. those looking for wage gains will also spend spend liberally, but that is the exception in this country, not the rule. coming up at 7:00, astonishing data on just how negative americans are on the economy. and a look at how sour the american economy is on everyone. >> you know, steve, if people are feeling much more like that especially if they have $50,000 at least in the stock market, i'm wondering like last year how much they cut back as a result of the massive market losses that we saw. >> i think that's right, becky.

if this survey ends up being right, it's because everyone is estimating how much the wealthy cut back last year. >> is this a return to the norm? >> probably. but the other thing you have to add into that is pent up demand. i think there's pent up demand across income groups. the wealthier income groups have the ability to deal with that pent up command. whereas the less wealthy, they don't have that ability. >> last december was so dramatic and emotional. but boosting your holiday spending 50%? i don't know a lot of people that are doing that. >> i guess people weren't spending much at all last year. things froze up. >> and you get one wealthy person buys a single wii fit or whatever, and that's almost twal equal to the spending of the person with $30,000 or less. and then you look at the -- we did a breakdown, by the way, of

the attitude of the spending of the unemployed and it is just dismal. it's unbelievably dismal to look at those attitudes and those spending plans. >> if you don't have a job and you're out there looking around, you're not going to be spending any money on probably just about anything. >> you keep it very, very tight. tory thing we're looking at is discounts and bargains. the wealthy will be frugal, but they'll -- we've always said this. you can't tell whether or not americans are going to spend until you know the price they're not going to spend at, right? >> right. >> they bring the discounts, if they have the inventory, then i think they'll shell out money from their wallets. >> steve, thank you very much. oh, joe? >> speaking of wealth in america, that's new, isn't it? >> it's new. >> that's the first time you've worn it. >> yes. >> i notice things like that. >> did you not cut the -- >> no, i just haven't seen

steve -- i look closely at him. >> it fits you well in america. >> i will tell you a funny thing. i told them we were going to do a wealth in america senior va and they said, is there any? >> you're wavering it. you but yesterday, from the federal reserve showed up 5% increase in network in america. real estate values are up a little bit. stock values are up a little bit. >> two quarters now. >> and and compared to how dismal things were last december, they say it's possible to eek out the gains. >> i couldn't tell anybody how much i spend for the holidays. i'm out, i buy things here and there. >> the two year error is $13 on average and that the other two, like nrf, was off by $90 over two years.

it's a young survey. it's the third year we've done it. i don't know what is different about our methodology versus theirs. >> it's the same guys that do the understandsy. it's the national survey of all the gizmos and gadgets. i know we have to go right now, but we'll be back at 7:00 with attitudes on the economy and then at 8:00 on the political fallout of this, which is quite striking. meantime, economic reports today focus on consumer spending and sentiment as the final two weeks of holiday shopping season approach. retail sales for november are expected to show an increase of 0.7% when they're reported at 8:30 eastern time. that is less than we saw last month. that rise includes the important black friday shopping holiday. those are the numbers we'll be getting today. coming up at 8:30, import and export prices.

at 10:00 a.m., october business inventories will be out. pay czar ken feinberg is announcing new ruleses at 10:30 a.m. his decisions will affect the 26 through 100 top paid employees. bank of america is no longer subject to his decrease as the company repaid its t.a.r.p. money this week, joe. >> you're right. and i was reading this about bank of new york mellon. ceo's robert kelly is said to be back in the running for the top job at bank of america while brian kelly has been named -- >> notre dame. >> brian kelly, notre dame -- >> it's the perfect set. >> how does cincinnati get ready for florida? but it is now -- notre dame, it's been a while. they've been looking for someone

to bring back the holy grail. they went to cincinnati one other time, but it didn't work so well. moellor high school, this is a different kelly. this is robert kelly, not brian kelly. but two kellys are in the new jobs story today, right? but now that bank of america is no longer subject to those pay restrictions after paying back the t.a.r.p., now maybe they get this guy. bank of america had been leaning toward an intern pick. now they can go out and get, you know, bigger names, more talent. >> and what they want. >> exactly. >> that's how it often works, right? that's how it's supposed to work. >> compensation all over the place. goldman, a big story today, as well. >> meanwhile, the house of

representatives getting closer to a final vote on the house reform bill. they also passed a measure to limit financial firms to 20% stakes in clearinghouses for those investments. the senate debate on the reform bill is expected to last well into next year. now financial services men paul kanjorski and jeb hensarling will bring the debate to "squawk box" at 8:00 a.m. eastern time. >> interesting piece in the journal. we know now, there are some things too big to fail. there just are. and we now know that that is going to be tough to do. because there are institutions that we can't let bounce. geoff cutmore is joining us from copenhagen. hey, jeff. >> hi, joe. we're in a danish chamber of

xherz event here where the business community are getting their chance to have a say. tight security, we've had 38 arrests so far of anti-capital i can't tellalist demonstrators have gathered outside this building to make their views known on this issue. now, there is quite a high american representation here. we've got jim rogers from duke energy. we've got the chairman and ceo of coca-cola and the u.s. chambers of xherz are going to arrive a little later on under the very tight security around this business representation today. the business community, of course, trying to feed in its views to the ongoing climate change meeting that's taking place here in copenhagen. joe, back to you. >> all right. thank you. appreciate that. should be interesting to watch. you got a lot of mileage yesterday on that. >> did you watch that? >> i do.

>> he acknowledged, i do have a gift and he does have a gift. did you see those people listening to him? he is up and coming. >> and he's getting some props from people that you would not expect. the palins of the world for the speech yesterday. >> i think it was the second paragraph where he says, first of all, i don't feel worthy of this entire speech for the people who have taken this and accepted this before me. >> and there's evil in the world. no longer we're the evil in the world and we're sorry. >> which is why he said gandhi and martin luther king jr. can't be the only examples that he follows. >> nothing like get ago presidential intelligence briefing, right? >> in chicago? i wasn't here when you guys talked about this. i remember in chicago when he went into the fbi's offices after the elections before he became president. and the ashen looks that he had when he came out of there were like, whoa. >> what's brewing, you have these five guys leaving here to go train. what did we do to these guys

that was so bad in this country that makes them want to join al qaeda? >> and then there's the mumbai attack. and there's been a lot of bad apples. >> and this gentleman from colorado who was here in new york looking at things, that was, what, two months ago? in any event, a lot of troubles out there. let's get to the overseas markets right now. christine tan is starting things out in singapore and let's get the latest from guy johnson. >> good morning, becky. this is how we sit at the moment, generally up by around .5% to around 1%. the mining stocks are doing very well, chemicals are doing very well. i want to draw your attention to eads, the owner of airbus. airbus flew this morning its a400m military transport aircraft. this aircraft is three to four years later. it's $5 billion over bucket and they're still negotiating with the customers, which are basically european government toes try and sort out the mess.

but it flew this morning in bru brussels today, we've got meetings. they've been putting pressure on the imf to talk about the tobin tax. the europeans really seem to want this. it's gaining a lot of traction over here. i know timothy geithner has not put his foot in the water here on this one. that is happening in france as we speak. that's the european story and christine tan has the asian story. >> thanks for that, guides. asian markets are get ago boost from robust economic data coming from china that showed the economy on a brisk path to recovery. china reported that industrial growth in november grew at its fastest pay in 2 1/2 years.

a sign of robust domestic demand. the china didn't prompted investors to boost the currency. the nikkei surging 2.5%. that data from china allowed hong kong to recover from five straight days of losses. the hang seng was up almost 2% in the morning ahead of the gains to close 0.9% higher. china, however, did get a boost, but fell on concerns about new share supplies. that limits the gains. the shanghai xot composite at the end sliding 0.21%. when we come back, the markets near break even for the week. today is going to put wall street back into the green possible.

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welcome back to "squawk

box." dow component etx expecting profits to rise next year as a year of cost cutting pays off. is he still chairman inspect i missed that whole -- you know, the tiger stuff preempted all of that. but there was a pretty good trial going on there. >> i'm sheer you'll appreciate -- >> the worl's biggest maker of elevators and commercial remember? she's the sweetest thing. anyway, expected to remain weak in the united states next year partly offset by strong growth in china. wendy's is withdrawing from japan. they were never able to challenge mcdonald's for some reason. finally, video game sells fell more than 7% in november, despite efforts in my family to hold up prices and sales. recent price cuts of major came

consoles and the launch of call of duty modern warfare -- >> that was a one bright spot where they sold a son of things. but if you want sales to match up to last year, sales will have to be up 20%. >> do you call of duty or do you do the driving stuff? >> yeah, a little bit, but they're still young. >> that's a bad one. >> is it? >> yeah. and part of it i've read. i haven't ever seen it or played it. but you get to pretend you're a terrorist and go attack people. >> we love grand theft auto so much. my son with those hookers. >> the other game i hate. >> crazy. you know, he's seven. >> you're kidding, you're kidding. we know. some people at home understand you're not -- >> we don't have grand theft auto. super mario. >> that's a good one. joining us this morning, david wrestler.

and chris johnson, the ceo chief investment strategist from johnson research group. chris, great to see you this morning. i think you're in cincinnati and joe was just mentioning the brian kelly stuff. you would procedure rather talk about that, right? >> he's a good coach, you have to admit, right? >> great coach, awesome coach. there's just so much drama here over the last 36 to 48 hours, oh, my gosh, i couldn't avoid it on the way into the studio here today. >> joe, you should appreciate, they're talking about gary combs as talking in here. >> they were all prenal. >> between them and the bengals. >> chris, what do you make of it? the dow is up four to five sessions, but people are still complaining about the lack of off side movement. >> carl, there is no -- there's

just little to no confidence in where the market is going to go. everybody is expecting that santa claus rally and it's taking the perception of, do you believe? do you really believe right now? and unfortunately, with the volume tapering off right now, investors are not willing to make the commitment to move the s&p 500 above some of the technical resistance, namely around that 1100 to 1105 level. it's one of those rate and see markets, which typically investors hate to see. but we're a little more cautious right now. 1080, 1085 have been stubborn support. >> that's right. where the 50-day movingerage is for the s&p 500 support. i think we can continue to see the market that that is going to ride around in the small trading range for the end of the year. at some point, something is going to blink here. the thing that's been missing, carl, is a true catalyst. earnings will obviously come in january and that will be the big prize that everybody is going to have their eye on right now. but right now, looking at --

especially with the employment report that came out last week, investors are not buying the news. they're kind of still in that wait and see mode. so i think we need something a little more exciting right now to get stocks moving. >> david, people still want to believe that the 11k print was a one off. whether or not we're going to get more sustainable numbers is in doubt. >> i think it is in doubt. we're optimistic that we're going to get the turn sometime in the next few months. but he's right, we've got considerable uncertainty facing the economy right now, especially among small businesses. they're uncertain about the tax outlook, the health reform, and prospects for another fiscal stimulus. and it all creates more uncertainty than any benefit you're going to get. >> we're going to get retail numbers at 8:30 today. we have our wealth in america survey suggesting at least on the top end of income, which is where a lot of spending takes place, people do feel better.

we've got household net worth up two quarters in a row. >> yeah, exactly. and i think one of the things we've seen recently, since late september, early october, is there does seem to be a shift in spending by higher income earnings, that they're kicking it up a notch. and i think that's because it looks like we're near the peak of the unemployment rate, might go a little higher. but people who have survived thus far, i think they're feeling more confident that they're going to have their jobs income and they're spending more freely. >> is that enough to carry the economy overall? >> i think it's going to be enough to keeping us growing, yes. i don't see a second dip in this economy. in fact, i think it's going to be about 3% now because of the trade data. >> we're hearing more about three handles as opposed to two. >> some are getting up close to four. and i think that's too aggressive. i think three is about the right number. we're going to get a bounce -- or sustained growth in consumer

spending, not quite as strong as in the third quarter when we had cash for clunkers. but we're going to get pretty good growth outside of the car sector, we think. and we've got one of the higher investments on retail spending. >> chris, all that said, we still hear from economists who are sort of market watchers on the side, rosenbergs and so forth who argue that we are in a small correction in a secular bear market and they have big worries that in 2010 we hit new low peps. >> you know what? i'm not sure we're going to hit new lows, carl. as you know, we watch the pessimism and the sent mimp in the market. it was more or less a perfect storm that we saw earlier this year and investors did find that hatered for the market that they usually find as we hit those lows that are typically going to be long-term buying opportunities for the market. i really don't see us returning though those levels that we saw at the bottom here in 2009. i think you're going to find some bumps for 2010.

the economic growth story, i think, is going to -- i don't want to call it resilient. but it's going to remain consistent in terms of tempting investors to stay into the market. and as a result, we think that instead of a market that you're going to find that is going to be -- i hate to use the word crash. but certainly, you know, a second crash in the series here. i think you're going to find a market that is still going to continue to provide these buying opportunities for the traders. and the short-term investors. and you're going to be able to find those sectors in the market that are just going to continue to roll over. this is going to be a year in which we're going to chase money from sector to sector. and whether it's going to be commodities and other products like that or whether it's going to be just sector plays is yet to be seen. >> chris, good luck with the bengals this weekend. thanks for your time. >> i think it is, but i don't think the spread is that wide, right? >> i don't know. i'm worried. but go in there, yeah, the

positives, anyway. where is prado today? trophy town. what happened? it's like lowly brown. >> i know. >> so early in the morning, too. >> he started it. coming up on squawk, we have a friend that does text messaging quite a bit. you coming up this morning, we'll get more of your top stories. we're going to be talking about retail sales. those will be posted just over two hours from now. as we take a look back at the scam of the century, it has been one year since the bernie madoff scandal came clear. we're going to take a look back and a look ahead when squawk comes right back.

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good morning and welcome back to "squawk box" here on cnbc. i'm joe kernen along with becky quick and carl quintanilla. i'm trying, i'm trying, among the stories we're following this morning, boeing's dream liner could fly as soon as next week. the company has officially opened the test flight window for the long awaited aircraft and it could have its first test flight next tuesday. this is considered a major step after boeing delayed the planned flight at least five times over

the past few years. but at the time we said take your time, right? >> yep. >> they found some structural things where the wing was attached. >> right. >> work that out. >> apparently it's fine now. >> good. i'm excited. it's a beautiful plane and i hope we kick butt over with airbus. i hope this plane -- korea, don't you? >> yeah. >> i hope this is the plane that becomes for the next 50 years. >> we're going to hear more about that later today. >> am i allowed to do that? >> yes. >> kick butt? >> no. to hope for boeing versus airbus. there's evil in the world. i feel emboldened by the president. >> i don't think he was referring to airbus in his speech, but do with it what you want. >> so he didn't say specifically eads or anything like that? >> no. >> whatever. >> meanwhile, aig may be about to lose its counsel.

anasazi kelly has told them she may be planning to exercise her departure rights. four others of the company have done the same after having their compensation reduced. aig will only say that kelly has not resigned. >> she's just thinking about it. >> right. >> all right. the u.s. is no longer the world's number one automaker. china now has that distinction, according to new figures from jd power. more than 12.7 million cares and trucks will be sold in china this year. that is up 44% from a year ago. and it's above the 10.3 million likely to be sold in the united states for 2009. just a few years ago, jd power predicted that china would surpass the u.s., but knoll until 2025. ben lichtenstein of tradersaudio.com. hey, ben. it is you. >> good morning. >> i thought i was expecting

somebody else. but it's good to see you, ben. yesterday, that treasury auction that came off was weaker than expected. those were for 30 years. what is this telling us about the appetite for long-term debt in the united states right now? >> well, it's tough to say. we haven't seen that bond substantially over the last few days. i think it was probably leading into this report that we saw yesterday. but you know, becky, i think it goes without saying right now that we're in unprecedented social and economic times right now. i think it's another one of the contributing factors to the uncertainty that we're experiencing right now. and i think the market had a bit of a reflection of that yesterday afternoon. most of the focus, actually, was on that, it seemed like yesterday and away from some of the equity products that were out there. in terms of in addition to another contributing factor to that was the rollover. the focus was definitely on that. we did see that the bond price is lower. >> is it too soon for people to be able to say, hey, this is a

big sign of trouble because it means there's been all this appetite for two years unless people think rates will have to get jacked much higher if the u.s. continues to spend at this pace? >> yeah, i think so. rates for one are flat, basically, and that's contributing to the lack of volatility that we've been seeing recently, the lack of interest across the board. and this isn't something that just started in the last couple of weeks. we're talking about the last eight months now basically that the focus has been shifted to this. and again, until this changes right now, i think that we can continue to expect to see kind of this lack of volatility. one thing that has happened run of that has been the activity that we've been seeing in the dollar recently. gold, etcetera. >> ben, it's great to see you. have a wum weekend.

if you have questions on anything you see on squawk, e-mail us. this guy wants tiger banned from golf. why? >> i have no idea. it's been one year since the arrest of bernie madoff. most of his victims are still trying to recoup their losses. scott cohen speaks to his attorney a year after the cam was detected.

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it has been one year since bernie madoff became a household name and his scam shoot an already battered investing public. scott cohen spoke exclusively with madoff's attorney and scott joins us here on set. good morning to you. >> good morning. it's been amazing it's been a year. by his own estimation, sorkin has represented some pretty bad guys, but nothing could have prepared him for the rage prevented to him after representing bernie madoff. today, isorkin keeps a looseleaf notebook on his desk of those e-mails to remind him why he became an attorney. >> in defending people who do bad things, we are protecting the rights of people who don't do bad things and who get copy up in the legal system. and most of the e-mail, putting aside the cursing and the death

threats and the anti-semitism, dealt with how could you possibly represent someone who is a criminal? how can you represent people who do these types of things? and without a lack of understanding at all, you know, civics 101 as to what the bill of rights is all about, what the constitution is all about, and the roll that we play. >> how has this case changed you? going through all of this experience, having a year to look back on what's gone on over the past year, how hates affected you? >> if nothing uls, i'm often asked would i do this again and the answer is absolutely yes. >> bernie madoff confessed to his family december 10th of the last year and was arrested the following day. sorkin said madoff contacted him on december 1st to set up an

appointment. they were supposed to meet on the 15th. but on the 11th, sorkin was visiting his granddaughter's preschool outside of washington and his life was about to change forever. >> i'm sitting in class and these 2 1/2-year-olds are standing around pretending they're on a farm and the teacher is asking what sounds do you hear on a farm, and i'm hearing all these animal sounds and my cell phone rings. and it's bernie madoff and he tells me he's been arrested by the fbi. he's handcuffed to a chair. he needs my help. and in the background, i'm hearing moo moo, quack quack, oink, oink. it's a matter of public record, i told him, sa no more. >> it's too late, though. madoff had already confessed. sorkin says he is still in contact with madoff. sorkin's thought on that and the big question we all asked, who else is involved? thoughts on that in the next

hour. >> scott, you understand from his perspective on the civics 101. but defense attorneys make a lot of money for what they do, too. there are going the be people who make money when a lot of people who got ripped off won't get their money back. >> well, sure. and i guess you can argue, though, that you get what you pay for. and they're entitled to a defense. they still have rights and even bernie madoff still has rights and that's why sorkin went into it and why he stands behind that, despite all of the backlash that he felt. >> when he says -- just to say you need to defend people who do really bad things, i still don't understand, tell me what was -- tell me why again? he didn't really go into why. he stated it as a declarative sentence, but didn't really explain. >> why? >> why that helps for people who don't do bad things. >> if people who don't do bad things and get caught up in the legal things -- >> but he confessed to it.

couldn't we give him a crummy lawyer? why does he need a good lawyer? >> i guess you can say you go into it and here is someone who has confessed to a massive ponzi scheme, you need a good lawyer to sort through all of that wreckage. >> give him a lawyer that flunked the bar three or four times, right? >> that's a lot of lawyers. >> one that doesn't really have anything else to do. >> then there's the information in the journal today about his life in prison after a year, doing dishes, making 11 cents an hour in some case bibs very popular among the other cons. >> because he didn't rat. >> nobody likes a rat and he didn't. now, we talked about that a little bit with ice sorkin about this. why didn't he cooperate. >> why didn't his lawyer get his to cooperate? >> he tells us cooperation is a

two-way street. the investigation continues and it's not necessarily true that he hasn't cooperated, although we know he wouldn't give anybody up. >> it's a two-way street? so he should have gotten a break first? >> oh, no, they have to ask for him to cooperate. >> they wouldn't want to try to get to the bottom of this? if they felt that bad, maybe he would have cooperated a little bit. >> we don't know the extent to which he cooperated. >> the hedge fund industry facing new challenges since that scandal. here with us is jack mcdonald who runs hedge fund security advisers. jack, you almost said that madoff, in the memory of that has had more to do with changes in the hedge fund industry than the financial collapse over the last year. >> well, good morning. i certainly -- it has had a profound impact. and i think the hangover of the madoff scandal is very much

alive and manifesting itself in terms of what investors are demanding as well as what hedge funds manager are spond demanding as a response to that. it's showing his face in terms of the use of third party fund administrators that the largest, most well established funds in the country are now using third party administrators to value their portfolios to report to investors, not something that was done in many cases a year or two before. and the other big product i would tell you that we've seen a significant growth in is separately managed accounts. i think you're seeing a profound impact on the industry as a result of the madoff affair. >> wow, so those are all pretty good things, i guess. so hedge funds used to have -- do their own accounting? >> by and large, actually, in europe, it was a trend that was in place many, many years ago in the u.s. the use of third party fund administration has been well adopted in the last years.

but there were some holdouts. some funds had a long established practice of doing their own portfolio evaluation and reporting to investors. no one has found any problems in some of those funds, but some of the large institutions have demanded post madoff that those large funds have produced a large administrator. >> so the hedge funds now would find it much more difficult, i guess, to have an accountant in a one-room office at this point, like if you had $5 billion or $10 billion under management. that's clearly a red flag, right? >> let's just say that's not too popular these days and it's not being tolerated. i think the pendulum has won in favor of the investors in terms of making demands on investores and you're seeing a trickle down impact across the board in terms of what sort of terms investors are demanding, as well. >> we appreciate it. silver lining for this whole story. thank you. appreciate your time this morning. >> thank you. >> okay. when we return, we will head

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>> okay. we are in the chairs and we talk about things that people are talking about and you say if you talk about tiger we get mail that says stop talking about tiger. >> we did yesterday. >> why do they keep putting him on the cover? >> we read it. why put it on the cover every day? >> because it sells. >> so people do want to talk about it or they don't want to talk about it? they still do. >> a lot of people want to hear about it. >> pga boss, they must step up and ban tiger. does this rise to the level -- >> does it say why? >> a viewer says if you ban people for drugs because it hurts the image and this guy says -- >> you go to jail for doing drugs. >> well. prostitutes. that's hearsay at this point, too, isn't it? you do need a trial to be accused of criminal behavior or something. this guy says he not only hurt

her and his family but he hurt all of the people that he used d sociopathically. should he be banned because he hurt the women? they don't appear to be damaged. >> they're richer today be than before the scandal broke. >> richer and more famous. >> "people" is reporting that elin, his wife, says if he stays he needs to focus on marriage first and cut back on golf. >> but do you think pga needs to get involved? endorsements are one thing. it will be hard for a blue chip company or something, that might be hard. nike less so. >> it's a male orientated brand. so much of their golf sales are reliant on him. i'm sure that the cwhat if thiss over and we lose him now and try to go back later, that's a hard sell. >> we watched tiger woods.

it has nothing to do when he's not inside the ropes for the reason that we watch him. it's his swing and his putting. >> i agree with those things. you're not condoning his behavior because nobody is. nobody is thrilled with any of this. i also don't think you look into private affairs as to what people are doing there. >> i would still like to -- if he's going to shoot 64 four straight days -- >> all of the stuff you heard about people on that tour and in other sports, they'll wind up with nobody left to play these things. that's not a good thing to say about society. nobody is saying this is great behavior. >> when he plays again, the ratings for golf channel and nbc and a bunch of other sports networks will do well. >> the tour will not be very good without -- viewership is down 50% when he's not in a tournament. >> "times" has a good piece if you're a lawyer in florida, there's a case that says you can't be friends with a judge on facebook. and that creates the appearance of impropriety especially

conveys to others the impression that those lawyer friends are in a special position to influence the judges. others say they are being too hypersensitive. judges don't drop out of society when they become a judge. they're still friends. >> can you be friends and go to dinner? >> that's a good question. you can't be friends on facebook but you can be a fan on the judge's fan page if you can imagine that. interesting how facebook has messed up the relationships that people have to sort out. >> you don't, do you? >> friends of judges? >> facebook. are you on? >> i was. i took it off. >> she didn't like the privacy aspect. >> i don't understand the appeal. >> you can to everybody all of the time back and forth on these texting things. >> you have an appreciation page which you have not taken down. >> you have to sign up to take it down. >> i have an appreciation page on facebook? i like people to appreciate me. >> it has hundreds of members.

>> tens of dozens. >> you'll see it. >> do that. migrate it. try to talk me into tweeting and being a twit. maybe i will. >> coming up, we'll talk to a business icon and former honeywell ceo joining us on the set getting his thoughts on the economy and government's bailout and what's in store for 2010. more "squawk" right after this. (announcer) we call it the american renewal.

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>> the mood of main street changing little despite a

trillion dollars worth of government stimulus and bailouts. we have results of the latest cnbc wealth in america plan. >> what's good for the bank may be bad for investors. we'll look at plans to repay the government. >> life after bernie. how hedge funds may resume their dominance on the investment scene in a post-madoff environment. a look back at the scam of the century and what lies ahead as second hour of "squawk" begins right now. good friday morning. welcome back to "squawk on the street." what a great lineup we have for you this morning. josh rosner will be here to discuss citi's repayment of the t.a.r.p. and a closer look at

the hedge fund industry a year after madoff bilked investors out of billions of dollars. this is the one-year anniversary of him getting arrested. >> among top stories this morning, dow component united technologies says profits will rise above 10% next year after falling about 16% in this year. that comes after utx completed a significant round of cost cutting. it still expects weakness in many key markets in 2010. china has overtaken the united states as the world's biggest market for automobiles according to jd power and associates. more than 12.7 million cars and trucks sold in china this year up 44% from the previous year. china has long been expected to overtake the united states because its population of 1.3 billion is more than quadruple of the united states. j.d. power didn't think it would happen until the year 2025. the consumer will ben focus today.

retail sales for november will show an increase of 0.7% with a report at 8:30 eastern time. less than the 1.4% last month and the number we'll get today includes the important black friday shopping friday. import and export prices will be out at that time. we have consumer sentiment coming out at 10:00 a.m. business inventory so all of those numbers are things we're watching. in the last hour we reported that holiday spending will be up this year but americans remain very pessimistic about the economy. that's according to the latest cnbc wealth in america survey. steve liesman is here with that. >> despite the government committing $1.5 trillion, americans are still down on the economy and are not confident things will get better and they're not confident in our leaders. 800 respondents found that 95% a

year ago had confidence at the height of the crisis. some improvement in a 10% drop in those giving it the worst mark. troubled by deepest recession in the postwar era, job uncertainty, declining home values, the public is pessimi pessimistic about the current state of the economy and the outlook. a big reason for pessimistic is wage outlook. americans look for wages to rise just 1.3% over the next year. smallest amount in the three-year life of our survey. americans believe prices are rising at an accelerating rate. with expectation for inflation to hit 6.9%. one piece of good news, housing. americans expect a 0.3% decline in home prices over the next year. an improvement from 1.6% decline expected a year ago. that improvement could be key to outlook. improvement in the housing outlook could mean better economic attitudes and better economic times ahead as we'll report at 8:00 a.m. there's

tremendous political fallout from these sour economic attitudes and no one is spared. not obama. not republicans. not democrats. very interesting results in an hour. full results of all questions and answers in our "wealth in america" survey and demographics of the people we polled at cnbc.com. it's a -- >> we do the right thing all the time, don't we? >> the views were not as bad as everybody else. geithner to bernanke -- >> where is real inflation right now? give me the two numbers, one with and one without and the way we do it. how do they come up with 7%? it's not near 7%. >> if you look at the median which throws out the top and bottom, it's much lower. it's 4%. we ask people -- >> what's real inflation? >> real inflation is like 1.5%.

>> how did we get -- >> ask people what they think and feel. that number is always dicey. >> sounds like tips. >> let me tell you quickly what's important about this. if you asked fed what they ask about is inflation expectations. what people think inflation will be. if inflation expectations are on the rise, whatever the number is higher than the last one, there's real economic value in knowing that because if people think prices will be higher they may spend today which creates the inflation spiral so that's why the fed is focused on expectations. >> let's get more from the survey now and reaction from our guest host and cnbc contributor, you have been on the board of dow 30 at some point. also with us chief economist. let me start with you. where are we right now?

we escaped the year ago. is this where we are? >> if you look at the glass half full, you see job losses beginning to come down. you see 50,000 temps hired which is generally a precursor to hiring. you see housing up 4%. you see steel production up. you see manufacturing index up. those are good things. negatives, we have 15.4 million people unemployed. 38% of which have been unemployed for six months or more. that's an all-time high with inventory of unsold homes and mortgage foreclosures, you won't see a pickup in residential housing of any magnitude. you see 17% vacancy now in office space which is a precursor of bad things to come for commercial real estate. the end for me is this. short-term positives outweigh long-term negatives. even though we have an enormous debt in this country, i think

2010 will be a decent year. 3% gdp. i think stocks, equities up 8%. corporate profits will be good. >> you weren't surprised it was better than people thought. you expect that to continue. >> if you look for the year it was 700,000 in the first quarter. 425,000 down in the second quarter. the last couple months are averaging minus 60. very reasonable to say positive numbers in the first quarter and i think reasonable to say you'll create more than 2 million jobs in 2010 and that's the piece that puts you into a self-sustaining expansion. i think the survey you did reflects the fact that what is in place right now is still a real tough situation.

10% unemployment. the populous at large has never been good at forecast. it's not good right now so they're worried it will stay bad. i think if you're in the forecasting business, you are supposed to look at the friends right now. say, wow, did we dodge a big bullet and this looks like a good 2010. >> you're definitely half full then. do we do okay in 2010 because of the sugar high from all of the government programs or is this a run of the mill recovery that like the ones in the past? >> i think i'm with you. we could have done with less and not more in terms of fiscal stimulus. i thought all along the issue was could you restore the banking system and have a functioning financial system. i do think they got that right. they didn't nationalize all of the banks and they didn't let them go bankrupt and once you get that restarted credit engine, you get a typically good

recovery. it's more true normal. >> it won't be the same recovery we've seen over most recessions in terms of the degree of increase for all of the reasons that we mentioned. i think 2010 will be considerably better than people thought six months ago. >> bob, i'm with you on the kind of structural parts of the recovery. what bothers me looking at the survey is at the end of the day you definitely want to have some psychological aspect to a recovery. you want people to be more confident especially when it comes to business. you want them confident enough in future revenue to invest today to hire today and what troubles me about this is i don't see the tide turning in any meaningful way from a psychological satandpoint. >> that's a good point. if we look at when they change their minds, they discover that things are happening and then they change their minds in the survey. you go back to 2006/2007, companies talked about how they

needed to use more leverage and if you have cash on the spre spreadshe spreadsheet, you weren't a clever manager. i think it's more typical than atypical. as things get better they'll decide it's better and begin to tell you they'll put that money to work. >> all right. bob, we appreciate it. good to see you this morning. we'll see you next jobs friday. when is that? >> first friday of the month. >> probably in january by my reckoning. >> thanks a lot. >> you've been doing this a while. >> you saw that. like a steel trap. larry will be with us for the rest of the show. >> that's right. in the meantime, any comments or questions, drop us an e-mail. we are reading them. squawk@cnbc.com. citi is eager to pay back the t.a.r.p. money but investors concerned they are moving too quick. scam of the century.

one year later. what investors have learned from the madoff scandal. (sneezing): ah-choo! hope i don't miss work this christmas. yeah, how will you pay for things like food...electricity? dental bills... gazooks. you need a back-up plan ho, ho, ho. that's why we have aflac! so i'll have cash to help pay bills! great...but what if you're still not better by christmas? hmm... afllaaccccccccc!!!!!!! (santa): aflac. we've got you under our wing. rudolph's better... but now blitzen's sick!

the futures right now are indicated at a higher open. talking about dow up by 42 points. we get data at 8:30 eastern time including retail sales so stay tuned for that. also, boeing 787 dreamliner jet could take off as soon as this tuesday. the company has been finished reviewing results of a test conducted last week. a patch to the fuselage was made to correct those potential stress cracks found over the summer. if boeing doesn't feel conditions are right to fly the maiden voyage could be pushed back by a day. it's two years behind schedule but a major advance today. >> we'll be talking on tuesday if it goes up. citi wants to get you the from under the t.a.r.p. but some

worry that it's moving too clickly for its own good. josh, good to see you again. good morning to you. i know you've been either in the mix or near the mix. what do you know about what's going on in washington? >> what i snow what everyone else knows. there are talks and i think an officer generally on the table. i expect that the offer would require dollar for dollar capital raise. >> that's a lot of money. >> it's a lot of money. i think people believe they could do it at this point. i'm not sure it's sensible and that it is the right move at this time. i think it would be sending a message from treasury that they are guaranteeing there's no risk of a double dip. >> so you say it's not the right move or may not be the right move, are they not ready? >> i don't think they're ready. i think there are still real risks. we heard bernanke and his washington economic speech this

week discuss the fact that there are risks ahead. whether there's a rebound or not, we have credit quality on commercial real estate and we have real exposure still on residential real estate that haven't been taken yet. and so you wonder what the metrics that they're using and what stressors we use to figure out if citi is ready or not ready. if they repay $25 billion and find themselves back at the government's doorstep six months, nine months or a year from now, would that mean that we'll allow them to come into an insurance policy right before their house is on fire again. >> josh, i'm not sure that's going to be the government's problem the next time around. i can't imagine there being any political support for a second citi bail -- the fourth citi bailout next year. there is one thing i know that treasury is thinking about which is that t.a.r.p. may have succeeded in stabilizing the financial industry. it has been an object failure

when it comes to the ability to loan on these funds. the reason is because banks have wanted nothing from the day they got the money and congress passed the compensation restrictions to get out of t.a.r.p. a dollar of equity from the private sector that replaces a dollar of government can actually be loaned. the dollar of capital from the government -- >> that's incorrect. i explained from the very beginning of the t.a.r.p. process that that money was not going to be loaned. it wasn't going to be loaned because banks needed to keep capital on their balance sheet for declining asset values and increased reserves. that's the case until we're done with deteriorating asset quality and written down exposures appropriately. >> you're not going to loan a dollar of temporary capital if you're going to want to pay that money back to the government, you'll hold onto it and not loan against it. >> you'll not loan against the private capital at this point either. it's just a regular plain old business decision that what you're going to want to do is make sure that you use it to cushion yourself from declining

asset values or increased provision requirements. >> citi is in a tough position. the only one with t.a.r.p. is competitive disadvantage so they are concerned about this. i think people forget that government has guaranteed $300 billion worth of citi's assets in mortgages, car loans and real estate loans so i can certainly understand why they're interested in bringing this about but i think there's a long trip ahead to do it in a way that doesn't come back to haunt the fed. >> that's exactly right. i think that we should look at t.a.r.p. and know metrics to get out. they should be clear and understand the stress test used to get out. that should be clear. at the end of the day not all t.a.r.p. recipients are the same or equal or should be on the same time frame to get out. it's sort of for some of them should end up like the roach motel. >> fair to say that you think compared to the b of a talks,

these will be more more complex? >> that's fair. i do. >> i want to ask josh. you are arguing that we're better off or who's better off with citi keeping government money? if citi can replace government money such that it's the private sector at that takes it on the chin if there's future losses and problems at citi, aren't taxpayers better off? >> yes and no. no if they end up having to come back. there's no public will for another bailout but at the end of the day it's an institution we haven't figured out how to resolve. we have too big to fail issue. it's not a question of whether there's a government will or willingness or want to bail them out if they come back to our doorstep. we haven't figured out an option yet. we don't have legislation passed. if they came back to our doorstep, they would have to. i think the confidence in treasury if they come back to our doorstep would actually be further diminished and i think that's very damaging to tell or

indicate that we're guaranteeing they won't be back which is what allowing them out would be suggesting to the public to investors. and then have them come back. >> josh, real quickly, i know we have to go. tune in in an hour and we'll show you how low confidence is in treasury. there's not much further for it to fall. >> they won't take a risk on this one. i'm promise you that. >> josh, appreciate the insight. good to see you again. coming up, climate summit protests expected to escalate. we go live to copenhagen next. look at oil this morning as we go to break.

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hello from rio. yes, it rained this morning but as you can see some rio clad individuals on the beach this morning. this is the site of the beach volleyball tournament for the 2016 olympics.

brazil, the fast facts are impressive. you have the fifth most populous country in the world. fifth biggest land mass in the world and it's one of the ten biggest economies and in november it had record hiring. does that justify a stock market that's nearly doubled in 2009? that's one of the biggest questions for investors. we'll tackle it from the beach coming up all day on cnbc. back to you guys. >> have you been there? did you have one of those -- you didn't have a thong? >> i couldn't even wear those when i was young. >> that guy that just ran by did. >> could they not have waited for maybe someone else to run before she started taping. >> you wanted someone running by. more from erin throughout the day. she'll be live there for "squawk on the street." pressure for leaders to reach a deal at the global climate summit. ann, good to see you.

good morning. >> reporter: good morning, carl. i'm in the section of copenhagen where behind me in that red brick building with a copper roof is a meeting held by the international chamber of commerce. ceos from around the world are there to discuss business and climate change included in that list of ceos, coca-cola, duke energy to name a few. this morning they were greeted by protesters. 150 young people marched through the streets of copenhagen shouting it's our climate, not your business. they are protesting the fact they believe that big business is setting the agenda on how to deal with climate change. about a third of those protesters, 53 to be exact, were arrested for public disorder. now, at the center where the climate talks are being held, we got the first outline, if you will, of a potential agreement. and in that outline it says that the world should aim to cut

greenhouse gases by 50% by the year 2050 and that rich countries should aim to cut their greenhouse gas emissions from 75% to 90% as you know president obama has said he would like to see the u.s. reduce greenhouse gas emissions by more than 80% in 2050. that's the latest from copenhagen. i can't think of anybody who would enjoy this more than joe kernen. my favorite turkey net. back to you. i couldn't resist. >> that's from mary. your older, less successful sister. i got her. it was a bit of a delay. >> we love the thompson twins. >> stories making headlines and we pick larry bossidy's brain. we will come right back.

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welcome back to "squawk box" on cnbc. we've been watching the futures and they are above fair value right now the dow futures up by 52 points. one hour from now we'll get data looking at retail sales number for the month of november. a gain is expected of 0.7%. >> some of the stories we're following this morning, the first flight of boeing's dreamliner could take place on tuesday. boeing says the aircraft is past the final round of tests and if conditions permit the jet will take to the air on the 15th of the month. we'll get november retail sales today in about an hour and later this morning the latest consumer information as well. the sentiment index from the university of michigan. meantime, seeing how the dollar is faring following week comments from moodies. they say neither the u.s. nor

u.k. is in danger of having top credit ratings cut in the near term but it could happen a few years down the road depending on conditions. they call the economies resilient after warnings of downgrades over spain and greece but aaa not in any immediate danger. >> let's talk to our guest host today watching the news out there today. larry bossidbossidy. we were talking about citigroup and whether they should be allowed to pay back this t.a.r.p. money and what the risks are and you're somebody who knows very well these balance sheets inside and out. what should happen here and what are the biggest risks? >> i think it's an interesting franchise. it's wonderful in the sense that it has worldwide participation in almost every line of business that you would associate with

commercial bank and investment banker. that's the blessing. curse is that it's hard to manage. they haven't had a lot of success on the latter point over a number of years and i think that has to ultimately be the biggest risk. in other words, there are banks such as jpmorgan who have been able to handle the variety of risks that go along with the franchise of this size. citibank has had had less success in that regard. i would think if i was in the fed you would go out of your way to see if you could allow them to pay back. the taxpayer gets reimbursed but on the other hand i would be careful to reach a conclusion that they have where with all in terms of management strength to keep this on the right track after the t.a.r.p. funds are repaid. >> a lot has been written about their lack of risk controls in the early days. do you think that because of the pay restrictions that's even been eroded further? >> i don't. i think risk controls are okay. we always control the risks that have happened.

the question is in any one of these institutions, are we going to control the risks that are going happen next? there's very inventive people on wall street. they'll invent profit all the time. whether or not we control those are not, i'm cynical. we'll have another one of these in ten years. how deep it will be i don't know and what the cause will be i don't know. we'll have one. and then we'll go back and we'll put more reforms in place and we'll have one in 20 years. so it's just something that the politicians have great time with but whether it will have any real impact is the question mark. >> that gets you back to the question of too big to fail and that not having been addressed yet, should citi be allowed to exist in its current form or should it be forced to breakup? not just citi but other banks, too. >> one of the things that i think t.a.r.p. funds certainly stabilize in the big banks. if we'll think companies be big, we have to let them fail. there's a lot of debate whether

b what this interconnectiveness means. a lot of people say after the fact that if aig had gone bust, the world wouldn't have come apart. i don't think you can regulate against too big to fail. i think you should. on the other hand if they fail, then they should be allowed to fail. >> this argument that aig may not have taken everybody down but we saw what a mess things were with lehman. >> yes. but we survived lehman. again, i don't think you can pull rules and regulations in place and what business you can be in and how big you can be. i don't think that's the free market system at work. on the other hand one of the aspects of the free market system is when they fail, they fail. and so there's too much in the way of artificial trappings around these places in my mind. >> do you think we could survive afailure at this point? >> yes.

we have to do things to prop up things and we would but we wouldn't have to -- i don't want to pick on citi. an institution of that size could fail and, yes, the world would survive. if it did, by the way, the next one would happen a long time later because there would be governance in place to see that it wouldn't happen again. >> are these banks expected to be good corporate citizens? good societal citizens, larry? >> yes. >> there is the notion really that they exist for one reason and that's to enrich their top executive. do we want to be living in a society where we say you can't have an enterprise just to make big bucks? i mean, we don't want to preclude people from doing that necessarily. should we demand some type of responsibility? >> i think they get a bad rap. the people in these places are very charitable in terms of cities and communities they live in. >> by not letting them fail,

there's a perception that it's a big risk and when it works they get money and when it doesn't, taxpayers eat it. that's the worst reason for -- that's the most compelling reason to say you have to let these guys -- it's got to be a double edge sword or it's not a fair playing field and everybody gets mad. >> i agree with you on that. i think they should be allowed to fail and they get to govern their own risk like any other enterprise. >> if 80% of an income is trading paper or should it be helping companies grow and merge and raising capital and doing productive things? >> most places do develop businesses. >> most of the recent be income has been trading. low interest rates. they are guaranteed. >> that's cyclical. >> you get goldman to do five years of no cash and only stock and it they got to feel pretty

guilty to agree to that. >> plus advisory say on pay. >> they have to put the vote to shareholders. >> they're in the eye of the storm. if you didn't, you would be seen as being arrogant and if you did, you're seen as being compliant. i think when you look at the judgment there, that was the right thing to do. not every bank will do the same thing because it isn't going to have the notoriety that goldman has. given the fact they're in the center of the page, i think they did the right thing. >> no one disputed it should be shareholders having a say on this stuff. if shareholder say it's fine, it's fine. >> i think asking shareholders what people ought to get paid is a farce. >> you're talking not about individuals but how much money

they bring in should go back. >> change them. that's what boards are there for. among other things govern pay but to ask some guy in iowa what they ought to get paid, i don't think so. >> what about someone that owns a billion dollars worth of shares? >> he has a right. he can call directors. he has a voice. he should be listened to. you got to strengthen boards so that they can take this responsibility seriously and exercise the judgment that everybody thinks is valid. >> a lot of people never send in the proxy. but they want returns. >> and they complain. >> more from larry throughout the show this morning. it's been a good one. we'll talk about the fallout from the madoff scandal. our next guest will talk about the lessons learned when "squawk" continues. (announcer) we call it the american renewal.

because we believe in the strength of american businesses. ge capital understands what small businesses need to grow and create jobs. today, over 300,000 businesses rely on ge capital for the critical financing they need to help get our economy back on track. the american renewal is happening. right now.

stock futures higher this morning with wall street major averages near break even for the

week. you're talking about dow futures higher by just over 48 points above fair value. we're awaiting data to come out at 8:30 this morning. while we await the outcome on bidding for cadberry. the trade union is teaming up with u.k. lawmakers in an attempt to try to thwart that bid. the union says kraft has a poor record in takeovers. one year since bernie madoff fessed up to the biggest fraud in history. it's led to a chain of events still being felt today. scott, one year later, what can we say? >> well, we can say that it's amazing a year has gone by this fast and it's amazing what has happened. bernie madoff was arrested a year ago today after confessing to his sons the day before but his attorney revealed to us for the first time that madoff's scheme was apparently falling apart well before december 11th.

he got a call from madoff on december 1st to set up an appointment. they scheduled a meeting for the 15th but the scam blew up too soon for that. madoff confessed to the fbi by the time he called his attorney who was then faced with the task of containing the damage particularly to madoff's family. madoff's wife, ruth, has so far been spared criminal charges. she was left with a couple million dollars though she faced millions and millions more in lawsuit. madoff's son and brother have also not been charged. >> you know, somebody asked me the other day, why hasn't ruth madoff and peter madoff and his boys been charged? and the short answer is that the u.s. attorney's office and the s.e.c. particularly the u.s. attorney's office has been investigating this for a year now and have not brought charges which leads me to conclude that either they as mr. madoff said didn't do anything wrong or that

the u.s. attorney has decided that they didn't do anything wrong. what was floating around initially was everybody is involved. how could they not be involved? you know, these conspiracy theories that everyone is involved. the investigation as i understand it is still continuing and u.s. attorney's office if they had sufficient evidence to bring charges, i have no doubt that they would have brought charges. >> now, the family members each have their own attorneys. no word on how or if the family members are marking this anniversary. as for bernie madoff six months or so into his 150-year sentence at the federal prison in north carolina, sorkin is in touch with madoff and he's okay under the circumstances. still deeply regretting the pain he caused. that of course is not much comfort to his thousands of victims. carl? >> scott, thank you for that. interesting sound from sorkin. meantime, the hedge fund industry up and running obviously but along with the rest of the investing world, the

future was altered significantly by the scandal. you represent alternative investment advisers with combined assets under management over $100 million. what's different? what's the question? >> what's different today is positive is different. managers that have produced through 2008 came into 2009. those managers are growing and surviving. that's the biggest fundamental change in this industry it is part of a market economy. managers who did a poor job failed. and that's what should have happened. investors smarter about it now as well. >> the bad managers, are they washed out? they are still in the system, right? >> is every bad manager -- someone who invested poorly a bad manager? there's be been a significant

washout of managers who didn't produce when all markets are going up, it's hard to discern and they chase highest returns without looking at the underlines. >> is there a feeling that what madoff put together is replicable? a sense that others could do what he did? >> i think now would be difficult. the question of what size frauds are still out there is open to question. there's some recent ones that in fact were larger than i expected that were still there. understand that his was whether it was 17 billion, 40, 60, 80, whatever the actual number, there was perception in the investing public institutions levera leverage providers into the industry that when you got above

a certain size, things had to be fine. >> henry, the whole question of regulating hedge funds, madoff was certainly a massive failure of regulation. there's been a lot of talk that hedge funds need to be reigned in more. will we get that or was it just that as we were told that a lot of it was just that they failed the examination process and the s.e.c. examiners weren't doing their job right? >> i don't think that massive regulation is necessary in the hedge fund industry to limit excesses. madoff was heavily regulated in fact. and that's something that is underreported to a large degree. madoff was not a hedge fund. he wasn't a master fund. madoff was a highly regulated broker/dealer and certainly the regulators missed not only warning signs but basic regulatory functions.

>> the funds of funds which were hedge funds they totally seemed to have skated on this, right? >> the due diligence process now one thing that came out of the madoff ponzi scheme failure is increased reality based due diligence. if due diligence was thought of as overhead in the past, now due diligence is really part of the positive investment process and there's been tremendous changes. >> if i may, young fund manager just starting out today, how is life going to be different starting up my fund than if i graduated from harvard business school five years ago? >> a young fund manage we are record on a trading desk? >> let's say yes. >> you're a hotshot guy who graduated harvard and been doing well and three years ago you could have been seated with $200 million.

250 milli$250 million. really sharp could you have done more. you wouldn't necessarily been regulated as an investment adviser. now thosemanagers looking at how it was ten years ago. going to build a track record. go raise money. they are still seating but not at the levels that were there before. >> that's different than it was. >> that's different than a year ago. >> henry, thank you for your time. we're still talking about it a year later. >> next, we'll have stocks to watch include dow component united technologies and then next hour one of our favorite "squawk box" icons will be our special guest with some forecasts for 2010. i think animal orchestra will make an appearance. larry loves it. "squawk box" will be right back.

>> let's take a look at stocks to watch.

any way, united technologies 440 to 465. that was in line with expectations. revenue guided to slightly above expectations. we'll see whether united technologies helps the dow today. it is indicated higher. 6793 close. bidding 68. asking 69. up 57. let's look at boeing which opened the first test window for the 787. it will be december 15th and that will allay some concerns that there will be additional delays which have plagued that program. that also would be better to show -- actually, 55.80 is the bid. okay. so we're unable to get those. electronic arts and activision on a report that there was a

7.68% drop in november of video game sales despite the success of call of duty and price cuts for video game units. there are two schools of thought. one is the market is floating on thin air well above fundamentals. the other school of thought would be that at 6,000 we already overshot and we just got back to a more normal level. do you have a feeling one way or another? >> i think we're going to see a reasonable stock market next year. i think certainly fueled by good corporate results. you saw decent corporate results by cost cutting. if you see volume and people say there will be volume next year and you will see corporate profits be appealing and that can drive the market to reasonable gains. >> does it matter where the

money comes from? is it bad that a lot of this is from governments around the world and that printing money to do the stimulus and therefore -- is there a difference between that money and self-generated money? >> it's a fair question but this argument about the dollar, for example, in my mind is ridiculous because when you see economies like china or brazil and india booming, and you see our exports go up and imports go down, that's primarily because of the dollar and so i think that can fuel -- the export deficit is down as you saw. in my mind i think so long as we can continue to satisfy demands around the world, and these companies are in good shape from a cost perspective, that people will look at the composition of earnings and say this is fine. >> we're up four out of five. could be five out of six if it's

high today. it's during a period the dollar has stabilized. it isn't risk trade that has market up. it was the same day that "the wall street journal" had another story that the market looks tired and there's no leadership and it's definitely ready to go back. >> look at volume on up days versus down days. >> you remember july. you remember march. >> the ones who were questioning it now, didn't predict it then either. i think it's relatively healthy now and i think it will continue to provide gains as we go into 2010. >> more from larry throughout the show. in the next hour, we'll talk about the house getting set for a vote on financial reform. we've got congressman paul kanjorski and jeb hensarling and we look at the people in charge of handling the economy. the results may surprise you. "squawk box" will be right back. with fidelity, you can take your trading around the world,

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the house set to vote on massive changes to regulating our financial system. pennsylvania democrat congressman and a texas republican both on the financial services committee. both bringing the debate to "squawk box." >> you don't exactly have what i call a debator's body. slim arguments come from slim hips. >> climate control. >> ice age. >> the nation's largest operator of nuclear power plants will give us his perspective on heated debate over climate change. >> i'm mr. green christmas. i'm mr. sun. >> cnbc's exclusive wealth in america report. ♪ listen to the money talk >> how americans feel about the top money men and how they're handling the economy and the financial crisis. let's just say it ain't pretty. "squawk box" begins right now.

♪ >> all right. welcome back to "squawk box" here on cnbc, first in business worldwide. good morning, i'm becky quick along with carl quintanilla and joe kernen. we have larry bossidy with us. sales are expected to have risen by 0.7% in november. strip out autos and numbers will be higher by 0.4%. we have pimco ceo joining us at 8:40 eastern time. stick around. >> get some of the top stories. ken feinberg will announce new rulings today. his decisions will impact the pay for employees at aig, citi, the automakers as well.

bank of america could name a new chief executive as soon as next week according to the journal. robert kelly an ongoing candidate for the job but until b of a paid back t.a.r.p. money those pay restrictions were quite an obstacle. u.n. holding climate change summit in copenhagen. some protesters amid the policy, anne, that's prying to be worked out. >> reporter: yeah. it's been amazing. the protests in copenhagen have been mild in the first week of talks. we're expecting they'll pick up over the weekend. in fact, organizers say there's going to be a protest of some 40,000 people tomorrow. but today as the international chamber of commerce held a meeting here in copenhagen in the red brick building behind me with ceos from all over the world to talk about climate change and business, about 150 young people marched through the streets of copenhagen tried to

get to the plaza. they were stopped by police. 61 of them have been detained. and they will be held for the next 24 hours on charges of basically disorderly conduct. what they were protesting is what they say is big business determining the agenda of how the world will deal with climate change. they say the big business created the problem and now big business is trying to make money off the problem by dictating how we solve it. now, trying to figure out how to solve that problem is exactly what's going on in here in copenhagen where the united nations is holding its climate negotiations. today we got a look at a draft text. it's very, very preliminary. but what it suggests is that the world would agree to reduce global greenhouse gas emissions by 50% by the year 2050 and rich

nations, the u.s., european union, would agree to cut their emissions by anywhere from 75% to 90%. now, just for a moment back to the protests, there's a mcdonald's around the corner from here and it is closed today. it's boarded up as a symbol of clearly they were worried about any kind of damage that would be done to the building you can see boarded up windows. there's been no vandalism as i said. only 61 arrests. all of them just for trying to go where police ask the protesters not to go. >> all right. appreciate that. >> joe. >> i'm still talking to you sort of, anne. >> how is the wig? which dun do yone do you have o? >> it's the fresh cut. medium cut and needs a cut.

>> you need to make it look like you got a haircut recently. >> yeah. i like the one that looks like you just got your haircut. that's the best. >> how about the just for men reference. people are sure it's that, too. we'll leave you there now, anne. >> i'm also a client. >> all right. all right. thank you. this is serious stuff this copenhagen stuff. >> not anymore. >> mcdonald's, tmethane is a problem. >> yes. >> becky and i are at risk right now. >> i saw the students walking along. they are not going to be able to go for that long. >> is this what climate change is all about? i didn't realize that. >> carbon dioxide. you're doing it right now. you're not cooperating right now. i love getting my stats from people that are 18 years owld. >> who don't like mcdonald's.

>> house set to vote on the financial reform bill. joining us ahead of the vote first on cnbc, our friend and congressman and a republican member of financial services and banking committees. we should also point out that until stepping down just days ago, the congressman was part of the congressional oversight panel for t.a.r.p. you're out of there now, right? why? >> well, i just didn't find it to be a terribly effective oversight panel. i respect the people who are on there but it became more of a congressional advisory panel leaving the heavy work of oversight frankly to the special inspector general and as a member of congress i have plenty of opportunities to advise my colleagues. >> that's fair enough. congressman, how are you? what are we doing here and how

does it differ from what the senate is doing and how are we going to get these things together and do something that will work? >> we have a lot of things coming together. we should be optimistic about it. there are some philosophical differences between jeb and myself and what the committee will do but quite frankly this is going to be the most significant reform of the regulatory structure of the united states since the 1930s and the great depression. one of the big things larry mentioned in this country we have -- if we really believe in the markets and we should, the markets have to be a clearing house for companies so we cannot allow companies to put the society in such jeopardy that we can no longer allow them to fail. they can't become too big to fail. what this legislation does is provide the frame work and mechanism so that we can step in and prevent preliminarily and before there is systemic risk occurring to stop these organizations from getting so large so that they will be

allowed to fail and the natural market forces can take their effect. >> congressman, in principle that sounds good. do you think congress is in a position to write a bill that can do that? >> absolutely not. i have the highest regard for paul but we do have a difference of philosophy. i would disagree this is not significant legislation, this is radical legislation. it institutionalizes bailout. it creates a permanent bailout fund which ultimately will get more fannies and freddies and create more systemic risk because it will hurt and harm market discipline going forward. second of all, it creates a whole new unelected czar that can ban and ration consumer credit. we'll have 4% to 5% less jobs

available. credit will become more expensive. frankly, they can ban them for subjective purposes of either being "unfair" or "abusive." it allows large companies to be broken up no withstanding the fact that they could be safe and sound under this legislation american airlines or dell computer could wake up and have a government bureaucrat knocking on their door saying we think you have something to do with systemic risk. you're too successful. we'll break you up. it's a radical regime that is going to hurt jobs at a time when we're having the worst unemployment in a generation. >> i would just like to ask powell a question. it looked like yesterday that the consumer finances protection agency came under assault. will that survive, do you think, or not? >> i think it's going to survive. that is experimental. it only came about because --

i'm a believer as you would be, larry, that safety and soundness is the most important tool that we have of the regulator and that's of primary importance. we've had an example of several years, maybe a decade, of the consumer being totally ignored and unprotected by very large institutions. the best example of that that i can give is there isn't anybody in america that can justify what credit card companies are doing to their lenders -- to their participants. it's tragic. we have to have the ability to come back and resolve that problem and only way that we see -- we've tried it in every otherages in every other way and we'll have to get to a regulate-year to implement consumer protection at that level. >> what happens next, congressman, to get the two bills together? when do you expect this to be on the president's desk? >> well, i think we're going to get our bill through today.

the senate is working on a bill. they probably should be able to get it out either by -- i would say no later than st. patrick's day but maybe even around the state of the union time. and then we'll go to quick conference and then put the bills together and then probably have them at the president's desk before easter. >> they're not so different that it will take a while. who will give in? will it look more like your bill? >> the house bill is probably a firmer bill and is taking many more actions to try to prevent what happened last year from happening again and we're not trying to -- we don't want anymore bailouts. we don't want anymore bailouts because we don't want more financial crises to occur and this is a response to stopping financial crises in the future. we can't stop them forever but we can do what happened from 1930s and now and have a long dry period of 75 years before we

face another crisis. >> thank you. do you have something, jeb? >> i was going to say i hear paul and democrat colleagues say they don't want more bailouts but they create a bailout fund. you create an agency that now you have to go receive permission to get mortgages and credit cards. >> thank you. appreciate it. civics class, i don't remember the whole bill thing. you had the song. >> i'm just a bill. >> i wish -- >> it's a mess. something is coming up. carl? >> yeah. coming up. we'll talk with david gregory about politics of fixing the economy and exclusive wealth in america report. how do people feel about those.

let's say no one is getting extremely high marks. we'll talk about that when "squawk" continues.

all right. welcome back. steve liesman has been rolling out the results of the cnbc "wealth in america" report. now it turns to confidence in the nation's top money men and steve has more on that right now. not the best marks, right, steve? >> no. you wouldn't want to write home about these marks. aggressive news by washington to fix the economy has not impressed americans. the survey finding the public remains pessimistic about the economic outlook and trust in washington's economic leadership is at dismal levels. they disapprove of the job washington's leaders are doing on the economy. president obama rating the best with 46% approval with almost as many disapproving. you can see that's down by ten percentage points. democratic party ranked second with 39% approval followed by republican party at 26%. ben bernanke, 22%. tim geithner, 18%. >> the challenges the democrats are facing is they're the party

in power and ultimately the buck stops with them and they're clearly not getting the job done with the public right now. the problem for the republicans is that they are the opposition party but they're seen as a poor alternative. their approval numbers are far lower than democrats and if they want to gain back into power they need to see numbers improve significantly. >> that's jay campbell. the only upside for geithner and bernanke, half of americans don't have an opinion at all or aren't sure. there may be hope. here's something that really caught the pollsters attention. 47% disapprove of the way both political parties are handling the economy. can you say third party out there. americans don't trust the people and don't trust the economic institutions. 24% of americans express confidence in federal reserve. 19% have faith in treasury. that's barely above trust in fema. only 1 in 10 americans say they trust wall street.

by confidence, you can see 77% of americans say they're confident in the american military. with this dissatisfaction, it comes as no surprise they say no to more stimulus. 56% say the government should worry about the deficit even if it means it will take the economy longer to recover. for full results and questions and answers and demographics of people we polled, go to our website. a couple really interesting things. just from internals on the survey. subgroups that think that price could increase, you can't find meaningful support for wall street among any of them. no support for wall street. on bernanke the investor class if you call people with more than 100,000 income and more than 50,000 in the market, they support bernanke in more meaningful numbers as do democrats more than republicans. on the investor class, they have the same approval rating for

both parties among those with money in the market and those with higher income. you can see a financial advantage for republicans on approval and it's not there in our numbers. >> i guess the fema numbers -- fema has more support. >> a little bit less. >> a lot more than wall street. >> a lot more than wall street. >> less than the fed. >> what do you think that translates to? >> at the extreme when it comes to taking treasury numbers with geithner numbers, the question is whether or not that's a political liability for obama on one hand. i think it also translates into for more economic stimulus. i just don't think the support is out there for it in the public right now. we asked the harshest question we could have asked. we said do you support spending more money or reducing the deficit if it means the economic recovery will take longer. that's a harsh question. 56% said yes. do it that way. >> steve, interesting numbers. first reaction we want to turn

to david gregory, moderator of "meet the press" joining from us washington. good morning to you. not sure if you were able to hear some of what steve was bringing us. we have t.a.r.p. that will be a relative money maker. we're within a hair's breath of positive jobs growth. and yet there doesn't seem to be a turn in the popularity of how they've handled the economy. why not? >> i don't think that there's much faith in the economy when you have unemployment at 10% and that sort of underreports how bad the job picture is. we're supposed to be recovering but it feels like jobless recovery because that's what it's been so far. the question of where's the exit from government intervention in the economy which certainly business doesn't like. americans are skeptical about it because they wonder how far you can take it without ultimately paying the bills and it is creeping into other aspects of our life. i think that's the lack of confidence. my question about the stimulus for example is if you want to

judge the merits of it thus far, you're still only really evaluating the first third of it. there's still most of it that hasn't been paid out and can they really then step up and try to provide additional stimulus without seeing the result of the rest of the payout. >> that's why the debt ceiling measure is more politically loaded than ever i would imaginefimagin imagine. >> that's a huge debate about what should be priority. deficit reduction or doing something to help private sector start hiring again. there really are limits obviously to what the government can do in this regard. the fed maxed out. so what is it that's going to get misses to start investing again and hiring again? what's going to get the consumer jump-started? again, it's not clear that anything that stimulus has done has done anything more than stabilize the picture. >> david, steve liesman. our pollsters who you know are

surprised by 22% of the population that doesn't support the economic policies of either party. neither republicans nor democrats. you know more about this political stuff that i ever will. the question i have is this opening the door for some kind of third party candidacy here? >> i think third party is still too difficult to pull off and is he premature. i think as poll rises, you have to look at it seriously. especially because you have independents around the country who are popular figures. i think there's just -- i think americans are maxed out with government. they don't think government is getting the job done. they don't think major institutions are getting the job done. i think there's cynicism in major institutions media, government, wall street, but that creates so much headwind for the government instead of looking at where the government has been effective at preventing collapse, people still don't really understand how the financial system operates.

the financial it's llliteracy i huge contributor to that. you don't have a job. you've been looking for a long time. government doesn't appear to help you at this point. they don't appear to be moving this cruise line in any significant direction. i think that's the hardest part about this politically as well as economically which is what does recovery really look like. how is it different from the recession of the early 1980s where the job loss was pretty sharp but so was the recovery where we look to be in a different situation now. >> speaking of those past recoveries, who is coming up on sunday? >> christie roamer and also our all-star panel with jim cramer, alan greenspan, governor from michigan and mitt romney. >> cramer and greenspan together. interesting. we got to go, david.

we'll see you on sunday. tune into "meet the press" on nbc on sunday morning. check local times. "squawk" continues in a moment. (announcer) we call it the american renewal.

because we believe in the strength of american businesses. ge capital understands what small businesses need to grow and create jobs. today, over 300,000 businesses rely on ge capital for the critical financing they need to help get our economy back on track. the american renewal is happening.

right now. dow futures up 37%. we get data in a moment. we'll find out if consumers were spending in november. government retail sales report is out in moments and we have

pimco's chief on the way with his words of wisdom for the markets. stay right here. "squawk" will be right back.

two numbers coming out.

retail sales and import prices. rick santelli, let's have the numbers. >> all right. numbers are out. here we go. import prices up 1.7. if you look at year over year up 3.7. these are rather large but don't worry, folks. they tell us there's no inflation. advance retail sales, they're up 1.3. that's a pretty decent number. you strip out autos, up 1.2. we had subtle revisions to retail sales but nothing horrible and if you strip out autos and gas it's still holding up rather remarkably well up .6. let's summarize. import prices, they're moving up. you read an article about china today they say they have deflation under control. check the dots. remember what currency they seem to be linked with. if you look at the response in the marketplace, rates are going up.

not rates that people try to control. the market rates. even subsidized market. if you look at what's going on in foreign exchange, the dollar is going up. that's probably a good thing unless you own stocks. back to you. >> i think futures aren't doing too poorly despite a steadier dollar. we'll get reaction from steve and larry. 1.3 on retail and we were looking for almost half that. >> i was looking at the import numbers and the price numbers and what i find is that headline number driven by the petroleum prices up 6.2%. go down to nonpetroleum prices, year on year they are down 1.6%. year on year. there is just really very slow consumer goods minus 0.1%. so the inflation numbers are not really there unless you take out -- we take out petroleum that went down in price and will show a decline in the next month's numbers.

>> what's explaining strength in retail? >> a lot of people will parch these numbers but that's a good set of numbers it seems to me. i think it is cohesive with some of the other numbers we've seen. >> china industrial production last night. their exports. our exports yesterday. even jobless claims with a moderate bump. the notion that global economy is impairing is intact. >> carl, did you happen to notice the emergency claims yesterday? >> what was that, rick? >> did you notice the emergency claims benefits in the report yesterday? >> no. we did look at continuing claims. >> you know what? the emergency claims were up 327,000 to 4.2 million. six times what they were a year ago. so painting a picture that number yesterday was responsible for lowering people's fear of the jobs market may be a little bit of an overreach when

nonseasonally adjusted numbers were much, much, much higher than the headlines. >> rick, i'm not sure your numbers are right there on -- there's no program called emergency. there's extended unemployment benefits and there's extended unemployment and extended benefits and those numbers are in the 400 -- >> i'll send you a copy. it happens to be on the bureau of labor statistics website. why let details get in the way? >> because the numbers aren't what you say they are, rick. >> okay. how much would you like to make a wager there, big guy? >> unemployment claims up 4.1 million and the extended benefits up 407,000. there's no emergency program. there is continued claims which were up -- >> i'll send it to you. we'll link it to cnbc.com later. >> what about inflation numbers, rick? what about inflation? >> up 1.7 up 3.7 year over year.

why don't we believe these numbers? >> we believe them. it's heavily influenced by petroleum, rick. >> i don't ever use petroleum. i thought you said petroleum prices were down. >> they will be in the next month's report. >> why are the numbers up? >> it was last month, rick. it's november. >> okay. >> glad we got that settled. >> i want to come back. have you looked at retail. >> i looked at retail. give me a second. >> i think they should have you on "meet the press," too. >> real quick here -- >> he's been on. >> darn it. give me a minute. you have gasoline sales up 6% drif beven by higher gas prices. electronics up. so bottom line is there seems to be where with all out there for consumers to spend money out there. i like that it goes with the survey that suggested better than expected christmas spending out there. >> good times.

rick, thank you. steve, pleasure. >> you saw protests in copenhagen this morning that were 150 people there chanting. all young. the u.n. is holding its climate change summit. world leaders hoping to draft new standards that would mandate harsher emission standards replacing the treaty which expires in 2012. john, you are a member of the cnbc carbon council. i'm not a member of that. you like what they're doing in copenhagen. also i think you support the administration's efforts on cap and trade. can you tell us why? is it just so the epa doesn't get involved which could be even worse for business or just in general you think it's a good idea? >> well, i think it's very important idea.

exelon wants to see a practical cap and trade bill with a tight cap on costs as well as on carbon emissions. and we support that because we are absolutely convinced it's the cheapest way and most job friendly way of dealing with climate challenge. you pick your technology and we know someone who wants to bet everything on it. whether that's nuclear or wind or solar or gas. experience of 26 years in energy business say we never get one bet right. we need a system that puts the market to work building better jobs and that's what president obama wants and that's what i want. now, as to copenhagen, i think

they're trying to go in the right direction. we'll judge the results when we see them but like president obama and senator mccain and senator lieberman, i think this is a problem we have to deal with and cap and trade system is the most economic way of doing that. >> the thing we read about a lot and we don't really talk about it but we dismiss it unless it's to get an argument going but climate incident does that cause you pause whatsoever? >> it doesn't cause me pause because i read the scientific reports and met with so many of the scientists that i think i'm keenly aware of how deep the scientific consensus is but it comes as no shock to me or you that within the science community like every other community there's a person or two who is unpleasant.

they tend to create problems for all of us but the depth of the consensus is there. the national academy of science in this country 18 u.s. scientific groups wrote a letter to the president. we know where the consensus is on the problem. and the issue as the president made clear at a meeting two days ago is how to deal with this problem in a way that creates jobs instead of destroys jobs. >> john, some people say if you look at cap and trade that's a system not needed and you could have regulators say you have to do this and we regulate you. this is what you have to do. they create a system of clear winners and losers and exelon is listed as a big winner. why not say this is what you have to do? >> then you'll do the most expensive things first and the economy can't afford that. >> cap and trade -- >> exelon is a winner in a cap

and trade system and the reason we're a winner is we've sold most of our fossil plants. we're shutting down several others. we have a very large, very clean nuclear fleet. that costs our shareholders a great deal of money over decades to get here and we think it's our turn to win. but the reason for the cap and trade is not who is a winner and who is a loser. the reason for the cap and trade is it's cheaper for the consumer than the kind of epa mandates that you refer to. if you simply say go to this level and you have no way to trade to get the cheaper things done instead of more expensive, you have a very costly system. the economy can't afford that sort of mandate. >> you talk about the depth of the consensus. your argument suggests that consensus equals truth. don't need to tell you the number of examples in the last couple of years where people thought something was true and

it turned out to be the opposite. >> and the reason i put the weight there is i'm not a meteorologist. i'm not a glacier scientists. i don't follow sea level algae myself. i run an electric company and what i try to do is read the work these people do, talk to people i really respect who i know are smart, and i try to hunt for the truth. in this case this issue has been battered about the scientific community for so long that the depth -- >> 15, 20 years? in the last ten it's hard to get the data to fit with the models. >> it's not last ten years data they're looking at. some of the data they're looking at goes back for several centuries. >> other data goes back 4 billion years. >> one of the things, john, they've been arguing it for all these years, there must be some substance to nonbelievers here or this issue would have been

put to bed a long time ago. >> science is not a matter of revelation. you don't get one absolute truth and it stays. science is a matter of constantly looking at a whole variety of different tools. ice levels, carbon contents, and trying to figure out what is happening and why it is happening. and whether you look again at the ice cores, the depth of the ice sheets, it's very clear to nearly all scientists, that the climate is warming in a long-term trend. now, that's happened before. the only possible reason isn't just human activity. but in this case there's a great body of evidence that suggests that that's a very big contributor. the point i'm making is you

don't just -- >> you go along with it because you're nuclear. and you'll win with cap and trade. >> i started working on this when i ran a coal burning utility and i did it because i thought there was a problem here that we needed to understand and we need to find a prudent way to deal with it. i wouldn't bet our whole economy on any one solution but neither would i bet the climate on the proposition that the scientists are wrong. instead you hunt for a system that has a feedback loop that we can afford and that's cap and trade rather than a simple mandate. >> it's a hedge. >> you make a good and compelling argument. we appreciate your time. thank you. up next, making calls on stocks, bonds and the economy and the feds next move. none other than that pimco's ceo. they're all here. we'll talk to him in just a minute. "squawk box" will be right back.

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let's look at future future. retail numbers up better than expected. more numbers coming out at 9:55. we're getting consumer confidence at that time and 10:00 we get business inventories. joining us right now with his thoughts on the economic numbers, the t.a.r.p. extension, all sorts of other matters related to the market, the ceo and co-cio of pimco.

great to see you this morning. have you been listening over the last few minutes as we listened to those numbers coming in getting debate going on that? >> yes. >> what did you think better than expected retail sales numbers for november? is this telling us that there are concerns about inflation to come down and great news that consumers are spending more than expected? >> a couple things. retail numbers were better than expected and that's good news. one has to look at two things and that's true for all the numbers these days, becky. first, composition and second how sustainable are the good numbers. this is going to be important because increasingly what's going to matter is not just the level of growth, but also the quality of growth. that's for two reasons. it has to be sustainable. it has to lead to demand. that's what companies need in 2010 and that's what the economy needs. secondly, it has to be

sustainable without continued support of the public finances. the market made it clear over the last couple weeks that it's worried about sovereign balance sheets. it's worried about public debt. so one has got to look at these numbers and ask what is the quality of these numbers? >> you know, another question we've been debating back and forth here this morning is citi and it's intent to try to pay back the t.a.r.p. money. there's been debate it's great idea if taxpayers get money back but other is will they pay it back too soon and that's something that larry bossidy has been concerned about. >> they should not pay back unless they're confident the balance sheet is strong enough not only to sustain what they have on it right now but also to sustain headwinds to commercial real estate and credit cards. citi is exposed on both fronts. they have to be very careful not to do something too early.

what is important is to ask the question if they do it, and if it is indeed signal that banking system is normalizing which is what everybody wants, how quickly should we expect the banking system to start lending again? that's the critical issue. when does the banking system start lending again? that's what the economy needs. there are many, many small firms that have no access to credit right now. the way we view it, becky, 2009 was all about main street versus wall street. if you go to 2010, there's a lot more segmentation going on. a lot of segmentation going on between the big companies that have access to capital markets and can get credit and smaller companies that have access to banks and cannot get credit. and your survey also shows that there is a gulf starting to develop between households well off and starting to spend and households less well off and

still can't spend. >> it's clear now with sovereign debt question as it relates to greece and spain and ireland, that there's some concerns. is there a basis of concern to the extent that it could cause a worldwide disruption or is there something that can be accommodated over time? >> it's something that has to be monitored very carefully, larry. you know, we've gone through a sequence where every balance sheet was levered and the last balance sheet to be levered was the sovereign balance sheet. that's why the survey steve talked about has people concerned about debt in the u.s. and markets are concerned about greece, ireland, italy about dubai. so we've got to the end now in terms of the balance sheet that can be levered. there isn't anything else beyond that unless you go to the chinese consumer that will take time for the chinese consumer to take up his or her leverage. it's something that one has got to look at. it's important that governments

start having credible programs to reduce this massive growth in the the deficits and the debt dynamics. i can tell you that's something we look at and debate every single day. >> how are you rolling the idea of china around in your head? because on the one hand we've got a lot of skeptics talking about over capacity, the way they count durables, selling washing machines to people who can't use them. on the other hand, there is a waiting list to get a toyota. they buy bigger televisions than we do here in the states. i mean, is their consumer for real or not? >> it is, but the problem that a lot of us face is that we try to bring china and put it into a framework that is very understandable to us but that's alien to the chinese situation. so think of china engaged in a multiyear development process. they are managing that process extremely well. so when you look at china in itself, china can navigate the various indications of bubbles. they can navigate and sustain

growth and employment. what china cannot do overnight is take up global responsibilities. mike spence who we had on your show a few weeks ago made a really important point. he said, you know, it's not often that a low income country is asked to take on massive global responsibilities. and the system now is expecting china to take on massive global responsibilities, but the chinese are focused, understandably so, on what's right for china right now. >> all right. we want to thank you for joining us. it's always good talking to you. >> thank you. >> have a great weekend. okay? >> you, too. >> when we come back this morning a lot more on the market day ahead with the opening bell just about half an hour away, 40 minutes or so. larry bossidy will get a final chance to sound off after a short break.

welcome back to "squawk box." we'd like to tell you about some special guests in house with us today. bill is here with his wife and mother and they're visiting us because they donated money to the neuroblastoma cancer foundation. bill is one of the founders of a group that put together the ally and friends golf outing. you want to tell us a little bit about ally, who she was and where this money goes?

>> ally was a little girl that contracted cancer and the foundation was started to help find a cure for cancer. we put together a golf outing about four years ago with 30 of us. now it's over 400 people and it's a two-day event. we've had a lot of great interaction with the indianapolis colts and a couple other former nfl players -- tony dungee, peyton manning, adam venetari and it's a great event. we raise money every year to research. we search out different individuals and foundations that can support us. >> all right. well, bill, again, we thank you for coming in today and appreciate your time and again it's the neuro blastoma foundation they've been raising money for. we appreciate it. >> thank you. >> our guest host larry bossidy will sound off on the economy

after a short break. wait until you hear where he thinks joblessness is going.

our guest host, cnbc contributor larry bossidy has been with us for a couple hours. we've done a lot of good work. joblessness you think even though it's going to be elevated for a while could come down to about where? >> you know, if we get to 9% in 2010 i think we've made enormous progress because as you know the under employed now is something like 17 1/2%. and people are going to add people very reluctantly. they'll make sure volume is in place before they go about hiring again. so it's going to be a long way back. >> yes. >> hopefully we'll get -- make some progress in 2010 but we'll still be worrying about it a year from today. >> long term six or seven? is that a call by you? if so, by when? >> i think the basic unemployment is going to go up from four to something in the range of five or six in the future. that's unfortunate. we have a dynamic economy with lots of innovation but we're going to have to fight this time to provide the number of jobs that people are in search of. >> judging from the people we bring in,