could agree to underwrite the euro if everyone falls in to line on its demands for fiscal responsibility. reports suggest berlin is will be to consider greater miss cal union if they ccan agree on structural reform. is it enough or is it too little too late. also portugal set to inject billions of euros in it largest banks hoping them cope with the crisis. most of the funds will company from a bailout received a year ago. and chew that is making plans for dealing with a greek withdrawal from the eurozone including keeping the yuan currency stable and step up policies to stabilize the domestic which i. in the meantime, china srl bank chief says the country will continue to invest in eurozone government debt and other assets. and comments published today, he

urged step up reforms to stem it debt crisis. >> let's check on the world markets. futures down 59 points after got rough on friday. could be an important session to see whether the dow can make a stand in the averages. probably not going to help with what we'reing in europe and asia. the only good thing i can tell you is that the uk won't be down today. >> because they're closed. >> but there you can see a bit of a stand being made in some of the problematic cuountries. let's check out the wall boards. all the way down to $81. we could have a 7 handle this

week depending on what happens. ten year bond probably won't be talking about this that much more because i doubt the ten year will go below zero, but we're at -- don't have that many more basis points. >> i think i got to. i have to. how much further can it go is this you just said it. >> i'm just interesting in -- i just watch from you afar to see how the other half live, the other 1%. and i want to know when you refi the apartment next to yours when you're actually knocking down that one. that's going to happen. and you'll have a $10 million place by then probably. which is fitting i think. >> why are you refiing? >> i it pot tt did not too long. >> you could pick up a couple

bucks. might be worth considering. >> could you move to -- are you upper west or upper east? >> upper west, but could i i co is east, like the jeffersons. >> right. 1.24 on the euro. out of all the markets that really get extended, that one's really not cooperating. that could be down to 1.20 now. >> after some real pressure. it's not really the euro rebounding as much as the dollar. so not defeat as muches of a safe haven. >> check out the right. that had nothing to do with a flight to quality or risk. that was all helicopter ben. and after what happened on friday and the idea that now if you're the fed and you've got a dual mandate by the law to worry about price stability on unemployment and you go and

you're at 8.2%, they're going to -- did you read curtiss? i haven't read it yet, but he was talking about it here. you go to the speech bernanke made and we're right about in the middle part of the things that the fed can do. it's all there. twist, qe. >> will they do it is the question. will they do it at their next meeting and part of the question is what happens in greece. >> don't you think they're kind of burned? none of this is lasting. some people would say given everything coming out of europe, maybe we should be happy to be where we are, but the negative consequences that come from the fed action with very little -- seems like you temporarily inflate asset values and on other things elsewhere start -- there's dislocations elsewhere and it's not worth it. >> it was supposed to give us time to take care of the other problems. but none of the things got

recapitalized. >> probably don't get obama care today, but -- >> why couldn't you get it today if. >> i don't feel it. i'd get it out of way. i wouldn't delay. that might help. >> we looked all the boards, but we didn't look at the boards that greenspan told us he watches. >> we can do that right now. what a great segue. >> tomorrow is wisconsin. >> that is true. >> which will be something to watch. >> and people say this gives us a sign for what to expect in november. but i almost look at it as the supreme court ruling where whatever side wins may lose in the election because it's goiin bolster people on the other side. >> and an in raid numbn in trad. chance for re-election. >> let's take becky's segue and

go to where mr. greenspan looks every morning. the global markets report. kelly evans is standing would i by in london. give us mr. greenspan's numbers. >> andrew, i was admiring the map behind me. it looks like we might have started off in a pretty ugly session given what was happening across asia. but a better tone here actually in europe this morning. xetra dax the weak performer of the morning. but a bit better over here if you look at the cac 40 out of paris. ibex 35 in spain, look at this, up 2.5% as some of the spanish banks in particular are bouncing back from that really long period of weakness that we've seen. the question becomes whether that in conjunction with a little bit better jobs report out of spain this morning provides the opportunity for stocks really to stage anything of a comeback here.

bond yields kind of flat for the morning. portugal we threw up because finance minister out making comments about how they have taken the needed steps to get their next round of bailout funds. so a remind der, we haven't seen this in a while. 12% still on the ten year debt that is on the market already. ten year in spain is below that 6.5% level. ten year in japan making headlines, it was below 0.8% and now back up to 0.82. and the german bund at high levels of 1.199%. and weaker picture if you look at some of the commodities. this may indicate where more of the global jitters are showing up. take a look at oil. we've got crude here, 81.78 for nymex. not that big of a move to see that go beyond $80. brent below 100. gold is actually lower this morning after some gains. copper down 1.2%, as well. the euro-dollar i'll leave you with this because we all know

this is the one to watch it if you're trying to gauge whether we're risk on or risk off. that has just turned from red to green this morning. and now it's back in the red. so keep an eye on what this is doing. that will tell you what message to key off of for everything else. but so par not the worst case in the world given what we were initially looking at last night. >> kelly, thanks for that. mr. greenspan i'm sure was watching with anticipation. >> kelly, we decided that we have to devalue the euro even more. >> i'm long the dollar, so i'm totally okay with that. >> a big massive co-dependence i over there. germany's resolve is weakening because this they realize how important it is to be able to export to the south. >> it's a great point. there's a double benefit here. they have an extremely low currency or at least a currency lower than a stand alone

country. a couple things to love. >> a co-dependency. a sick one, too, that no one can get out of. but just seems like the end result is devaluing -- or printing or something. just not going to be good. which is why 1.24, i thought it might even be lower. but i don't know. it's down a lot. we'll see. we have time. >> give it a couple days without any more policy action and then we'll see where we're at. >> so usual gyou're getting pai in dollars, so you're good over there. >> oh, yeah. >> you go right through the chunnel. have you done that on weekends yet? >> i haven't yet. >> you're busy. >> the pound still being at 1.60, i will tell you, that still hurts. >> that's what i mean. you're an hour away or two hours away from paris, i think. it's about two hours really on a nice train. >> but that's not the cheapest city will in the world. i have to go to greece if i want to capture the benefit. >> draw. all right.

thank, kelly. back here in the states, the dow and s&p are 10% from the recent peaks. would mark a so-called correction. michelle jury girar dwchlt d an christopher joining us. i was going to ask you for your top stock pick, but that might not be you. did you downgrade any growth expect sxapgs ations after frid? >> no, and you had said we're hearing that people are -- uncertainty pushing companies to the hiring sidelines. and the kram figuclaims figure evidence didn't suggest. and understandably all the uncertainty has pushed companies i think into a much more conservative mode and when you're only getting this kind of job growth, the income prospects

for consumers is worse. >> so you mean euro uncertainty and fiscal -- >> that's the important thing to being about. it isn't like the economy is suddenly -- we have big imbalances that immediate to s corrected. they could be hiring, it's just the uncertainty has pushed them to the sidelines. and understandably so. >> christopher, what are you telling clients right now after last week? >> well, i think clearly it's evidence that we've moved where the political inaction has been overshadowing to maybe now erasing some or all of it. >> what political inaction? >> not just europe. it's across the globe and it's a clear wake-up call. compared to two months ago, i think investors do realize the urgency and need for action. so unfortunately, you still need to be very careful. >> what kind of action? >> some greater action of policy

response. mainly quantitative easing. but not just here in the u.s. i know you shudder, but it's a very different world than where we were a year and a half ago. >> so you're ready for another fix. you don't want to get off of drugs and kick the habit. you're sweating, you can't sleep, you know, you're -- you need that. >> i sleep like a baby. i wake up every three hours crying. >> that's good line. i've heard take beforhat before. >> but it has to be more than the u.s. inflation rolled over the end of last year. this is a time when it immediates to be coordinated global policy response. and i think that's what the it 2002 speech was all about. deflation not happening here. i don't say that we're there, but we're certainly closer than where we were a year, year and a half ago. >> then you would suggest that we are going to get it and the markets then go higher? >> i think it has to be coordinated.

it can't just be the u.s. i think first of all chairman bernanke has a speech this week. it's probably a little early for him to tip his hand. more likely that they do it in june than before. you don't want to wait too long and have it perceived through a political filter, but it needs to be china, the ecb, the uk. because i mean the signs are clear. it wasn't just the jobs report on friday. it was china. we're definitely in a slower at best global economy and i think there needs to be action beyond just quantitative easing. immediates s needs to be a fundamental change in europe. beginning to happen, but nclear cut yet. >> did you watch bernanke? that was your assignment. he does attribute some of what's happening to the deficit here. >> absolutely. the uncertainty about what's coming. >> do we want austerity or do we

want -- >> we need to focus on on the supply side here. we need to get the same type of issues in terms of reforms here, we need tax cuts, we need certainty over the tax policy. i guess that's the biggest thing. we need to know -- we can do qe. the biggest thing that would help the u.s. economy is to come out and remove the uncertainty about fiscal policy. >> if there was a certainty that taxes were going up on difference tends, capital gains and income, as lon as it long a it's a certainty, will that help? >> that's a very good point. 2000 some extent -- >> that seems to be the certainty we have right now. >> i'm not so shower. to the exte sure. are the middle class tax cuts going away? for me i think that's a scenario that people are worried about. you're right in the sense if we knew they were all going up, the

outcome would likely be negative. on the other hand, about if we at least knew that it will be the upper income earners, that's not a positive development, but at some point after you factor that energy you begin to be able to go on. companies can begin to make decisions about what that means and what they will do and move forward. and to the extent that we're worried about that, everybody has to keep that possibility in their outlook. >> then what is that unto itself, what is the fiscal -- >> i have a little bit less than others. i think 2% to 2.5%. i'm not as big as some people who say 3% to 5%. but i'm only expecting 2.5%. so that would take us to the brink even with my relatively small markings on what it all means. >> so chris, what's the pot lilin bottom line -- i hate that erm. a 1.4% in the ten year and then

years from now they will vee like $4 more than they had now. you sound like you're not telling them to do anything today. i can do that myself. >> i think you go further than that. but you have to ask the question safety has become a scarce asset and the idea of buying ten year treasuries at the rate we're seeing -- you stay up in quality, you do buy the large u.s. multinational companies. we favor dividend growers over dividend pay ors. but there are attractive valuations. in the mere term, markets will be choppy. but if you're just now deciding to get defensive, it's a bit late for that. >> all right. thank you. coming up, what the jobs report means for the most of election. and plus it's monday in june, so

we're on supreme court decision watch. but first, this is no joke. bill maher now owns a stake in the new york mets. the stand up comic was at citifield and revealed he bought a minority share months ago. he grew up in nearby new jersey and has been a mets fan his whole life. wouldn't disclose how much he spent or how large his stake is.

i was thinking about kyle and how cute he is and how much he loves the duck. i was going see about if i can read these like duck, but it's not clear enough. if you're just waking up -- he's probably not up. >> might be. >> u.s. equity futures at this hour are indicated down about 0.4% as you can see there on the s&p and dow jones. european stocks are i guess you would call help mixed. greece pretty ugly. uk closed. why is it closed? >> i don't know what the holiday is. is it the jubilee? >> that's right. so more than one day. >> i thought this was going to be uglier. it was really ugly on bring, but

ju friday, but and you the tall, the soros speech. >> i guess it's based on the idea run on the banks. >> don't you want to know his position before you take anything he says seriously? >> you look at the front of every newspaper. along with the jubilee. >> do they know there's a guy by the name of mike mayo? >> i wonder. >> he has lost his mind, bloomberg. the soda thing is -- >> i saw his comments yesterday. the point me that was a good one is people thought he was crazy when he was leading the way on cigarettes. and the ban on smoking. which now there's no way people would touch that. >> god help us. i liked some of the commentary

from the right of center pundits that when you know you're going to pay for everything eventually, then this is when you'll start doing all this and the idea that you eventually have to eat broccoli, that's what scalia said about the mandate, that that's not that far off. >> even democrats aren't getting behind bloomberg on this. they're saying -- >> it's crazy. but before i did the big slurpee, the big gulp, you would not be allowed to smoke anywhere in manhattan. wouldn't you just outlaw cigarettes before you outlawed a large size drink? >> it still seems like a strange way to do it. why not just tax it and at that time tax money and put it back in. >> and if you want -- we'll go to someone who is bad for the health of all republicans and that is -- is harwood ready? you wouldn't want to outlaw him. >> let's get john in so he can

defend himself. >> i'm not defending myself for anything. >> where are those glasses? put those on. did you see him? they're funky. >> good looking glasses. >> so tiny. >> we saw what happened friday. we talked to you before the jobs report came out. after it hit, it certainly changed the entire tenor. >> you went right into a bar, right? >> what is the consensus in washington at this point? how big of a problem is this economy? because at this point, you can call this a trend that it's been tr trending down. what does it mean for the obama campaign is this. >> a huge problem for it they will. we have the third straight spring slowdown in a row. this report confirmed it. and what that does is just narrow the margin for error for an obama campaign that was already expecting a close race. i talked to one of their main strategists last might. they're very concerned about this and they have good reason

to be. this plays exactly into mitt romney's argument and takes a campaign that was a one, two, three point race and squeezes it a little bit tighter about it that even be done. >> the point you were making on friday that we were ib credit uhe husband, but how it's a person's own position about whether his job is safe, that it has hg nothing to do with the headlines. did you see the headlines some you don't think that impinged on anyone's con susnesciousness is the country is doing? >> what the headlines did is lock in trend of the previous two months of quaekneweakness a slowdown in growth. the headline itself isn't the issue. it's the conditions that the headline reflects. and what it reflects is we had a heard of uncertainty as to whether or not 2012 is going to repeat the pattern of 2010 and

2011. and you heard mark zandi saying 165. that was the safe zone that democratic strategists had assumed. i talked to a leading strategist a couple days ago and i said what sort of shape do you think obama is in. he said 150,000 jobs a month growth, he'll be fine. below that, all bets are off. and that's where re are. >> people say it's the summer months that set the tone. other people say if there's a turn in september, that still matters. wh which month matters most? >> i think it's just the accumulated evidence. there have been some past studies of voting behavior that show that in the late spring/early summer of an election year, that's when perceptions lock in among voters about where the economy is going. and it's hard to move them after that. that may be true, but that also

may be relevant to an era before rapid communication, 24/7 internet, all of the about a think are barrage of data that people get. but nobody can be sure. there aren't that many case of presidential elections and there is no doubt whatsoever this a very, very bad moment for the obama team. >> john, thank you very much. great talking to you. coming up, we'll be looking at the global markets and after what happened on friday. stocks in europe and the u.s. are off their lows of the morning. and later mark faber, gloom, boom and doom publisher. he'll join us with his new -- [ male announcer ] citi turns 200 this year.

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welcome back to "squawk box" here on cnbc. it's not that bad this morning. i'm joe kernen along with becky quick and andrew ross sorkin. officials in brussels, frankfurt and berlin said to be working on a master plan. so you can rest easy. reports suggest that berlin is willing to consider greater fiscal union if euro members agree to hand over power on government spending and structural reform. could you have thought about that when you decided to get the same currency.

>> germany was worried, too, but now they're calling all the shots. >> and it involves working for a living. it would haves paying taxes. involves these things that are here to forepere not that popul. >> and that was george soros' point. there was this great unrealized promise and the euro sounded great, but never did it to begin with. >> and i saw big lines in portugal where i have been. reportedly set to inject billions of euros in to its largest banks. most come from a bailout received a year ago. >> let's get a check on the markets this morning. don't worry, it's not as bad as it could be. the dow futures only down by 33 points. that's well off their lowest levels. we've been watching very closely

what's been happening. friday made for the worst start to the month of june we've seen in a decade. on friday the dow down by 2.2%. the s&p 500 was off by 2.5%. and you're looking at technical corrections or close to it. the s&p is about a point away from a technical correction. 10% off of its highest levels. this morning in europe, you do see some red arrow, but off of our weakest levels. frank has turned positive, it's up by about 15 points. dax off by about 1%. in spain, it's actually higher by 3.3%. greece continues to drop. down by another 4.5% today. uk known shown because it's closed for the jubilee. market holiday as well as a federal holiday will, as well. energy prices continue to weaken this morning. real concerns that put a lot of pressure on the energy complex last week. continuing today with crude oil at 81.84.

down another 1.6%. and if you take a look at the ten year, the yields that we've been watching, slightly higher yield today, but still below 1.5% at 1 about.495%. the dollar not showing nearly as much strength as last week. a little stronger against the yen. $1625.20 an ounce. >> the euro debt crisis and what it means for the united states election, joining us now jared bernstein at the center of budget and policy priorities. and republican strategist joe wat kins who worked for president george h.w. bush. good morning to both of you. i assume joe will wail on you, so -- >> no, he's a pro.

watch, he will admit and concede all these points, but then he'll -- >> i concede nothing! >> let's see what you concede and what you don't. make your case. over the weekend, i heard that democrats over and over again try to blame the republicans for where we are, suggesting that president obama hasn't been able to make his case, hasn't been able to legislate the way he wanted and that's the reason that we're here. that seems to me completely not even relative, just unfair. >> well, it does seem to leave a lot out. i'll grant you that. i think it's fair to say the president, the democrats tried to take some insurance out against precisely this kind of situation we're this rigin righ. if you go back to the american jobs act and other jobs measures that were blocked, it's plausible and at the time by the way there were middle of the road economists saying that those kinds of measures could shave a point off the

unemployment rate, could add 1 million to 2 million jobs. so i think that's a pair claim. but you can't ignore everything else that's happened in the meantime either. >> are you middle of the road economist? just wondering. >> no. >> you're not. >> i'm not really in the middle. what i'm saying is you look at the cbo, you know -- >> i think zandi, you'd call him middle of the road. >> he's pry secisely the guy mag ho those calls. >> joe, i'll can to your job for you. if you were to hear chants of four more year, explain to me why you would want four more years right now of what we're living lieu. >> you did definitely wouldn't want four more years of what we're living through. you have to recognize a lot of what we're living through has to do with an economic playbook that the other by ether guy is . so you want to avoid deepening the problems we're in. >> i feel like you you didn't really have to speak actually

given all the way i've been trying to go after jared. i know joe -- >> i could go after joe. because i talked to someone yesterday and said you can't be supporting -- and he said i voted for bush twice and look at what we got. so we ca get much better fiscal responsibility. we got an entitlement for anybody who is old basically with prescription drugs. that made no sense. the republicans before obama did things that made obama look fiscally responsible. >> well, what we have on consider is that this is 2012 and now obama's up to bat. and the president told us that at this point the rate of employment would be 2.5% lower than it is. and here it is in june of 2012, we just have seen one of the worst months ever. only 69,000 you new jobs created. and this administration has had a consistent narrative that it's really hostile to job creator

tos, people in small business. it's said i want to raise your taxes, raise capital gain, i want to regulate you more heavily. and you are part of the problem. i'll fight you if you're private equity. >> assuming you're right on everything you just said and i probably disagree on a bit of it put a number on it. what's that drag been? all the uncertainty been on the economy. >> if the president was able to see an economy where we were creating 150,000 new jobs a month, you know, then you might be able to say that we have what looks like sustainable growth. but you can't have a sustainable recovery without creating jobs. and if you have an environment -- and you can't blame the president for everything. everything is not his fault. but clearly he's created an environment that says we are not friendly toward job creators.

we are looking to raise your taxes, pay your fair share and we want to regulate you more heavily and that environment is a real turnoff to the people that create jobs in this country. >> jash redo you buy that? >> not for a second. the environmental stuff is bunk. somebody he had earlier about four more years. the last four years really haven't been a block of exactly the said kind of economic dynamics. we'd all agree with that. if you go back to when the president took office, we were hemorrhaging jobs. gdp cratering at 9%. so there has been a turn around. the problem is the turn awround hasn't been fast enough. the president has cut taxes very dramatically over his tenure. now, obviously we need more revenue down the road and i think fiscally it's irresponsible not to recognize that. but if you want to -- let me

just say one third, about $290 billion of the recovery act, were tax cuts. >> joe, 20 seconds. we'll leave you with the last word. >> the last word is that mitt romney offers hope to job creators. and he says if you give me a chance, i'll create the jobs that america needs. >> that's just a talking point. >> it's real. >> jared, try this. maybe the policies and uncertainty aren't what's causing it, but you have to ask yourself, to be where we are, a trillion dollars doesn't grow on trees. and we try to cut things over ten years, we spent 800 build and we got 8.2%. you can at least say that didn't provide what we needed. just a huge boondoggle that didn't help anyone.

>> you have to look at where we are relative to where we were. we ought to be doing better, but -- >> 800 billion and this is what we get? i'd rather have my money back. >> you guys of all people now how deep this great recession is. >> i'm giving you that talking point. next time i'm telling what you to say. just an idea. because you can't touch him, you can't what i a glove on him. he's a professional arguer. >> bobbing and weaving here. >> he is. and there will be a lot of punches thrown in this thing. >> guys, we is to have to leave it there. >> any comments or questions, e-mail ussquawk@cnbc.com. when we come back, the futures pits. things are looking a little brighter by the minute this morning. also we'll get the view on the economy from behind the wheel. mike jackson will join us at 6:50 eastern i'm. ttd# 1-800-345-2550

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our top story this morning is the global market. scott nations joining us. looks like things are improving. >> certainly our market is turning away largely to a certain degree european equity markets have turned around. they're not cratering as we might have feared. and some are actually in the green. unfortunately, this is us holding our breath. this is not a solution. and think we'll end up in a situation over the rest of the week where we're looking for some sort of political resolution as long as germany continues to hold themselves one level removed from full

commitment that is can dead sharing or euro bonds, i think we'll still continue to worry about banks in spain. >> are you in soros' camp that they have three months or so some solutions have been too late in coming. by the time they came, something that would have worked six months ago isn't going to work today. >> i think that's a great question. if germany continues to say that they'll support spanish banks only through the stability facility rather than -- and i don't blame the germanss for the pot wanting to take on the responsibility. but if thaeif thaent ends what they're a day late and euro-dollar short. >> so what happens today? the big concern on friday was what happened with our jobs report and this idea that the globe was slowing everywhere,

the economy slowing down. what do we look to this week to feel any better about that? there's not a lot of numbers that could change that opinion, are there? >> you're right. and i don't think we'll see any big change out of europe. so we'll look in the other direction and we're starting to see people, american banks, american analysts, lower estimates for growth in china. we're certainly below 8% now and we're starting to see 7.7, 7.5, which is lower than i think everybody had assumed. the chinese, they like to establish these targets for growth and then they beat them convincingly. it may be a situation thousand where they've actually lowered hair target for growth and unfortunately, they'll end up meeting, which is really a disaster as far as growth in china is concerned. so i think that we're going to start paying more attention to our own analysis of growth in china and that's going to mean potentially trouble for companies like boeing and caterpillar, companies that just

are great companies here, but huge exporters to asia. >> scott, thank you very much for joining us. >> coming up, a squawk ceo call. auto nation boss mike jackson, what his car sales can tell us about the broader health of the u.s. economy.

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up 49 -- 69,000. >> the president's policies have made it less likely to businesses to want to hire more people. >> as we learned in today's jobs reports, we're still not creating as fast as we want. >> we have indiscriminate panic-driven selling. that's what bottoms are made of. there's almost no reason to own stocks. that means that's exactly what you should be doing.

>> welcome back. we talk every morning about stats but today we're taking a snapshot of the real economy. mike jackson is the ceo of autonation. we were in washington with steny hoyer. i had no idea your numbers could be what they are. the industry numbers are great but your numbers were off the charts. can you tell us about them? >> good morning, joe. yes, i saw you in washington and up look good in a coat and tie. very distinguished. i was impressed. and you sounded much more intelligent with a jacket on. we had outstanding numbers for the month of may.

we retailed just under 24,000 units, which is a 45% increase over the prior year, driven by the recovery of our asian business, when i was up 80% led by the performance of toyota, up 120%. let's put that in the context of two years so can you smooth out the effects of the jbs earthquakes. we're up almost 25% over the two-year period. there is a real sustainable recovery going on in auoughauto that has to be viewed in the context of an artificial low. in '09 we had far more demand for or products than we were selling. we had a constriction around credit, which dramatically reduced our sales. not that we didn't have the customers, yes weeks had a

recession but there wasn't a depression and that took the sales around 10 million and now we were on a recovery. even though our numbers are very good, i believe this recovery will continue, for this year, just over mid 14 million units, that's still a recessionary number. we need to get back to 16 million as a new normal before we can say we have a true recovery -- full rekof appropriate all our great numbers and automotive is a bright spot in the economic recovery, it's coming off an artificial low because of financing. everybody pays for the car loans first. >> that puts it all in a little bit better perspective. if you were looking just at these numbers, you'd think the consumer is in good shape, the economy is in good shape. number one, it's kind of a bounce from a really depressed

level and maybe it's not quite like buying a house or, you know, having a -- getting a mortgage. you need to know you have a job to die bye a car if you have a clunk are. we're in the middle of an upgrade cycle, too. these things are sort of distinctive with -- you can't just look at the resurgence with auto and say we go have a great economy or great manufacturing sector. >> i absolutely agree with you. i'm out there across the country all the time talking to customers and there is real pain out there in america. and this economic recovery is fragile and anemic and if you consider that this is probably the greatest federal stimulus program of all time between the federal reserve having interest rates at zero, expanding its balance sheet and running trillion dollar deficits and

only a 2% increase in gdp tells you how great the pain is out there. so i'm very happy, believe me, that automotive is a bright spot and it's going to continue despite the economic difficulties, high gas prices and everything else, because there's a genuine replacement need. they even postpone fixing their cars for several years. they either take $2,000, $3,000 and fix the clunker or put $2,000, $3,000 on a new car. i'm happy to be at the right place at the right time. >> i'm going to talk to andrew. andrew, you had an experience with a gas station? >> gas station. >> he rented an expedition. his going down the highway up to connecticut, $4.19 a gallon, mobile on 96th street.

>> was it self-serve? >> it was not self-serve. i wanted it to be self-serve. >> you stick with your driver and you won't have to get involved in that. >> it was kind of like the first president bush at the supermarket counter, wasn't it? >> no, no, i've done this before. i've done this before. >> gas prices by the fall will be down to the low $3 a gallon again. >> i was driving a gas guzzler, too, doing everything i wasn't supposed to do. >> efs wondering if your friends knew about your carbon footprint this weekend. >> it was high. >> they do now. >> you might get a slap on the wrist for it. you're getting demerits. >> i'm getting demerits. >> coming up michelle caruso-cabrera will join us with a cautionary tale and marc faber

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stocks shocked by friday's disappointing jobs report. >> overall nowhere to hide given this report. >> squawk market master jeremy seeingal, mark wilson and marc faber, dr. doom, are here to talk to us about the global economy. >> nobel thoughts on the economy. columbia university professor joseph stiglitz is our latest recipient of the squawk blue chip book award. >> plus the latest headlines you need to be watching before the day's tried. the second hour of "squawk box" begins right now.

good morning. welcome to "squawk box" here on cnbc on a monday morning. i'm andrew ross sorkin, along with joe kernen and becky quick. the futures right now, it not as bad as you might have imagined given all of the hullabaloo on friday and over the weekend and given what's happened in asia overnight and some of the other numbers, this is not a bad way to start the morning. we'll key an eye to see where it goes. let's check other market benchmarks this morning. japan's broader topics index talking a $28-year low. and a quick note, sony down at levels not seen since 1980 when the walkman was first introduced. u.s. treasury yields are modestly higher but the ten-year benchmark yield remains below

1.5% and crude oil 81.21 a barrel, the lowest in almost eight month. >> europe again setting up to be a major driver for the global markets. michelle caruso-cabrera joins us here. i know there's some things happening over there but -- >> it's too early. >> is it. >> you'd be there all the time. >> i'd be there all summer. it's not even the first week of summer. >> euro bonds someday maybe -- >> it's consistent to what you said. >> we need to be able to tell everyone what to do before we do that, right? we need huge fiscal consolidation. >> did you doubt the germans would ever say anything differently? >> i think they're weakening. it's a co-dependency. we're in this together. >> oh, yeah. >> we're not, they are. >> they need a weak euro or else their exports get more expensive. >> it's a sick co-dependency. >> it's like the average marriage. >> you shouldn't be talking

about the average marriage. some of us are still -- >> happily married. >> penelope, you are well loved, this is obvious. let's show you the front page of the actual physical paper, it says the finance minister of spain is negotiating with europe the formula for recapitalizing the banks. so the moment has arrived, the one that many have feared. one of the big four euro countries have going to the eu hat in hand saying they need money. we knew it would come to this, we knew they needed to recapitalize their banks. the process is getting official. the details of the ask are very different from what we saw from greece the other big event was the prime minister of the minucount and offered this statement, we are not on the verge of the apocalypse, but we would be

willing to give control of our budgets to some centralized authority. that is a big deal because just two months ago this is a the prime minister who at a meeting in brussels said we're not going to meet your deficit targets, it's our national sovereign right to do it and can you just stuff it. he's totally changed his tune. >> if you're not on the edge of the apocalypsapocalypse, what go change his mind? >> their yields have been rising. when they started the bailout of the bank, they said we're not going to bail them out, we're going to lend them money at 10% and we're only borrowing at 5%, so we're going to make money.

spains interest rates have been rising and rising and rising. they got to borrow money on thursday for ten years and people are worried about that auction. the details about how they're going to the eu are very different than greece. they're not saying we need money to fund the budget, we need money for payroll, we don't. we need money to recapitalize the banks. right now the rules say you have to give us the government the money first and we give it to the bank. it's not efficient. the minute you give us the money, our debt to gdt rises, we're going to be forced to wut spending, raise taxes, everything will get worse. skip that step, give it to the banks, ala tarp here in the united states and the government will be better off. the jermsgermans are against th they want to dictate to the

government troukia style. >> and you say greenspan on friday. >> i did, he was great. >> a lot of times people get um there in years and say whatever's on their mind. he said when we did the eurozone he said people assumed that the portuguese, spanish, that they would act like germans and the greeks, and they have never and will never act like germans. >> i disagreed with him. i think blaming culture -- i took a course in college where they made us read all these texts about japan in the 40s and 50s and they would never succeed -- >> you don't see a difference between the germans and italians. >> you can't blame culture, you blame incentivising. greece has a great culture down

there. >> they have nothing but squids out there. >> infrastructure. >> we said that before, look at their infrastructure. they're single pillars sticking up in the air. why did they leave that there? build something. other than tourism, what do you have there? >> they do have some energy industries. >> but it's hard. >> it's hard there. that's the biggest problem. that's not cultural, that's bureaucratic. >> the germans brought in the east, their nose to the grindstone, they work every day that it's dreary outside, they work, they work, they work. down in greece it's like oompa! >> i think there's an easy way to say it, and i watched them say it and i said that sum it is up right there. for over here the different states, it's only been a couple

of hundred years. over there they've been different for 2,000 years they've been not getting along. >> greenspan's theory doesn't explain why greece was successful -- >> at some point. >> from 45 bc to 200 -- they built a nice library. >> have we introduced who this character is? >> he's greek. >> harry wilson. >> great, great, beautiful jewelry. >> i forgot to bring it. >> he's guest host for the next two weeks. >> we're watching spain. >> thank you. dow's gains have been officially wiped out. we have that third consecutive disappointing jobs report we saw on friday. joining to talk about the health of the united states and global markets is squawk market master at the wharton school, jeremy seeingal and publisher of bloom

and doom report marc faber and harry wilson, a senior adviser for the auto task force and he's been talking to the greeks about what's happening there, too. professor segal, you wrote an op-ed piece where you said we're reaching the boiling point for the european crisis. what do we do to turn down the heat? >> good morning, becky. if you go through history, it is monetary crises, it is banking crises are the major sources of severe stock market setbacks. i think honestly you have to stop the flows that are going from spain, from greece, the peripheral countries into germany and i believe that the ecb should insure all the deposits of the major banks in the eurozone, just like bernanke did after the lehman crisis in the u.s. that fear is what's driving the

markets. my belief is last week was much more than the jobs report. i think it is europe and i think europe is going to be the major factor in the markets until the ecb takes some strong action. >> mr. faber, that's certainly what we saw last week, including from robert zoellick of the world bank who said we're not on a run of the banks but we're certainly jogging. what professor siegel laid out, would that be one way to stop that run? >> there's outflow from italy, spain and greece would be reduced but it's a little bit difficult to guarantee something about which you have no control and that would certainly apply at the present time to ecb or to germany. i just overheard your conversation before when you made fun of germany and painted

germany as if it were a villain. i'd just like to mention that if you lend money as a german, then obviously you want to impose your conditions that you get repaid so i think their action is actually very natural. >> i think joe was actually giving the greeks a little bit of a harder time than that for not agreeing to pay taxes and work hard. >> you got a bad connection, marc. germany is the only place that works over there, that they put in an eight-hour day and five-day work week and pay taxes. they bring in the east and now they have to bring in the south. it not fair. >> marc, aside from the greek question, though, we're dealing with the situation where the economy is slowing down around the globe. you can look at this and try and figure out what that means for next year but you've got some serious concerns about the entire globe going into the recession, too.

>> i'm convinced that europe is in a recession today, if you add every country. and i think there is a very meaningful and more substantial slowdown in china than the official statistics would suggest, probably there is at the present time hardly any growth at all. and so that slows down the demand for industrial commodities and that then slows down the production in countries that produce industrial commodities and their demand. so you have essentially a chain, a vicious spiral going through the global economy, which means that corporate profits in the u.s. and don't forget about 40% of corporate profits are outside the u.s. and of that i would imagine about 50% is in europe, that corporate profits will disappoint. >> that's a scary scenario, harry, if you add all that up as an investor, where do you look? i guess that's why we've seen a

lot of the very severe moves we've seen in recent weeks, people think that could be the case. >> i think that's exactly right. we talked for the last year and a half about risk of recession. the one thing marc said that caught my attention was you said you thought china is barely growing at all. official data puts growth at 6% 20 to 8%. do you think the official growth is incorrect? >> if you look at electricity production, steel production, they're flat and so i think these are very meaningful signs indicators that the economy is hardly growing at the present time. and then you look at the demand

for iron and coming from china, it essentially all flat to down, otherwise prices wouldn't be so weak. so i think that i would rather rely on those statistics. but i'd just like to mention one point and i think you should ask jeremy siegel about this, you know, everything looks bad at the present time and people are relatively bearish. at the same time you have the ten-year note at less than 1.5% and you have say a stock like johnson & johnson yielding almost 4%. i'm not saying that johnson & johnson won't go down along with the rest of the market, i'm just saying if you have a time horizon of ten years, i believe you're going to make more money in johnson & johnson than in u.s. government bonds. >> jeremy? >> i certainly agree with that. it's the first time in 60 years that the dividend yield on the

market exceeds long-term interest rates. it's the first time in 60 years when you don't need gains in stocks to have a higher return than gains in bonds. you don't really have to worry so much about the day-to-day volatility if the corporation, if the firm has good coverage on its dividends because it going to continue to pay. that's a very special position for the stock market to be in. i agree completely on that for long-term investors. i'd also like to say that there is a side benefit to the weakness and commodity prices, oil prices, especially for the united states, which is still an importer of oil. this is very different than last year. people are comparing now what we had to last year, we had a slow council in spring and summer. last spring we had oil prices rising. remember the arab spring, the disturbances in those oil producing countries caused oil to go up to $120, $125, 1d 30 a

barrel. this down shift we have will add purchasing power to the u.s. and that i think is going to cushion the downin the u.s. most people i talk to are still talking about 2.5% to quarter, they may have lowered the second quarter from 2.5 to 2. slow growth, no recession, earnings flat but well covered, it's still a very good story for stock ps. >> you think a good story for stocks not only over the ten-year period but over the one-year period? >> if there's an implosion in europe and flows get worse, in the short run you're going to get downward movement in stocks. again, the market will react to monetary disturbances stronger than anything else. i do think the ecb has to come in very, very strong with some

measures to prevent those flows from happening. even european stocks are now eight to nine times earnings. wow. we haven't seen that level since we had 15% interest rates in 1979. that is truly extraordinary. >> professor, real quick, what did you miss in this? you've been very bullish on the broadcast over the past couple of months. did you not expect we were going to be in this soup this summer? >> i didn't expect that the outflows from the banks, the periphery, was going to gain as much strength. and i've been worried the last several weeks that that is really undermining the current market. disturbances of money flows from peripheral banks in spain, even in italy, not just greece anymore. that's a very dangerous situation. the ecb i think has to put deposit insurance -- not formal

insurance, say temporarily we're going to insure those deposits. otherwise you're going to continue get the bleeding and continue pressure on the stock market. >> professor siegel, mr. faber, thank you both very much for your time. we appreciate it. >> when we return, we'll have more from our guest host, harry wilson. and later, does the ecb have the power to do more? our guest will join us and a lot more. t, 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,

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our guest host this morning, harry wilson, the chairman and ceo of mava advisers. when i hear jeremy siegel talk about historically we've never seen the yield on long-term government debt fall below the dividend rate on the stock market and he was using that as a positive. but we talk something is amiss here. there's some fear in the back of investors' minds that there could be some of that in the future, it would cause you to be

risk averse. and i think that's europe. i think you look at the damage done by one investment bank, a big one, lee man brothers. and we all kind of pooh-pooh the idea if europe were to break up or implode, it's something we can handle and i worry that some think that 2008 is a warmup for something worse. >> we're also on the verge for other kinds of history -- >> and a huge economy. >> and so i think you've got two fundamental issues driving the fear. the first is there are no bright spots. the u.s. is probably the best house in a bad neighborhood but we're a 2%, in the best case we have a big fiscal cliff greater than that coming up.

>> and government at 25% of gdp, growing to 38% if we don't do something. >> and up have lots of tail risk, china and what may happen there is a question of uncertainty because people don't believe or understand the statistics. no bright spots and tail risk leads to downward pressure. >> anything paying 3 pb.5, 40, 4.5 dividends, we know how quickly 5% can disappear in the stock market. y obviously people aren't taking that advice at this point. >> i wouldn't say that. i think stocks are attractively valued, likely to go down in the near term. you see a 20% down draft in

earnings, which would be pretty huge, still at 15, 16 times. so relative to any other asset class out there it's attractive but on an historical basis it's reasonably attractive. if you take a ten-year average, how much of the current levels is cheap money. >> coming up, a squawk laureate, best selling author and one of the most respected economists in the universe joseph stiglitz joins us. the right minds from inside and outside the company come together to work on an idea. adding to it from the road, improving it in the cloud all in real time. good idea. ♪ it's the at&t network -- providing new ways to work together, so business works better. ♪ [ male announcer ] we began with the rx.

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. welcome back to "squawk box," everybody. we had a pretty scary weekend. let's get a check on the market this morning. after friday's big selloff, you'll see things are not looking that bad. the s&p 500 only down by only a point. dow futures down by about 15 points now and the nasdaq has turned positive. a lot of this comes oos some of the markets in europe have turned positive. oracle and hewlett packard squaring off in court today. hp is suing oracle for ending

support for its servers that use its titanium chip. we have the government reporting april factory order at 10:00 a.m. eastern time. economists expect orders to come in unchanged after a 1.5% drop in march. and facebook and yahoo! are said to be talking about ongoing patent disputes between the two. the settlement is said to involve extensive cross-licensing. andrew, back over to you. >> we are inducting a new member to the "squawk box" book club this morning around presenting a blue chip book award. it goes to "the price of inquality," it goes to nobel laureate joseph stiglitz. we'll have to get your signature on the book. i want to talk about the book and also want to talk about europe and what's going on in

the markets. we were talking off camera before. joe had paid me $1 a word to read what made be the antithesis of your book in many ways "the road to freedom" -- >> arthur brooks. >> you make the argument that inekwai inequality and how to fix it. he makes the opposite argument, that it's about the individual responsibility, the individual earned success and that will ultimately solve the problem. make your case. >> the first point is we are paying i think a very high price for inequality. that's the title of the book. we're going through a recession. we're talking about that. there is broad consensus that one of the reasons for the weakness of our economy is the huge level of inequality that emerged in the years before the crisis. one of the problem when you have a high level of inequality is it

leads to political division. we're seeing that in the united states, the kind of gridlock that makes it difficult to reach a political consensus and provide the basics of education, infrastructure, technology, opportunity. do you realize that america has become the country -- advanced industry country with the most inequality and the least equality of opportunity. >> upward mokt. >> upward mobility or downward mobility. if you're born at the top you stay there. if you're born at the bottom we're stay there. >> we are worse than -- >> let me ask a question. is a goal then to rise and raise the bottom group up or do we think the 1% is too high and has to come down? >> it's mainly to increase opportunity. a lot of the income at the top, not all of it --

>> because there's so much rhetoric that there's too much income at the tom and there are people out there saying it's got to come down. that is sort of feeding this nair a difficult. >> i wouldn't use the word too much. it's how it orange nates from what i and others have called sent seeking behavior. when you have and onless, that int interpractices, pred at this lending, you get a lot of money at the top by hurting people at the bottom. when you get larges from the government, when the government overpays for drugs because of lobbying, when the government undercharges for the sale of natural resources like minerals, you hurt a lot of weather but hurt the rest of society.

>> you argue for a big role of government. one of the conversations we had is look at the post office. and how the government ultimately may not be the most efficient. one of the things you said off air is the government is a more efficient provider of services and youth. >> that's right. the datesia is clear the transaction cost for the government in add minute stefring medicare is less than private sector firms that do this kind of thing. >> tro -- and noting about problems for the future. >> there are two separate issues. >> i heard how you parsed it but -- >> transactions. based on collective society or

you do better when there's a profit incentive, which causes people to be accountable and mind their ps and qs or no profit incentive where you're free to if -- >> look at our private sector banks. they were private but they brought the economy to the brink of ruin and we had to subsidize it to the tune of millions of dollars. >> what business would be best not run by the government? >> i didn't say that. >> right. but if you just got the profit incentive out of all business so there wasn't that nagging responsibility to shareholders, when you just do it for the good of society, why doesn't it work when they try it? >> you don't have this simplified system that you have in your mind. we have large corporations where ceos often run the corporation for the benefit of them and their group around them. not for the benefit of the shareholders. that's 2 1s -- >> crony capitalism is one of

the keefe points in the book. >> and we agree on that. but not all our capitalism is crony capitalism. you look at what happened in the banks, the executives did very well, the shareholders have done miserably. >> the way the ceo pay has been the hot button issue for the last five years has been to try to align shareholder interest with ceo pay. they're trying to do that and boards need to do that. >> but that could be part of crony capitalism in that the numbers were too high because of that. >> exactly right. and the resistance to even say and pay, which is a simple reform of carb pret government -- if you have something working for you, it seems reasonable that you should have some say if what thech get paid. the modern of the capitalism is the shareholders have no say in pay. >> what should stay private?

>> i think most companies should stay private. >> for what reason? >> i believe in a vast majority of area the kind of profit motive works well but where there are problems, like what we call externalaltiees, that you need overseeing. in the case of social security that the government has low tracks action costs. it isn't involved in the preem skimming, which takes so much of the revenues. art of that, there have been a lot of parmts at this. they show because of these efforts of trying to maximize transaction costs, retirees, who

are -- they get a lot less. >> should the government be handling the retirement needs of the middle class in. >> i think there's a role for the private sector. >> a role for the private sector. why should the government be involved in retirement for the middle class or even take it furr, for the upper class. why should wealthy individual -- >> social security has do and more than anything else to reduce -- >> we all agree on safety net for everybody. >> but who is going to be in their safety net? you have to have a core program. that provides the safety net. and then beyond that there's a role for the private sector but it has to be well regulated. other wise you get firms that try to maximize transaction costs. remember, for the banks transaction costs are a good thing. that's their profit. >> most people don't know what they pay for their 401(k)s.

as of today they have to publish those fees. zit very hid i don't know. >> what's the trade-off between low transaction fees from medicare and the fraud and no one minding the store and not -- you know, or the lack of innovation because there's no reason to try and do it better than someone -- >> we've tried to set up a system in medicare where we have innovation. >> we've tried but how effective is the government in relation to that? >> most innovation in health care rests on a foundation of government-sponsored research. >> based on science. no one's saying that we shouldn't fund the nsf but there's a difference between administering the health care system and funding the nsf or the national academy of sciences. >> we only have a couch for minutes. i just wanted to segue briefly to europe if we had you.

i don't know if you saw the speech soros game over the weekend, he thought we should have three months. i think there's right that there's a very strong danger. most realize the foundation of the europe owe was -- >> is it it fixable booksable in your mind. but it will require a lot more political cone p con ses us but if you're going to do that, you're going to have to create a euro banking system. >> are we in a lehman moment? is it baked into the game? >> spain had a surplus before the crisis. so this idea it's all based

in -- it's just wrong. ireland had a surplus, low debt to gdp system. the basic framework and response of europe to the problems is fraud. austerity is bringing problems, it's the entertainment state that is prevalent in europe. to a government promising more than it can deliver to its the scandinavian countries have strong welfare state but they said we're give and we'll pay for it. and it works very well. it gives more opportunity. one of the reasons tharp growing

strongly and in terms of most indicators of the well ng of most of the citizens they're performing better. most americans are worse off today than they were 15 years ago. so we have a system where there's been growth but all the growth has gone to the people at the top and most americans are not doing well. so something is wrong with our system of the market economy. >> professor, we're going to have to leave it there pop we'll have to have you come back again. >> coming up next, the battle at kosh. and then at the top of the hour two market pros. what to make of friday's jobs data and how to go forward.

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it's great to see you. a lot in the press over the weekend about the new targeted drugs to ramp up the immune system to target what the drugs can do against cancer. >> there's a lot of really exciting things here today. the one i think captured most people's attention is a drug we presented the data on yesterday called tdm-1. just to back um for the audience, patients with aggressive cancer are often treated with chemotherapy. while it's particularly effective at killing cancer cells, one of the problems is it also kills normal cells and causes nausea, vomiting, diarrhea, hair loss, things like this. with this drug, why it's so special, we combined the chemotherapy with the targeted therapy and deliver it directly to the cancer sell and we've

minimized a lot of the side effects. data suggests this is not only more effective than what's traditionally given -- >> it's the next generation i get herceptin. obviously it could go in and there was a certain marker that some people who have breast cancer, but not most. a minority of people who have breast cancer but herceptin found the marker. now you've loaded it and i guess you've attached it to kechemo s it deliver it is to these her-plus cells. how did it used to work and why is it better? >> herceptin is for the patients who have a certain type of breast cancer, about one in five patients will have this form of

aggressive breast cancer. we found the tdm-1 molecule, new medicine, by linking it to the chemo, we get the activity of her accept ten plus the chemo but it delivered directly to the cancer sell. we have patients living longer with cancer at bay. it's a real technology. we have eight other molecules like this in clinical testing today and another 16 in the research. it's a very exciting advance. >> this stuff, this technology, people have been trying to use it for how long? 10, 15 years. it never worked. why is it starting to work now? >> you're absolutely right. this idea about the imagine being bullet, about putting chemo directly into the cancer cell has been a concept that's been talked about for many years but there's been a lot of advances we've made in collaboration with other

companies to figure out how to link the chemotherapy to the medicine and we think we've made some big advances here. >> i guess that speaks to one of the draw backs has been the side effects of some of this stuff. if it doesn't go directly into the cancer sell, it hurt the normal tissue. that's the progress that's been made in that area. that is exciting. next we're need a bunch of -- it would be nice to have the other 80% of breast cancer, if you could find a marker for the rest of it, then could you do the same thing. it's frustrating it's just on that 20%. aren't there markers for the rest of breast cancer or not? >> you're absolutely right, joe. the key thing is to find other tumors that have the ability to get the targeted therapies into

them. we have eight other molecules that are what's called antibody drug conjugates. >> it would be nice to have some way that cancer would be seen as foreign and where the cancer can't fool the immune system into thinking it's attacking itself or something. and there is progress being made there, too, not just in the b cell stuff but overall immune response, right? >> you're absolutely right. some pretty interesting data here, how to ref up off our body's immune system. we have an approach to help the body target the cancer itself and do some significant benefit for patients if we can get that

to work. >> it's great. appreciate your time this morning. chief medical officer, hall baron, thank you. >> all right, take a look. the dow actually just turned positive. barely but it's positive. when we come back, we'll have stocks to watch on this among morning. and at the top of the hour, two market pros talking about jobs and the friday selloff. and take another look at the futures. the dow is bouncing back and forth. we'll take that as a victory if you ttd#: 1-800-345-2550 a predetermined script. ttd#: 1-800-345-2550 at charles schwab, we actually take the time to listen - ttd#: 1-800-345-2550 to understand you and your goals... ttd#: 1-800-345-2550 ...so together we can find real-life answers for your ttd#: 1-800-345-2550 real-life retirement. ttd#: 1-800-345-2550 talk to chuck ttd#: 1-800-345-2550 and let's write a script based on your life story. ttd#: 1-800-345-2550

at boving, upgraded and amazon has been removed from the list at -- conviction list at evercore. >> when we come back, taking advantage of the flight to safety. former treasury secretary larry summers has a plan to boost growth. it involves more borrowing by the u.s. government. he says take advantage of those

low rates. and peter fisher will join us to talk about jobs, the european debt crisis and looming fiscal cliff. stick around. >> if you're just tuning in, you're two hours too late. >> all of the uncertainty has pushed companies i think into a much more conservative mode. >> it's across the globe and i think it's a clear wake-up call that compared to two months ago i think investors do realize the urgency and need for actions. >> the ecb should insure all the deposits of the major banks in the eurozone. just like bernanke did after the lehman crisis in the u.s. >> i'm convinced that europe is actually in a recession today, if you add every country. and i think there is a very meaningful and more substantial slowdown in china than the official statistics would

suggest. >> there is blowout consensus one of the reasons for the weakness in the economy is the huge level of inequality that emerged in the years before the crisis.

xx stocks sliding after friday's dismal jobs report. >> the flight to safety. the yield on the ten-year treasury dropping below 1.5%. >> the ten-year down, the dow is down. >> larry summers wants the u.s. to take advantage of low cost on bonds. the third hour of "squawk box" starts right now.

welcome back to "squawk box" here on cnbc, first in business worldwide, i'm joe kernen along with becky quick and andrew ross sorkin. our guest host is harry wilson, chairman of maeva group and former senior member of president obama's task force. >> on friday the selloff erased all of the 2012 gangs for the dow. take a look at the futures this morning. we did see triple-digit losses last night on these future. right now you're looking essentially flat, futures down about 4.5. s&p full futs have just turned positive and much better than last night. it's been improving throughout the course of the morning. crude oil prices are down at this point by about 87 cents to

82.36. earlier this morning we were looking at an 81 handle on oil. look at the yield on the ten-year treasury. at this point it's at 1.5%. it's stepped up a little bit, by about 4 basis points or so. we did see a little weaker this morning. maybe some pulling back from the most panic we have seen. officials in brussels, frankfurt and berlin are working what is said to be a master plan. reports suggest that berlin is now willing to consider great are fiscal union if euro members agree to hand over power on government spending and structural reform of their economies. portugal is set to inject billions of euros into its largest banks. the government hope to help them cope. most of the funds will come from a bailout from a year ago.

right now you can see france has turned positive, up by 21 points. in germany the dax is off by less than half a purse, spain is better than 3% and greece is still the markets facing pressure, down by 4.5%. >> the dow erases gains for the year following a weaker than expected jobs report. we really thought, paulsen, when we called you today, we thought the studio was going to say he didn't show up. normally this is not good timing for you. everything is going to be okay? is that what you're going to tell me? >> i think so, joe. >> that sounded wimpy and kind

of weak. give me an absolutely, things are fine. >> it's always tough to watch the market move down so violently. here's my interpretation of the data on friday and recent reports. i still think the first part of this year we were upwardly disporting the economic reports because of the mild winter and now we're underestimating them. if you step back from that for a minute and just look at how we've done offer tover the firs five months of the year, we look okay. we've created 170,000 private jobs, that is among the best five-year job grains of this recovery. if you look at the household numbers, which were summarily ignored on friday and told a very different story by the way, through the first five months of this year, we've created 300,000 jobs a month while 224,000 people have entered the labor force each month and even though a quarter million people came into the job market every month,

we managed to lower the unemployment rate from 8.5 to 8.2. that's not just okay job reports, that's good. i really think the economy is much better than what what these numbers suggest. i think in the next few months we'll continue to get data that show the economy is holding together and a 12.8 multiple on trailing earnings, 12.2 on year end, these are valuation levels, pe levels, we have not seen in the post world era, except when interest rates and inflation are much, much higher. i think the type of valuations we had and if the economy shows it's showing together, it's going to accept for -- inspire some greed before the year is out. i still think we've got a good chance yet, joe, of reaching some new recovery highs again before the year is out.

>> you heard there's a lot of reasons for the market to be higher than it is and yet it's not. is there something the market knows that we don't know or is the market participants overreacting to the negative. >> one of the key points i think of the markets, of the global economy right now is the extremely low rates, both in the treasuries and in the bund in particular. that's almost like a cry for help or economic tatonic plate rubbing up together. there's such a lack of quality collateral that the market is being funneled into those instruments to the detriment of savers and other things like that. but it's even gone beyond that i think because in the last couple of weeks ip think you're getting positions that are just so wrong footed that people, the higher the prices go on the bund and

the treasuries. the low yields are indicative of a major problem or concern from the economic system. as jim was say being, we had the good weather in the winter and i think that's the anomaly. before that happened we shall had very mediocre to poor labor market condition last fall and i think we've fallen back to that with the anomaly being the winter, an adjustment of the seasonals that flattered those numbers. >> i'm trying to figure out what you just said. were you talking about the fed has flooded the system with liquidity but it's gone in the wrong places? >> well, i mean, no. even though there's a lot of treasuries available, once the economic -- we had the 2008/2009, a lot of the securitization markets that had created what was considered to be quality collateral, those markets collapsed.

>> the shadow. >> the shadow banking market collapsed. not only did you get therefore less securitization, less collateral, but the reuse of that collateral shrunk as well. therefore, people who would have gone into these other securities have been forced into treasuries. now the situation has been made more acute over the last couple of years because of europe. so, therefore, i mean, you're not going to get an inves commit commit less invent for the next been for until -- the flight into this stuff, into the treasury and into the bund has taken the yields below fundamentally where they should be. now i think the situation has gotten such that the lower the yields go that there's some positions that just have to buy more and more and that's putting us in a pretty ten uietty tenuo

situation. >> we have a guest that says you should take advantage of the loaf rates -- >> it depends what you're going to do with it. that would then therefore supply more collateral, which the market is in need of right now. i don't have any problem with the idea of that. obviously the execution is important. >> hmm -- then they have china and they build stadiums where no one goes to any games in.

i guess that's taking it to hyperbole. were you nodding that the government should be borrowing more and just assume we never have a day of reckoning, jim? >> i don't necessarily think the government should borrow more and spend more. i don't think we need it, joe. i really don't. i think the economy will grow 2.5% to 3% the rest of the year. i'd like to see the government lock in longer term funding, take advantage of that. a little different interpretation of that long bond. i keep getting the sense that i'm reliving the same thing again thach relived -- or lived through ten years ago only it's just switched from stocks to ponds. ten -- everyone knew it was too high but no one could pull themselves out of the market because thereof so much optimism about the new era. today the bond market is selling at 40 to 50 times earnings, if you will, for the exact same

reason. they're just this ongoing excessive pessimism about the future because of the new normal. yet everyone knows they're too low. how many times are we going to play the story that the euro wolf how wills that the sky is falling and everyone says armageddon is coming and to sell and yet every time it's happened, the market has recovered and gone on to new recovery highs. this would be the third time at least that's happened. am sot point you would think market participants would look if he situation of europe flairing fears as a buying opportunity rather than a selling opportunity. every time they've sold in in the past, it's been wrong. >> that would say there's a light flooit to quality going on but when the s&p was making a new high for the move, did you ten year-yielding under 2%.

so there's not that give and tack between the stocks are attracted to the bonds. i think it goes are not related to the stunt als or, which is people chasing and paying your actual prices for something because they think that it's -- i think it's more of a des praegs or a lack of alternative. >> and there is some that. i think also you're talking about a market and trying to get a market signal from it that's hugely distorted by the central banks. it hard to get a market signal from an asset that is just being sit on by a hugely several ton pond elephant this let the yield rise. maybe we'd start to fix this revaluation between stocks and

bonds. >> we've been -- you guys going back and forth. we got to end it, though. >> other, lull. >> when we come back, the outlook for global growth is looking a lot more blooming of a need's disnumbers. >> also in the next half hour we'll talk fixed income from the "squawk box" hour of the third more, on the leading indicators. [ female announcer ] you're the boss of your life. in charge of long weekends and longer retirements.

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salesforce.com has sealed the deal to buy buddy media. >> coming up, larry summers on the path to global economy and peter fisher will join us in the next half hour. he's a "squawk box" market master. ♪ wish it were sunday, that's my fun day ♪ ttd#: 1-800-345-2550

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welcome back to "squawk box" on this monday morning. the outlook for the global recovery looking more gloomy after friday's weak jobs reports. larry summers says countries like the u.s. should take advantage of the low cost of borrowing to invest in domestic projects and spur economic growth. joining us now, larry summers, former treasury secretary and former director of the national economic council. he is currently the charles w. elliott university professor at harvard university. good morning to you, mr. summers. thank you for joining us. >> glad to be with you, andrew. >> we all read your op-ed. it makes a lot of sense except one thing for me. here's the question. we are already overlevered. if we weren't overlevered, taking on more lever may sound right but make the case. explain why even in this completely overlevered world

we're in, you're suggesting more. >> there's two separate issues the first issue that should be easy for everybody is that we can term out this debt and we can use it to reduce our future fiscal costs. if we do maintenance projects this year instead of two years from now and borrow the money at the negative real rates that are available, that puts the government ahead in budget terms. we take buildings that the government's leasing, that it's paying 6, 7, 8, 10% of the cost of the buildings and we buy those buildings right now, thens government's budget situation is better. who running any kind of responsible financial operation with the opportunity to borrow money at a rate of 2.5% for 30 years, especially in a currency that they get to issue over 30 years, wouldn't be taking more advantage of that opportunity? we can take advantage of that opportunity to prefund future

obligations and if we do that, the financial health of the government is actually improved, not made worse. then there's a separate question, which is should we raise the level of government spending to stimulate the economy? if you look at the areas where the has done well, they've been areas where the government made a serious commitment, like manufacturing, harry who is with you, was an integral part of all of that. if you look at the parts of the economy that really look in very weak shape, it's areas like construction, state and local employment, teachers and the like, where the proposals that were put forward to get the economy growing were not accepted by the congress. so, look, i yield to no one in

being concerned about our long-run fiscal picture, but i will tell you that as the evidence of japan demonstrates, the single greatest threat to the long-run creditworthiness of the united states is a failure to reestablish strong economic growth. and that's why that's got to be the priority. >> what is the evidence of china suggest on the other side, thou though? >> i think the evidence of china suggests that they pursued a substantial stimulus program to respond to the 2008 financial crisis and they've had results in terms of economic growth, in terms of job creation over the last several years that most countries would envy. now, there's plenty that's wrong in china and plenty of economic and financial issues in china, but they're really -- it's a different kettle of fish. they spend 35% of their gdp on household consumption. that's a world record low.

that's a very different set of issues than we're dealing with in the united states. >> when i was reading it, it seemed like you very carefully chose some things that it would be tough to disagree with, like military cycles that we know are coming forward, pay them forward or rent on government buildings. that's a far cry, though, if you think about if you took this to its logical extension, would you say do this for high speed rail in certain places where the political, you know, you start worrying about things being politicized. how about alternative energy? that's where we worry where the government may not be the best allocator of capital. >> i'm not making any blanket endorsement of anything. >> but that's what happens sometimes. >> well, sometimes it might. and sometimes very strong

proposals that would make us better off are rejected because of gridlock and you have to find your way between these two -- >> couldn't we bank a bunch of -- >> i'm sorry. >> what if we didn't spend it. what if we just issued a lot of 30-year debt and didn't immediately blow it. >> you're a financial guy, joe. what sense would it make to issue 30-year debt at 2.5% and put the money in the bank at 0%? >> it just feels -- >> that wouldn't make any sense at all. >> i don't want to spend it on greece and the unions, for example. that's going to happen, too. it's going to be all union -- >> i don't think there's anybody who is advocating a program like the one you describe. you mentioned clean energy. >> yeah. or the bullet trains. is that what we want, larry? >> i'll tell you, i travel up and down the east coast a lot.

if you're proud of the -- if you're proud of the kind of systems that we have -- >> no, i'm not -- >> for connecting people -- >> i don't want to double down on amtrak. you want to double down on amtrak? >> no, i don't want to double down on amtrak. i want to make responsible, prudent investments in an infrastructure in this country that lags very badly. and you're absolutely right that there have been plenty of problems of infrastructure being politicized. that's why the proposals that were made for an infrastructure bank were to take the poll tait out it have. those proposals haven't been accepted by the congress. but you and i can agree on taking the politics out of infrastructure investment, you and i can agree on taking the politics out of energy investments. you talk about energy investments. you guys do this all the time. you know that you can't judge a venture capital portfolio on the

basis of a few companies because you know that you're doing it for a few big successes. and we'll see how that plays out. >> larry weeks got to have you come in. we got to talk presidential elections and much more. but it is a must read op-ed. we encourage everyone to get out and read the f.t. this morning. >> good to be with you. >> coming up, peter fisher. thel and hurtle us all into space. which would render retirement planning unnecessary. but say the sun rises on december 22nd, and you still need to retire. td ameritrade's investment consultants can help you build a plan that fits your life. we'll even throw in up to $600 when you open a new account or roll over an old 401(k). so who's in control now, mayans?

after friday's disappointing jobs report, we're looking for the potential for more fed action, which steve didn't think would happen and now -- >> no. have i to report the news. if you want to ask me what i think after, we can spend a few minutes. i'll tell you what the market -- >> all i care about is what you think. the rest is crap as far as i'm concerned. >> we want to know what the market expects and the reason we launched the cnbc fed survey over a year ago, if the main policy tool is quantitative easing, there's no market to gauge that the way we have the

feds fund interest rate. we have this way to see what the market is pricing in now. we can know if they're meeting expects takes or disappointing. we found the market has dramatically raised its outlook for the fed to step in with additional easing. yes up to 58% from 33% in our last survey in april. no down to 32% from 56% in april. and 10% still not paying attention and they're unsure. we had 60 economists and strategists respond. "the downright dismal performance of the labor markets in may increases the odds of fed alexandra matically." but old on "the economy's primary head wind is business

community fear about the imbalances being generated by severe eye accommodative fiscal and monetary policy." you can see right there it's up -- i don't have a monitor. >> 42% from june from 65%. >> and july moving to 47% now expecting the fed announce in july. we asked what else the fed should do to drive down long-term yields. can you see april now for extended operation twist up 42% from 25. sterilized qe, that never really took off, reducing interest rates on reserve, 25%. and then none. that's done to 24%. you can see the general sense the market thinks the fed will do something. >> "i feel the fed will almost certainly extend operation kpis.

beyond that, tension the fed will not sit on their hands for long with gdp is 2% or less and unfloumt is stick at-- unemploy stuck at 8% or higher." now, in a report this weekend, morgan stanley upped their probability for the fed to announce qe in june to 80%. they were done around 40%. pe expectations have changed and dramatically. drew and matty said over the weekend "what would be the point"? some guys are telling us what they think the fed will do rather than what they think the fed should do. there's more disagreement in the efficacy of these policies that i can ever remember. >> the 17th is when greece votes. i wonder how much that can play

into it as well. >> if i was ben bernanke, would i want greece to step forward and i would take a page out of the book that says if the fed steps in for the need for fiscal authority to get its act together. i don't think we've reached the uptick yet. bernanke said we've had this uptick from warm weather, we're having a down particular and i don't think he thinks 70,000 is the right now for jobs. that said, now that we have this whole european fiscal contagion happening, maybe he's changing his mind. i believe it's thursday where ben bernanke will speak.

that's going to be the big day of the week. >> if people are expecting quantitative easing and they don't do that, is that near term bearish? >> i think it is near term bearish. i think what happened on friday was a wake-up call. all of a sudden there is a recession probability coming in. i will tell you for what it's worth i'm seeing very few recession forecasts out there. we've taken growth done from 2.5% to 2%. some guys more extreme, jpmorgan took a full point off its third quarter growth forecast from 3 to 2. instead of an economy growing momentum as the year goes by, it's an economy that remains at 2%. >> let's bring in rick santelli. we had larry summers on. i wonder if you think that with the cases he talked about, rick,

where you got these low long-term rates that the government can borrow, you know you got a military cycle upgrade coming in a year or two so you do it now because you can borrow so cheaply. you know that you're going to have the government, it's going to be housed somewhere so you do something with a lease back and with buying building with rent, using it. are there things that make sense to actually use the low interest rates to borrow and spend on infrastructure right now since they're so low, rick, in your view? >> the problem with rates that are managed low are than they should be, you misallocate resources. i don't know if those are the right things to do, nn if now is the time to do them. i know people like larry summers are not the people i'd listen to if i decide whether to do that. >> but companies do this. >> and we have shareholders to answer to. companies are different. companies aren't playing with public money. >> and they have share holders to -- >> again, it seems like it makes

sense if can you do it now versus a year from now and save money on it. >> why? >> how can you argue with me as a taxpayer, how are we stuck? >> as a taxpayer you'll be stuck with the very same costs. are you saying we shouldn't spend the military to upgrade a year from now? >> you let the military worry about their own budget. i don't understand why these decisions have to be made with a thought to the dangerous times we live in and how various agencies, group, fed, treasury have put these lows. >> but you're turning into thoo -- this into an ideological argument. >> it is. >> there's nothing ideological about it. >> this is trying to dig holes, give them spoons, give them shovels. >> you're making a difference between mandatory and discretionary spending. you're saying pull forward the

mandatory spending. that's not financing. >> rick, that doesn't make sense, the idea just pulling forward -- >> no, no. why are we having a conversation at all? because interest rates are low and you're trying to -- you know, what i think we need budgets. how do we know what the military spending is going to be? >> they're already budgeting to do. it's just pulling the spending forward. >> okay, then what's the issue, andrew? what's the real issue? >> what is the market signal about the supply of treasuries right now? i nope you're going to say it's distorted by the federal reserve but interest rates have fallen and yields have fall i don't know sharply while fed policy has remained unchanged. there's's an argument out there that the u.s. is screaming for more paper and that the

governments should spend until those yields rise. rick? >> steve, my notion is the government has too big a prosence. all these questions, what you're asking me, i just doesn't know if i have an answer for. >> what's the market signal? >> there is no market signal. we're looking at interest rates in europe at 1%, the ten-year at 1.40. i can't see a reality to make any valid argument to any of the discussions we're having today thus far. >> thanks, rick. >> when we come back, the ten-year falling below 1.5% after friday's disappointing jobs report. when we come back, we have blje fisher who will join us to talk about what he sees.

chesapeake has announced changers to its board of directors. they will add four directors. one director has retired. and they will keep the ceo and get a new chairman. >> harry wilson has called out

and thought much of the board will retire. you were saying friday this is where this evenings should be going. is this headed in the right direction? >> finally. songs as long as we get the right people. chesapeake is today's poster child for poor corporate governance. it looks like they're going to turn over the board. they need to launch an independent investigation into all the practices that have been closed to make sure everything is turned over and revealed to the public. >> can you keep the ceo? >> depends on the outcome of that investigation. if he's clean and the practices are in the past, i think he can stay. >> harry, thank you. we'll have more in just a moment. we've been watching the yields on the u.s. treasury debt sinking to record lows on friday. it continued to raise concerns about the health of the u.s.

economy. squawk market master peter fissures joins us. we've been trying to get a feel of where we're headed. what's your take on all of it? >> i think we squeezed out the remaining shorts in the market. i agree with what steve said, we didn't learn much about the u.s. economy, we're growing at 2%, sometimes faster, sometimes slower and right now slower. the news that did matter is that china is slowing down a lot, taking a big share of aggregate demand out of the world. china being weaker is bad for europe. in the inflation market, they went way down, weak outlook for the world. that dragged yields down all around. we have the flight to safety coming out of europe. i thought the news out of europe was middle term positive. the spaniards have to

recapitalize their banking system. so they're moving in the right direction but we had a capitulation last week. >> we talked about marc faber earlier this morning and he suggested that china could be growing even more slowly than those official numbers indicate at this point. he thinks they're barely growing. does that change the picture at all? >> i share that fear, the data out of china is always hard to have confidence in. i think they've been slofing down a lot. look back a year ago, the inflation data slowed before the demand data did. that's not usually how it happens. so, yes, i am worried about that big piece of aggregate demand we're count on on in the world being china and east area disappearing on us. i think the markets are worried about that, too. >> what's an investor do you do at this point? with you go with ten-year or

30-year about? >> you're treating it as a slightly yieldy form of cash and hope being can you get out if the market turns. but i think a lot of investors, and ourselves included, are not trying to be too cute about trading this interest rate market. there's a lot of noise out there. >> so what do you do instead? >> the central banks are hoarding duration. if you really have to make your money either trading volatility or picking up credit spread. those are the two two omss out there. >> so does that lead you -- as trading volatility is hard for most investors, does that lead you to high yields to pick up credit spreads? where does that lead you? >> whatever your comfort level. high yield if you have a good diversified portfolio.

>> if you have to be in fixed income, i can&why you'd say that. if you don't have to be, what's the argument for taking good credit risk, particularly duration risk. >> because you think you might be able to buy stocks cheaper later. it's not a yield play. it an option on buying other assets later. >> can't you do that by staying short on the yield curve? you'd have a lot less principle risk. >> wherever your duration neutral is is likely where you want to be because you can't get too cute. >> what is blackrock's overall fiscal strategy at this point? what's the percentage you would have allocated to bonds at this point? >> i'm just the bond guy. >> overall for blackrock. if there was a push, is

blackrock as a whole less positive on bonds at this point or has it maintained a steady pace of what they would recommend the average investor put in terms of bonds versus stocks? >> well, i think we've been suggesting for some time that investors want to be long risk assets, whether those are high yield or equity assets and you want to not be too underweight them and we think a lot of investors to get cheap are. but the world's you want to try to pick up some return, not fail to participate in either the equity mark or the spread market. >> peter, thank you. we aushl appreciate talking to you. >> pleasure. thanks. >> coming up, we'll take a look at stocks on the move on the trading week and more from our guest host harry wilson.

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welcome back to "squawk" on this monday morning. more now from our guest host harry wilson. he's a new yahoo! board member. we have not had a chance to discuss what's going on. how long have you been on the job now, three weeks? >> about three weeks. >> there's some news today on all things d that yahoo! and

facebook may be near -- >> can you speak to this? i imagine you're going to try not to. >> as you can imagine, no. >> we're here at the table. you can offer us a little bit on what's going on. >> i think the key thing people should focus on and we've really tried to focus on is turning the page on bad recent history. we've got a brand-new board. almost everybody on board is new. there's a focus on driving shareholder value. the alibaba transaction is the first step in the process. >> who's going to be your ceo long term. is the guy who's got the job now going to stay? >> ross is doing an excellent job. >> he'd like to keep the job. >> there's a process in place to evaluate him and other candidates. we'll see how that plays out. >> what kind of person would you like? think of the people that have had the job. a long list. >> all across the board. >> if you were to pick the kind of person that you'd want it would be what? >> the core question is what does the company need to be

successful, right? >> how do you make it relevant again. >> the biggest part of yahoo! has enormous traffic, enormous reach. it's failed to monetize that in two respects. failed to drive a high quality user experience and become relevant to users, remain relevant other than e-mail which is a core driver. secondly to monetize that. if you drive the user experience you can monetize that. >> is that a tech guy? >> it's either a marketing guy who understands the technology or a technology guy who could drive the marketing. it's got to be -- it's got to be someone who can really understand both which is part of the challenge in the business. it's not like his peers don't have that same challenge. it's just that the company has failed to find the right person in the past that can address both those challenges. >> have you heard any sort of a plan that really puts yahoo! back on track to compete with the likes of google? i saw ttill have a yahoo! e-mai account. it seems like yahoo! after holding the key position has gotten completely surpassed. how do you get back in the game.

>> it's hard to see a scenario where yahoo! can out -- google search. they've fallen so far behind. where they really have some opportunities is driving results from the existing traffic and user base they have. they have a really strong franchise. yahoo! finance, yahoo! sports, yahoo! news. there's the ability to make those better. but they're strong franchises. and drives both a better user experience as well as being able to monetize those. >> do you go on yahoo! every day? >> not every day but frequently. more frequently now than i used to. >> cnbc.com. come on. >> they have some good charts. i like the charts. >> it's horrible compared to cnbc. >> we're not comparing it to cnbc. >> there's no reason to ever even leave cnbc.com.

what? anyway, all right. thank you. >> thank you. >> do a good job. god speed. >> he's coming back. >> i mean with yahoo!. coming up, final thoughts from your guest host. if you thought those were final, those were the not the final thoughts. we're a little more than five months from election day. tomorrow on "squawk box" we're going to break down the markets, the economy and the unemployment effect on the 2012 presidential campaign. [ male announcer ] this is the at&t network...

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check chesapeake energy is the stock of the day. you know the story. we've mentioned it a few times. the company is announcing some changes to its board of directors. five members are leaving. does carl feel like being a director? he doesn't want to do that, does he? >> they have the board meetings after noon. then he's fine. >> in new york. >> or by conference call. >> he might. >> if they ran them at 1:00 a.m. in the morning he'd be thrilled to go. at his apartment. our guest host this morning has been harry wilson. harry, we've talked about a lot of things.

one thing we haven't really touched on is what's happening with greece. you're greek. you've been talking to a lot of the leaders there. what's happened? >> well, in the next two weeks, elections on the 17th. all the polls show a very tight race between new democracy and the socialists. i personally think new democracy will edge it out. i think people will be rational. but sariza has sold this concept of a new lunch. new has not done a good job of countering that argument. if he wins, all bets are off. the germans will have to take a free stand and say there is no free lunch, you're out. see if sariza blink which is they probably would. you have a lot of uncertainty and volatility in a short period of time. i do think the more likely thing is new democracy narrowly wins and then has to try to form a coalition government which will be hard. >> harry, thank you very much for joining us. it's been a pleasure having you here today. >> you got to talk