hi, everybody. welcome to "the wall street journal report."romo. he's been right before, will he be right again? the man who says the greece debt crisis will lead to a lehmann moment. the author of a new book that says the superwealthy are vital to american economy and society. looking for travel bargains? we've got them. "wall street journal report" begins right now. here is a look at what is making news as awhaed to a new week on wall street. hopes for the european debt crisis were dashed yet again

this week. leaders gathered in brussels. there were hopes for a euro bond, backed by the ecb which would centralize the debt of all 17 countries in the eurozone. it did not happen. germany continues to resist that that helped bring the euro to a two-year low. europe drove the markets much of the week and there were several late-day turn arounds. dow down 200 points, but finished flat. more signs of recovery in the housing market. new housing sales increased 3.5%, while every region in the country improved except for the south. sales of previously owned homes rose 3.5%, to an annualized rate of 4.6 million. two earnings reports from technology land. dell missed earnings expectations, while hewlett-packard beat estimates. dell stock fell, hewlett went higher, from the facebook fiasco to burning words about greece.

how do you protect your money in this environment? joining me now, larry adam of deutsche bank private wealth management and komalsri-kumar. sri, the last time we spoke, you said the debt crisis in greece would be resolved by mid year. where are you on that? what happens next in terms of this story playing out? >> i still think of mid year 2012 as a decision point where things come to a head. we have the greek elections take place on june 17th. and i wouldn't be surprised if greece has a major problem, even before the 17th of june, because there is an immense amount of capital if not what we are hearing is that the far left party is gaining so much in terms of popularity, opposing austerity, he did come to power it will cost it soon after june 17th.

i'm sticking to my timeline. >> larry, you are not quite as pessimistic in terms of greece and how this ends. what impact are you expecting this chaos to have? >> it is a problem and when you have 75% of the people in greece that want to stay in the euro, 75% of them don't want austerity, there is a big problem there. i think it's important to keep in context how big greece really is. he's talking about a country as big as boston or philadelphia or baltimore, right? we have to keep that in mind, and i still think that the ecb has plenty of firepower behind it it could cut rates, do another ltro and could do what the federal reserve has been doing. buy bonds to stabilize the situation. so i'm not quite as pessimistic about the situation. >> what you are saying, even if greece leaves the euro, you don't think it will have a big impact? >> i think near term it will have a big impact. longer term, it strengthens the remaining countries and the euro actually bounces from those levels. >> and, sri, you think there

could be a disorderly market. i was reading your report and you said we could actually see as a result of fwrooes leaving the euro, create an environment when lehman brothers went bankrupt. >> i think the prospect for chaos and confusion will rival september 2008. the reason being, the european situation hasn't been resolved two years ago, they had let it go on, let it get much bigger which is my sense of worry increases. in terms of what larry just said, even though greece is only 2% of eurozone gdp, much more important as a symptom if greece were to leave, it is going to immensely increase pressure on both spain italy and increase capital flight, because are you going to see the depositors are taking money out of those countries and that is the big risk. >> and the u.s. economy, what

about the strength or the improvements that we've seen here in this country? can the u.s. come to the rescue of all of this? >> the u.s. is able to come to this, the fiscal deficit in the united states is already very high and second, terms of the u.s. economy, maria, u.s. economy is now smaller than that of the european union. second, the consumer here is not going to be as resilient as he or she was in december, january, february. i think that there is going to be a slowdown, so the u.s. will be the strength. >> all of the uncertainty has created a real lack of confidence, larry, terms of equities. retail investor i guess is upset again after the whole facebook ipo fee as coifi as come. >> that is one of the symptoms we see. weak confidence and you look at p.e.s, trading at a pretty

depressed level. look at fund flows, negative. out of the equity market, and you compare that to bonds, record-low yields for treasuries and even overseas, so i think it continues to weigh on -- on investor confidence. >> what does that mean? how does it play out? are you expecting the retail investor to have a catalyst on the horizon to get them back into the market? how does it sort itself out? >> you said the word, confidence. it begins first of all with washington in the u.s. if investors felt better about what's going to happen next year, we keep hearing every day about the fiscal cliff coming next year and i don't have a lot of confidence that anything really gets resolved prior to the election and that has a lot of uncertainty. spending patterns of businesses, spending patterns for consumers, it does still pose a problem. >> still in standstill mode, the whole fiscal cliff that larry brings up. we'll see the bush tax cuts expire, couple that with the fact that spending on certain

projects will expire, whether it's unemployment benefits. discretionary spending, spending on infrastructure and people are worried this is a fiscal cliff. how do you think we get around that? >> the intense amount of uncertainty is going to happen between now and year end, because some of those points, maria, that you made, they take effect at the end of december, some of them in early january. what happens, we have the november elections, and so it also depends on whether president obama gets re-elected or we have a president elect romney. if it is the latter, then president elect will not be able to take any action before january anyway. so as a result of that, the uncertainty increases, i expect the market volatility to increase significantly and if the european debt crisis still stays with us, have you a combination from both sides of the atlantic. >> sri, what do you think? larry likes the dividend payers. how do you invest with the gloom and doom out there?

>> same as learry, i think the dividend pay companies will continue to do well. that is very defensive, and that's good when a period of risk on is not what prevails markrrhea, and i think if the u.s. treasury, the bunds, will be very good. keep money for firepower for distress. the european distress will look very attractive in the second half of the year and put something in risky strategies. >> the sectors you are looking at, how do you want to be exposed? >> i like the dividend paying stocks. an interesting sector is health care. coming up in june, you get the decision by the supreme court on the mandate for health care. we still think 5-4 they strike it down. i still like health care, best sector, dividends continue to increase in that space. high cash flow. i think you still have to look at that sector. >> we'll leave it there.

always great to have you on the program. >> thank you. up next on "wall street journal report" what went wrong, what went right in the u.s. financial crisis? one member of 1%, on what he thinks the rich are wort to the rest of us. don't let a euro drop get you down. things may be looking up for your travel. take a look how the stock market ended the week. back in a moment.

if your main argument for how to grow the economy is i knew how to make a lot of money for investors, then you're missing what this job is about.

>> presidential politics heating up. and republican candidate mitt romney in the field of private equity. ed conrad, author of "unintended consequences, why everything you have been told about the economy is wrong." ed, good to have you on the program. >> you spent many years as managing director at bain. what do you say to those who say private equity destroys jobs? >> let's not kid ourselves about these attacks. not really on private equity. under the guise of private eggity. private equity is not doing anything different than business. we are trying to grow them stronger, faster and serve them better as competitors and that creates profit for investors. we're not doing anything different than any other business is doing. >> okay. but what -- are you saying that business destroys jobs too?

they are saying private equity destroys jobs. >> businesses are always cutting costs. in industries that are losing jobs, it's rare that investors are making profit. the idea on what went wrong, trying to figure those companies only, most investments are in very successful companies. in a horse racing business, you buy a thoroughbred, teach that horse to run fast, you don't buy the lamest horse and start there. occasionally you end up there. the idea that that's the only place where private equity is focusing, they are differentiating private equity from business in a way that's unrealistic. >> when private equity acquires a company and tries to make it healthy again, you cut jobs in the beginning, but ultimately, you are trying to create jobs at some point. >> absolutely. always trying to make the company stronger and grow them

faster. i would tell you, i wouldn't tell you private equity is skewed toward the unhealthy companies. quite the contrary, trying to buy strong companies and make them better. >> had you a fair a. press for the ideas in your book, described as defending the 1% or the top of the top percent. do you think there is some good in income inequality? >> i make the argument in the book, if you believe we're still living in the economy of the 195 0z, you might scratch your head and wonder why income equality has grown and talented people in the u.s. haven't earned it. the economy today is very different than the economy in the 1 the 5 0z. in the '50s, capitalizing on mass market goods like cars, you need big companies, big-scale investments, individuals are less important in that economy. since the commercial inflation of the internet, investment opportunities have changed. now 13 people create instagram and a billion dollars of value in two years. we have an enormous opportunity,

in the old economy that economy slowed down in the 1970s, 1980s, individuals are more important. equity much more important than it was in the 195 0z. ultimate ultimately, we come down, do we have to pay successful risktakers to achoef the things we've achieved in the united states relative to europe and japan. >> how do be oui bring the country together to make people understand the strength and pow power of upward mobility. do you think upward mobility still exists in the united states? >> sure i do. i think -- i don't see why the success of another steve jobs or another successful entrepreneur has any effect on income mobility. now, it's true that, say, coming out of the second world war we educated our population, education has been distributed more efficiently across our population. so is it to a certain extent

income equality going to slow down as you distribute education more effectively? yes, it is. but i don't think that's indicative of a problem in america, i think that's indicative of success. >> but wealth sometimes creates benefits for society and at other times creates more wealth. so you have strong faith that markets reward those that contribute the most. one of the lessons of the financial crisis it seems is that the incentives to make money were in place and the risks were in a different place. can we have faith that markets are going to actually settle out and sort of create truths? or are the markets misplaced? >> i think people misunderstand the financial crisis. in part, they believe that banks made reckless, no money down loans, and were crippled by those loans when real estate prices fell. in truth, investors are making the homeowner's down payment and in large part those were nonbank investors. from a bank's points of view or aaa point of view, largely where the banks invested, it didn't

matter whether a homeowner made the down payment or an investor made the down payment, they were protected from a 20% drop in real estate prices. 30% drop, institutional investors flooded out of the banking system, $1 5 trillion withdrawals, $300 billion of subprime losses largely suffered by nonbank investors. that's a very different problem, a problem this administration has not addressed or stopped. thank you for being on the program, ed conard. up next on "the wall street journal report," if spring fever has you itching to hit the road, the best ways to find value for your vacation dollars this summer. and i hope you find us on facebook. 3q it's very important to understand how math and science kind of makes the world work. in high school, i had a physics teacher by the name of mr. davies. he made physics more than theoretical, he made it real for me. we built a guitar, we did things with electronics and mother boards. that's where the interest in engineering came from. so now, as an engineer,

i have a career that speaks to that passion. thank you, mr. davies. and people. and the planes can seem the same so, it comes down to the people. because, bad weather the price of oil those are every airlines reality. and solutions won't come from 500 tons of metal and a paint job. they'll come from people. delta people. who made us one of the biggest airlines in the world. and then decided that wasn't enough.

welcome back. nearly 35 million americans are hitting the road traveling from home this weekend from memorial day to labor day. how can you maximize your spending for the time you spend away? sarah spagnolo is with us from "travel and leisure" magazine. great to have you on the program. love talking about travel as we kick off memorial day weekend here. here we are in the middle of the weekend. tell me what your expectations are, who's traveling, where are they? >> the u.s. travel association is saying people are optimistic and because of that they're traveling. aaa is predicting about 34.8 million people to be traveling just this weekend. that's an increase of about 1.2% year over year. people are traveling shorter distances, they're going on average about 640 miles from home.

that's about 150 miles fewer than last year. but everybody's hitting the road. i think you'll see people in the airports, on the roads. about 154 million people are saying they anticipate they'll take a leisure trip in the next six months. so we're seeing travel now and of course through the summer and into the early fall. >> expect the streets to be crowded with traffic and people getting out to their vacation. the economy is feeling a little better than previous summers. does the economic sentiment impact behavior whether it comes to travel? >> gas prices are down since their high in april. 30.7 people are taking a road trip this weekend. people are looking forward to experiencing travel and visiting cities, beaches, et cetera. >> what about the cost? airfare i think is creeping up in january. are there strategies out there to find the most economical fare? >> definitely. so airfare is up. we're talking about a rise about 7% year over year. because occupancy is up so

people are paying a premium for flights. flights are centered right now on about 29 major hubs in the country. smaller flights, regional airports are not offering as many flights so major airports are going to be more crowded. bing.com, they have a price predictor, a great way to feel confident about your flight, booking your ticket. it will tell you whether to book now or wait. kayak will offer a weekly e-mail about a particular route so you can track a flight and price over time so you can feel confident when you book. get an e-mail, subscribe to airfarewatchdog.com for weekly e-mail. flights from your home airport to see where there are great rates and great deals and look for a particular flight. book with orbits price assurance, so if you book and somebody gets a lower fair, they'll reimburse the difference. looking for a quick fix, what i can say is if you're traveling on saturday, tuesday or

wednesday, you'll often find lower fares. >> saturday, tuesday, wednesday, very good trip. what about trends in hotel costs? how do you find the best rates for hotel? >> hotel will be about $109. if you can find something around that, you're in the clear. a city like chicago, average hotel rate is $119 right now. that's a pretty great rate. there are great deals to be had. something to keep keep in mind is look for hotels offering a fourth night free. a hotel can retain their price, they establish loyalty, they don't have to reduce their room rate, you can get great deals. >> let me ask you about the euro. dropping to an almost two-year low this week. can an american traveler today capitalize on that? how do you make the most of your money if you want to go to europe? >> great point. "travel and leisure" readers love europe. choose an unexpected destination. such as iceland. get great rates to iceland. it's beautiful in the

summertime. plenty of daylight. there's great hiking, great horseback riding, it's great for kids. choose a destination like portugal which has an old world european feel but has lower rates. >> great advice. thanks so much. have a fantastic rest of the weekend. sarah spagnolo joining us. we'll look at the news that will impact your money. and the australian who makes a million every half hour. why the land down under may earn a spot at the top of the heap. stay with us. i have three daughters and my son,

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for more on our show and guests check out wsjr.cnbc.com. follow me on twitter and google plus @mariabartiromo. look at the stories coming up that may move the markets and impact your money. monday, memorial day, may 28th, markets are closed. tuesday, we get a look at housing with prices across the country coming out. in the 20-city s&p case shiller index. the gross dome domestic product is released. gdp, the broadest measure. typically a market mover. the big market moreoverer of all. friday, the 1st of june, total auto sales for the last month are out, as is the highly anticipated latest employment report from the labor department. that tells us how many jobs the economy gained or lost in the month of may. finally, does the world have a new wealthiest woman? australian mining magnate gina rinehart is worth more than $29 billion. according to an aussie annual

ranking on wealth. rinehart makes some $600 a second on the rising price of commodities. a substantial asian investment in iron ore net her nearly $20 billion last year alone. putting rinehart ahead of american christie walton, the walmart heiress worth some $25 billion. that's the show for today. thank you so much for being with me. next week, a look at the jobs numbers. what will it take to put a debt in the unemployment rate in this country? keep it right here where wall street meets main street. have a great week, everybody. happy memorial day and i'll see you next weekend. [ male announcer ] we imagined a vehicle that could adapt to changing road conditions. one that continually monitors and corrects for wheel slip. we imagined a vehicle that can increase emergency braking power when you need it most. and we imagined it looking like nothing else on the road today. then...we built it. the 2012 glk.

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