good morning. welcome to "squawk box" here on cnbc. i'm becky quick along with andrew ross sorkin and steve liesman. steve, welcome. good to have you here. >> nice to be here. >> joe will be back i think if two days. in just a moment, we'll have much more on what is arguably the corporate talker of the day. the walmart mexico bribery scandal. we have a management expert joining us. but first let's get to this morning's other top stories. a lot of deal news out there. nestle buying pfizer's infant new tregs busineutrition busine. nestle paying almost five times the unit's expected sales. it will extend its lead in the infant formula market. also astrazeneca, 54% premium to

the company's closing price and gives them a new drug to bolster its pipeline. also amlin spurped a takeover bid from bristol-myers and is fending off a lawsuit by carl icahn. >> i like did today. we haven't seen this in a while. i don't know if you consider this the pharmaceutical sector when you start thinking about baby infor formula. >> why do they need the cash? >> pfizer has become a bloated big old mess. >> so they get all this money -- >> they'll use it for research and probably see it in divide dividends. largest story is pfizer trying to get its act together. some people think it's become too much. the question of course can you put it into research and get anything for the research.

or they could turn and you willy buy biotech stuff. but if you missed the story over the weekend, the "new york times" reporting that walmart silenced its own internal investigation of allegations made by former executive of its subsidiary in mexico. the allegations suggested that the mexican division orchestrated a campaign of bribery to grab market dominance. i don't know if you saw this story, but it was just unbelievable. and just went on forever and also was so detailed in who i intricate the bribery really was. >> and they've been investigating this a long time. walmart found out back in december and that's when the company turned away and let u.s. authorities know there had been situations there. but this is something that you have to believe at this point will lead to big shakeups.

we have also a lawyer who will be joining us a little later, jacob frankel, who says this could be one of the top five issues you've ever seen. >> interesting it went to the top and silenced at the top. >> and let's get more perspecti perspective, dean for executive programs is with us. jeff, you read the piece. you know a lot of people on that board. does this get to the top and what happens next? >> it is such a horrible headline to wake up to. congratulations to the "times" on ferreting this out. your colleagues have been trying to get warning and clarity. but as you mentioned, it happened at the very top that we

have this terrible trail of evidence that is so apparently condemning that we also have this great global icon caught up in the 's hundreds of cases of this. it didn't need to have to cheat to win. and there's no defense for this. >> as a corporate executive, what should the board be doing right now? >> they should have an independent outside firm. instead it got passed down the line much as the way we've seen failed investigations earlier days at hp or more recently at news corp. we've seen it at adp. so many examples of very sophisticated board members.

you need an outside investigator. you certainly need a committee, an audit committee. i know some people on thand you had audit committee. i don't understand why they haven't put outside investigators outside the board. the board has failed in complicity or oversight. >> the vice chairman of the company eduardo castro wright was the executive in early 2005 when many of these briberies were alleged to have taken place. she be suspended immediately? >> well, shoot sli both through whatever claw backs the company can get on his xen sarks he's entitled to due process, but of course legally, sadly we're

seeing very top names, past chairman and current ceo, appaerntsly were aware of something here. we've seen withis in bp. people knew about things and again this horrible cover up being worse than the crime. to see a company lying to see payments disguised as legal payments when they were outright bribes, corrupting public officials. some of the business community surely will circle the wagons and say this is a terrible law, we can't compete. no, that's nonsense. >> we should point out in the "times" article, it says wright was there at the top for this and certainly says that this behavior accelerated under his watch because he was pushing so quickly to get stores done. i don't believe they ever drew the line that he knew explicit thely that this was happening. and i guess how do you separate

the two or is there a reason to separate the two. >> that's why i say there should be due process. but when you have in-criminal nation of quite a number of whistle blowers, not just a single individual, but internal investigators were squelched and they have pretty strong evidence from what i read in the times that the actual investigations were is you pleased. that's a big problem. these are people who didn't want the truth out and sure they're entitled to their day in court, but tom phillips fought for the act saying great american businesses new to compete on a level playing field. ups, ibm, they would never compete in this kind of nonsense. >> jeff, to what extent do executives go to jail for violating the act? >> they have and this could be basically multiple levels. depending on how it's taken in

terms of lying and fraud and financial records, a lot of different ways where people can get hammered on this. and it's the company's fundamental character. in man for all seasons, just before henry thomas moore is hung, he said company's character is as fragile as a liquid cup in your hands. once you separate it, it's forever gone. the characters of walmart, who knows what's going on in end i can't or ci said india or china. when investigators are told not look at certain things, when whistle blowers suffer, these are some of the issues in the news corp investigation. they were told not to look behind the hacking of the royal files and when they had evidence, they were told to

ignore it and they did. these are big problems when the actual procedures are so badly violated. where is the diligence, where is the sense of governance oversight. mar mark twain said honesty is the best policy especially if there's cash in it. the company's reputation is worth a lot. great companies in the past of course like johnson a& johnson, they've known there's a great value of having a reputation that stands for something. >> jeff, thanks for your perspective. appreciate you being here. >> during the next two hours, we'll take a look at every angle of the story. that's the investigator side plus the legal hot water that walmart may find itself in. how much of walmart's culture plays into the scandal and what this all could mean for the company's stock. we'll keep an eye on all of that. and there is walmart and there

is walmex and a number of short sellers taking a look at that. walmart owning 69% of walmex. it tech slinically is a separat stock. >> walmart closed at 6245 on on friday. right now the bid at $60.50. the ask is at $61.50. fairly widespread. it is early on right now. we'll see where this tightens up through the course of the morning. >> but jeff's point is that there's money in reputation. and we'll see how much money. >> and there's money in these fines that come out when it comes to the act. in some say this could top a billion dollars. we'll hear more about that later today. >> and time for the global markets report. ross westgate is standing by in london. >> a lot of red arrows here. >> we are down fairly heavily

giving up most of last week's gains here. you can see dow jones stoxx 6 oorks just 20 stocks at the moment in positive territory. phillips really opening the earnings season here in europe. they came out with first quarter numbers that beat forecasts. that's pretty much it in terms of bright stocks for europe. so off 1.7%. ftse last week was up around 2% for the week. dax up 2.5%. the dax you can see has given all those gains back. down nearly 100 points for the ftse. ibex has been down 3%. just below that at the moment -- or just above it at 2.8%. a number of stories driving us down, eurozone pmis that came out for april. much weak than we might have expected.

of particular concern was weaker french numbers and also german manufacturing. german manufacturing activity as measured by market composite pmi coming in at the weakest since 2009. new orders down at # 4.9, the tenth month of contraction. bunds still as a result near those record lows at 1.672%. we've also got politics coming into play today. dutch government pretty much unable to agree to austerity measures. and it looks like the dutch prime minister may well have to call an election. spreads between ten year debt and german bunds widening out to the widest in these years. italian debt yields are the widest in three months over german bunds and of course now we're heading in to the second round of elections in france, hollande who may renegotiate the fiscal compact. that's it. back to you. >> with all those different things that you're looking at,

the lousy numbers that came in on manufacturing, the concerns with the netherlands and what's going to happen with the earlier elections, with the french elections, which of those three factors is playing the biggest role on the markets this morning? >> definitely hit the session low just after that pmi number came out. and we knew it was going to be bad because the german and french numbers came out sort of half an hour before that. but as we heard from which is williamson this morning, he said it indicates that europe is now contracting for the third quarter in a row. whether that continues we'll have to see. but that has certainly been the biggest weight this morning. i think the french election result we probably thought that was going to happen. we'll have to wait and see how that leads out. and we'll keep our eye on holland, as well. if they can't agree to get their budgets in to order, that also adds another span in the works

of political cohesion. >> is the market thinking a couple moves down the line here where the potential victory by the socialist creates potential french discord in europe? >> people are talking about that. whether they're pricing that in, steve, at the this particular moment, we don't know. there's sort of an assumption here that what gets said in an election, remember he wants to reduce the retirement age, shove taxes up, penalize the banks. sort of a feeling what you say in an election is not what gets implemented when you become president. but you have to remember the last time we had a socialist president in france, he did start implementing the things that he had talked about in the election. so people are wondering whether he would basically -- will he break up that franco-german

alliance, are will he side with latin america countries. he may not know himself at this particular moment. >> okay, ross, thanks very much. we mentioned the lousy manufacturing numbers coming out of europe. that was not the case in the china. china came in with strong manufacturing numbers. strongest all year long. biggest automakers gathering in china and that's where we find phil lebeau. >> two big stories here at the beijing auto show this year. there is the resin shortage hitting the entire industry. and whether or not china auto sales in the china market might be slowing down to a level where people are a little bit concerned. remember, they're used to double digit growth. we had a chance to catch up with chrysler's ceo who was over here as jeep and chrysler unveiled a

couple new models they'll roll out later this year. of the big three, u.s. big three, gm and nord ford are much better positioned than chrysler. chrysler sales a drop in the bucket in the market. we asked sergio about the potential impact of this resin shortage, the nylon 12, which is used in so many engine compartments and whether or not it might hit production slowdown around the country and around the world. here's what he had to say. >> we were talking to our people overnight out of europe, the u.s., there's a better than 50% chance that we'll find alternatives to the resin issue. i sincerely hope i haven't jinxed the odds by having said that. but it's a tough issue.

>> very tough issue being studied by toyota. we talked about toyota, the ceo, and he says the company is also working on the resin shortage. remember, this is an industry wide problem. toyoda is optimistic and he says china sales should continue on the trajectory where at the are in the range of 8% to 9% fwagai. and next hour, a "squawk box" important interview, a first on cnbc with dan akerson. he's here in beijing because as we all know, china is critical to the growth of general motors. they sell more cars in china than they do in the united states. and this is a profit driver for the company. he's here for the auto show and we'll be talking with him first on cnbc. but for now, back to you where

it's morning team and it's evening here in beijing. >> last week we spoke with alan coleman at dupont and it's an issue that not just the auto industry is trying to come up with a solution, but those in the chemical industry are, too. >> absolutely. it affects a number of industries. it is a key component, all engine components across all vehicle lineups. >> phil, thank you. and this morning u.s. equity futures called sharply lower today. dow futures off more than 100 points below fair value. we'll talk that and a lot more coming up. imf calling on european countries to make bold changes. today squawk is getting involved in solving the eurozone crisis. we'll be joined by the head of the central bank of austria and he's making his way to our set

as we speak. and that's still ahead. nowotny. tomorrow our guest host jn n huntsm huntsman. and we'll talk energy and pollices with schweitzer and earnings reports from at&t and united technologies. don't miss "squawk box" starting at 6:00 a.m. tomorrow. auto-bliss.

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futures are indicated sharply lower. right now the dow would open up about 100 points below fair value. a lot of concern based on what we've seen coming out of europe this morning and the story of the french elections and also the menetherlands. you can see the s&p futures down by 12, dow by almost 100. also concern about manufacturing at least in europe. very lousy numbers across the board there everybody though we did see strong manufacturing numbers coming from china. sun trust is reporting that first quarter earnings came in with numbers that beat the street by 15 creents. revenue also topping consensus. and gasoline prices declined for the first time since mid-december. this according to the lundberg survey. it says that the average for a gallon of regular unleaded dropped by five cents.

>> and now to the news out of washington. this morning john harwood joins us now. john, i was reading the "wall street journal." don't know if you saw it. an article about romney and in particular his cash. and how he may be hitting a snag because of some sec pay to play rules. do you know thinking about will this? >> i have not seen that story. are you talking about romney's personal finances? >> this is not personal finances. this is him trying to raise money and apparently because of these sec rules, he's getting hfr-hegetting -- he's having difficulty raising new money. i didn't know if it's something that hit your radar. but if it hasn't, we can talk about things that have. >> this is a very difficult fund-raising environment comparatively speaking for both candidates. president obama is mind the pace that he set in 2008. i think both of these candidates

are going to have enough money to get their message out. mitt romney is going to probably raise less in his campaign, but the republican super packs are likely to make up that difference. so i don't see fund-raising as something that's likely to be a decisive element in the campaign, but everybody knows that in this economy and in an election that doesn't have the same electricity that it did four years ago, not as easy to raise money for both sides. >> imf had their big meeting. do politicians try to get involved in that at all? >> well, sure, because administrations of the most important economies in the world are in continuous communication with the imf and with the world bank, as well, as they try to figure out ways to sustain this global recovery. and we're seeing head winds now that we haven't seen in over the last receiver months. energy prices have made things more difficult.

but, yes, they do keep very close tabs on that. >> we are ron paul coming up here for two hours. give us the overview of his role right now in the campaign. obviously pot going not going t the nomination, but is he a power lplayer still? >> no. ron paul underperformed some of the expectations for him. when we started out, everybody was impressed with the organizational ability that ron paul was showing and the plom that he had in caucus stateses in particular because he had a relatively small niche of highly motivated people who in a primary year when mitt romney was not exciting people and you had other candidates emerging and then fading, but ron paul dwn break through in the way that we expected. he had hoped to go through the primary calendar, am mass a cash of delegates and be able to have leverage at the convention to advance his agenda. but he hasn't been able to do

that. so, yes, he's around. yes, he'll be at the convention. he has a few delegates. but it's been a pretty disappointing performance you willy. >> okay, john, thanks very much. coming up, the world's rarlarge retailer in the middle of a bribery scandal. how will walmart handle the situation raising eyebrows across corporate america? should investors worry? plus we'll welcome the head of the central bank of austria and ecb board member right here on squawk. if you are one of the millions of men

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pressure coming on the markets this morning. red arrows across the board. dow futures down by over 100 points. s&p futures down by 12 1/2. major pressure as we're also seeing pressure in europe this morning. and this is carrying out right how. head of the central bank of austria is right here onset with us. but let's get to the corporate talker of the morning. "new york times" story of walmart's effort to make a bribery case go away in mexico has board rooms buzzing today. but should walmart investors worry about a scandal that took place years ago south of the border some courtney ray began joins us from new jersey at the walmart right outside of new york city. >> reporter: the story reads like a hollywolywood movie scri.

the world's largest retailer bribed mexican officials and covered it up. if the allegations are true, walmart did violate the foreign corrupt practices act which is an international corruption charge. however, there's a five year statute of limitations which could save walmart from facing criminal charges. but what about the penalty walmart will face from investors. the number of analysts that i spoke to yesterday and so far today believe as long as walmart continues to grow, that key same store sales number, it could get a pass. many analysts do believe that we will see some short term pressure on the stock, but that it would probably be short lived as a result of this bribery investigation. shares are up almost 16% a year and 4% year to date. last year walmart reported income from continuing operations of $15.8 billion. that's up nearly 3%. the retailer returned $11.3 billion to shaer horeholders.

we're told while it shines a negative light on a number of current key executives including mike duke, he doesn't think there is a fundamental impact that should change shareholders current investment strategy. however deutsche bank thinks it will be hard to sweep it under the rug. proven troo, the allegations could damage the company's growth engine. and for those involved, jail time isn't out of the question for some current and former employees. and that some senior management could be asked to step down. but members of the founding walton family hold about 15% of the company's shares and the sons are both members of the board. possible impasses standing in the way of quick management changes. now, regardless of what happens with the share price today, analysts do believe in a this will cause trust issues and possibly further investigations into walmart's over foreign business dealings. >> all right, courtney, thank you very much. we should take a look at the bid

ask today. you'll see today the shares are going to open a little lower. at this point, the bid is at $60.65. the ask is at $61.30 and that's a stock that closed at $62.45. this is a dow component so part of the reason you're seeing some of the red arrows. >> we should pick up walmex and see what they're doing. i've heard a number of short sellers talking about it as a pure play that could have the most problems. >> meanwhile, european fears dominating the global market story. joining us on set, ewalt nowotny. mr. nowotny, thanks for joining us. let's start off with the news over the weekend, the different countries giving money into this imf fund. is this something that you

support and ecb supports? >> yes, we support it because we think this makes sense. it's part of stabilizing the world economy. it is something where imf and eu can work together i have to say i regret a bit that the u.s. is not participating in this. but i think it will be part of the recovery that we see. >> and how much more do you feel the european central bank can and should do to help support european recovery and stabilize the crisis? >> the european central bank has done quite substantial deal, both with regard to liquidity, with regard to interest rates. so i think we really have con tribucontribut contributed quite a lot. i would not advise to have let's say heavier -- a quick succession of steps.

i'm more for a steady hand approach. we have this big liquidity operation with a net effect of over 500 billion. now let's see how this affects the economy. >> about if you take a look at how it affects the sfok mtock m, there is not the desired impact. red arrows across the board. >> that's true, but -- >> are you surprised by that? >> well, not so much. at least the way how i see it, this is mainly politically motivated. as you have seen, we have elections in france, we have certain turmoils in the netherlands. and i think this is mainly politically motivated. we have elections in greece. so everything with monetary policy needs some time. so i think for us, the main are the fundamentals. i think the fundamentals in europe are improving

substantially. budget deficits are going down. current account balance in total is balanced. and again you have to look at specific countries. >> would you say that additional long term repurchase operations are off the table? >> for the time being, our strategy is a steady hand strategy. let's see how it works. >> but governor, we're looking at manufacturing numbers take came in very weak. ross westgate thinks that's the biggest reason the market selloff was there, not every n political issues. manufacturing numbers should economies could be weakening and if that's the case, budget deficits will get a lot bigger. are you worried about falling off the edge of some cliff in terms of just the economy itself? >> no, because what you have to see is a number of the countries concerned have started quite substantial structural changes.

and we all know the structural changes need time. so the critical period is exactly now when we have to wait how this comes out. on the other hand, we see strong economies. in germany, we have full employment. in us a tree, a unemployment rate of 4.5%. so full employment. higher growth rate as compared to germany. so of course we have different countries within europe. but in general, i think we should really stick to our strategy, have a lot of structural reforms. >> when is it appropriate to remeasure where things are? appreciating that these are structural changes that take tile. at what event for do you say victory this worked or we have to go back to the drawing board? >> in the current policies it's

not easy to say victory. so it's a step after step. the first thing that we'll see -- >> because the market is judging it today. >> of course. and this is the markets have the short term view. and this is correct. but we also have to look at the fundamentals. so i think for us, it will be important to see how much deficits developing, what are the current accounts developments. here we see positive development. and then you have to act. so it's the policy of the ecb never to pre-commit. but as you have shown in the past, if necessary, we can act in a forceful way. >> there's a debate about the feeling on the ecb about interest rates. is 1% a floor in your opinion? >> 1% is our main policy, but of course the market interest rate de facto are lower and it is de facto -- it is our deposit rate

which is 0.25 that is really rate for the markets. so i think we are at the low stage. >> so there's no point in lowering rates further because the market is a lower rate. >> at least for the time people, i don't see a point. >> americans are a little, i don't know, perplexed sometimes with how things happen in europe and whether or not there is the ability to do more on the part of the european central bank. is there an argument to do more, is there a willing f iningness more if the situation worsens? >> the european central bank has one prime objective and this is price stability. and we have quite substantial measures that we have injected

in total over 1,000 billion euros. net effect of about 500. we have also other operations. so i think the main point is really now to see that on the monetary side, i think we have more or less done quite a lot. and now we'll see how it effects. on the other hand, we have the fiscal policy side. this is not the feel of the european central bank. this is something that the governments have responsibility. there has been started quite a substantial policy of reducing structural budgets of deficits and i think this will work out. >> governor, you said you were disappointed that the united states didn't get involved in this latest round. but are you at all surprised? >> no, i'm not surprised because i know this is election year and it is perhaps difficult to have let's say international cooperation in such a rear. but for the u.s., if i may say

this, this is the biggest economy of the world. so of course it is closely connected with the rest of the world and i think this also has to translate into specific actions. >> and you also talked about how there are so many different economies. us a tree, austria and germany doing well. is that an argument for no longer having the euro? >> no, if i may say, also in the u.s., you have quite substantial regional differences in the economic growth and per capita income. this is also the case in europe. what we have to see is that there has to emerge a way of cooperation that for the time being the structural changes have to be concentrated on those countries that have economic problems and this has started. but of course all structural reforms need time. >> is spain going to need additional assistance? >> for the time being, i don't

see this. very substantial structure changes have been undertaken with reforms in the labor market, with reforms in the miss c mi fiscal systems. in half a year times and at the end of this year, results will show. >> so six months. watch the numbers. six months. that's what i was going for. >> i'd be happy to return. >> thanks for coming in. we'll hope you come back in three or six months for an update. >> i will be back. >> comments, questions, shoot us an e-mail. if you have views on walmart or something else. coming up, u.s. equity futures called sharply lower this morning. we'll head down to the trading pits in chicago and try tound wh to understand what's causing the weakness. and at the top of the hour, congressman ron paul, the gop

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welcome back. not a good way to start the week. u.s. equity futures at this hour, dow would open about 104 lowers respect nasdaq off 22, s&p 500 off about 13, all that result from jitters in europe this morning. plus walmart news, plus mergers. a lot of things going on. a few headlines in just the last few minutes, hasbro is reporting

four cents a share. revenues missing the mark. dollar thrifty this morning saying that q1 earnings will be between $1.30 and $1.40. that is better than consensus. citing flave favorable fleet co. >> didn't mattel come in with weaker numbers, too? people are not buying gifts for their kids? >> no toys? >> we'll see. as andrew mentioned, u.s. puts are sharply below fair value. scott the bower from the cme, what gives this morning, down by triple digits by the dow. what's the biggest fan to being, europe, elections, concerns with the euro? or is this an issue of walmart and others? >> i think it's all of the above. walmart is actually very minimal in what's happening in the futures. everything comes out of europe and uneasiness of the elections

is what's going on here. corporate iearnings have actualy been very good. over 80% of the companies beating estimates and giving good guidance going forward. at some point as things hopefully stabilize a bit and coming out of europe, at some point, these corporate earnings will in my opinion trump everything else and we'll see the market pick up again. but right now, europe and the elections is what's on everyone's mind. >> we know europe is out this, we know europe is out there just with every day. what makes it different today? >> i think now because this election news. coming out of france and maybe there's going to be a change of power which then translates over to merkel's biggest ally not being there. i think there is a great piece of uncertainty now that what's going to on happen with the euro and how that will affect what's happening here. the news out of china this morning, that was actually pretty good.

manufacturing numbers were a little bit better than expected and what the analysts are saying, we've reached a bottom there. so hopefully that can maybe propel us a little bit higher. but that news of the election up easiness and unnerving over there, that's what's causing the fult futures to be lower. >> how much does it matter that the fed not expected to make any new announcements. how much of this volatility around every single piece of data is the result of the idea that there is maybe less monetary knit out there? >> i totally agree. i think that whatever chairman bernanke says on wednesday really is not going to impact the markets down here. traders on the floor don't believe that rates are going anywhere anytime soon and that monetary policy is not going to change. so i think this week's fed announcements by mr. bernanke

will not have much of an impact whatsoever. >> scott, thank you very much for your time today. >> have a great day. >> you, for your time today. >> have a great day. >> you, too. >> coming up, the newsmaker of the hour. representative and president convention candidate ron paul will join us. why he says ben bernanke is a little bit off the mark. and don't miss "squawk box." we have a lineup of guests. former merrill lynch president greg policemening and a couple of surprises during the week. we have jeremy siegel on deck. "squawk box" returns after the break. [ horn honks ]

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welcome back, everybody, on this monday morning. weep are keeping a very close eye on the markets. as can you see across the board, red arrows in europe. the ftse is down by 6%, the cac 40 down and spain is down by 3%. that's having an impact right here in the united states as well. right now those dow futures are down triple digits, s&ps off by 12.5 points.

a lot happening in europe, part of it was the manufacturing numbers down and the elections in france showed that was up for grabs. the president coming in in second place, losing out to the socialist candidate. there will be a runoff but that did shake things up a little bit. question marks around the euro today. we've got walmart hark, a dow component indicated weaker today. that's coming up, too. >> coming up, we're going to welcome congressman ron paul, he's doing the walk. no topic is off the table. he'll join us for the next two hours. and from beijing, another major newsmaker when squawk returns. we've got a lot.

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against all odds -- >> we don't need people closing us out and saying we have our candidate. i think we should have a debate. >> gop presidential candidate ron paul is putting it all on the line as today's guest host. gold, the fed, the global economy and the race for the white house. >> walmart is known for rolling back the price but how about rolling back a bribery investigation. the world's largest retailer finds itself in the middle of a

scandal. how much trouble does this mean for walmart? >> and phil lebeau is live in chinese as "squawk box" begins right now. ♪ on the road again, can't wait to get on the road again ♪ good morning, everybody. welcome back to "squawk box" right here on cnbc. i'm becky quick along with andrew ross sorkin and steve liesman. joe kernen is off today. the "new york times" reports walmart executives moved to silence an investigation that uncovered extensive briefry at i -- bribery at its mexico affiliate. >> in other news this morning,

gasoline prices fell by about 5.5 cents in the latest two weeks, putting the average price across the nation at $3.91. hard to believe it, that's actually good news based on where prices have been headed over the last many months. >> take a look at the futures, this is not good news. the dow futures down by 106 points, s&p futures off by 13.5. a lot is driven by what we saw in europe overnight. >> when you think about europe, you think about autos. that's where we'll find major executives from all over hoping to cash in on 30 million vehicles by 2012. phil lebeau is there with a special guest. >> hi there. we're at a hotel outside of

where the auto show is. you just had a press conference updating your prospects. give us your take in terms of what we can expect for the rest of this year in terms of auto sales. >> 2011 the market here was down 2%. general motors was up 9%. so our market share jumped from mid 13s to over 15%, which is good news for general motors. starts and ends with great product. as we look into 2012, we're guardedly optimistic and our goals are somewhere between the 7% and 10% range. >> you just announced this week you've restructured your partnership with seic. the importance there is you now will have more of the say or an equal partnership say in terms

of product, platform strategy. explain the importance there. >> well, i mean, candidly when you have 49% or 50%, the fundamental difference in a partnership is infinitesimal. there was a restructuring of the deal not unlike and it's exactly the same of what volkswagen has with saic, our partner here in china. it's a restructuring and we're pleased that we're in constructive and cordial and good dialogue with our chinese partners. >> important in a country where you've doubled profits in the last couple of years. cadillac, though, has not been a major player relative to others in the luxury auto space in this country. you just announced you're going to be building the xts here. do you feel like you're behind the eight ball in terms of luxury sales in this country where the luxury market is red hot? >> i wouldn't describe it as

being behind the eight ball, as you might imagine. our sales are up 79% last year, admittedly on a smaller basis of premium competitors. that being said, our products are getting a good reception here. it is growth, it's an american product which is well received here. we are going to start to build them in china. we expect that to grow pretty well over the next three to five years. >> no characterization of percentage growth for cadillac? too hard to say? >> i don't think we'll grow 79% like we did this past year but i would guess it's going to be pretty healthy. >> you've got an electric vehicle you're developing for this market here. there's so much emphasis on the chinese government really pushing electric vehicles. is it going to take off here faster than it will in the united states? >> well, that's hard to say but it certainly is a national priority here, the electrification of the car. so we are in development for a car specifically for china. it's a small, called a chevrolet

sail. it should be in the market place by 2013. we're exporting from the united states, importing volts here, just starting to deliver them to our dealerships and hopefully they'll be test driven and we'll get a good sense of how good a take we'll get there as well. >> one last question. the resin shortage hitting the entire auto industry, everybody is impacted by this, do you sense you'll be able to avoid product shutdowns in terms of production or is it still up in the air for you guys as it is for many auto makers? >> we're pretty sure we've got our hands on this. we know we have inventory that will get us lieu a good part of may. then i think things will sort themselves out. we're pretty confident we have it in hand. >> dan akerson joining us here in beijing. the beijing auto show in terms of size, you go to detroit, it's a big show, international show,

nothing like the show here. 90 auto makers here. it is enormous. general motors is one of the largest players here given its market share in this country. >> thank you very much. phil will be in beijing and have much more coverage from the beijing auto show. let's get back here to our set where we welcome our guest host this morning, texas congressman and republicans presidential candidate ron paul. dr. paul, thank you for joining us this morning. >> thank you. nice to be with pup. >> can you give us an update where the campaign stands now? >> we had a pretty good meeting. there were caucus meetings, delegate selections in minnesota, we got 20 out of 24 of the delegates. in missouri there were 20 out of 40 that we got in iowa there was a meeting that was held to select the steering committee. there's 17 members of the steering committee. we got 15 out of the 17 and we have the chairman of the party in iowa. and this type of activity is

going on around the country, so it doesn't get the attention that we think it deserves but i think the campaign is going very well. a lot of people like to write us off and say why are you there, why are you doing these things? the market tells me we're doing pretty well because the crowds get bigger, the money keeps coming in, the enthusiasm grows. we can get up to 8,000 people on a college campus. yesterday in very, very bad weather in philadelphia we had almost 4,500 people show up and stood in the rain for two, three hours. so the enthusiasm is there, the money is there. we're making inroads in the structure of the republican party and the one thing everybody is agreeing on is something has to be done in this country. they're very unhappy with the way things are going around the world and in country monetarily, financially, debt, this whole problem. >> is that what the campaign is about? meaning from a practical

perspective, polls would suggest the chance is very low, if not impossible. is this not so much about winning as changing the debate? >> why can't it be both? people have trouble seeing a candidate that really believes in something and the goal is to move that and therefore he doesn't want to win or his goal isn't to win. this is what i did in the congressional raciaes, people wrote me off and i won 12 times. but it was always on the believes that i had. winning the election was the endorsement. if you win you get the endorsement, if you do well you get some endorsement. i don't shy away from the fact it has a lot to do with changing the nature of the debate. i mean, if you don't change the nature of the debate, you can't

tinker with the budget. this is why nothing's happening in washington. there's no philosophic discussion. both party leaders endorse the same foreign policy, endorse the same monetary policy. they really don't care about spending and debt. republicans say we're going to balance the budget in 30 years. i want to cut a trillion dollars and balance is in three years, i want to change the monetary system sew poo politicians can' away with spending and get their debt taken care of by the federal reserve. but the young people know this. they know what's coming on and they're rallying because they're inheriting this mess. they've been sucked into the system, they ended up with tens of thousands of debt, student debt, and they ket get jobs. they know structurally something is wrong. >> do you still believe can you get enough delegates to win the republican nomination? >> theoretically you can. it's not likely. nobody knew santorum was going to drop out last week. only a little over half the

votes have been counted. when we come up with texas and california, another third of the vote are yet to be counted. so you don't know. but in theory you can. in practical accounting i think we're very realistic but the one thing that is not practical and not realistic for supporters who have encouraged me to do this would be to say, well, we're in the third lap of a mile race, we're behind, okay, let's just walk off the field. that's the way they would see that. don't quit because you happen to be behind. you want to see how you do. and who knows, maybe somebody will stumble. you can't tell. >> santorum dropped out because he did not think he could eventually win. would you -- are you in this to the end or are you in this until there's not a mathematical chance? where do you see the end conclusion? will you take this all the way? >> you course i decide as we go

along. if tomorrow romney had the absolute number, i would probably continue in a modified way to maximize the number of delegates to go to that convention. they have worked so hard. it's not like six months or two years. it's been for four years they have been working. i mean, there are some states we've had ten and 20 new state representatives and state senators involved. for to us say, well, we don't want a presence, we're going to give up, we're going to maximize the delegate. even a lot of the delegates, where the delegates are required to vote for romney, they're our supporters but they're going to be there and they'll have an influence and have something to do with the platform. eight much bigger thing than anybody realizes. i think -- i go by ordinarily in an ordinary campaign if you get in and say, well, it looks like romney is going to win, you are don't get any money, you end up with debt and you don't get any crowds out.

the other candidates, they're not going to get these thousands and thousands of people coming out. the market is telling me this campaign is very, very viable and for two reasons -- one, they want to win if we consideration they want to maximize the delegates and they do want to have an impact. that is very important to every single supporter. >> is romney a flawed candidate in your opinion? >> well, i think the system is flawed and i think all the other candidates and all the democrats are deeply flawed philosophically. they've been talked about the same economists and endorsed a foreign policy which is deeply flawed and their understanding and need to follow the constitution is quite different. so i think the congress, the system is deeply flawed in they endorse interventionism, keynesian economics. >> how about mitt romney? >> he's part of that whole crowd of politicians, republicans and democrat, that are much closer

together than most people realize. there's not that much difference when you come to policy. rhetoric might be different but just think we get the republicans in and what do you do? you get double the size the department of education, you get more government medicine. this is why young people are so disgusted. >> romney has said he would cut back -- >> often they don't get what they're supposed to get. >> romney said i think last week he would cut back the department of education. not get rid of it but to cut back on its size. >> the republicans have hinted to that to 30, 40 years and they've never done a thing. the difference is they know i'm serious. >> why don't you run as an independent candidate if the system is that flawed. >> i've been a republican, i've run as a republican for 12 years. when i first started running, it wasn't a republican district so hi to convince democrats and independents. that's where our support is and

that's why we seem to couple up short in the republican primary because our support is tremendous. when you put my name up against obama, can i do better than romney. but you don't hear that. nobody talks about that. but rasmussen this last weekend, i was one point higher and romney was essentially higher or one point behind. >> but you haven't won a state in three attempts of running for the presidential nomination. why is that when you have such a strong support base? >> because sometimes there are independents and democrats and they feel uncomfortable going to a republican primary. but winning a state is dominating that caucus. that's still up for grabs, just like i said. minneapolis, maine, we still have a chance as well as nevada. alaska, we had the votes there to dominate and they just locked the doors. they kicked us out. and they're fighting that battle now.

they did that four years ago in nevada. a year or so later they admitted they did it, they found the documents to show we had the votes to take over the convention but they didn't want us to. yes, we're challenged in the status kwos of the entire country as well as the republican party, people don't like to give up their power. but the momentum is very powerful. i'm part of it but i'm not it. it's much big ager than me. >> dr. paul is with us for the next two hours. >> i have some political questions for him, too. in the moeantime, breaking news. kellogg just cut earnings expectations, expecting them to come in ant $3.18 versus $3.48 a share. the ceo saying we're disappointed with the performance of the company in the first quarter of 2012 saying

the decline was driven by european business, weak growth and don't know if you caught the cover of the sunday business section but there was a big cover story on kelloggs and how they're trying to compete against so many sugar high brands and how they're trying to invest in all sorts of new products but tony the tiger having a tough time this morning. >> speaking of tony the tiger, we have ron paul right here. more coming up. questions, e-mail us at squawk or you can follow us on twitter. and squawk master stephen roach talks earnings. and we'll tell you if retail's crown will be tarnished.

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we're back checking the futures right now as we head into about 7:20 eastern time this morning. we still have red arrows. dow jones looks like it would open 103 points lower, s&p would be off 13 points and nasdaq down

nestle buying pfizer's new baby food unit for $11.9 billion. it's a big deal for them. the second largest divestiture since they sold that consumer unit to j&j a year or two ago. commit remains under lots of pressure. we're trying to break down the recovery's risk with a squawk master of the market. stephen roach is a senior fellow at yale university, senior fellow the morgan stanley and held the chief economist post. you're in new york, not in new haven today. >> how about that. good morning, andrew. >> the imf had a meeting this weekend. the jitters. where are you on the economy?

>> i think the data flow is mixed. i think the most disappointing thing in the u.s. is it looks like a lot of the hiring that we were so enthusiastic about late last year was weather related. so the jobless claims are now slightly more elevated than we'd like to stay on a brisk hiring curve. so a little bit of a bloom is off the rose. the housing indicators were weak, underlying retail sales data were week. europe is in recession for the third quarter in a row, so all this euphoria about a resumption of rapid global growth was probably an overstatement, the markets are reacting to that. >> steve, your expectation for the rest of the year -- we have ron paul here on the set. we're in the middle of this big presidential election. whatever the economic number is or the unemployment number may be by the end of the year may ultimately decide all this. where do you expect all of this to shake out? >> i think in a weak recovery

we're going to have a really hard time getting this unemployment rate down below 8%. it may tick there a tiny bit but you add in the underemployment and you've still got mid teens in terms of broad base measures of labor market distress in the united states, which is really without precedent for a so-called peace time expansion. so the economy does remain, i think, the central issue for the upcoming campaign and representative paul is focused on that very much so for a number of years. >> representative paul is also focused on the idea of a gold standard. would you say that's the right way to go for the u.s. economy? >> no. and he wants to end the fed. i don't buy that either. he just made the point in the previous segment that the political debate should be about ideology and philosophy and that's a fair point. he's got very extreme views on

gold and the fed that i don't agree with but i respect his position and his willingness to debate these issues. >> ron, you have the floor. it's yours if you want it. >> well, the thing of it is if you're not for a commodity standard, gold, silver, whatever the market picks, you have to be for a paper standard. the record for paper is a lot worse than the record for commodities. if you have a gold coin from roman times, it's still worth something but paper money self-self self-destructs. to argue against gold means you have to argue for paper. if you're for paper, it's necessary to have paper to finance government the people don't support. otherwise people would just pay their taxes and fight these wars and support the entitlement system. but, yes, the people want the programs but they don't want to pay for them and you have to have paper to do this.

but paper will always end badly. and we're in the process of the end of this, the european currency -- the only reason the dollar does so well is the european is such a mess over there and we still have a bit of a reserve status. but i would think that defending paper is much more difficult than defending honest money. and it's still in the constitution that we didn't repeal that part that said that legal tender ought to be gold and silver. >> i think you're really overstating and exaggerating paper versus something hard. under paul volcker late 70s, early 80s. we had paper. we just had a disciplined, tough monetary policy that was aimed at squeezing a hyper inflation out of the system. we need responsible policy. it not a question of hard or soft, gold or paper. we just need policy, discipline and an independent fed, not a fed that is eliminated, as you

have argued in your book. >> but the purchasing power of the dollar since the fed's been in charge, we've lost 97% of it. the purchasing power of gold for thousands and thousands of years maintains its values and actually with increase of production, it goes up in value. >> let get stephen roach's response to that. is that right we've lost 97% of the value? >> no, not even close. i would challenge the congressman's numbers. how we lost 97% of the purchasing power of the dollar, relative to what? the american economy has done darn well. we're having problems right now, there's no question about it. we went through a horrific crisis and are the of that you're correct in pointing out reflected irresponsible monetary policy in the years leading up to the subprime crisis. but to be on television and tell the american public they've lost 97% of the purchasing power of their currency is i think really irresponsible.

>> okay. what about, you know, when the fed took over the ratio was $20 to an ounce. today it's 1,650 to an ounce. what percentage is that? and cpi is not quite as much. you're right, you have to pick what you're comparing it to but historically the best measurement of the purchasing power of a currency is gold. just look at the disaster in the stock market valued in gold. if you ever look at that curve, in the last 10, 12 years the value of the stock market is down a loss worse than the nominal value, let me tell you. >> you're right about that but to compare the purchasing power of a dollar of the average american to the price of gold, a precious metal that he or she doesn't own except maybe a few of them have it in their mouth is just i don't think an accurate way to judge the strength of the economy.

>> steve, you have to repeal some economic laws that have been around for many years. >> we have to set up a lunch so you can continue the debate. >> i happen to agree with a lot of his writing, i enjoyed read ing. >> thank you, congressman. >> and ron paul will be here for the remaining portion of the show. >> coming up, walmart allegedly covering up an investigation at its mexican affiliate. huh! no! who's gonna help cover the holes in their plans? aflac! quack! like medical bills they don't pay for? aflac! or help pay the mortgage? quack! or child care? quack! aflaaac! and everyday expenses? huh?! blurlbrlblrlbr!!! [ thlurp! ] aflac! [ male announcer ] help your family stay afloat at aflac.com. plegh!

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good morning. it's about 7:30 on the east coast. we're checking out some corporate earnings that have just crossed this morning. toy maker hasboro earning 4 cents per sure for the first quarter. that was 4 cents shy of estimates. hasboro saying it still expects a higher percentage of full-year sales to occur in the second half of the year. kelloggs cutting its 2012 outluck, citing unexpected weakness in europe in the u.s. there was a big story in the "new york times" yesterday on that.

and sun trust earned 46 cents per share for the first quarter. that's 13 cents above estimates. that's good news. the bank is also benefiting from improved credit quality. comments, questions about anything you see here on squawk, shoot us an e-mail and follow us on twitter. you can also do it to us personally. joe kernen is not here but he's still getting his tweets. up next, guest ron paul has been a strong advocate for money for years, that's part of why he likes gold. is there a gold boom waiting to happen? we'll find out after the break. time for today's aflac trivia question. in this day in 1980, what song by queen reached number one on the billboard hot 100 list? the answer when cnbc "squawk box" continues.

now the answer to today's aflac trivia question. on this day in 1980, what song by queen reached number one on the billboard hot 100 list? the answer: "crazy little thing called love."

>> aflac! welcome back, everybody. there are still a lot of red arrows this morning. in fact, those dow futures down by close to 110 points. the s&p futures off by better than 13.5. this comes after some very disappointing numbers on european manufacturing hit the continent. also concerns about the french election and an earlier than expected election that will be called in the netherlands because they have not been able to agree on austerity merciers. and check point software reporting an adjusted 74 cents a share per earnings, 2 cents better than expected. >> and another deal for you. beam announcing a deal to buy pinnacle vodka for around $600 million in an all cash deal.

it's one of the vodka is one of the fastest growing alcohol -- >> and i mean wodka. >> what is wodka? >> it's because you lived in russia. >> i lived in russia in which i gained an immunity to vodka. >> you're the only one who can drink vodka and continue -- >> you're talking about very dangerous drugs. this is serious stuff. >> let's continue our discussion with our guest host. we were just talking about the gold standard and congressman paul identified me as one of those paper people, which is not the worst thing somebody has said about me on tv here. congressman, one of the problems with the gold standard that has been pointed out by economists is the inability of the government to respond with lower

interest rates in a recession. and the idea that the government is ham strung, in fact, it has to raise interest rates to keep the gold in the country. is that what you want the government doing during a recession is to raise interest rates? >> what i want is a market economy. i don't want the dependency -- as a matter of fact, that's the big disadvantage of paper because of the moral hazard. if we get into trouble, we always know the lender of last resort. it was set up for that reason. gamble, do anything, take risks, the government's insurance. so they get into trouble. but if they get into trouble, they shouldn't come and rescue the economy. they shouldn't be bailing out general motors in these trillions of dollars in both the fed and congress, that was set up. i complained about that for ten years. you know, this line of credit of fannie mae, freddie mac. and they overdo things. they overinvest. a lot of times they talk about

the inflation, about the price level. the biggest problem with inflating the money supply and giving you artificially low interest rates is the mal investment. >> but it is conventional wisdom that one of the reasons why the recession in 2930 became a great depression was because of the gold standard. there's research showing those countries that got off the gold standard the quickest were the quickest to recover. >> what you have to do is find out why we had a depression and it was because we inflated in the 1920s. so the fed, you know, this is interesting because bernanke is the expert and he said the fed was at fault because they didn't print enough money fast enough and he always guaranteed he would. he's got his helicopters up there and he's dumping it out by the trillions of dollars. the big problem was the fed but

the fed according to free market and economic business cycle theory is they inflated which caused a distortion and recession is inevitable. in 1920, 1921 they had to inflate once again, had the fed inflate for the war and we had the correction. nobody remembers 1921. it was one year severe depression but they did nothing. they just allowed interest rates to go up, the collapse, gdp went down and they were back on their feet again. the prolongation is we were propping up the system, not allowing the bad debt to be liquidated. we're doing the same thing again. we're into it five years. japan did the same thing. we're going to be in this for a long, long time because we're not allowing the liquidation of debt. you expect the fed to come in and save them, we're not -- we bite debt and transfer the debt from those making a lot of money and we dump it on the taxpayer. >> what would the cost be?

where would unemployment be today if we didn't pursuit the bailouts, if the fed didn't inject the money it did into the economy? however you want to look at gdp in the economy right now? >> there are variables, what would you do with the tax code and what would you do with spending? i want to cut $1 trillion of spending. so what are you going to do with capital gains? >> if you took the bailouts off the table, for example, and people would argue, you've argued it's effectively steroids what the fed has put in. if you took that out of the system, where would we be now? >> costs would be a lot less. it wouldn't be trillions and trillions of obligation. it wouldn't be this shrinking of the middle class. >> would unemployment be 8% or 16% is it. >> you don't know the numbers but i bet it would be a lot lot better than it is now. housing prices instead of doing this and this and this for six years, you'd have this, other, a hundred thousand dollars house

is now worth 10,000, let's go buy it. people who saved could start buying their houses again. but the system, once you correct the monetary system, you might be rewarded for savings. you get back to the market. the allocation of credit now is all done by the fed. >> the temporary pain has to be enormous, though. you recognize that? >> the long-term pain is ten times worse than temporary pain. in 1920, ' 21 was one bad year, a year and a half. >> that's what concerns me. i understand the logic of thinking, we've gotten on this system on steroid, the federal allowed that housing bubble to build up soap it has to come back down. when you start talking about $1 trillion in cuts immediately rather than over the course of a decade or longer, and going back to the gold standard and getting rid of this ability to print money and print your way out of things, i can't even imagine the

unforeseen consequences. we talk about the unforeseen consequences that come with dodd-frank or something else. i can't imagine the unforeseen consequences that would come with that much of a shock to the system where you were basically ripping off everything that's been created over the last five, six decade. >> if it's one queer year or sos different. your argument would be let's do it over five or ten years, less have another world wide depression. this is different than even the depression. this is much bigger and much worse. but there is a good example in history of big cuts. world war ii. we cut the budget by approximately 60%, taxes were cut 30%. we had 10 million military personnel come back and they say we have to have jobs programs because there was the new deal stuff. they didn't even have time to start the jobs program but by that time all the bad debt was liquidated, people came back, ten million people were hired and we had an economic boom, the depression finally ended after

world war ii about '46, '47. >> but tax rates went up significantly. i looked at the irs data for another column i've been working on and taxes went up incredibly in terms of collection. i looked back at the tax rates -- >> more people were working. >> not only were more people working, people who had been working less money were suddenly -- they were collecting tax president all of them going up. there were things like the national victory tax. i couldn't figure out why they'd gone up until i called the irs. >> after world war ii? >> as world war ii started. >> sure. but afterwards a lot of that stuff was put aside, which helps my argument. they got rid of that and allowed people to go back to work and pay. the revenues went up because there was a lot of people working. it was still flawed because we still had the fed to deal with and things came back but it was so much better than it had been

after we got out of the way. germany's recovery was really when they decided to wage and price controls over there and rejected the american keynesian advice to put on wage and price control and europe recovered, especially in germany, by just not following our advice. >> congressman, does the walmart story relative to what's happening in mexico and this allegation of briberies do, that fit in your economic framework? >> how do you say in a? >> the idea that walmart is alleged to have paid bribes in mexico and alleged to have covered it up for many years? >> i don't know the details of that but people are corrupt and paying bribes, i mean that, doesn't sound like anything anybody can defend. why would you blame free markets or sound money -- >> i'm not blaming free markets. i'm wondering you had a reaction to the story in. >> well, no. i don't know the details of that. i have a lot of respect for

walmart because it's a good business. i get a little hesitant when they use eminent domain. i don't like that part of it and i believe they've used that. >> more to come from our guest host ron paul. but coming up, much more with our guest host including open season on the fed. first, our next guest will tell us what consequences walmart could be facing following allegations of trying to cover up a bribery investigation in members of congress co. "squawk box" coming right back. tdd# 1-800-345-2550 resistance, breakouts, tdd# 1-800-345-2550 a few other tricks that i'll keep to myself. tdd# 1-800-345-2550 that's how i trade. tdd# 1-800-345-2550 and i do it all with charles schwab, tdd# 1-800-345-2550 because their streetsmart edge platform tdd# 1-800-345-2550 helps me trade quickly, intuitively. tdd# 1-800-345-2550 staying on top of the market is key! tdd# 1-800-345-2550 and the momentum tool, tdd# 1-800-345-2550 it lets me do it at a glance, tdd# 1-800-345-2550 so when things shift, i'm ready. tdd# 1-800-345-2550 then to track the stocks i have my eye on, tdd# 1-800-345-2550 i turn to schwab's high/low ticker. tdd# 1-800-345-2550 so i can spot a potential breakout

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welcome back, everybody. the alleged walmart bribery scandal is our big story of the morning. joining us a former federal corruption criminal prosecutor and a partner at schulman rogers. jacob, this is a big deal, the foreign corrupt practices act. what can we expect coming out of is and how can you put this in context for us? >> becky, it really is a big deal. the department of justice has placed a high premium on investigating and prosecuting cases involving violations of our anti-bribery law. this has been based on

allegations in the times stories is a case study on how not to conduct a corporate investigation, how not to respond to foreign corrupt act practices violations. it highlights the challenges even on paper for one of the best companies in america in terms of dealing with foreign subsidiaries that put themselves in the way of potential bribery allegations and going back to really where this all started, potential consequences. we could easily see criminal prosecutions not likely walmart itself but using the bae example from a number of years ago could easily see an expectation that the mexican subsidiary actually plead guilty in a united states court proceedings wouldn't be at all surprised. >> what would it mean if they did that, jacob? >> the idea of that, it's all about accountability. if i could tell you one other place, that is the biggest challenge for the government in prosecuting fcpa cases is

getting that high profile perp walk like we saw in the enron-worldcom days. there have been prosecution of individuals over the last two, three years but walmart is going to give the government a very high profile. ultimately what does it mean to prosecute a foreign subsidiary? not much. it keeps the apparent company away from prosecution but at the end of the day when we talk about consequences, i wouldn't be surprised if we're talking about coat al costs somewhere in the neighborhood of probably $1 billion when you start thinking about settlements, cost of investigation and clean-up of this mess. >> can you tell us, though, just in terms of trying to do business in mexico, you read through that story and it sounded like the on way things would get done is if there bribes along the way. how do you match up a violation

of u.s. anti-bribery laws with how do you do business in places like this and other nations where there's so much corruption? >> becky, you have hit on the head the biggest challenge and the question the u.s. government never can answer well, which is where non-u.s. based companies are paying bribes with impunity, how does a u.s. company actually compete? but the answer from the united states government consistently is you benefit from the protection. u.s. laws. therefore you have to comply with the u.s. laws and really when you get to the heart of this, what you're talking about, efforts to expedite. as we read the allegations and we're going to learn more over the coming weeks and months, these allegations were not about this is the only way you can do business, this is the way can you do business faster. this is the way people could climb the corporate ladder. this is about a massive coverup and a company that did not respond in a manner that's

consistent not only with best practice bs but what we know th founder of walmart said his expectations of ethical practices. >> the idea there is this separate mexican subsidiary, are u.s. executives liable, are there potential jail time for walmart executives if these allegations prove to be true? >> my answer is yes potentially. we've seen people promoted, there's the issue of conspiracy and coverup. tyson food it in 2011 entered a deferred prosecution agreement with the justice department and a settlement with the s.e.c. in connection with conduct at its mexican subsidiary. we have seaman's is an example, chrysler. there have been many examples. the fact it's a u.s. company acting through its subsidiary does not give the parent or even the parent's executives

protection. anybody who had their fingerprints on this conduct in mexico has potential vulnerability civilly and criminally. >> jake, if you were advising the board, you tell them now to do what? obviously to continue the investigation but are there people you'd pull off the board? are there people you'd pull out of management, people you would suspend just based on the evidence you've seen so far? >> based on the times report, people in executive position who is had their finger on the conduct should be suspended from their management roles. the issue is clean this up as quickly as possible. >> wait a minute, you're talking about going all the way up at this point toshts top levels, vice chairman, chairman. >> you get to lee scout, you know. >> what's going on right now at best buy. you have the ceo who is asked to step aside for infidelity reasons. that is the expectation in corporate governance. best practices and ethics at the top. there has to be discipline at

the top of this corporation. >> jacob frenkel, thank you for joining us. >> next up, ewald nowotney made news with his comments. we'll try to get a reaction from ron paul. ♪ now i'm a geologist at chevron, and i get to help science teachers. it has four servo motors and a wireless microcontroller. over the last three years we've put nearly 100 million dollars into american education. that's thousands of kids learning to love science. ♪ isn't that cool? and that's pretty cool. ♪

up next, it's no secret that congressman ron paul is not a fan of the fed. with the central bank about to take center stage, our guest host will get the chance to tee

off on wall street and ben bernanke. and we check out the efforts to check out on corrupt business practices. "squawk box" coming right back. i went to a small high school. the teacher that comes to mind for me is my high school math teacher, dr. gilmore. i mean he could teach. he was there for us, even if we needed him in college. you could call him, you had his phone number. he was just focused on making sure we were gonna be successful.

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walmart's mexican division reportedly orchestrating a campaign of bribery to grab market dominance and then silencing its own investigation into the matter. >> the major asian markets closing lower, european stocks down in early trading and u.s. with a rough start on wall street. >> it's the fight for our fiscal future. in one corner the scrappy congressman from the lone star state who wants to end the federal reserve. >> the fed creates a problem. >> i put them at the seed of responsibility. >> we should end the fed. >> and a former insider. watch the sparks ply as the final hour of "squawk box" begins right now. ♪ ♪

welcome back to "squawk box" here on cnbc, first in business worldwide. i'm becky quick along with andrew ross sorkin and steve liesman. our guest this morning, texas congressman ron paul, a candidate for republican nominee for president. and you see right now the dow futures are down by about 111 points, the s&p futures down by about 12 points. it always comes based on what we've seen in europe, too. you've had the french elections that have given people a lot of pause and the situation in the netherlands where we're looking at an earlier than expected election because they could not reach austerity. in any event, it's all adding up to red arrows not only here but across the board in europe. ecb board nem ewald nowotney

said economic standards are improving. >> the monetary policy needs some time. for us the main point are the fundamentals, i think the fundamentals in europe are improving substantially, the budget deficits are going down. we have a current account balance in total it's balanced. >> nowotney also reassures markets he does not believe spain is going to need additional aid, at least not at the moment as a result of its reforms will become apparent he says in six months time. obviously that is not the situation playing out in the markets today. red arrows across the board, not buying into this additional money raised by the imf. we should point out he looked to the imf there and said he was disappointed that the united states did not give more money but is not surprised. >> and conoco phillips just

crossing the wire with earnings and the companies earnings $2.02 a share, 6 cents below estimates. it is missing and we will probably see that stock called lower. let's talk about the big story of the morning, the "new york times" story on walmart's efforts to make a bribery go away in mexico has board rooms buzzing. michelle caruso-cabrera joins us. david faber will share some of the walmart culture issues. let's start with michelle in mexico. >> hey there, andrew. none of the business leaders are surprised local government officials would be accused of accepting bribes in order to speed up permitting processes. bribery is so rampant.

according to the "new york times" articles, walmart and mexico from 2002 to 2005 used two people in particular to help them facilitate the process. local business leaders say they are surprised that, a, walmart would be involved, and, b, the amount of the payments and, c, that walmart executives would try to cover up once they were told about it. pee wee know from 2002 to 2005 there was tremendous growth at walmart in mexico. they increased the number of stores by more than 50%, had 147 new stores in that three-year time period. they run under suburbia, several store fronts here. they were building a lot. the "new york times" article points to edwardo castro wright, who went on to become vice chairman of walmart and is expected to retire in july. walmart says they're deeply

concerned about the allegations, they are conducting an internal investigation and there are two stocks to watch when the market opens at 9:30 eastern time, the mexico city market opens at exactly the same time, 8:30 local time here, only a one-hour difference, watch walmart in the united states and wal-mex which reports here in mexico city. they're going to do a conference call this afternoon. we'll be listening to that for sure. >> thank you, michelle. let's go to scott, who is on set. you know everything about the foreign corrupt practices act. >> this is serious stuff. the payment in question amounts to about two hours of sales. we are talking about serious

crimes. the foreign corrupt practices act, with limited exception it makes it illegal for any company, officer, director, agent or stockholder to pay or offer anything of value to any foreign official for the purpose of influencing any act or decision in that official's official capacity. in essence, bribery is illegal. there are prison sentences as high as $25 million per offense, not to mention civil liabilities and enforcement of the law has become a priority in the obama justice department and at the s.e.c., which now has a whole unit devoted to fcpa enforcement. walmart joins a who's who of companies that have investigations, including avon products, hewlett packard answering questions about a

five-year deal in russia. kraft foods and marathon oil got subpoenaed last year over payments it made to the government of libya. that's just five of many companies that are dealing with this. all of these companies are cooperating of course. that will become a major focus for walmart as it now tries to contain the damage. if these allegations are true, there will be damage. the test case on this, which may not bode well for walmart's current management is siemens. the new management just this pass december accepted prosecutes secure indictments against eight foreign executives in that case. suffice it to say, as we said, this is serious stuff with serious stakes for walmart, its management and investors. >> we had a conversation last night, i said when i was in

russia the europeans loved our foreign corruption act because they said it gave them an advantage. you say it isn't true. >> it did but even russia has an anti-bribery law as it tries to get more integrated -- >> is that enforced? >> i can tell you it's not. >> let's bring david faber into this conversation. david, michelle hit this point, probably not surprising to hear about bribery taking place in mexico, but to hear that it was walmart involved in this and to hear allegations that this was covered up by the top executives of the company, that's what probably caught most people off guard. >> i think it's the idea of a coverup as opposed to making it more transparent that is surprising. all of these are allegations that are made by what seems to

be one main source that was followed up extensively by the "new york times" reporters. i will tell you interestingly we were doing our first documentary on walmart during the time it appears some of this was going on in mexico and had an opportunity o of course to sit down with many executives there. in the course of doing documentary, you'll also go to dinner with some of the people you are following and doing work with and the like. and to a man every single walmart, tiff i've ever been to dinner with would never, ever allow me to pay the check for them. that is the point it which they are so stringent about any perception of any influence whatsoever that even a reporter who is working on a documentary would not be allowed in any way to buy anything for them. and i mean even -- well, they can't drink alcohol anyway at dinner or at least have the company pay for it but anything at all. so it is surprising given how pervasive that culture is here in the u.s. about obviously

saving money and sharing rooms but also about not receiving anything from even a reporter, let alone of course a buyer, that it would not at least have raised significant red flags over here when it came back to the u.s., even looked at by lee scott, the former ceo, who remains on the board and is also on the board of goldman sachs. >> in terms of lee scott, if this does go to the top, that's where it will go. can you speak about him in terms of corporate culture? when it comes to a big allegation like this, could you see him be somebody who tries to sweep this under the rug? >> it's not, you know, i don't think i'm in a position to judge mr. scott. it's quite some time ago. dihave a good deal of exposure to him, at least for a reporter. but it's surprising. i would say that. it would be surprising to me based on what i know about the man. but that is not to say that i know the man particularly well. >> david, i want to follow up

there. your sense is that this is not something that was directed by bettenville to mexico, it was not one of those do what you need to do to get it done? >> well, you know, i think in this case -- again, we're relying here, i've not done independent reporting,steve, on the "new york times." it does appear that wright, who was running the mexican makes at that time was very, very aggressive. mr. wright succeeded and moved up in the organization and at one point not long oofr that ran walmart stars in the u.s. and was discussed as a potential candidate to replace mr. scott as ceo. that job went to mike duke. but he was certainly in that conversation and had been for some time. so he had a great deal of success. i can't speak to what exactly they knew or didn't know or mike duke who ran international at

the time, who is now ceo knew or didn't know but they point aggressively at mr. castro-wright. >> the story does not suggest that go do this. he was arguing that they were doing it on their own but when they found out about it, they didn't do anything about it. >> quickly, i just wanted to throw a question at scott if i could. i'm sure we all started to read about the fcpa last night. the exception you said do allow for -- you are allowed to potentially move that along and that is called kind of greasing things. that is not a violation, correct in. >> that's actually written into the law if it's a payment to facilitate a certain action that, it can be legal. also if it's written into the law. but there's very strict interpretations of that. >> sounds like exactly what this was. if it was moving permits along.

>> it could be. that could be their defense. it doesn't sound like they're mounting an affirmative defense to this at this point. >> michelle, very quickly, does the u.s. reputation suffer in mexico from this? >> i don't think so. just to give you some insight into the way people think here, i asked when wallmex opens today or tomorrow, is it going to get hit? and one very senior guy who would know said i don't think so, i don't think it will move that much. another person said it might go down but it shouldn't. up know the revenues will be the same. we doubt there will be any investigation here in mexico. so i don't think so, no. >> thanks, michelle. thanks, everybody. we're going to be hearing from all these folks during the day. coming up we've been spending the moment with ron paul. he's not shy about his desire to go after the federal reserve. now ainsi

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welcome backs to "squawk box." the futures right now, it's got i don't know a little worse this morning, 115 the implied open,

133 in the actual. watch shares of kellogg's today. it cites more significant challenges in europe and the united states. conoco till ips, shared called earnings after the company's earnings missed the street by 6 cents. how does a oil company in this environment miss by 6 cents? so there's individual stock stuff as well as an overall bad vibe from europe. >> our guest host is an open critic to the fed, calling fo an end to the institution. we get ready for this year's two day flma two-day meeting. . our guest host is ron paul. thank you for being here. >> good morning. >> there's an article in the

times. it says bernanke has tried to speak more freely then predecessor. there are reasons to doubt this increased effort of public understanding is working. some say the increased volume of communication is creating a ka calf any and is turning into a big consulting business for a lot of people do you think you have any better understanding of where the fed is headed than we did before? >> look, it's true the fed has -- is speaking a lot more. the chairman is speaking whether it's "60 minutes," whether it's college students, press conference, we're hearing so much more from the fed in the past. until 1994 the fed didn't even announce its policy actions. had you to read it in their open market operations. there is a lot more

communication going on. the fed doesn't necessarily -- nobody can tell what the future is going to be. people want to know what will the fed do in three months and since months. the fed doesn't know what it will do in three months or six months. >> so is the communication helpful then or hurtful? >> i think what i would say is it can't hurt. >> it can? >> i think it cannot. >> ron paul may disagree with you. >> i'm sure he won't be shy about that. the thing about bernanke, is if you go back to his days at a professor of princeton, he was always very big on clarity, on transparency, on communication. he's living up to the tenets that he had espoused before he was at the fed. >> you believe there's no transparency to this system. >> well, there's a little bit but there's a lot of deception going on. recently rhadigan demanded paper

and he got some under the freedom of information act. i think there was a lot of foreign transactions going on in these currency swaps and there's a lot of benefit, there's a lot of shenanigans going on there. we did it four, five years ago and we're preparing to do it again. we're very much involved in currency swaps in order to, you know, i see it as punishing the american people at the expense of helping other people, banks that might own the greek debt and european debt and when you look at the large picture, well, we got to protect the system but there's always somebody who has to pay. we see this is too often, whether the derivatives and the mortgages were bought out for the people who were going bankrupt, the fed owns them but indirectly that's the people because it further undermines the value of the currency and this hurt people. so we see it only a transfer of wealth where the rich get bailed

out and the poor and middle class is getting smaller and getting poorer. they lost their jobs and they lost their houses. so that is our concern, that it serves the interest of those who get the money first and if they get into trouble, they get the bailouts. and a lot of people agree with that. >> on the question of there's a lot of controversy obviously about bailouts and who should get them and who shouldn't. congress has acted to constrict the lending the fed can do with dodd-frank. the kind of lending made to aig it cannot do. and that's only for broad programs open to everything. so congress can take steps to limit what the fed can do and it has done that. the fed has to live within the democratic process, right, and it can do what the federal reserve act allows it to do and congress can act to restrict that. >> but they came up with all kinds of new tools that nobody had really thought of before. it's not just the idea of

tinkering with interest rates. beyond that there was quantitative easing and different types of policies, even the operation twist that probably nobody was thinking about when they came up with the federal reserve act. >> the federal reserve act gives the fed broad objectives and the fed has instruments within those to achieve those objectives. the congress can always act to change the objectives. they have not done that as soon as 1978. it's actually three mandates, maximum employment, it's price stability and it's modest long-term interest rates, which people usually forget about. you've got these broad be a i was and then instruments the fed has, reserve requirements, purchasing assets, setting interest rates, et cetera. the congress can act to restrict that if it thinks that the fed is misusing those. basically that has not happened. >> but so often they can get around that. say they don't want or are not allowed to give a direct loan to

a bank in europe but if they do a currency swap and the central bank does it, it's indirectly. that's why the audit is so important because they can hide these things. it might not be direct and technically they may be willing to the recommendation or law of the congress but believe me, there's plenty of room to get around. >> why do you think ben bernanke is doing things to benefit the banks and hurt the middle class? >> i've asked green stan and bernanke this question. it wasn't a sharp conversation at all. it has to do with why do you keep interest rates so low and hurt the people who want to save, the people who are frugal, the people who have a cd? i believe in market interest rates. i don't believe in this managed economy by manipulation of interest rate. so if somebody is retired and they saved their money and they have $100,000 cd and they mack 1% and the market says they should make 6%, i ask them why

do you penalize it? they admit it's true. they say that's what you have to do because you're saving the system, you have to preserve financial stability. i hear about the fairness to the people who might save because i want the market to work, i want allocation of credit by savings, not by somebody creating money out of mid air and giving it to their friends. >> dino, we'll have to have you back, we'll have you both back to continue this dialogue. appreciate you both being here. >> this is the substance of the debate right there. there's no charge for the bag. thanks. i know a quiet little place where we can get some work done. there's a three-prong plug. i have club passes. [ male announcer ] get the mileage card with special perks on united, like a free checked bag, united club passes, and priority boarding. thanks. ♪ okay. what's your secret? [ male announcer ] the united mileageplus explorer card. get it and you're in. my high school science teacher made me what i am today.

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we're back on this monday morning. u.s. equity futures called sharply below fair value. we're going to get the full story from the trading pits in chicago. that's coming up next after the break. how did we do it last time?

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welcome back to "squawk box," everybody. it is 8:30 on the east coast. right now the futures are under pressure. let's get a rapid fire session for you this morning. nestle is biezing pfizer's infant nutrition business for $11.9 billion. astro zeneca is buying ardea biosciences. amylin pharmaceutical is exploring a sale by reaching out to potential buyers. it said no thanks to a takeover bid from bristol myers and is fending off a lawsuit from an

activist. beam and pinnacle -- beam is buying pinnacle vodka. and vodafone agrees to buy c & w worldwide for $1.9 billion. >> let's get a check on the markets which do not see this deal news as good. we've been right around this area here with the market -- >> i'm not sure it's the deal news as much as the earnings in europe. >> the market is not impressed by the deal news. we would opensharply lower this morning, more than 111 points. rick santelli standing by at the cme in chicago. rick, what has them troubled down there in the pits? let's see if we can solve their problems. >> well, there's no problems in life, there are only issues. when you say the market is

opening down ignoring deals, i'm not watching the deals as closely as everybody at that desk but i like the statement to give us an idea about how to look at the market in general. for all we know, the stock market would have been three times or two times as much. we just don't know. it's the same as all the discussion you've been having earlier i've been getting boat loads of e-mail on, whether you saved the kcountry from a depression or not. it's simple this morning. could you look at exports regarding the u.s. and say the slowdown in europe isn't going to be that big a deal and it's oh, so much more. if you don't think it's so much more, the market obviously does. the dutch are breaking apart because they can't have enough austerity to get it 4.7 debt down to 3% gdp. look at our own country with a

1.5 to-- 1.3 to 1.5 trillion de. we couldn't come close to making it. whether it's elections in the france, what's going on in the netherlands or u.s., one speed, one suit does not fit all and to think the european central bank in the big picture can hold this all together to me sounds like a cartoon. >> there's a monetary world you and ron paul would prefer but unfortunately there is one that exists right now. we have our cnbc fed survey coming out tomorrow that will try to gauge market expectations, what they expect from the fed. tell us how this meeting plays this week in terms of trading you think. >> the last meeting was the turning point in the marketplace, albeit it was a very short detour. we saw a lot more selling coming into the market as there was a notion that the chairman really wasn't going to sign for any extension on renting the apartment of accommodation. but at this point it almost

doesn't matter. i think no matter where rates would be without fed programs, we know the pressure from europe is pushing rates down. that's the overwhelming dynamic. >> all right. congressman paul, the fed meets this week. it has operation twist, which is ending in june. the market not expecting additional quantitative easing from the federal reserve. in your opinion should the fed just let these programs end or would you even counsel rolling them back? >> well, the market will eventual li roll them back in real terms but they should be ended. why continue the process that hasn't achieved a whole lot? we're still in a slump. i think our economy has been slumping since the collapse of the nasdaq bubble. real growth is in there. this idea you can solve your problem with too much spending and inflating the money supply with more debt and more spending

and more inflation, it is preposterous. i don't see any way this will solve it. the sooner they get out, the better. and there is a real question on how you do it. i would -- see, although i stand for getting rid of the fed, i don't call for the end of the fed tomorrow. if you read that carefully, what i want is just competition. i want people to opt out of the system. today if you want to use another currency, and internationally you use different currency all the time, why can't. we use it domestically? you go to jail if you try to use a silver dollar as currency and that's -- that is the law of the land. all i want is competition. i think the people who love paper money and the fed and buying those bonds and make no interest, let them buy the bonds. they're outpriced. but i would say that we should be talking about buying gold bonds. >> do you personally own

anything but gold? do you own stocks in the market? what do you do with your money? >> well, mining stocks and i like gold but i like real estate, you know, real real estate but long term no doubt, maybe some income from it. something of real value. >> i take it you don't like treasuries? >> oh, boy. look at these trillions of dollars that go into treasuries. who buy as 30-year bond as an investment? oh, yeah, i want to take care of my kids. >> the world is buying these bonds. in fact, it sounds to me like the world has more confidence in the u.s. and its financial situation than you do. >> they're awash in dollars. do you want them to buy euros? >> why are they biograpuying th united states? >> because there's nothing else to buy.

i would say there's still an illusion and trust in the u.s. dollar, it's still reserve currency. what happens if they start pricing oil in something other than dollars. >> what are they going to price that in? >> well, somebody might come up with another currency. they're talking about using something else. what if somebody comes up with a gold backed currency and somebody says this is a better idea once you get more rampant price inflation. i think the dollars destined to lose its reserve senate us. >> when is it happening? >> that's one thing you can't predict. but i'll bet you that -- it could happen any time because the foundation is gone for the whole system. it could be five years, it could be ten years but it will eventually be replaced. >> all right. rick, thank you for joining us this morning. we have more from our guest host coming up, becky. >> when we come back, we're going to be talking more with ron paul about some issues that we haven't gotten to yet today.

plus gasoline prices, you probably have noticed this, they've been high, super high. $3.91 a gallon and that is actually the good news. prices are now below their year-ago levels for the first time since october of 2009. we'll have the details from triple a right after this. and don't miss "squawk box" all this week. a huge lineup of guests coming. form you are utah governor john huntsman is our guest tomorrow, former merrill lynch pred greg fleming will join us, bart chilton and jeremy siegel. that's part of the lineup we have. >> we're on pace to see earnings up 6% from a year ago for the first quarter. >> 50% returns, how does that happen? >> this falls into the category of what we call panicked head

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welcome back. the futures looking lower on nervousness from europe. we did have merger activity but

it doesn't seem to be moving the needle in terms of those animal spirits. the dow looks down about 104. >> i've seen it down 117. it is going to open lower. >> triple a says that gasoline prices are pee low year-ago levels for the first time since october 2009. the average price falling almost 5 cents in the latest week to $3.88. >> we've been tweeting about this this morning, $3.85 is triple a. the national average for the lundburg survey says $3.81. it depends on where you are and which survey you're looking at. th they both show a drop. >> you see gas prices all over the place. what's the highest place you see?

>> when i leave texas i'm impressed because i see the number 4 frequently i've been very impressed by that. but, you know, i guess things doesn't go straight up or straight down. my guess is that long term they're going to continue to go up. i remember the 70s so clearly. a barrel of oil was $5 and went up as high as 40 over a ten-year period. it went back done to 10. there's all keeninds of reasons embargo embargoes, supply and demand. they don't talk about inevitably the value of the dollar. if you look at the value of oil and the value of the currency, it does a lot of this but long term it reflects the basic value of the dollar. the value of the dollar is going down. if we have a crisis, we continue to mess up in the middle east and mess around with iran and that breaks out, could you see $200 a barrel gasoline, you're

going to see a real chaos in this country. that's the potential. >> we have had sitting fed officials, including the fed president in st. louis, who have said that they do believe that all of of the easy money policies have had some impact on the commodities market. you talked about oil in particular. but i don't think you'd see them say we shouldn't do the steps that we've taken as a result. it something i believe they we need to watch but they still think monetary policy and having the fed riding over that is important. >> i can understand that. you made the point about the pain that might go through it. i look at it in medical terms. it's sort of like an addiction. getting off a drug isn't easy but if you don't get off the drug, you kill the patient. our government depends on inflation, and stimulus and bailing out. if you remove it, there is some suffering from that but long term it isn't good.

and we are addicted to the system, it's not going to be easy. nothing can be sold until we as a people rea. if everyone agrees we should run our personal life and have this monster government violating our civil liberty. we have to once again reassert ourselves and say what type of government do we want? >> another part of your platform is you think the u.s. should pull back quite substantially on foreign aid. >> not just foreign said. especially the military and everything. i mean, our nationalt went up $4 trillion due to the spending overseas in the last ten years, fighting wars that were undeclared, unwinnable, we don't know why we're there. there's so much chaos, the violence is getting worse in iraq, they're talking about kurdistan breaking away, we're

into syria already, anxious to go into iran, all this nation building going on. no, i want to get out thereof. there's no benefit whatsoever -- >> it's a consistent part of the libertarian philosophy that the foreign issues -- in other words, if we're going to have all these expenses overseas, we have to seed certain expenses at home to pay for it. >> there's a civil liberties component to it. it doesn't help with national defense. >> it doesn't help our national defense? >> one second. in this current campaign i get more money than all the other candidates put together. so my foreign policy is what is attractive to the military. >> you said it doesn't help our national defense to be in all these places. why not? >> because of the blowback

phenomenon. we go over -- how can it help us building more and more enemies? how can it help us by saying we're occupying your country. i like to tell people look at this this way, what if anybody did to us what we do to other countries, we march in, we put our troops nshs we kill a lot of people. we now have declared world on the world with a global war on terrorism and every spot on the earth is vulnerable to our drone attacks. >> it happened as a result of september 11th, 2001. >> that's an excuse and it's a misunderstanding. the war in iraq was planned, the first speech i gave against the war in iraq was in 1998 because the policy was changed and i said our policy now is tohussei. he used to be our friend and now we're going to get rid of him. saddam hussein had nothing to do with 9/11. saudi arabia, we don't say a

word about them. >> no question we were attacked on our soil, though. >> sure, it is. >> the question is how to respond? >> maybe if you understand al qaeda, yes. they purposely did it and they explained exactly why. they said it was because we had troops in saudi arabia on their holy land and we had this embargo and bombing mission for ten years in iraq that our people admitted killed 500,000 children. that's what the muslims know about. so they felt very justified to get our attention. but to say -- >> what about what saddam hussein do d to himself own people? >> what did the soviet do to their people and what did pohl pot do? what about what's going on in africa? >> big jump from that -- >> you know where i stand on africa but there are issues that you could fight back on.

>> i agree. >> he sure makes you think, that congressman paul. >> he does. >> we'll head down to the new york stock exchange for the latest buzz on wall street. plus, we'll ask jim cramer what he makes of the walmart-mexico bribery story. "squawk box" with ron paul coming right back. so you can kill invading weeds down to the root. without harming your lawn. guaranteed. ortho weed b gon max.

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welcome to the world leader in derivatives. welcome to superderivatives.

welcome back to "squawk box." there is wal-mart there. reaction to the wal-mart bribery story. citi group says they would use any dip as a unique opportunity. jim, are you seeing an enhanced buying opportunity? >> wal-mart is a company that nobody likes. they're not liked anywhere in this country and they are a natural target of the justice department. i think what david said is absolutely right. you can't prejudge. if you are a u.s. attorney or for the justice department this

is a career maker. >> they have been a lot more aggressive. look at avon. that is figured in the back and forth about the problems in avon and wanting the due diligence to understand what the liability might be. we are seeing a figure more prominently in single corporate events. >> you can't just say this is a buying opportunity. it is the new york times. this is a year where we weren't able to put away a lot of bankers that did wrong things. >> if you own the stock do you keep it or get rid of it? >> the stock closed within 18 cents of the 52 week high on friday. there is no way you can say i want to buy it. i would rather sell it unless it is below 58. there will not be a new york times story tomorrow of any great consequence. >> we think it's about one to two points on monday morning.

it is worth more than that right now. >> carl has a special later this week. cost co dauz a lot of business in mexico. i think that is a natural place to go because i have to tell you. there is a presidential election in mexico and it is not going to be argentina. no one is in the mood to defend wal-mart's actions right now. >> we look forward to seeing you later and we'll be watching to see what happens to wal-mart's stocks. we will get final thoughts from our guest host, congressman ron paul when "squawk box" returns. w i bathed it in miracles.

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arrival. with hertz gold plus rewards, you skip the counters, the lines, and the paperwork. zap. it's our fastest and easiest way to get you into your car. it's just another way you'll be traveling at the speed of hertz. our guest host has been ron paul. i have two questions for you. one came in from a viewer who asked should workers at every

level be able to save their wage in currency and still be able to store their purchasing power? >> they can't do it if you do it in federal reserve notes. >> in a broad context in a perfect world if you got rid of the fed would you still be able to do that? >> absolutely. more so. the fed is a counterfeiter. he counterfeits and destroys the value of money. if you have real money you encourage savings. capital cannot come out of a printing press. it has to come from what is left over after you earn something and you use what you need and what you save. the only reason the federal reserve what they do acts as capital because it dilutes the real value of your money and causes distortions. >> quick political question. if you do not get the nomination

to be republican president will you back and support mitt romney? >> i haven't thought that through. it depends whether he agrees with me on foreign policy and the fed. >> if not you would not support it? >> i would have to think about it. we get along well. we do not have a lot in common in terms of politics. >> did you support bush? >> i did not support mccain. i didn't make an announcement on others. >> there is a ron paul video game in the works. >> i heard about it. you know about the law. if they do that, do i get a cut on that stuff? >> if you play the video game you can try to destroy the fed. >> it must be a friend. maybe he'll spend money to the