eastern time. policymakers are seeing keeping rates at 1% but the big event to watch is ecb president's news conference that starts at 8:00 a.m. eastern time. economists say he could signal a willingness to cut i want rates. we'll see what happens. moody's is cutting the credit rating. the ratings agency cites the risk the firms face if the eurozone crisis deepens. mood chip's note the relative strength of the german and austrian economies are bringing in chance. fitch's ceo says the eurozone is increasingly threatened by leaders putting off decisions. he said people will assume the crisis will muddle through. he warns the risk it won't. i want increases as problems continue to be pushed down the road. andrew? >> let's talk some corporate headlines this morning.

senate banking committee will hold another hearing on jpmorgan. top regulator will say the financial firm changed its strategy aimed at containing risks starting late last year. according to prepared testimony the controller of the currency will say his agency is reviewing whether jpmorgan executives should give back compensation. due to the bank's failed hedging stramg that produced $2 billion in losses. that number stands closer to $4 billion. the nasdaq reportedly plans to make an announcement today about facebook compensation. "wall street journal" saying the exchange is expected to release details of a plan to makeup some of those losses sustained by banks and trading firms from the firm's botch ipo. the losses estimated more than $100 million. facebook is letting marketers place ads specifically in mobile versions of its social network. it wants to broaden its appeal. take a look at shares of

facebook. they closed lower again yesterday. down to 25.87. now 32% below it's ipo price of $38 since going public the stock has fallen on eight of 12 trading days. joe? >> maybe they will still cancel some of these trades and get it back to 38, you know? maybe that might still happen. grass jobs we'll get h grasso, we'll get him on the phone. in political news this morning, wisconsin governor scott walker surviving a bitterly fought recall effort. the republican defeating challenger tom barrett. and so milwaukee's democratic mayor. that was the second time he beat this guy. vote saw heavy turnout across wisconsin. recall was spurred when walker passed controversial budget cutting measures which included stripping most public employees

of collective bargaining reits and asking the public employees pay some of their health care and pension costs. his victory yesterday is an affirmation of political courage. >> tonight, tonight we tell wisconsin, we tell our country, and we tell people am across the globe that people want leaders to stand up and make tough decisions. >> he's the first u.s. governor to ever survive a recall vote. >> voters in two major california cities approve measures to cut retirement benefits for city workers. it happened in san jose and san diego. the votes were closely watched across the country as state and local governments are struggling with ballooning pension payments. >> president clinton said the u.s. economy is in a recession in an interview with cnbc's maria bartiromo. he urged congress to extend tax cuts which is off message due to expire at the end.

year. he sawed the current tax structure wouldn't look so bad if the economy were doing better. >> still pretty low, the government's spending levels. but i think they look high because there's a recession so the taxes look higher than they would be if we had 2.5%, 3% growth and spend is higher than it would be if we had 2.5%, 3% growth because so many people getting food stamps, so many people get be unemployment. >> clinton blamed the damage on sovereign debt crisis. >> the president's office, former president's office issued clarification. they say two questions have been raised regarding president clinton's massacre view. first on extending the bush tax cuts, he supported extending all of the cuts in 2010 as part of the bill agreement but does not believe the tax cuts for the wealthiest americans should be extended again. they clarified that a bit.

he sawed in the interview he doubt ad long term agreement on spending cuts and revenues would be reached until after the election. and he said the main goals for those in washington the office keep the expansion going. >> i don't know if you saw the other piece of it he walk back, almost cory bookered it again. he had a sterling reputation and then over the weekend made some other comments suggesting i woke up saw all the news reports suggesting here i was not supporting romney necessarily but supporting his business cause and it was almost as if -- >> although with maria, he did say he has a lot of friends at bain and thinks the governor did a very good job there. >> right. warren buffett sees little chance of a u.s. recession despite recent signs of weakness. when he was speaking at the economic club of washington last night he warned that could change the the effects of europe's financial crisis were to quote spill over in a big way. buffet also said both political

parties deserve blame for the federal government's failure. >> create cbo report today. good piece in the editorial section of the "wall street journal". we were 40% of debt in 2008. public debt held by the public. we're at 70 right now. the highest since world war ii. we're headed to well over 100. if things don't change by 2013 we're headed to 225% of public debt. being held. so, you know, this is the cbo which is supposedly a nonpartisan. >> you also have some real appreciate if we get forced in the situation where the automatic cuts come to the defense, did you see the story about the defense contractors, lockheed martin warning that they could have to shutter some of their lines and layoff people by the beginning the year and have to let them know that one september or october. >> more importantly, did you see

this? i wanted ask you, do you recognize this girl over here? >> what? >> do you recognize her? >> do you recognize her? >> she looks like she must be from "bay watch." >> do you know who that is? take a good guess. guess who this girl is? you ready. john, are you ready. get ready. go! it's the tan lady when she was younger. >> oh, no. >> really? >> they never get me who is this person and i thought, okay, is that nicole kidman. but they really got me today. she tanned. there's another picture. yeah. stay away from the -- >> tanning beds. >> what's on the -- >> economic agenda. >> i'm glad you asked that. we do have a lot of things happening.

productivity and cost coming up at 8:00 eastern. then this afternoon the fed will have their beig ebook released. preparing for the next policy setting session by the central bank on the 18th and 19th of june one day after greece votes. >> you liked her. you liked that. >> i know. >> you're like -- >> the crying game. >> that's what you were most worried about. don't tell me it's a guy. >> let's get a check on the markets this morning because -- >> not that there's anything wrong with that. >> four days of losses. yesterday we saw a gain of 26 points. this morning take a look, a big rebound. dow up by triple digits. s&p up by 11 points. probably because of this ecb meeting. you're wondering what you'll hear from mario draghi. >> concerted central bank

intervention. this is one thing i'll tell you. if we had -- if i called larry and rousted him out of bed, kudlow would say something it's about wisconsin. >> he would say more wisconsin. we have these half measures proposed constantly about europe that never work. i'm sure larry would tie it to an eight-point win in a state that hasn't been won by a republican since ronald reagan. >> so our good friend comes on the program yesterday. we ask him what the chances are of qe3. he done say i think more. then today in the "journal" he writes it that -- >> he was on yesterday and said no. >> he didn't say no. he didn't handicap it. today he handicaps it. >> he wanted to save it. >> read his piece and the piece didn't seem it was anything

different than what steve liesman or anybody else said on friday. when you add it up it's more likely they will act but not necessarily act soon. >> do we want qe3? will the markets react positively? >> maybe a knee jerk reaction. >> what do i know? >> let's take a look at oil prices this morning again after some big pullbacks. slightly higher today up $76, 85.05 which is well above monday morning with oil prices back around $81. if you're watching the ten year at this point the yield is sitting at 1.6%. increasing gains on the yield as well. dollar this morning after everything we've seen is a mixed bag. right now it's a little lower against the euro but still sitting at 1.2495. dollar/yen is 79.06 and gold is up $17.71.

>> thanks. time for the global markets report. kelly evans is standing by in london with more. kelly? >> yeah. >> hold on, what are you doing sitting down? >> if you can see behind me what we have is a special couple hours of programming. i know you guys have to do your show in the u.s. but there's a bank of england and ecb and we have special programming. i'm sitting for the report. we're seeing more risk on mood in markets. in fact pretty much by the book. we have the dollar weaker. everything from the ftse to the dax to the cac to the spain up in the range of 2%. the ibex in spain was up. euro a little bit stronger last i checked and, joe, i'm sorry i don't think wisconsin has a heck of a lot to do with the triple-digit dow move that we'll

see here. we saw some talk out of china overnight on some of their journals about further interest rate cuts. europe has continued with that theme. it will continue into the u.s.. let me just say, though, this feels to me a little bit like the kind of condition you get before people expect that policy stimulus to come. we've heard a lot of people saying you know it could be time for that face dripping rally. if we don't get anything concrete out of today and we're seeing the banking proposal that would go into effect by 2015, great. if we don't get anything from the ecb or whatnot over the next couple of days you have to wonder if these -- if the return we're seeing in the rally we're starting to see will continue. handing off to you guys. if you can see the chips behind me you would see a sea of green. >> larry would say that. that doesn't mean -- >> don't make this about larry.

>> i said larry kudlow if we got him up he would come over and say it was due to wisconsin. but obama's intrade is 52. i hope you're putting a little away for that million dollars i got coming to me when the media's favorite might have some trouble in november. just maybe every week put some in pre-tax. all right? >> appreciate the investment advice. >> but larry will probably say that. first thing i said it's news coming out of europe but we get news every day out of europe. sometimes it goes up, sometimes i want goes down. >> the news today, the data today wasn't that encouraging. that's why i'm talking about the stimulus theme. >> central banks. >> weaker gdp. yeah. wasn't a great mix. >> that's what we were talking about the concerted effort. all i know is that you went over there right before the biggest party that country ever had and

i don't think that's a coincidence? right? you're set up for the 60 we're jubilee. oh, gee am i here? >> and wimbledon. >> followed by wimbledon and olympics. >> are there any pubs in london? >> no. i don't think so. >> you haven't spotted any. >> haven't had any guinness. no. we did have the diageo ceo on. they are announcing a big vecht in scotland, and he said it wasn't spurred by the pr trouble they had a few weeks ago, prospects of the global economy. he likes vicks, vietnam, indonesia, colombia and sub sahara. >> i thought they took the impb out of brics. but we digress. thanks, kelly. >> you like guinness?

>> i do. >> we had him here. >> brilliant. >> remember -- you were here? it was good. i drank it in the morning. >> less carbs. >> did you the mojito guy. you're in trouble. >> got me in trouble. >> i felt pretty good. but it was at the end of the show. >> did you have the squawker? >> i tried it. towards the end of the show. you did it unfortunately at 6:00 a.m. >> it made 7:00 and 8:00 that much more fun. >> it did. which is not a bad thing. >> coming up we'll have this morning's national weather forecast. a live report from temp cb meeting in frankfurt. john harwood joins us live from wisconsin on scott walker's big win last night. stick around. >> tomorrow on "squawk box," global risk and your portfolio. our guest host will be larry fink, blackrock chairman and ceo. plus cftc chairman larry

gensler. don't miss "squawk box" tomorrow.

welcome back, everybody. if you're just waking up, look out. there's a surprise this morning. we're actually looking at the dow futures up by triple digits. those dow futures up by 107 points. s&p futures up by almost 1%. in our headlines home depot is out with news. the company says it expects its 2012 share buy back to be about

$4 billion, up $500 million from its prior guidance. >> today's national forecast, alex wallace is joining us from the weather channel. >> we got more in the way of rain this morning in the eastern part of the country, this morning stretching across parts of northeast some light showers moving across new york state. heavier rains, those carolinas, back down through georgia and even into florida where we're tracking stronger storms there. active weather here into texas, we're fining out this morning between lubbock and san angelo. heavy rain and more activity off to the north, northern parts of the plains all in association with the storm system that's hanging out there in the western portions of the plain states. that's going continue to work its way towards the east slowly there. we got our storms along this

boundary from texas to the east coast. cool conditions and showers out there thanks to this upper level low-hanging around. been very slow move to. we'll keep things on the cool side again today. temperatures well below average. boston nearly 15 degrees below average. d.c. quite cool. tomorrow we warm up a little bit but most of us still going remain below average. texas this boundary in place, upper level disturbance that's moving on through as well. plenty of moisture streaming on in. that will lend itself to quite a bit of rain in the next 36 to 48 hours. through friday morning this is what we anticipate, one to two inches of rain in wichita falls, abilene two to three inch, dallas less than an inch. we need some of this rain in texas, guys, so we'll take it. >> alex, thank you. >> the ecb is holding a policy meeting today, decision on rates

expected about 7:45 eastern. steve liesman on "squawk" yesterday on what needs to be done in europe and who should save the day. >> you guys create x we'll give you y and we'll solve this problem. >> we have no money. >> are you happy now? this working for you? because it ain't work forge me. it ain't work forge markets. it's not working for anybody. this is not the way civilized people should be living. >> you want us to go to europe and lighten it up. who will lighten us up. >> let me finish one second. you know what? all of them still want to be re-elected. what they have to learn from latin america in the '80s none of them are surviving. >> cnbc silvia wadhwa joins us from frankfurt. steve, i don't know, we're 12,000 on the dow and he's

really despondent in life in america based on what's happening in europe and he wants us to pony up big money to the imf to save you guys. do you need us to save you guys? >> reporter: well, we all need each other these days. i think that's the bottom line. americans are still not used to the fact that they are dependent on what happens in another part of the world. but aside from that, i don't really think pumping money into any of the systems is really going to do it. i think the ugly truth is if europe and probably the rest of the world wants to get out of this deep, deep hole where we dug ourselves into, i'm sorry, we have to get some kind of debt relief. that means a debt cut, that means a very ugly, very short hair cut and not only for the likes of greece but other countries because we built a pyramid of debt on top of each other that one fine day will come crashing down on us. the only choice we have and it's

not a choice front load that with if affiliation by printing more and more money but it doesn't take away the problem. unfortunately as we talked about debt, i picked up with steve liesman debate there before, politicians want to get re-elected not only on your side of the pond, on our side of the pond too so they will keep pressuring the fed whether it's the ecb, bank of england to pump more money, print morgan and lo and behold at the end. day that's what they will do. that's most the end. problem. >> when is the last time someone over in europe part of the world was re-elected? >> reporter: that's a good question. they don't get re-elected period whether they give us the ugly truth or whether they give us the not so ugly untruth. that's the other part of the problem that governments at the moment are being voted out for two reasons. first of all, because people

simply think they are not telling us the truth, there is some ugly truth out there, there are some painful reforms out there. but the other part of the reason why they are not being re-elected is because people don't really believe that whatever government they vote for is actually going to push through with the necessary reforms. everybody just thinks oh, well they will tweak around the edges a bit and after that we sort of merrily or unmerrily have the same disaster as before. there's a complete lack of confidence not just in the markets in the euro or eurozone there's a complete lack of confidence of the general public in the general politics, whether that's in greece or in germany or in france. people simply don't believe that the mainstream politicians are doing the job and that's why unfortunately they often resort to party, new parties on the fringes. in germany we have a party that calls themselves the pirates and they are gaining more ground. in greece you see a similar

picture where parties at the left or right corner of the political spectrum gain power. but it doesn't make for stability in euroland. >> yeah. it is interesting as we see these governments falling over there. we have an election in november. we'll see whether -- we have a big space, a big ocean between where we are and where the continent is, obviously bust we'll see whether the sentiments the same. we did have a re-election yesterday, so we have the governor that usually they run every four years. this guy had to win two elections in two years but -- anyway we thank you. and one of these days i want you up on that thing like right where the -- there's a place you could be sitting like the man in the moon on the anvil of entertainment. i want to see whether those things if you twist the star if they are removable.

just in case. just in case by january 1st you need to take a couple of them off of there. >> okay. but we wait for better weather. >> you might slip. all right. thanks, silvia wadhwa. this morning's top stories, scott walker's big win in wisconsin and what it means for the national landscape come november. john hardwood has he composed himself now? can he -- >> i think he's ready. >> is he ready? first as we head to break a look at yesterday's winners and losers. in that time there've been some good days.

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♪ good morning. welcome back. welcome back to "squawk box" here on cnbc. i'm joe kernen along with becky quick and andrew ross sorkin. making headlines, ecb decision is expected at 7:45 eastern. policymakers are widely seen at keeping rates at 1%. key event is watching everyone cb president mario draghi's news current. he could signal a readiness to

cut interest rates as early as next month given a weakening economy and spain's banking troubles. moody is cutting the credit ratings of six german banging groups. the ratings agency sites the risk that the firms face if the crisis deepens further but they note the relative strength of the german and austrian economy. european stocks are doing well today up a percentage point or so. spain up even more than that. three. france up 2%. in political news, wisconsin governor, scott walker surviving a bitterly fought recall effort. cnbc's chief washington correspondent john harwood joins us from madison this morning. yesterday, john, in a very even balanced report that you did and i'm serious about that and because of that you were, i think you had an idea this was

going to be the outcome and, in fact, the margin for the outcome too, i would say. this was pretty much as expected, no? >> reporter: this margin that walker had over tom barrett last night interestingly almost exactly matched the average of the polls that were taken in the last week. we talked about that on air. real clear politics.com takes all the recent polls, tumbles them around, averages and comes up with a spread and the spread was seven points and that's what scott walker won by, a little bit more than he beat tom barrett by two years ago. >> yes. you sort of knew it was coming and i don't know, ed schultz, i don't know where he was, it hit him hard. >> reporter: he was in a bar around the corner from me. >> it hit him hard. i don't know if you've seen him today. hopefully he's all right. >> reporter: i saw him last night and i was going on with

rachel maddox after midnight. >> what a life you lead. that threw me off. my question now is a republican hasn't won this very liberal state since ronald reagan. people are, you know, he's immediately saying this is going to be a big boost for mitt romney's chances in november and also in wisconsin but then immediately that's tempered by what i reed that there are a lot of people that like walker that will vote for president obama. and that it's not a slam dunk. but still, john, there are bigger implications than just public unions in wisconsin for what happened here. >> reporter: well, look. republicans have come close in this case. george w. bush loss to al gore and john kerry by very thin

margins so when president obama won by 12 points that was out of the pattern of most recent elections and, you know, the bush/gore race was a race where al gore was competitive with george w. bush and he almost lost it. you certainly have to think romney has a chance. among the people who showed up to vote you had obama within nine percent jack point advantage not as much as we won in 2008 but a significant advantage. having said that this is early in the campaign and, you know, certainly president obama is is a lot better known than mitt romney and so mitt romney has got time and i think republicans do have to be encouraged. this was a full out turnout battle. both sides put a lot of energy and money into it. republicans had more money. but ultimately it comes to getting people out on the ground. it wasn't just about television because so many people made up their minds a long time ago. any time you have a direct match-up of turnout machinery and your side wins you got to be

encouraged. on the other hand, democrats are going to become aware of their weaknesses. >> i can write the script, i'll scene it over to our sister network. it was coke money and citizens united and big corporate influence that did this anyway not the common working man that was once again down troddened by all these special interests. i can write that script for hem. that's what you're going to read in the general media, don't you think, john? >> reporter: but it's also true that scott walker, he's a very polarizing figure as obama is a polarizing figure nationally. he does have an approval rating in wisconsin of about 50%. that's not far off what his final vote share was. >> you know everybody else that has gone up against public unions hasn't fared very well. if you take that on your family will get threaten. you're going to hear a lot. you'll become the target and there's a bull's eye in the

middle of your back. >> reporter: any time any political leader democrat or republican goes full out for the agenda of their party in a very split environment, they are going to be polarizing. health care was polarizing. stimulus was polarizing. that's the nature of our politics. the campaign discussion morphed into the economy. a majority of the people thought scott walk der a decent job of creating jobs which is not what we're used to hearing in the environment we're in right now but that was certainly something that provided some win on walker's back. >> in the ends came out. that could be a story line for november too. >> john, thank you. thank you for appearing this

morning. i remember when roy mcelroy lost that golf tournament and shows a lot of chassis after a setback and still get it together. >> reporter: for get roy mcelroy, moub the celtics? they beat the heat? >> i'm waiting for march madness. i love the celts. >> he looks like he's in washington. >> that's wisconsin's state capital. >> thanks john. >> sean parker launching his latest venture called air time. we got to talk about facebook with him. he's not as worried as some other people think. take a listen. >> everybody is predicting the demise of facebook since the very early days. you know, there were these predecessors like myspace that seemed like fads but failed for

reasons that had nothing to do with culture, they had to do with technology. facebook is such a basic utility. it's something that is such a part of people's lives. it's hard to imagine it going away. there's almost a sense of relief with the ipo. there was such a speculative market around facebook shares particularly around the retail investor. the fact that that's no longer an issue for the company is a good thing. eventually you want the stock to stabilize and you basically want to have a large of institutions that take a long view. all the founders of the company, employees of the company have taken a long view. we've sold minimal to no shares over essentially eight year life of the company. so, you know, i think at the end. day it's just a milestone that will being marked historically in the company's development. >> it was -- putting aside the facebook issue it was cool to

see this air time thing. it didn't go off glitch free at all. there were a lot of problems with the demonstration of how it works but basically skype on steroids. >> you explained -- >> i explained to it yesterday. >> you connected the dots. your willing to connect the dots on air of what this actually -- >> it's basically -- it has two components. >> speed dating. >> it can become like speed dating. put your interests in because it's all over facebook. you immediately hook up online video and you can do it anonymously. >> it's not censored. >> you can wear what you want. >> there are safety issues. >> there's something that came out with this in 2009. shot roulette. it dropped off because men kept flashing people. >> there's a safety element to this. >> you're not allowed to flash. you are allowed to flash. >> without permission. >> what?

>> yes. what they are saying -- >> how in the world -- >> you can do whatever you want. >> from the person you're watching. >> from the other side. >> that's not hard to get. >> if you're the one watching. >> no, no. i'm not saying. in order for the guy to sell it, i don't know many guys that say you don't have permission. the basic service is a skype-like service. >> you don't have permission. >> we don't have permission. >> no! >> thanks. >> it's fascinating. very cool service. >> how late were you out last night with these guys? >> not last night the night before. >> i was kidding. >> they were doing the rehearsal. jim carey was there. jimmy fallon. they had a lot of celebrities participating in these conversations. >> a lot of celebrities. >> hooking up online. >> flashing? >> no flashing. no flashing. >> but it's possible? >> it is possible. >> you'll be on this thing this afternoon.

>> i don't know how to go on facebook. all i know how to do is retweet. i don't even tweet. that's sick. i resent that remark. i do. oil sue you for defamation of character. you've been heard. you haven't heard somebody say -- then you say oil follow it up and sue you for defamation of character. >> ann winblad will join us at 7:30. we'll talk about all these things then. if you have any questions about anything you see on cnbc, if you're flasher e-mail us as "squawk box" @cnbcdom. and we'll talk about mario draghi's press conference. we'll hear what traders are talking about. we'll be right back.

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welcome back. u.s. equity futures up triple digits this morning on the dow. nice move on the s&p as well. making headlines, nokia unveiled its first touch screen phone today. aimed at the budget end of the market. who still buys those, budget phones. people want all over the world, buying less here but in india, nokia is looking to fill a gap. >> in india they have more cell phones than toilets. >> i believe that.

i believe it. >> when i was there, i read the difference between two. everyone has got one. >> and they have more phones than computers. >> more phones than anything. >> like on a golf course, you know, if you like track down -- is there a reason -- is there a reason to really find a bathroom on a golf course? i mean for a man. >> for me. >> for you. for a man if there's no one around. >> the world is your toilet. >> there's animals every where and plants like it sometimes i think and if you can go to it discreetly. would you wait four holes -- >> never. i'm so envious of men. >> that comes out. >> scott bower of trading advantage joins us and scott we're looking at triple-digit gains for the dow. is this the thought that maybe the ecb will step in and do something maybe the fed, maybe central banks around the world will do something to offer a little relief? >> it sure looks like it. it's almost a situation of, you know, the little boy that cried

wolf and we have these problems. we have these problems. but the underlying feeling especially of traders is that there's going to be some resolution. there's going some bailout. i'll tell you what's interesting over the last couple of days is the growing sentiment down here is that at the end of the game it will be the u.s. that will bail everyone out. so, even though risk is high, volatility is high, people want protection, really people are still thinking, though, we'll get out of it some way. >> we brought up this conversation earlier and joe made the point that do we really want more quantitative easing at this point or are we getting to the point where these measures are going to be less and less effective because the debt has gotten to be such a huge load no matter which country you look at? >> any sort of easing going forward has to have some new twists, some new creativity. like you just said the prevailing thought is okay we'll get easing, we'll get a nice little pop in the marketplace, what's it's going to do for the

economy down the road. we'll just be in the same place six, nine, 12 months down the road. something major has to have. some new qe3. it has to have a different flavor to it. but going forward, the feeling really is we'll get qe3. there's going to be a bailout. the ecb will come through. so volatility is high. risk is there. but traders are willing to take it because they really feel that there will be some resolution and we'll see that in the next week or two with all the news coming out. >> scott thank you very much. have a great day. >> few. >> coming up today marks the 68th anniversary of the invasion of normandy and our next guest says lessons from that day is more relevant than any other. stay tuned for that and more. ttd#: 1-800-345-2550

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all right. take it easy. welcome back. we're joined by jeff loftus, author of "lead like ike." it's the anniversary of d-day. we've all seen "previous ryan." i was just reading, he sent 160,000 guys to storm that beach. unfortunately, the first 10,000 were going to certain death, i think, at that point, almost. the guys that came out of those boats. i mean, it took a lot of leadership from him, and it took

a lot of nerve and guts and grit from our guys, too, right? >> oh, absolutely. well, the projections were pretty awful. and in many cases, they were expecting up to 50% casualties. and they sent 150,000 men onto the beaches. so they were looking at wounded and dead of possibly 75,000. that's not what happened. they actually had casualties around 2500, which is still awful for those families. but it's amazingly less than what they were thinking they were going to encounter. and it's all because of risk management and extensive planning. they just planned and planned and planned and never stopped planning, never stopped dealing with contingencies and risk. >> they also had to pull the trigger. >> you know, ike pulled the trigger -- >> a different term to use, but ike had to decide that i'm willing to do this at the time.

i'll do what it takes to stop hitler, basically. >> absolutely. and he did it in the middle of the morning over 24 hours in advance. it was raining and windy outside. they weren't absolutely sure the troops could get ashore. and he made the decision on very little sleep and way too many cigarettes and coffee. >> 2500 dead -- 9,000 killed or wounded. >> yeah. on the first day. >> on the first day as they left those -- what were those boats called? i can't remember. remember, they said we're going -- we're -- >> we're not going into normandy. >> we're not storming normandy. a mercedes going into the new york fed. i mean, we all -- i think it's etched into our -- "saving private ryan," the people that were there said that was a fairly accurate portrayal of what it was like. and it was the worst -- i mean, if you haven't been in a war and you have questions about what it would be like, you kind of got

the gist of it. >> probably. obviously i wasn't there either. you know, it would have been the -- it was either going to be the best -- the greatest victory the allies had during the war or it was going to be the worst failure. there was no black or white. sorry, it was black and white. it was not gray. it wasn't going to be a disaster. it was going to be a triumph. >> if a ceo acts like a general -- >> mm-hmm. >> -- isn't there -- there must be some drawbacks for that. no? >> the biggest drawback or the biggest challenge, i think, to acting like a general is that a ceo is not dealing in life and death. and ike had the urgency of the situation to keep everybody focused. they all knew this was life and death. they all knew they were trying to free europe from nazi tyranny. they were trying to break open the prison camps and free the jews and the eastern europeans. so they knew that this was a pretty desperate situation, and they had to deal with it.

most ceos, thank god, don't face that kind of problem. you can still focus the way ike did. you can still do the kind of risk planning that ike did. you can still own up to what goes wrong the way ike did. i don't think people understand that ike's willingness to accept blame for things was huge. now, he didn't have to accept any for d-day because it was a success. but later in the war one of the worst setbacks, he didn't make a lot of excuses. he didn't say, well, this happened. we tried but this didn't work out. he just said, i made a mistake. it's my fault. >> well, good luck. it's fascinating and a good day to be talking about it. >> thank you very much. when we come back, we'll have more of this morning's top stories. plus our guest host is stephen roach. he has a warning for asia. bewar beware, you are more exposed to the banking system than we are. [ female announcer ] it's time for the annual shareholders meeting.

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saving europe! should u.s. taxpayers have to help bail out europe? >> europe has not been able to solve its problems by its own. it is time for the united states to step up. >> the latest on that continent as investors eye a possible rescue plan from world central banks. energy politics. republican congressman kevin mccarthy taking a swipe at the president saying he's not doing enough to help our nation get off foreign oil. he joins us with his plans to save america. and it's the battle of the maps. ♪ if there's a place you gotta go ♪ ♪ i'm the one you need to know ♪ i'm the map >> google and apple find themselves in a heated fight to win consumers as the companies battle for map dominance.

♪ i'm the map i'm the map i'm the map ♪ >> the second hour of "squawk" begins right now. ♪ good morning, everybody. welcome back to "squawk box" on cnbc. i'm becky quick. let's get to your morning headlines. we are awaiting that rate decision from the ecb at 7:45 eastern time. in the meantime, investors are also looking ahead to some fresh news from the fed today. the central bank will be out with its beige book. the region-by-region assessment of the u.s. economy, it's going to be released at 2:00 p.m. eastern. moody's has cut debt ratings. moody's says those banks face increasing risks if the eurozone debt crisis becomes worse. and wisconsin's scott walker has become the first governor in u.s. history to survive a recall election.

walker won by more than 7 percentage points over his democratic challenger, milwaukee mayor, tom barrett. this morning futures have been taking off. a lot of this is because there's this expectation that central banks are going to get more involved to do something to ease the situation. after all, the bad economic news we've been getting. dow futures are up by 116 points. the s&p futures up by better than 14 points. and joe, i'll send it over to you. beck, thank you. he's a "squawk" master of the markets with a global reach. stephen reaoach is now a senior fellow at yale university. and perfectly fine fellow, just in general. >> thanks, joe. >> i think. i'm looking at the headlines. we do need to talk china. that was so weird. did you see the move in the stock market was exactly 64 points on 6/4, and they had to -- they couldn't even report on the stock market move in mainland china because it said

6-4, which is tiananmen. >> they have a thing with numbers. i don't get it. >> but what i want to talk about, if you peruse the papers, just in the last week or so, ft spain in appeal for bank aid. there's some -- they do need something there probably for the banks. germany grappling with rescue roll. and an eminent economist well known, just yesterday, steve liesman, i think you know him, says that we need to give a bunch of money to the imf. the u.s., we've got to rescue europe again by ponying up to the imf and having a big bazooka. >> and where does steve think we're going to get the money from? >> i don't think he really cares. >> we could print some more money. >> print more money. >> just print, print, print. yeah. >> i told him we've got to let these chips fall where they may. but he says do you like the life you're leading right now? as if we're doing that badly over here in the united states because of europe.

>> the point is we're interconnected, right? >> i like what silvia said. she gave sort of a collectivist sort of overall thing. >> but look. i mean, bailouts are a short-term panacea prior to the open. but do they really solve the underlying problem? one of the courses i teach at yale is the lessons of japan. so what japan did in the early '90s to deal with its post-bubble malaise is they bailed out the banks. they kept the banks on artificial life support creating what we called zombie banks. the walking dead. and they did the same thing with our corporations. they kept a lot of companies afloat just by feeding them with bailouts. and that led to what we call zombie congestion. it clogged the system of these walking deads and didn't allow the excess to come out through

restructuring, consolidation and recreating new entities from the mess they were in. they finally did that in the late '90s. they pulled the plug. they forced reorganization. and the japanese economy started to recover in the late '90s and the early 2000s and then got clobbered by a lot of other things that came its way. i'm not sure the bailout is the long-term answer for us or for europe. >> silvia said the same thing. she said you've got to cut the debt -- i mean you've got to restructure the debt. and debt holders need to take a huge haircut. >> debt holders do. >> she could be a fellow at yale. we already heard this from silv silvia. >> i'll send her a note. here's the lesson for europe. if europe is going to be europe, does it to have to spanish banks? french banks? italian banks? does it have to have banks in every single one of the 17 or 27 countries, or does it need european banks? >> the german banks are the ones

that hold so much of the sovereign debt, too. so if you let this go down, will they have banks left in any of these nations? >> again, becky, if europe is serious about pan-european integration, does it need national banks in each one of the countries? >> you're talking about bank consolidation. >> yes. europe is an economic entity, andrew, about the same size as us. maybe a slight bit bigger. how many big banks do we need? and that's probably a way to scale the answer. >> canada? are we all talking about trying to just have four, five or six banks that are it? >> i mean, henry coffman has a great piece in "the wall street journal" where he says maybe big banks are not the answer for anyone. and i think that's a fair point and one worth debating. but i do feel strongly that in a pan-regional integration model

like europe has, there are too many big banks. and so each nation state is clinging to its own national champions in the banking industry or other types of industries. and that's probably not a sustainable model for an integrated region unless they're going to fragment and go back to the former european state. >> would you be -- would you be to our viewers right now, telling them to pay a lot of attention to what's happening in europe for their own situation in terms of investments here? because what i got from steve yesterday, i was a little bit surprised where he was just saying, i'm living in this period right now, and it's not good. i don't like it. the markets don't like it. almost as if our quality of life here was suffering because of europe. i mean, do you think it's that paramount and in front of us that they do things correctly, or, you know -- >> well, steve is such an international guy.

he worries a lot about what goes on around him. he probably needs to look in the mirror sometimes, too. but i think europe is a problem for the u.s. only under, you know, a horrific worst-case shock scenario of a full-blown implosion of the european economy. then that would be a shock. >> why should we be funding the imf to save the entire continent? >> we have to figure out what the odds are of a disorderly -- >> calamitous -- >> you know, right now, they're still small. they're higher than they were three months ago or three weeks ago. but they're still relatively small. you know, 2008, 2009, which pressed the great recession, was a horrific outcome, and i think that's got people like steve scared that we're going to see a replay like that again. and i think it's a risk management exercise, joe. we just have to figure out if

europe is going to take the world right back to what we saw in '08 and early '09. >> i don't think there's a chance that washington is going to give any money to europe with an election, we've already got the administration saying no, there's not a chance that congress would sign off on something like this. but when you do look at the situation, i think it's easier for us to sit here and say they just need to take their medicine because we've come through the hardest part of our crisis. but when you start to hear statistics like "the wall street journal" had yesterday in this story about greece where something like 500,000 of their 2 million private employees who are under contract, 25% of them haven't been paid in over three months. or you hear what's been happening in spain with 40% unemployment. and you try and carry that out. europe's going to have to do something. >> yeah. >> to fix their problems. >> and the fact that every time they meet in their summits every other month, they come out with a strong message that they're

committed to solving their problem. details available shortly. we don't get that. and yesterday, i was traveling somewhere. so i was listening to you guys on satellite radio. >> thank you. >> there's the g-7 meeting on a conference call with no communique. like what did they do? just sort of talking to each other and, you know, exchanging travel plans for the summer? when you have policymakers come together whether they're in europe or the g-7 or the g-20, i think the world needs clarity in terms of the response and the commitment to dealing with tough issues. and we're not getting that from any of our policymakers around the world. tom friedman, again, has a pretty telling piece in today's "new york times" where he's bemoaning the ability of leaders whether they're in europe, the united states or even cheina to

step up with clarity and announce the plan to address the world's problems. and i think that's a very important point. the guy you just had on about eisenhower on d-day. there's an example of leadership. >> we're going to leave it here for now. but you watch a lot. did you see the greenspan show on friday? >> i'm still recovering from that show. >> wow! >> i want to recount just something he said in relation to china later when we get to the china thing. >> all right. >> so you can try and figure out what that is. if you've got comments, questions about anything you see here, anything steve just said, shoot us an e-mail, squawk@cnbc.com, also on twitter. house majority whip kevin mccarthy is pushing energy reform ahead of the november elections. his proposed changes, that's coming up. and later, too big to save. that's the question. are europe's problems so bad that even captain america's hopeless? we're going to find out when "squawk" continues. ttd#: 1-800-345-2550

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futures, triple digits still. the dow up about 1 percentage point. it mirrors some of the action we're seeing today in europe, at least up with percentage point gain. >> yeah, we're not expecting a move from the ecb, but when mario dragi speaks a little later at 8:30, maybe we'll hear

something coming down the road. as you pointed out, steven, a lot of these things need clarity. >> he said last week, we're done. so he's going to change his mind? >> maybe. >> he might have to. >> perhaps more importantly, check out the shares of te tempur-pedic. quite a bit of flux in the mattress business. it's been below its expectations. it says full-year north american sales will likely be down 8% over a year ago. the company has scheduled a conference call with analysts for 8:00 a.m. eastern time. for more on this, we're joined -- oh, no, i'm sorry. that's all we're going to do on this. >> how's sealy and serta doing? >> i don't know. the other day when we mentioned it and the next day in the tabloids, he does have a trump mattress made by sealy. >> is there a mattress index we

should be following? >> i hope so. i'm going to check. >> are people thinking less? >> i think people are -- see? >> tossing and turning. >> whatever we talk about. >> supply and demand, joe. >> it is. >> look at both sides of the equation. >> tempur-pedic is cool. >> it's where you jump on the bed and it doesn't wake the person next to you. >> red wine in bed. >> you've got a kid. for some of us, the bed is for more than just sleeping. >> oh. >> talking about drinking. drinking in bed. >> i'm talking about drinking. unfortunately, penelope keeps coming in on what i'm doing. and she doesn't knock. let's talk about the domestic energy and jobs -- >> how many times have i used that? >> -- unveiled today. joining us now with more is kevin mccarthy, house majority whip. thanks for joining us. >> thanks for having me. >> the jobs and energy act is actually a combination of seven different bills. can you lay out the gist of what

they all do? >> well, they do a number of different things. the core of what it does is produce more domestic energy because what we have found is when you look at north dakota, the fundamental growth, much of our growth has been on private lands, not public lands. the federal lands are down 14%. so we streamlined permitting. we've got 1600 permits from the blm sitting out there right now that have been delayed three years. that's 65,000 jobs. it touches on numerous different things such as the strategic petroleum reserve. anytime the president wants to tap that, all it says is we should replace that because that's a reserve. replace it and open up more federal land. is this an opportunity for job growth? recently, the house energy action team went across the country from all different places. i was up in north dakota. i have watched north dakota in just the last few years not only pascal cal but has now passed alaska. they don't have enough housing. i paid more than $200 a night at

a best western. they have economic growth and investments in america. we want to see that happen across america. >> congressman, obviously, you're going to have support from your party, but what are the odds of these acts, these bills getting passed, picked up by the senate and then approved by the administration? >> what's unique is every single one of these bills have bipartisan support out of committee. we don't know what happens in the senate because we have 29 bills that have been sitting over there. everything seems like it goes to the senate to die, but this is a unique opportunity that we can invest not only in america instead of someplace else, but we can raise the domestic job growth, but at the same time change our energy policy in make. >> the reason i ask that, though, is it seems that there is so little cooperation from the two parties in washington right now. and with an election looming, it doesn't seem like the easiest time to get more cooperation back and forth across the aisle. how confident do you feel that this is something that as you mentioned, it's got bipartisan support in the committees there?

how confident do you feel that this is something that can actually happen before november? >> i never put a great deal of confidence in the senate, but i do believe that the power of the idea should win at the end of the day. these are strong ideas that have bipartisan support that i think we should have that fight. i mean, we should be able to move it to the senate and have the senate bring it up. if it was able to come up on the floor, i'm very confident it would pass the senate. >> we've watched energy prices come down pretty drastically as we worry about what's happening in the economy, particularly with those jobs numbers that we got last friday. does that change anything? right now i think oil's back at around $83. it was down as low as $81. if energy prices come down, would that change the calculus of anything that goes into these acts? >> i don't see that because if you look today, it's almost at 100% -- the gasoline price is higher since the president has taken office. balkans is still profitable at $50 a barrel.

this is america. we should be for all of the above. the one thing i see in california, you have $4.30 a gallon is what i filled up. that is still a difficulty for american families. and you have 18 different boutique fuels that have gone online after memorial day. that changes the price of oil wherever it goes. that uncertainty in the job -- of what you're paying for energy costs hurts economic growth at the same time. >> congressman, there's a piece in "usa today," oregon is booming. and i don't think of it as -- i don't know. it's not north dakota. it's not -- it's just -- i mean, it's right above you. why aren't you doing better? what's oregon doing that california is not doing? >> if you look at the tax policies of california, we are so backwards. we have 12% of the nation's population, but we have 32% of the nation's welfare population. california gets 25% of their entire budget from 144,000 people out of 37 million. why? because california punishes job creation but rewards government

assistance. if you really want to look at the direction that america's going, it's california, and that's the wrong path. higher regulation, more boutique fuels. we can't build a new refinery so you don't have the infrastructure. the largest shell find today is where? monterey. but will we be able to tap it? we have new technology that we can environmentally tap new energy finds and also produce more american jobs. >> you need to tell that story between now and november, don't you? have you talked about this before? >> we talk about this every day. we just think the one thing you have found in america when you look just from 2000, where has the job growth been? it's been in the energy field, and it's been booming from north dakota to texas. and it goes out from pennsylvania, ohio. this is a unique opportunity that the investment will stay in america. >> and also, we've got to go, but supposedly it's cantor's birthday. so you can kiss up to him a little. nobody knows. so if you see him, wish him

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we're back. former president bill clinton's saying that the u.s. economy already in a recession. in an interview with cnbc's maria bartiromo.

take a listen. >> they're still pretty low, the government spending levels. but i think they look high because there's a recession. so the taxes look lower than they really would be if we had 2.5%, 3% growth, and the spending is higher than it would be if we had 2.5%, 3% growth because we have so many people on food stamps and on unemployment. >> two questions have been raised regarding president clinton's interview. first on extending the bush tax cuts as president clinton has said many times before he supported extending all of the cuts in 2010 as part of the budget agreement. but he does not believe that tax cuts for the wealthiest americans should be extended again. >> it was a little unclear in the interview. he basically said i don't think we should be raising taxes at this point. >> but didn't he just say, let's just push out this debate into early next year and give the

economy time, give the political process time? >> he did. >> that's a compromise. >> that's a compromise. >> and clinton is known for his ability to compromise. >> steve, that's what you want to key off of is that he was willing to compromise. >> compromise is key for any democracy to work, joe. >> until he got yelled at and then he didn't say it. and that's not compromise because you know the republicans aren't going to compromise if it's just extending it for people below $250,000. >> democracies don't work. >> but he took back the compromise when he got yelled at. >> he's being a good body. >> we don't know if he got yelled at. >> he legitimately thought -- >> but he just did a sterling reputation of romney over the weekend. >> you mean on private equity. >> he probably got spanked. >> i don't think anybody spanks a former president, though. >> if you're trying to get re-elected, you can. you don't think axelrod would yell at bill clinton? >> i guarantee you. >> i don't think so.

>> somebody calls somebody and next time he's out, maybe he could say it a little neisser. >> it wasn't clear if he said is or was. it's a big clinton debate over the word "is." >> if it looks like he isn't on board with this re-election, he'll get yelled at. >> if you have comments or questions, e-mail us, squawk@cnbc.com. we'll be right back.

welcome back to "squawk box," everyone. among the stories that we are following this morning, we are awaiting that ecb rate decision in just a few minutes. the bank, again, is expected to hold its key rate at 1%, but investors will be watching to hear what ecb president mario dragi says at 8:30. he'll be looking for any signs of the potential for new easing measures. wall street returning to profitability in the first quarter according to new figures from the new york state controller's office. profits came up to $7.3 billion. that compares to a $2 billion loss back in the fourth quarter of 2011. and mortgage applications rising 1.3% last week, driven by

that jump in refinancing activity. the mortgage bankers association averaged 30-year mortgage rates are now at 3.87%. that is the lowest ever recorded in this weekly survey. since then you have seen rates turn around. and a new battle may be brewing between apple and google after five years of kind of a cooperative relationship involving the google maps application. cnbc's john fort joins us now with more. good morning, john. >> good morning, joe. early, early morning out here. later today in san francisco google is hosting a maps event. this looks like it's about 3d maps. users access the service through mobile devices, and apple is expected to release its own service next week. this is a new front opening up in the escalating conflict between these two powerhouses. let's focus in on what it really means for investors.

on the one side, we have google maps, the reigning champ. google maps were fast, flexible and kept getting better. then apple made it the darling of mobile five years ago by making it the engine behind the iphone's maps apps. google maps must have more than 250 million mobile users. that's especially important as google looks for ways to crack the local advertising market. because hey, you've got to find where you are. on the other side, we have apple's product which should include 3t technologies. we expect to see it at the conference next week on monday. so apple has picked up these companies to grab more control over a crucial feature in its phones, maps where it had been relying on google to supply core technology. if apple puts its own technology into ios6, that's going to take nearly half of google maps' base. really what we end up with is these two companies clashing.

google needs it for advertising. apple really needs to gain control of this crucial feature in iphones and ipads to keep google from getting too much of a stronghold in its own operating system. it's really going to end up being pretty interesting, particularly to see how apple incorporates this into ios6 which all kinds of developers need to hook into, guys. >> very good. we talked about it a little bit yesterday. jon, that's a lot more info. we appreciate you coming on today. and we'll see. you do work for us. thank you anyway for coming on. she is a "squawk" master and a silicon valley insider with the scoop on up-and-coming companies making the trek cross country this time. we often see her only on remote, but we're happy to have ann winblad. thank you for being here. >> it's great to be here in person. >> it's great to see you. we should talk about it because we always talk about it, facebo

facebook. it's still our issue du jour. >> at least once. >> at least once, if not more. postmortem, where are you? >> well, it's interesting. everybody here is talking about rome like it's burning. but in the meantime in the social networking area, in the last week alone, enterprise software companies, oracle, google, sales force and even a little company in minneapolis called deluxe bought over $1 billion of software companies that focus on how do you manage facebook campaigns? how do you analyze data on facebook? >> like the buddy media deal. >> the buddy media deal, the virtue deal, the orange soda deal for deluxe, the intelligent deal that oracle bought that connected intelligence. all of these companies really are indicative of how early we are in the facebook game. >> so is it changing the valuations at all? is it changing any of the metrics the way you'll be looking at the next big

investment that you're going to make? >> well, we have a lot of investments in predictive analytics, and basically how you take things like twitter feeds, the 500 million people every day that go to facebook, the billions of posts they make, the data that is on e-mails, instant messagi messaging. marketeers really had a challenge here knowing what to do with all this stuff. and mobile included. so all of these companiy ies wi really enhance the value of facebook as well as really help the large corporations, the big brands know what to do with all this stuff. >> but valuation metrics. if changing the way you and others in the valley are thinking about the world now that one-third, if you will, of the value of facebook has been sliced off in two weeks? >> not for us. we focus on core enterprise. i think for some of the consumer deals where people are looking at these companies like phenoms is going to be the next facebook. it's hard to know the value of

the current facebook. so when you're saying i'm going to fund the next facebook, how much money should i put into these things? how much market should i buy before i become profitable? these are all questions up in the air that drive the amounts of money that go into these companies. and the more that goes in, the higher the valuation has to be. >> the thing yesterday with shawn parker. >> shawn parker. >> he said that's available on facebook. i have no idea how it works. >> facebook is the platform. >> right, that's the platform. so then i'm thinking, it's too bad the way this worked out because facebook is tarnished a little bit from this. and if they had priced it at $25, it's going to be up today. it's going to be $26.50 or so. price it at $25. it didn't matter. the rest of their shares eventually could be at $38, but they really messed that up. >> the question -- and ann, just a question to you. is facebook the utility that resides at the core and the value really goes to the applications that you're just describing? >> well, the value goes to

facebook and to the applications and tarnished in whose eyes? is it tarnished -- >> maybe just for a little while. when you value it at $108 billion, that was asking a lot, wasn't it? >> well, clearly it was because it wasn't valued at that. >> what caused that? all the trading? we've never seen that much trading in a stock before it went public. >> look, the ipo and the ipo process was a mess. maybe andrew should write his next book on this. but back to what's tarnished. do you have a platform or not, and is this platform core for the future of the internet platform? and tarnished -- is it tarnished in the face of innovators like the new companies building on this platform? there i think the answer is no. >> i want to go back to steve's question which is when you think about shawn parker's new product, it's a video product. there are going to be commercials eventually that are video commercials. who is going to collect the money on those commercials?

air play. facebook is not. so ultimately, as steve was suggesting, does the money move upstream, all of these applications that are residing on top of this utility? >> airtime? >> did i say air play? i apologize. airtime. air play is an apple product. >> oh. you. >> i think to be clear, we don't know who's going to collect the money on all of the ads and the ad products and what those ad products will be. in the google sense, there's ad words and ad sense. you know, we're likely to see a search product on facebook. an ad sense of facebook so to speak. we're likely to see all sorts of common editorials of how this is packaged up and mobile as well. >> you pick underwriters in your role as a board member of some of these companies that are in your portfolio. the next time morgan stanley comes -- >> is that where you're going? >> no, i'm going to ask. steve's a former morgan man.

>> i'm sorry. >> it's all right. >> the next time morgan stanley comes and pinches the business -- >> we invited you. >> -- what questions are you going to ask? >> well -- >> by the way, this may be the same case with jpmorgan or goldman sachs, but it's worth asking. >> it's really interesting when you pick underwriters, and it's an interesting process to watch because the underwriters compete with each other. and we really look at their ability to bring the offering to market successfully. so clearly we will look at that. we will look at which analysts are going to cover over time even though these are not combined anymore. the company, you know, how much they really know about the sector, what is a combination of investors going to be in that offering. and in the case of most of our companies which are core enterprise, the retail part is very small. these are primarily institutional investors. the dynamics of an ipo for our portfolio companies will be quite different than facebook. we may not have all the

premarket trading that happened on facebook. people will stay away from. and so how will people separate morgan stanley from those activities? >> would you blame morgan stanley? would you blame facebook? because some people facebook took too much control of this, or would you blame nasdaq in the beg beginning? is there one of those parties that bears more blame for how this ipo went wrong? >> or would you blame the trading that went wrong before it went public which is a new phenomena as well. was the company already public in price? that was an unknown, and this is the first company that's come to market with that phenomena as well. sure, you can blame them all. >> real quick because we'll have to go in a send. there's a big question about analysts and the role of them and whether certain information is given out to certain analysts and not others. historically, has your company or your companies given out information to the underwriting analysts that has not been made available to the public? >> no.

>> no? this is the issue apparently with facebook. i didn't know if that was a regular occurrence or was something that -- >> andrew, there are post-spitzer settlement firewalls, as you know, between research and banking. so when the research analysts write something, that is not something that gets fed into the banking pipeline under regulatory and legal requirements. so that's very important. >> right. big issue. >> that's changed. >> ann winblad, thank you for being here. appreciate it very much. this has been terrific. we learned a lot. coming up, the ecb's decision on interest rates is next. and then the american taxpayer to the rescue? traders are handicapping which central bank will step up next to help out the eurozone. and some say it's not just the ecb. liesman, he had to open his big mouth. and then at the top of the hour, senator john mccain on the economy, scott walker's win in wisconsin and much more. if you're one of those folks who gets heartburn

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welcome back, everybody. we've been awaiting that ecb rate decision. again, that is expected in just a moment. the expectation is is that europe will be keeping rates right where they are, unchanged at 1%. of course, the big deal is going to be coming at 8:30 when we hear from mario dragi. we've been watching futures all morning. the expectation is that he might open the door a little bit and make it sound as if they are more open to the idea of doing something. again, ecb is leaving things unchanged at this point, just as expected. you see the putback on futures just slightly on this news. dow futures had been up by about 120. right now they're up by 96 points. again, the real decision that the market's waiting to hear from is when mario dragi himself speaks. and stephen roach, we had been talking a little bit about what to expect. he seemed to shut the door last week by saying forget, it we're not going to do anything. do you think traders are right to have this assumption that maybe he changes his mind later this morning? >> becky, i think the issue

that's come up since he spoke last is this notion of some type of a consolidated effort to deal with european banks as a whole, which is very different than the monetary policy issues that dragi and the ecb deal with in the announcement that you just reported. so it has to do with the structural issues. and we spoke about this earlier this morning. what type of banking system is compatible with pan-european integration? you know, the spanish banks -- spanish government is pleading for help from the broader institutional authorities in europe or perhaps around the world. and i don't remember as an explicit -- an appeal from a national banking system as we're seeing right now from spain. >> but if there is something that comes from the ecb, what would it need to be for the

markets to think that this is a real plan this time around? >> well, the ecb could send a signal that they are in favor of a broad pan-european effort at bank backstop funding and reorganization. i think that would be a very important statement from mario dragi. >> again, we're awaiting to hear what he has to say at 8:30. in the meantime, we are joined by a very special guest. the financial fates of europe's banks, its governments, obviously, are in jeopardy. there are some saying that the largest european banks are just too big to safe. joining us now with his take is jim milstein, ceo of milstein and company. he's also restructuring officer at the treasury department. jim, thank you for joining the conversation today. >> my pleasure. >> what do you think at this point? are these banks too big to save, or does something have to happen right away to shore up european confidence? >> well, i think a thought

experiment might help illustrate the problem europe faces. so magical cal asimagine califo sovereign nation again. and at bank of america we're still headquartered in san francisco. the state of california today faces a, you know, $25 billion budget deficit. if we go back to 2009, bank of america was facing a capital hole in the 20 to $40 billion range. so for the state of california to be able to step up and fill that hole would either require massive cuts in spending on top of the cuts they're going to have to make or massive increases in taxes to fund the recapitalization of their own bank. and this is what spain is facing, relatively similar-sized economy to california. similar budget deficits and a similar hole in their banking system. this is really why you're seeing the spanish prime minister call out for help from his co-issuers

of the euro currency. >> jim, we would keep orange county and monterey carmel. can we do it that way? >> you may have to pay for it, joe. >> that's all right. we'll pay for that. but maybe some of the other parts we can -- that's an interesting analogy, though. and i think it was intentional with some of the other -- no, with some of the other problems that california has sort of brought upon itself are similar to some of europe's problems, too, right? >> well, i mean, it's the same problem we face at the federal level here. but the difference here is that we have a transfer union effectively. when california is hurting, other states, through the federal government, can help fill the holes for it. within limits, obviously. >> but corporations and rich people can move, too. >> that's true. that's true. and labor mobility in the united states. >> unfortunately, we don't want people to leave the country if we do the same thing as california, right? >> that's right. but going back to europe, which is the focus of this, the key

problem the europeans face is that they have a currency union without a fiscal union, as everyone's talked about. and that -- but what you're seeing them now start to inch towards and talk about and maybe dragi will address this this afternoon. maybe bernier will talk about it as well. these national banking systems can't stand on their own. they really do need the support of a supernational or a federal dmo deposit insurance scheme. on the one hand. a recapitalization on the other. if the union is going to surv e survive, they've got to make sure the banking system remains solvent. >> but how quickly -- jim, how quickly do we need a solution like that? because things have dramatically sped up with what's been happening in spain and not a run on the banks there but certainly a lack of confidence. >> i think, look. they've been working at this for

two to three years. it took the colonies of the united states five years to find their way towards a federal union. these guys are working their way there. i think in the short term, probably the best hope is the esm which comes into effect in july. it actual hi hly has the power create a bank recapitalization fund and deposit scheme without amending the treaty again. if the 17 finance ministers on its board agree, they can actually use the firepower there to create a bank recapitalization fund on the one hand and to create a deposit scheme on the other. >> jim, to the point we addressed earlier, does every one of the 17 states in europe need a national champion in terms of a bank, or is this the beginning of some rationalization and consolidation across europe to come up with a leaner, more efficient and truly pan-regional

banking system? >> yeah, steve, i totally agree with that. i think you're going to see -- i think there's significant deleveraging that needs to go on in the european banking sector. it dwarfs the size of our banking sector in terms of bank assets to gdp in the region. so there needs to be a downsizing of that and a consolidation effort. and i think, you know, national regulation, national deposit insurance, a national recapitalization plan will force that. and as i say, i think they've got to do it soon. and i think the best institutional mechanism is one they set up two years ago in the creation of the esm which does have the financial and political flexibility to actually create the institutions in the short term necessary to do it. >> how much time do they have? how much time will the markets will willing to give them? >> i think there's been a lot of loose talk about runs in the banking system. what is happening is that deposits are migrating to the ecb away from the national banking -- central banks. i mean, that is a sign that

depositors, even interbank lending, is moving towards the official institutions as a flight to safety. so i think the -- i think the interbank market is very fragile in europe now. i think they've really got to get at this. and my hope is by the time the esm becomes effective, they will have figuresed out how to use it to create a recap fund and deposit insurance. >> jim, you said there's been a lot of loose talk about runs. i think the thing that caught my attention most last week was when the world bank president wrote in an op-ed piece that this is not a run, but they seem to be jogging at this point. is that loose talk, or is that just a realistic view of what's really happening? >> yeah, no, i think when you look at balances at the various central banks in the ec system, you see that there is a migration of deposits into excess reserves, effectively.

and so there is -- which is a sign of fear in the interbank lending market. and when the interbank lending market freezes up, as we saw after lehman brothers, you can really have adverse consequences to the economy. so i think it's a very fragile situation right now. but i do think that they have, over the last three years, given themselves some tools to handle this crisis. >> okay. jim, thank you very much. >> thank you. coming up at the top of the hour, futures indicating a strong open in the u.s. despite the ongoing problems in europe. and senator john mccain, he's going to be talking to us about scott walker's big win in wisconsin. the nation's jobs situation and whether the u.s. is the next greece. stay tuned for that.

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in a globalized dynamically interconnected world, can the united states afford not to help europe avoid a melteddodown? >> let's see first whether the europeans can do it on their own. >> i'm ready to let the chips fall where they may. >> let it fall apart? or is it time once again to help our neighbors across the atlantic? >> it is time -- i'm pounding the table -- it is time for the united states to step up and lead in europe. >> senator john mccain will weigh in on the debate. and we'll break down global risk with john rutledge and jillian tet. 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. our guest host is stephen roach, liesman is here, too, the eminent economist. you're not preeminent yet. eminent is good enough. >> i'm thankful for eminent. i was just making a joke about your joke which is all i was doing. stephen roach is preeminent. was. >> don't make economist jokes about my jokes because you'll ruin them. >> we're all making economist jokes about you, joe. >> come down a little bit. we were up near 1% earlier. europe has been trading higher. >> we thought they were going to be keeping it at 1%. >> and dragi doesn't start talking still 8:30.

this is the top story. the ecb leaving the key interest rate steady at 1%, but we have seen a little bit of a pullback in futures since that point. as joe mentioned, we're awaiting draghi's comments. economists say he could signal a readiness to cut interest rates as early as next month given that spain's banking troubles. more importantly, he could say something about trying to shore up spain's banks or find a way to bring all of these banks closer together. that's what stephen roach has been talking about. we'll be monitoring that news conference. and we will bring you any developments as they happen. in political news this morning, wisconsin governor scott walker surviving a bitterly fought recall effort. the republican defeating challenger tom barrett, milwaukee's democratic mayor. this vote saw heavy turnout across wisconsin. and the recall was spurred when walker passed controversial budget-cutting measures. he becomes the first u.s. governor to ever survive a recall vote. he won by more than 7 percentage

points. >> the same guy he -- >> the same guy, this was like a redo. >> what's it all about, alfie? he won by 5.6 percentage points two years ago. >> right. >> now we go through all this and all this money. and now he wins by 7. and now he wins by 7. if you had to do it all over again, would you do it? >> if i was him? >> no -- >> oh, you're saying -- >> metaphorically. >> ah. i don't know. did you see what the president said? the president came out with a statement suggesting that this was, you know, a referendum on the opposite side of all this. >> i just like that he finally -- he at least tweeted the night before the election and said, you know, this barrett guy's okay. he's a good guy. give him a shot. but that made it even seem more conspicuous in his absence prior to that, i think, right? to finally throw the guy a bone with a tweet the night before? >> and people gave him a hard time on twitter for that. >> they did? >> they did. we talked about it with john

harwood the other day. >> i don't know how to find the responses to the tweets. >> it's called a retweet. >> that's a good name for it. let's get back to the other side of the pond. >> that sounds like barbara walters talking about what an army would do. >> let's talk a little bit about europe. >> wetweet! wetweet! >> she would tell the europeans to retreat. >> the debate, of course, continuing. what does europe need to do to avoid a meltdown, and how involved should the u.s. be in the recovery process? it's a conversation we've been talking about all morning and yesterday. steve liesman joins us now with more on that very topic. >> you know, i feel like i should take this passive aggressive attitude, which is just to be quiet. let it play out and say you know what, guys? what u now is what you're going to get. and let's just see how it plays out. >> we didn't listen to you? >> no, you listened to me. it was great. i think -- >> we didn't agree with you. >> you didn't agree with me.

and i got a lot of controversial e-mail. most of it -- well, you can't really repeat it. but it was interesting to see people responding. >> but you think -- you were eminent before any of the other economists. you were preeminent, right? >> i don't really think that, joe. i think i'm an economics reporter. and i've been a reporter covering the story for three years, watching a complete lack of progress. >> what got into you yesterday, though? >> i have been listening to the treasury for a very long time, and i know very well the tactic. they're going to praise these incremental movements by the europeans. and urge them very gent ly. what got into me, we need to do more. i'm looking at what's going on in germany and the inability of germany to lead because they don't trust them, because they don't have the money and thinking, what's the way out? and today is the anniversary of d-day. you guys had a great segment with ten things i can learn from

ike. one of the things he did was lead the europeans. and that's how we got out of it. >> but there's no political will here. i almost think it's a strong man. >> there's no political will here or there. >> i know. it's like the tyranny of hitler. not the tyranny of greece. >> of a poorly designed european currency? i don't know. it's obviously not as bad. from an economics point of view, it's hard to -- >> and we don't have any money. >> i think in the first instance, we need to ramp up the rhetoric in the first instance. the second instance -- >> you don't think that could backfire? >> how much worse could it get? is this okay with you, andrew? i really want to know. we lost 800 points. and by the way -- >> it's a pullback. it's not even a correction yet. >> rick took my argument the wrong way. i'm not saying that the current downturn we've had in jobs is the result of europe. i think it's the next one to come. i think it's going to happen this summer. i think it may be higher gas prices, whatever happened, the

snapback from warmer weather. i think it's the next thing. joe, i just don't see the u.s. ever getting to a sustained recovery. and i can grant you all the stuff that you've complained about about obama's regulatory policies. even if we got rid of all those, if we wake up every morning and have to deal with a potential european apocalypse -- i'm sorry, becky. >> no, that's okay. >> steve, the reason that we're dealing with this is because we have a lousy anemic recovery of our own. so we don't have a cushion that enables us to withstand any type of a blow from overseas. >> but correlations and cause and effects is the first thing we learn. the anemic recovery having anything to do with europe or not? you're saying it's completely divorced? i'm looking at business confidence and those sorts of things out there and saying you know what? when europe melts down, we take a step backwards every time. whatever you're doing, just keep doing it and have fun at it and let's see if that works. >> we're vulnerable because

we've had an anemic recovery from day one because all we ever did, to use your treasury model, was throw a lot of liquidity at frozen-up financial institutions and markets. but we didn't deal with our fundamental problems in the united states. and until we do, we're going to be vulnerable to europe, to asia. >> that's why we're going to have that election in november. >> we've got to leave it there for both steve and steve on this one. we will see you, this steve, at 8:30 for those productivity numbers. >> productivity. >> yep. governor scott walker's victory in wisconsin is among some of the hopeful signs for republicans, i would say, as they look forward to the november election. joining us now, the 2008 gop presidential candidate, senator john mccain. it's our pleasure to have you on today. especially we were talking about d-day earlier. we all admire you, obviously, and thank you for your service. but what do you make of wisconsin yesterday? >> i made of it that it was very important for walker to win.

otherwise it would have sent a message to governors all over america that you can't take on the public sector unions. but i also think we should temper that with the knowledge that most -- a lot of the citizens in wisconsin voted to retain governor walker because they believed that the only reason for recall is for incompetence or unethical behavior, not for policy differences. so i think we ought to appreciate that. and by the way, steven, preeminent comes with old age and senility. i've had people say he's a preeminent politician. so i think you're earning that. you're on the verge of earning that. >> it's nice to know. >> for liesman, what did you say, senility check. we're good on that. other than that, and i don't know how closely you follow all the polling numbers, senator. where do you think we are right now in the general election?

i see 52 for the president's re-election and i think mitt romney's up to about 43. that's not, you know, in concrete, obviously, and it's been coming down. but an incumbent president has a lot of advantages. do you think it's a pretty tight race here? >> i think it's a tight race. and i note that number is coming down. i think it was up around 58 or 60. for those that follow it. the impact of the latest economic news always takes time to be reflected in the pollings. i think we're going to be up late on election night, i really do, and we're going to be looking at three or four states that could go either way by a very small percentage. and by the way, i want to thank you for having president clinton on. he's the gift that keeps on giving. and i want to thank you for that. i hope you'll have him on more often to talk about bain capital and the necessity to extend the bush tax cuts. so we appreciate that public

service that you're doing. >> sterling is such -- i didn't even come up with sterling. we do have a sterling reputation. >> senator, we were debating this earlier, actually. the president appears to have -- president clinton appears to have rolled back some of those comments. >> sure. >> and we were wondering, do you really think that the white house calls up president clinton and says, look, ixnay, you can't say this anymore? >> i think they call his people. they know people. i don't think it's a direct contact. look, i'm very curious about this because the smartest pure politician that i've ever encountered is president bill clinton. and by the way, very the very smartest. i'm a little curious about these, quote, missteps that the day after has to be -- or the damage control kicks in. but i think he's right on both counts. but on this whole issue -- by the way, you know, last time i was on, i said, you know, until the housing market stabilizes,

that i didn't think we were going to see any signs of improvement. i'm happy to tell you that in arizona, it appears as if our housing situation has stabilized and maybe even showing a little bit of improvement. so there's a little ray of sunshine. if you're digging for the pony, i'd like to -- we are at least seeing some stabilization in the housing market. and as i mentioned before, the area we should have gone after first rather than the other bailouts in my view. >> senator, i know you're here today because you want to talk about some of the leaks we've seen in terms of national defense. >> i want to talk about whatever you want to talk about. >> i'd like to hear this, too. i mean, there's a story on the second page, a2 of "the wall street journal" today, the fbi is going to be probing some of these leaks. what do you think's happened, and why do you think it's such a huge problem that these leaks have been out about something like this? >> leaks have always been part of the environment here in washington. and many times they've served useful purpose, exposing

corruption, misbehavior. we all know that every administration wants to overclassify things so that they don't have to have embarrassing information out there in the public arena. but this is really serious stuff. and by the way, you know, for example, the bin laden operation, they leaked the name of s.e.a.l. team 6, all kinds of information including this doctor who has just been sentenced to basically a death sentence in pakistan, 33-year sentence. his name never should have been made public. and now we're talking about two of the most serious national security challenges that we have, the drones and the cyber situation as far as the iranian nuclear situation is concerned. both of those details have been revealed which had no business being in the public arena, can only alert our adversaries and give them a greater ability to counter what we are trying to do. i think it's really, really

harmful. and i hope that we in the armed services committee need to have a hearing on the drone issue. and this whole issue of what we try to do as far as the virus is concerned with the iranians can help no one but the iranians. >> where do you think the leaks are coming from? >> according to "the new york times" report, administration officials, the reporter got the information, and then it was confirmed. it was confirmed at the highest level of the white house. i can't tell you the number of times i've been called where you confirmed this. and i said, i don't talk about classified material. and it's pretty obvious that in all of these stories, guess who comes out looking pretty good? the brave leader. i think, you know, i wouldn't -- honestly, i think this was also an attempt by some in the white house to make the president look good on national security. >> senator, the one thing after

that jobs report, i just think republicans need to be wary of looking like it's playing into their hands, a slow economy and people out of work. and that's going to be used by the white house that the republicans are the reason that congress won't do anything, is because they're sending the president up for a loss. i just wonder, that's a tough thing to counteract, you know. >> well, i think you counteract it by the facts of the first two years of this administration. they had 60 votes in the senate, overwhelming majority in the house. >> filibusterproof. >> yeah. they could have done things a lot differently with the overwhelming majorities they had in both houses. instead we got three major obamacare, the stimulus and the third one is -- >> europe? >> yeah. and so there were three major pieces of legislation. and none of those turned out too well. >> all right, senator, thank

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breaking news this morning. cnbc's kate kelly joining us with that news. >> thanks, andrew. morgan stanley, after a lot of consideration and a look at the regulatory landscape they're finding themselves in is considering a partial sale of its commodities unit. they may want to bring on a minority investor to this unit, long one of their strong suits, a big moneymaker, although the last couple of years the pace has slowed a little bit. but they would talks with a variety of parties so far this year. i'm told the talks are very early stage. no deal is imminent. they have talked to the blackstone group about the possibility of some sort of investment. they've also talked about the possibility of selling the whole unit, although i'm told they are not leaning toward that eventuality right now. they're looking at a minority investment. this is a unit that's made anywhere from $1 billion to $3 billion in the last five to ten years. could be worth billions, but it's unclear what they're going to do with it. >> stephen roach, you're here, former morgan man. >> i am. >> it was always my impression,

kate, that once morgan stanley converted to a bank holding company, that it was only a matter of time before bank holding companies have to get out of things like commodity businesses or real estate or other types of real economic activity trading in sales, operations away from core banking. >> right. >> so it wasn't this sort of preordained by that decision to become a bank holding company. >> i think there's been concern for sure since 2008. i believe what it looks at a glance like is these assets are grandfathered in because the company became a bank holding company post-97 and they may be able to hang on to these. i think there are concerns about that it's not a cut and dried situation. my concern is the possible impact of volcker. if you look at their letter they

submitted in february to show their comments on dodd, frank and volcker. the co-head of their commodities unit has a lengthy attachment where he talks about things like commodity customer transactions require banking entities to engage in often complex strategies, careful management of principle risks, a banking commodity that maintains its knowledge of commodity market dynamics would be unable to price customer transactions and will likely incur greater risks. this is so interesting because it's at the heart of the debate over volcker, right? i think it's a fair argument that a lot of these commodities markets, not so much oil futures but some other ones, metals, ages, are really quite illiquid as a lot of derivatives instruments can be. see what the pricing dynamics are. however, you're going to want to hedge those. you may want to do something beyond hedging. some would regard it as proprietary trading. how do you balance the need to have that market intelligence and cover yourself, but at the

same time, not cross the line into what legislators are trying to avoid with too big to fail. >> in the old days -- in the old days, you'd sell a commodities unit when you felt the run was over. that's not the way it is anymore. the crb, historic run for the past 15 years or so, can you glean anything from that? gold was supposed to be at 2500 by now. and it's not. >> well, i think that's an interesting point. of course, we've seen the oil pullback of like 25% or so just in the last few months alone, joe. i mean, i don't know. i mean, you'd want to sell when the market was peaking, right? like blackstone did with its ipo. >> do you get in the situation if you're forced to sell this because of regulatory concerns where you're not going to be able to get the best price for it because people on the other side of the deal know there's a gun at your head, eventually you're going to have to get rid of this. >> maybe. that's what's so interesting about this story. i think the situation is very unclear. there's been a lot of debate within morgan stanley. do we need to act at all? sell a minority stake?

i don't hear, for example, that goldman sachs which has the other leading commodities franchise or jpmorgan, another big one in commodities, is doing anything close to this. >> but is there more important for a standalone commodity business rather than housed within a big financial services firm? that's the strategic choice. >> and by the way, if you think you have to get out of these eventu eventually, you might want to be the first one out of the gate. you might as well go first. >> and steve makes a good point, too. if you're a customer, if you're delta airlines, do you want the fiduciary responsibilities that come with a bank? i would argue you probably do. you may not want to trade with an insurer or a private commodity company. >> kate kelly, thank you. coming up, data on first quarter productivity and costs. we'll bring you the numbers and the market's reaction. then the debate continues. john rutledge and gillian tett will join us, and the extent to which the united states should intervene. >> it is time for the united states to step up and lead in

europe. >> i'm ready to let the chips fall where they may. >> where they may. let it fling apart. >> yeah!

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♪ coming up, assessing the risk from europe's debt crisis and a potential slowdown in china's growth. john rutledge and gillian tett will join us soon.

first, we're just minutes away from q1 productivity data. as we head to a break, take a look at the dow futures ahead of those numbers.

welcome back, everybody.

we are just a few seconds away from first quarter productivity numbers. also from the ecb, mario draghi making his comments. we have seen futures higher this morning. rick santelli is standing by at the cme in chicago. rick, take it away. >> reporter: all right. first quarterfinal nonfarm productivity. d dropped a bit more than expected, down 0.9%. last look was down 0.5%, and that was obviously unchanged to the new level. labor unit costs were expected to be up over 2%. the good news, they are not. up 1.3%. so we see productivity slipping a bit. unit labor costs slipping a bit. and of course, everybody's going to scratch their head and figure, is this going to give us some insight into potential maybe additional hiring down the road, some insight into pricing pressures? i'm not sure that it does. we saw the euro clipped off a 125 handle briefly. it slipped under.

i'm very interested in seeing what mario draghi has to say. he didn't surprise anybody. nobody down here was looking for a rate cut. but of course, the press conference will be very interesting. interest rates have climbed a bit. 159. intraday lows were in the low 140s. but we only closed one session, last friday, with a 140 handle. back to you. >> all right. rick, stay right there. we're still waiting to hear what mario draghi has to say. steve, what do you think of the numbers you just saw? >> a little bit worse. the details are kind of very interesting, actually, because manufacturing is still doing well, durables still doing well. all of the declines we've seen in total business. don't ask me. let's ask eminent economist luke crandall. preeminent fed watcher and one of only two members of the cnbc fed survey advisory board. thanks for joining us. and i know that last title is the most important one to you. >> absolutely. >> let's talk about productivity both from an economic standpoint and for what it does for fed

policy. >> well, one of the things that stands out is the downward revision. year-over-year basis. that's really just an echo of what we learned last week from the revisions because labor compensation was revised down a lot. it implies that employment trends were weaker than we thought coming into this. that was one of the big disappointments last week. that set the stage for the disappointing reaction to economic numbers. the fact that q4 and q1 look so much weaker in terms of national income. so that just says we have a little less momentum and makes the fed a little more inclined to go. >> as we are getting comments from draghi, he's saying exactly what we'd expect, the economic growth remains weak, news flash for anybody who's paying attention to this. says that price developments to remain in line with price stability, says that they're still looking for inflation to run at above 2% for 2012. >> yeah. i'm looking at that comment, becky, and i have to say that's the operative one.

we think -- i'll throw this to lou. he says what becky was implying, inflation likely to say above 2% for the rest of the year. they do not see the cooling off of inflation in the eurozone the way our central bank does here, which would imply policy being on hold. >> i mean, they're waiting for -- they don't think that a monetary solution is the answer right now. that comes later. >> hold on. another headline. >> ecb decided to extend fixed-rate full allotment lending policy. what does that mean? that they're going to push forward with some of the lending facilities and expand them? >> that just means -- go ahead. >> from a short run -- in terms of short-run funding from the ecb, it's still an a all-you-can-eat policy. we'll fund you to the extent you need it. >> and increased downside risk. but with inflation still above 2%, does that mean they're more likely to act or not?

>> i don't think this is being driven right now by near-term economic trends. it's being driven by the need to develop a political consensus. >> it's important to make the distinction between the monetary policy choices of the ecb which draghi is sort of ruling out as doing anything on a near-term basis. and this broad pan-european regulatory effort to support the banking system. it doesn't appear that he's commented on that in any way whatsoever right now. >> no, but he has commented on the ltro. they're saying it will continue until the end of 2012. maybe that's not as significant as the markets had been hoping for with what you had talked about, stephen. >> but there's nothing new and creative about the regulatory approach to dealing with a dysfunctioning banking system. >> stephen, what would you like to see them do? having criticized mine. >> i think that regional integration of this banking system ultimately is essential. >> right.

>> monetary union, you need a banking union. >> and you read the book "waiting for goodell," right? you've read that several times in college? >> i'm still waiting myself. >> and you still think that's a possibility? >> i think there's a lot of pressure, and the spanish are really putting their cards on the table. we need help. and the quid pro quo for the help is spanish banks start to become european banks. >> lou, last comment from you. solutions for ecb or what you think the fed's going to do here near term? >> solutions to the ecb, i don't have any. that's a tough one. in the near term, i think the fed's going to decide that it needs to give them something on june 20th. probably an extension of operation twist. >> going to decide on june 20th? >> yes. >> you think that's a done deal? 100%? >> nothing's ever 100%. i think it's moved into high probability. >> all right. how much? >> 75. >> 75 -- >> that they will -- >> no, how much asset purchase? >> they could do it in any way, shape or form.

it could be monthly. i would say $300 billion. >> lou, thank you very much. we'll have to have you back again soon. steve, thank you. and rick, we'll talk to you again tomorrow. coming up, the crisis of europe and signs of a slowdown in china. we've got china expert john rutledge and "financial times" editor gillian tett. and ecb president mario draghi saying inflation likely to stay above 2%. [ male announcer ] this is the at&t network... a living breathing intelligence

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welcome back to "squawk box." in corporate news, the nasdaq reportedly plans to make an announcement today about facebook compensation. "the wall street journal" says the exchange is expected to release details of a plan to make up some losses sustained by banks and trading firms from facebook's botched, it says here. it says "botched." so i'm going to go with it because i've got plausible deniability. i didn't write it. also, facebook is now letting marketers place ads specifically in mobile versions of its social network service. the move is aimed at addressing a key concern about broadening its appeal as smartphones and mobile devices become more popular. shares of facebook closing yesterday at $25.87. >> look, they're popping up a little. >> a little better today. but it is almost one-third below the ipo range -- or price of $38. and since going public, the

stock has fallen on 8 of the 12 trading days that it's had. facebook investor shawn parker, meanwhile, is launching his latest venture in new york this week, andrew. and cnbc caught up with him and asked him about the social networking giant's ipo. >> there's almost a sense of relief with the ipo. there was such a speculative market around facebook shares, particularly the retail investor. the fact that that's no longer an issue for the company is probably a good thing. i mean, eventually, you want the stock to stabilize, and you basically want to have a lot of large institutions who take a long view. >> parker said that over the eight-year life of the company, all the founders have taken a long-term view and sold very few shares. and you should -- you know more about this than any of us, and you hang out with these guys. >> i don't know if i hang out these guys. >> and the victoria's secret models. >> that would be good but i'm not sure that's right either. >> did you spot any of those? >> i did not.

>> did you ask sean parker what his latest offering -- >> he has a girlfriend. >> oh, yeah, you told me that. another guy that needs a good talking-to, right? >> let's get to serious things. before that, becky, should we grab -- >> futures have come down. >> a few of the ecb headlines. draghi has been talking. as these been making these comments, the futures, at least, have come down. you can see gains have been paired in the european markets as well. in germany, the dax is still up but only by 51 points. we saw spain and italy up significantly higher earlier this morning. dow futures are still up, but right now 62 points instead of the triple digits we had seen earlier this morning. first of all, they didn't cut rates, not that many were expecting it, but that was the first thing to knock futures down. second of all, draghi's making comments and none of it seems to be playing into what exactly some traders had bone hoping to hear. >> no quick fix. >> no quick fix from the ecb. there's a weird comment he just made about how abrupt disorderly adjustments and the banks'

balance sheets haven't been materialized, that they've been watching the data. >> so there's no run? >> that's what it sounds like. good news or he's saying there's not necessarily as urgent of a need as some people. >> that's good news. you're saying it's bad news? if there was a run, you know, we'd have more problems. >> i never can recall a central banker saying there was a run on banks under my purview. they would never say that. never. >> well, we will have to see. >> we lost that shot of sean. the director, not the producer, but the director has told me that that was your sweater apparently that sean parker was wearing. it was the same maker. but i think we've lost -- no, there it is. >> there it is. there it is. he has a bit of a broader neck. >> but you have -- you know what these guys -- and you had a hoodie. >> i did have a hoodie. >> are you going to be able to

see these guys? i'm going to go see them actually today. >> good. because you're the guy that can identify with these young bucks. >> i will try. >> peter out with a comment, like stephen roach was just telling us, that draghi didn't bring the meat today. >> what we need to do hear. >> took some of the steam out of the futures. >> we're going to continue this conversation. the debt crisis paired with fears of a slowdown in china painting a very dreary picture for the global growth economy. joining us now is john rutledge. he is chairman of rutledge capital and an honorary professor at the chinese academy of sciences. and from new york, gillian tett, u.s. managing editor and she could be the managing director if she wants to be for "the financial times." good to see both of you. i'm going to start with you, john, and steal a question that steve and i were talking about during the break which is china, given what's going on in the economy, given the slowdown there and across the board, why have we not seen them step up and provide more stimulus? >> well, john is actually not as

export driven as everybody thinks they are. it's much more driven by what happens internally. the slowdown is china is actually homegrown. exports are weakish. but it's really what's happening there in two sectors. it's property and infrastructure. they inflated the heck out of both of them during the stimulus. they under -- or overdid the hammer of policy to slow them down last year, and that's what they're getting. in china, policy is even more of a blunt-force instrument than it is in the u.s. and it causes blunt-force trauma. so we've seen some slowing. but it's not going to stop china. china still, i think, going to be an 8%ish growth for the year. i would expect to see more stimulus later in the year. >> okay. i want to bring gillian into the conversation in a second. but you've been nodding your head no. answer your own question, i guess. >> john, i just think that 3.5 years ago, china moved from the

face of a massive external demand chug. maybe they're saying the text external is not in the same ballpark of what we saw during the great recession. i think if china gets a whiff of sharp disorderly implosion in europe, they will be very aggressive in using all the tools at their disposal. >> no, absolutely, steve. actually, about three weeks ago, i sold a batch of my chinese stocks for exactly the reason is they're not looking like they're giving this a very aggressive stimulus. but inside china, you know, in the u.s. when we learned economics out of textbooks, we all think somebody changes the policy like an interest rate, and then all the people go out there and maximize, make all these little adjustments based on prices. it doesn't work like that in china. there are quotas and regulations, and they change the rules on mortgages, they change the rules on who can own a property or they wipe out infrastructure spending at the government level. and so they get bigger, lumpier

changes. and i think they've had the lumpy change. they have not responded by aggressive easing when this started out this year. and i wouldn't expect they will for some months yet. when they do, i think you could see a big move. >> hey, gillian? i want to talk a little bit about europe but maybe in the context of china, we had a conversation around this table earlier about the role that the u.s. should be playing in all of this. and i'm curious if you have a view on the role that china should be playing in all of this. >> well, i think the chinese are very wary because they can see the potential kblaimpact on the global economy if the eurozone does go into serious move. in a sense, it's grown up economically much faster than it's grown up politically. and i think that at the moment, they're trying to hunker down. they absolutely do not want to be seen as the savior of last resort in the sense of stepping in to buy up eurozone bonds.

but at the same time, they don't want to be seen as somebody who's a spoiler and making the situation worse. so they have a very difficult role to play. >> i don't know if you got a chance to see these comments of draghi's just out with. and you are one of my great europe experts. just quick thoughts on what's going on? >> the ecb is caught between a rock and a hard place. on the one hand, ecb officials, senior ecb officials, have told me recently nobody should underestimate the willingness of the ecb to take extraordinary measures if they think they're appropriate. i mean, just think back two years, who would imagine that the ltro would have been unveiled? so i think the ecb is getting ready to do something dramatic if they think it's appropriate. the one thing they don't want to do is be seen as a band-aid solution that means that politicians don't have to do their job. and there is real concern that by the ltro has essentially put a band-aid on the eurozone system. and politicians have avoided taking the necessary step which is essentially to agree on some kind of surgery for the

eurozone. >> that's a critical point, gillian. because by not offering something new to the table this morning, draghi is effectively putting it right back to the politicians to deal with this potential banking crisis. do you agree with that? >> absolutely. i mean, they are very worried at the ecb that the politicians, if they're given any room for simply carrying on fudging and kicking the can down the road, we'll just keep kicking that can down the road. and everybody knows they're simply fudging and playing for time just won't work. sooner or later, politicians must decide. >> john. >> absolutely. while the draghi is talking words, that giant sucking sound you hear is the european banks pulling out of capitalist structures. there is a massive investment opportunity in europe caused by the credit restrictions there of banks pulling out of existing deals where private equity

investors and other illiquid investors are coming in to put money at work in extraordinary returns, 20s and 30s rates of returns. that's the underlying weakness under the euro economy is the banks have been disappearing from working capital. >> okay. john, gillian, we've got to leave it will, but we thank you for your perspective this morning very much. when we come back, we will have more on the ecb president draghi's comments. also more on stocks on the move. we'll head down to the new york stock exchange right after this. looking for a better place to put your cash? here's one you may not have thought of -- fidelity.

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welcome back to "squawk box" everyone. take a look at tempurpedic. that stock down 4 %. the mattress maker says that north american sales have been below its expectations. let's get down to the new york stock exchange. jim cramer joins us right now. jim, we are watching that triple digit game for the dow after draghi doesn't seem like he's bridging it. >> they're talking about growth next year. they have everyone by the juggler and they clearly are not doing the right thing. i would say this. there's a tone set by not

tempurpedic but by home depot. these are signs that maybe people are saying you know what, our stocks have gotten too cheap. but in tend, if europe does the wrong thing, i'll be back here saying so much for that. >> jim, kind of parsing through the headlines, it's a litting bizarre where he's talk about it doesn't look like there's any massive adjustments in the bank's balance sheets. what is he trying to say, don't worry, we have more time? >> yeah, i mean, sometimes what i hate to do is be completely disparaging. but i want to be completely disparaging. he's got kind of a clueless approach to what we're doing. i was listening to you this morning, becky. yeah, they're bank runs. bank runs? you've got to stop bank runs because that's what we had in this country in several panics. but he seems to think hey,

listen, bank run here, bank run there, i don't know, we'd be closing these banks and nationalizing them. >> is he saying that we're wrong in what we've been reading? or is he sticking his head 234 the sand here? >> well, i think he's actually -- boy, i don't even know if he has a head. >> all right, jim, we're going to hear a lot more from you in just a few minutes. thank you. >> coming up, some final thoughts from our guest host, steven rich. >> tomorrow on "squawk box" global risk in your portfolio. cftc chairman gary ginsler. don't miss "squawk box" starting tomorrow at 6:00 a.m. eastern. r. and development. some new members of the team will be introduced. the chairman emeritus will distribute his usual wisdom. and you? well, you're the chief life officer.

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19 now at 24. and there's these other companies, as we go to mattresses, that's a g-1 firm. but god knows what's happened. it's all moving today. that's a grou stock. . >> is that still considered a growth stock? >> it was. it's at 24 day. it's down 18 points. anyway, our guest host this morning has been squawk master and yale university steven roach. and i was going to remind you of what greenspan said about central planning in china. if you've got ten guys deciding to build stadiums in every city that are goichk to be empty forever, sooner or later -- >> it's a typical greenspan bum wrap. china is doing rural migration on a scale that no society has ever accomplished. they've got to plan for that. they have to build ahead.

they err moving 15-20 million people a year from the koun tremendous. >> you're a free market guy. >> in a transition economy -- yeah, he's got his market l libertarian philosophy. once they get the system going, then they're going to be subjected to more market-type forces. right now, they're doing this migration on a scale. >> are you recommending we build bullet trains here? >> i'd like to take one nice train ride in the united states before it's over. >> you don't like the acela down to washington? >> i've been on it so many times and i've been delayed every single time. >> i've never been delayed. i eat bison chili. >> and how is your cell phone service?