i'm becky quinn along with joe kernen and andrew ross sorkin. in our headlines today, a successful bond auction in spain, the country was able on sell 2.1 billion euros. this was very widely watched sale. yields were slightly lower than at prior auctions. a spanish minister warned madrid was being cut off from the markets. also angela merkel is playing down expectations that a summit could produce a master plan for europe, but she does say that leaders will come up with an agenda to try to integrate the eurozone further. s&p says european leaders can still contain the region's debt crisis sure degrees default again, but washes time is running out. and also the bank of england will announce a decision on interest rates at 7:00. we'll check in with kelly evans for more. and andrew, over to you. >> we have a very busy u.s.

agenda. ben bernanke at 10:00 a.m. market expectations of course are now high that he'll hint at something revealing more about fed easing. steroids are a coming. the central bank second highest official laying out the case for the ped to provide more support to a fragile economy. vice chair janet yellen speaking will boston last might. take a listen. >> i'm convinced scope remains to provide further policy accommodation. >> citing risks from ongoing housing problem, a weak jobs market and worsening financial conditions. a number of other central bank officials will be out speaking today including lockhart, fisher, evans. a lot more than that. also beyond the fed heads, a few other economic events of mote today. at 8:30 a.m. eastern, we'll get you weekly jobless claims and this afternoon we'll get

consumer credit. >> i thought there was one other fed official talking, too, today. >> yes, you saw me -- >> wasn't will one other one? >> there was one. >> why would we leave one out? >> i was so embarrassed about possibly getting will wrong. >> you were the one who said you can skip over names. >> what if it turns out he's the one that says like the most important stuff and people will go i didn't know he was talking. >> coche cota. i practiced it. i would consider naming that when naming the guy. there he is right there.

put that on wheel of fortune. they would never get that. >> there was a 6-year-old on. >> i was graduate when slad whe. she was just too smart. >> oh, come on. >> eight and nine year would ons are am i stupid? m nasdaq will offer 40 plld in cash and rebates to clients harmed by its mishandling of that unbelievable facebook ipo. ceo on closing bell yesterday. >> in terms of generic comments with respect to the psychology of the market, i can't respond to that. everybody is entitled to their own opinion. but clearly we did what we had to do at 11:30 to get the cross off. at 150, the con per nations were

out and we completed our role. obviously not the way we wanted to. we apologize to the have i for that industry for that. >> criticism from the street. is it not enough -- >> like 100 million short of what it should be. >> and pot all cash. much of it is in credits. >> complaining about the nasdaq wanting to use rebates. clients claimings losses far in excess of what nasdaq is offering. will this end incourts or arbitration? >> we'll area something from this. courts or arbitration? >> we'll area something from this. liability capped at $3 million. so they have asked permission to give more than that back, but they also made like $10 million in trades themselves.

>> you were still writing in about staying on this, i haven't gotten a -- they canceled will but they didn't cancel when i asked. >> a mess. >> elsewhere, new york and delaware can intervene in bank of america's proposed $8.5 billion mortgage bond settlement. a judge ruling both states have identified legit mate interests this protecting the integrity of the marketplace. settlement far less than the mass receive losses investors have faced and will continue to pace. and goldman sachs is getting smaller. "new york times"s reports that the firm is expected to name fewer than 100 new partners this fall. goldman spends months vetting potential new partners. >> let's go across the pond to visit with kelly evans in

london. >> hello. yes, so we're back about in to the trading week here. uk's back. we were back yesterday. the rally that we saw at the beginning of the week appears to be continuing. a little less green than yet. but still a better tone to the market. the foot city and cac 40 up about 0.6%. ibex in spain up 1.3%. that continues the string of outperformance. may have something to do with the fact that spaen just auctioned off its debt. issue about $2 billion in debt. bid to cover haratios higher, b they had to pay 6.2% in the case of the ten year debt. across the board pay building one percentage point more than the last time around. and our guest this morning points out this debt may largely be going to spanish banks who

are being asked to take it off of the sovereign's hands. france borrowing at record low yields. in terms of data, somewhat okay report on uk service secretary o sector. consistent with april. and over in greece, the unemployment rate rose to i think 21.5% to 21.9%. market shrugging it off. i think all eyes are on the fed to see whether they are going to do whatever it takes. >> kelly, thank you very much. we'll all be watching closely. >> unless you're a fly -- i've got eyes on a lot of things.

so unless you're a fly -- one eye on this, maybe another eye on something else. but all eyes -- people don't know what my eyes are on. >> at 10:00, both of my eyes are going to be on -- >> i bet they're not. are you going to be here at 10:00? we won't be doing the jumbo or -- >> we'll be done with it by then. i'm really interested to hear what he has to say. >> there are people who say everything the fed has done has been effective. >> but i can't figure out -- >> why not do more. but i would say -- >> i don't know that operation twist has been effective. >> they said qe 1 thawed some of the frozen credit markets. qe-2 did a lot for oil.

>> is will any other way it to explain what gold did a couple days ago after that? up like $60. that was the only reason was because qe-3. >> that has been the premise that what'sis name, david -- >> sounds like -- >> bigger than a -- >> with the jelly donuts laid out with the fed saying that the fed you can't trust the fed and that's why gold -- >> i thought we were back to tepper again. we now know the fed conditions -- >> all we're doing is waiting -- we aareroided ed addicts?

>> john egan firing back. filing a petition to move his case. good morning. >> good morning. >> i've read back through the time line of everything that has happened with the sec since they began regulates you. and i'm hoping you can lay it out more to make us understand. what's happened with the chlt is ec and why are you moving to push this into a port? >> we don't believe that the sec is handling the independent rating firms with ourselves being at the top properly. waef hadwe've has a massive cre collapse and reports identifying inflated ratings issued by the conflicted rating firms as the primary cause and yet the sec hasn't even given them a parking

ticket. there have been 30 lawsuits claiming that the conflicted rating firms have defrauded investors. there's been none against us. and the is thesec has said that our 2008 application, that they have a different interpretation of ratings and the way we discontribute by theed our ratings and therefore basically thrown the book at us and we're fighting back. we don't think the sec is trooeting us properly. we think they're on the wrong side of the issue we want teamly accurate ratings, you want to encourage those and the sec has done the exact opposite. >> what is the action against egan jones? >> they filed a suit in their administrative court. we think that the sec has an institutional bias against -- >> but what are they claiming? >> they're saying that we aren't qualified, our 2008 application

was filed inappropriately for sovereigns ironically and structured finance. there are five lie sends. there are two that they're quibbling about. there it's a 2009, 10, 11, 12, they have no rproblems with thoe applications. so reaching basic basically five years. we don't think this has anything to do with the 2008 application. it's a much broader issue than that. >> what's the broader issue? >> broader issue is that they prefer that the rating industry look like s&p and moody's and they're comfortable with the conflict and we think that's against public policy. congress passed two laws encouraging the sec to take a closer look he macing tat manag conflicts. and they've gone the opposite

way. it's rare that you have the whole western world, the whole economy being brought to its knees with the 2007, 2008 prices and yet the end result is to go aft after the firm that has issued timely and accurate readings. there's been no question throughout any of will about the accuracy of our ratings. >> what are your ratings right now for spain, greece, portugal? >> lower than the others is the short answer. we warned about greece. in fact i came on cnbc a number of times last year, said that greece would have to default and that the recoveries would be minute haima minimal. that's exactly what happened. first go around, recovery only 25%. likely to have another restructuring and another big haircut. we said the ultimate recoveries would be between 5% and 10%. and last year, there was an article in barons when i was on "squawk box" early on saying that that's going to hurt the major european banks and that

happened. >> and what do you think the next step is? at sothis point you have a plan potentially coming next mochts. does that change your mind about your ridings on any of these countries? >> i think you have to step back and ask the question of whether or not there can be a solution in the short run to this problem. the fundamental problem is that debt debt is growing rapidly because of the interest increasing on a number of the southern european cuountries while gdp is not growing. so you have a structural problem. you also have a problem in the banking system that's very difficult to address. it's not well understood by a lot of people. but the dobundesbank has exposu.

so if greece were to depart, the ecb would have a massive hole in its balance sheet and the bundesbank would be looked into fill that hole. that's fairly difficult. so there's a structural problem there. it's been well documented. the problems with the monetary union, but not the miss cal union, but there are about four other structural problems that have to be addressed. our view is that these things are not going to go away very easily and that's doctor we've had significantly lower ratings than other people. the stronger countries will have to be a sosh tabsorb the proble the weaker countries. >> when did you know if your lawsuit will be moved to a court? >> well, our attorney said that this is not -- well, as far as it being moved, i don't know.

as far as going to trial our attorney says the sec doesn't have any case, they really don't want this to go to trial. we'll see about it that happens. >> sean, thank you very much for your time. a pleasure talking to you. >> thank you. coming up, another sean, shaup parker, the man of nap sister and facebook fame, he invited us in his home to talk about his latest venture. but first kefls staying alive. new jersey beating the l.a. kings 3-1, avoiding a sweep in the stanley cup pinls. game five is saturday night in new jersey. all in one account. keep watch on the markets. or use our exclusive tools to help find ideas. it's powerful, easy-to-use technology

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we have some of the ultimate disrupters thour s this morning. founders s of napster launchi new venture. we talked about how air time got its start at parker's home yesterday. >> it felt like the internet had become stale. like there was no life in it. people's real present identities weren't there. it's increasingly different to cu have a collection of stuff you love and share it with your friends. >> nothing feels like it's intended for just you you. you have a huge opportunity to

broadcast to the people that you know. you have things that are really baking it possible to produce an enormous amount of content and information, but at the end of the day, the best possible form of feedback is seeing another person respond, seeing their face, seeing them laugh. those are things that are the most natural and most meaningful and gratifying results. and if you think about why we post stuff online, eitherit's c over time. >> do you remember talking to each eother at 2:00 in the morning when you were talking about what we can do together? >> i was thinking about this 3 1/2, 3 years ago, how there was no product where you could have a shared space where someone could sit in the director's chair and choose what videos the room was watching. a lot of that was implemented by hangouts which is a swedish company that builds sharing applications. but, yeah, we talked about this

stuff for quite a while. the background story is that millner was working with andre the founder of chatter link and he approached me in new york and we had a long conversation about the possibilities. and he said we need to find a great team and we need a product vision. and i said as a matter of fact sean and i have been talking about a lot of these things. so we looked and what was interesting is i ultimately think it's a novel i product because didn't have stickiness. wasn't a product that people were -- no way to build relationships on it. very rudimentary. but it just changed the way we thought about things.

all of our interactions on line with so filtered filtered bay our social network, trying to figure ut how to build and use the social graph to filter media. >> so revenue model. how do you make money? >> i'm a firm believer is first step is to build your user base. create a great product that's a joy to use, build loyalty thin your user base. build a network and then over time gradually try to figure out the right balance of free versus monetization. without giving away too much about our thinking, it's pretty obvious in looking at our product because there's so much media, it's a media experience.

people are performing for each other. and there are a lot of opportunities to spintroduce videoed as, but nothing something we have immediate plans to do. also premium upgrade type models that you could conceive of. but again, more important to us just to build the user base and build the monetization later. >> much more throughout the show. he talks about facebook and a lot of other things. we randomly -- we happened to land yesterday on a writer, she kind of freaked out, she couldn't believe she was on there with sean parker p and she recognizeded me, too. but you said about predators or

do they have an algorithm in there so that you can't start putting the camera on yourself or doing things. and chat roulette, which is a former service used to have some of those issues. so this sort of attaches some parameters around things. >> i don't understand how can you protect people from cruising? cruisers don't need to expose themselves to be cruisers. for predator, this is a dream. >> it's attached to your name so you're not completely anonymous. you're anonymous to the other person, but if you did something, you could press a button and they would be off the service in a second. but they're looking for specific motions of the camera and things that -- and then it goes dead. however, by the way, from

friends or people you know or if you were doing this with your wife, for example, that algorithm is not turned on. >> if you're doing it with your wife, why are you doing it through the computer? >> you could be traveling. >> any way, air time is a service, but we'll talk more with sean later. >> the craigslist guy, i mean, it just makes me -- if you had video backed up with -- >> probably one of the things you don't want your kids on. >> a larger part of the service is not just meeting new people. it's me sitting on the computer and wanting to talk to becky and instead of calling her up -- >> like face time. >> my daughter was on something and she said some guy in someplace -- >> what? >> yeah, like a game. if you're playing games, and then you go a different server other --

>> and you can chat back and forth. >> shaee said, yeah, he's any forget what state. and i go what? what did you tell him? >> how old was he? >> who knows? it could be chris hansen. it's a "dateline" thing. he doesn't have enough time to catch all of the guys that are -- only the ones where find out that the 14-year-old girl is a male cop. >> they build a lot of safety stuff in. i'm less worried about that with will service. >> up next, we'll talk about building back the u.s. economy. jobs, politics and much more. 

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welcome back to "squawk box." i'm joe kernen along with becky quick and an drew ross sorkin. spain able to sell 2.1 billion you're roses.drew ross sorkin. spain able to sell 2.1 billion you're roses. yieldses slig es slightly lower prior auctions. spanish minister warned madrid was being cut off from markets. ben bernanke will testify before the joint economic committee. expectations are high he could hint at something revealing more

about fed easing respee ingasin continuation of twist or some such sthenk. we'll see if the markets will be satisfied. >> let's tee a look at ttake a markets. dan, ahead of bernanke, how do you possibly set yourself up?ee markets. dan, ahead of bernanke, how do you possibly set yourself up? t markets. dan, ahead of bernanke, how do you possibly set yourself up? t markets. dan, ahead of bernanke, how do you possibly set yourself up?ta markets. dan, ahead of bernanke, how do you possibly set yourself up? >> there's a lot of attention paid to this. and i think the key word is he'll say if the economy falls back in to a problem, they will do things to further ease. but i don't think he'll be real specific about what's going to cause it. we'll have to watch what happens with our economy and continue to monitor it. yesterday's base book was pretty decent. so any expectation that he's going to be aggressive today i think will be dampened. >> so are you suggesting that he's not going to come in with the expectation we want, the market will end lower?

>> no, i think there's a little bit too much riding on the expectation. he'll be ambivalent. he'll lean toward an ease about necessary. so the market will be play indicated by that. but the european situation is a dominant one that will affect the market. so as long as we don't hear thinking bad out of there, i think you'll muddle along a little better. >> dan, thanks for your perspective. >> the nation's top manufacturers are on capitol hill attending a two day summit on job creation. some 400 companies will be meeting with congressional members. jay timmons is president and ceo of the national association of manufacturers. jay, in a nutshell, we've heard manufacturing is making a comeback. we know about detroit. and then we know about, i don't know, software and high tech manufacturing. would you say, though, that there's been a renaissance in what we think of as american manufacturing in the midwest, is

is that happening too? >> i don't think we're at the renaissance point just yet, but i would say that we could be on the verge of one about we do things right in washington. and that's why as you noted 400 manufacturerses from across the country are descending on washington and capitol hill to get the message out that we need certainty, we need to reduce a cost differential that exists in in this country for manufacture wi ers through sound policy on taxes, regulation and energy. >> so as long as washington does the right thing. >> scary proposition.energy. >> so as long as washington does the right thing. >> scary proposition. >> i'll just write down. so it's going to happen. gr do you know what the great news is, everybody is talking about manufacturing. it doesn't matter what political party they belong to. they're talking about manufacturing. and it's got a great mullaeat m effect on the country. gr do you want the government to enact new policieses on key

appreciation or do they have to take an active role or just take things that are holding back manufacturingdkey appreciation or do they have to take an active role or just take things that are holding back manufacturingekey appreciation or do they have to take an active role or just take things that are holding back manufacturingey appreciation or do they have to take an active role or just take things that are holding back manufacturingy appreciation or do they have to take an active role or just take things that are holding back manufacturing appreciation or do they have to take an active role or just take things that are holding back manufacturingdeappreciation or to take an active role or just take things that are holding back manufacturing do more or less? >> i think it's a great questn n shgt. manacre ith cnt when compared to the rest of the word and th world and you don't itch fa't e in the cost of labor. >> so the overall corporate tax rate is hurting manufacturing? >> corporate tax really and also the individual tax rate that's getting ready to go up at the end of year. two-thirds of manufacturers pay taxes at the individual rate. so the entire tax system is a concern for manufacturers and it adds to that cost differential and cost burden. you look at the regulatory process, $1.8 billion of regulatory cost on businesses in this country. you look at our energy policy which right now is a bright spot

because of shale gas, we want to make sure that congress and the administration get it right and all sources of energy are available to manufacture. we use one-third of the nation's energy output. >> are you a political organization? >> we are a nonpartisan organization. for us it's all about policy, not politics. >> you just described the entire republican side of things on most of these issues. >> not really. >> okay. what -- if it's regulation in the last 3 1/2 years, would you say it's been deleterious to manufacturing or no? >> i would say regulation over the course of the last 20 years has been problematic. >> how about and tax policy, do you think you have a better chance -- >> in-s to compound over the years and we certainly have a problem that we have to address coming at the end of this year. taxmaggedon or whatever. but bottom line is uncertainty creates a situation for businesses in which they can't

operate and manufacturers are planning two to three years in advance. >> thanks. appreciate it. good luck. watching maria again yesterday, it was great watching a recap of all the clinton hoopla that happened. and it sort of drove home to me will this miss fist fist cal c again -- we perceive him as a moderate. >> he was the head of the governors party that kind of brought things together. >> but when he said let's extend them for a while, sounded like a compromise but only if you say across the board. the minute you say for just those below $250,000 we're back with the two entrenched sides. and if both sides have feeding concrete by the end of the year, that's not going on get taken

care of and they are going to expire for everyone. >> you don't think there will be a temporary deal? >> but obama and bill clinton said, no, i don't want -- they need to expire. but you need a deal to get to expire on 250 and above and to be extended for 250 and below. you would need a deal. obama said no way is this ever going to be extended and he got so much political flack the first time he did it from his base that he says no way and how -- that's why people got optimistic because clinton sounded like he was saying let's do it for a year or whatever or two years and maybe convince the party. so now this is going to be like a cliff. >> and if the president -- if president obama is digging in his heels and you still have that happening all the way up to the election, then you're talking about a problem that is less than two months away as of

election day. and that's when the miss cal cliff becomes such an issue. and about if you think nothing's going to get done during the elect, then you have less than two months to try to come up with some sort of a plan. >> but you can vote during the election on which side you come down on. >> why -- well, we he can talk about it later. >> why do i what? >> not about you. what i don't understand is why do we think the actual vote in november will change the outcome of the fiscal cliff? >> because it would be a lame duck congress anyway. >> exactly. and it they may just do whatever they want. >> right. >> i don't know how you pull together in two months. >> political capital can build up.

there was a little bit of a -- it looked like i don't know if i'd call it a sea change, maybe it was -- are there any small seas? peck a small sea. but you look with wisconsin and then throw in the california stuff, i mean, both of theseiec. but you look with wisconsin and then throw in the california stuff, i mean, both of theseck . but you look with wisconsin and then throw in the california stuff, i mean, both of these almost like greece and germany in a way. not quite. but california seam type of dynamics working in terms of tensions for public unions. all the stories in the joush rn usa today, republicans claims it meant a lot, democrats saying it didn't mean much. so you would click on her on air time basically? >> it's on the cover. somebody's making these decisions. i don't know. >> he have six newspapers over here and i pulled it right out.

>> i was just curious what that was. >> that's a woman. >> i thought we were going to break. >> comments or questions about anything you've seen here, you can e-mail us squawk@cnbc.com. when we come back, why what's good for banks might be bad for the overall economy. robert albert son has the answer. break.

the u.s. banking system could get a pick me up if european leaders make progress solving the region's debt crisis. but what's good for the nation's banks could have repercussions for our overall economy. here to talk about that and much more is robert albertson, chief

strategist and prince at sandler o'neal. good morning. >> good morning. >> this is interesting. i hadn't really thought this through before. but if we do see european leaders making some progress, obviously good news for the banking sector, what do you mean this is bad for the overall economy potentially? >> we're all in a global deleveraging race. and a lot of liquidity out there. most of it sitting here keeping our rates too low. if they start to calm down europe, fix the euro, at least partially, that money is likely to flow out and, therefore, our interest rates go back up. that's good for banks. but probably not terrific for the economy. >> bad for the housing sector in particular. >> and particularly housing. but we've been living in an unreal world here on interest rates. we all know that. we don't though when it will end, but we know he it will end. and that could be the trigger about if they take a couple steps that they almost have no choice but to take.

>> so you mean a couple of steps in terms of just making sure they bind the union more closely together, that they bail out some of the banks? >> i think what surfaced in the last week or so is the concept of deposit insurance that's more credible, more coordinated, and ergo could stop any kind of bank run or outflow. if they do that, that's kind of a back door to further fiscal union, maybe years ahead, but down that road. and about if you look at the numbers in europe and the problems, they really are surmountable. they're not going to require gobs of hone money to cure. sglits's frightening to think about because interest rates at these low unrealistic rates still haven't managed to fix the housing problem over all. still have house prices down. >> housing is not fixable by interest rates. it's fixable by job growth,

graduate and you would gradual reduction of even sorry. >> but we use see housing suffer because of interest rates. >> perhaps. as we've gone down to record lows, it hasn't done anything. i think going back to something normal may scare people initially. i don't think it has a darn thing to do with the fundamental strength of housing and the willingness of people to buy. >> it makes homes more expensive and it certainly makes the amount of home you can buy -- it cuts in will to twill to the am can buy. >> we've got a 30% plus decline from where we were. more importantly, the ability to get a mortgage without too much wrangling. the sad thing from 2008 board is that we nationalized the housing market in terms of mortgages and that has blocked any kind of freedom that the banks and originators might have at this point to try and get credit

approval quickly. but the big problem underlying this is anemic job growth which has been problematic now for several years. >> are you suggesting that banks want to lend more people money but the regulator s aren't allowing them to? >> i'm insisting that because i spent all my time on the road visiting banks all across the country. and they all say the same thing. we need to lend. these interest rates are killing us in term of spreads. and when we try and extend credit particularly in the housing sector, we're out in an arena where we'll get our head shot because we have lawyers, regulators. i understand regulators. they're still on the other extreme trying to be extremely tight when in fact they need to get back to neutral. but that's really the constraints. and you see loan growth in the business sector which is not levered that high.

therefore the regulators are thrilled to see it. >> is it that the banks can't charge a high enough interest rate to warrant taking a risk with people that are under 700 or something? >> no, it's not that at all. banks would take -- banks are already taking a risk in the business sector . they're lowering spreads. the regulatory community is holding back lending. the biggest factor holding back lending is the economy is slow and there's not a lot of demand. you have on realize that. this is the cart before the horse kind of thing. >> because if you did have the fed keeping rates too low to where a bank can charge what it needs to -- >> unfortunately the banks don't get the benefit of those low rates. the banks don't borrow at 0 or 25 basis points. >> i'd want to charge more on a mortgage for people -- >> and once you start raising mortgage rates, people say we better buy now, not later, and

you start that process again. >> robert, thank you very much for joining us today. >> good to see you. coming up, more from sean parker and then larry fink, he runs the largest money management firm and today we'll ask where his team is putting its trillion dollars to work. [ male announcer ] this is corporate caterers, miami, florida. in here, great food demands a great presentation. so at&t showed corporate caterers how to better collaborate by using a mobile solution, in a whole new way. using real-time photo sharing abilities, they can create and maintain high standards, from kitchen to table. this technology allows us to collaborate with our drivers to make a better experience for our customers. [ male announcer ] it's a network of possibilities -- helping you do what you do... even better. ♪ all in one account. keep watch on the markets. or use our exclusive tools to help find ideas.

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founders of napster unveiled their latest venture this week, airtime, but the debut which was star studded, jimmy fallon were there, jim carey. we were just talking about julia louis dreyfuss was there. it turned into a bit of a nightmare. in demo did not work out as planned. we asked sean parker about the rocky start. teak a listen. >> the demo was actually a staged sort of presentation of the product and the presentation was two weeks of work. we should have just probably run with the product that we knew worked as opposed to trying to walk people through a staged version of it. i didn >> i didn't know if it was jim

carey but somebody asked you who was going to get fired. were you that upset? >> i can't be that upset because we're trying to get something down, a launch of that magnitude, we're demoing complex ent actions with complex logistics back and forth between people. there's a reason people don't do launch iz like that and we learned that the hard way. but the amount of coverage that we've gotten as a result of it has been enormous. i'm not sure we would have gotten that much coverage had we not had some of the problems we had. in a weird way it sort of benefited us because people still use the product. if the product didn't work as well as it did, it wouldn't have been as good. >> we went on to talk about

snoop dawg who was spomoking po. >> if he said he's not so mad if somebody got fired, is somebody getting promoted? >> i remember working on a web site when we launched it and when we walked reporters through it i said don't hit european op-ed pages because we haven't posted anything. >> it's happened to steve jobs, it happened to the best. these demos don't always work. >> i saw andrew go right for it "naughty secrets." >> yes. >> i guess if you live long enough, you're going to see everything, cannibals.

apparently the reason it naughty, i heard of this but i had to ask you again "fifty shades of grey," there's all this bondage in this book. it's very popular. and supposedly according to the post, it's a cover spread on thein side so to speak, they have gone to hardware stores on the upper east side and guys that own the hardware store saying i've seen a ten-fold increase in the amount of rope we're selling, all to women. the women are coming in and buying this soft fabric rope purely because they read this book where it's all about bondage. and now they're giving classes at some of these places like babe land, fifty shades of spanking. >> let me -- when we come back, we'll welcome blackrock chairman and ceo, times have been tough

but he said things look good. >> you're turning into andrew. all in one account. keep watch on the markets. or use our exclusive tools to help find ideas. it's powerful, easy-to-use technology for trading stocks, options, and futures. keep trading whether you're at home, in the office, or on the go. optionsxpress, the broker smart traders deserve. open an account today at optionsxpress.com.

>> find out this billionaire entrepreneur sean park ser still buying facebook. >> would you buy more? >> and the latest headlines from europe as the second hour of "squawk box" begins right now. ♪ ♪

>> good morning. welcome to "squawk box." i'm andrew ross sorkin along with joe kernen and becky quick. the bank of england leaving its key interest rate unchanged at 0.5%. and fed chairman ben bernanke will testify before the joint economic committee beginning at 10:00 a.m. eastern time. the markets are going to be watching for any hint of further easing by the fed. and a closely watched bond auction in spain drew strong interest just days after officials say they were being shut out of world credit markets. and new documents obtained by reuters reportedly show how chesapeake ceo was mixing personal and corporate interests. those documents are said to show

chesapeake employees did about $3 million in work for mcclendon in 2010 and that company jets were extensively used by mcclendon's friends and family. let take a quick look at the futures right now. green arrows about the board, dow looks like it would open 80 points higher, nasdaq up 18 and s&p 500 up as well. >> thank you, andrew. stocks logging the best day of the year yesterday. a big rebound from oversold conditions you would think. it was amid the european debt crisis and what might happen there and got a lot going on in this country. here for the next two hours, squawk master -- market master larry fink, the world's largest investment management firm. is it safe to say 20 years ago no one ever talked about blackrock, did they? >> i would say even 15 years ago no within did but i wanted it that way. >> pretty fast, though. we were kidding around a little

bit yesterday. we did a promo for you coming on. >> right. >> we said draghi or you. i said i think you control more money than draghi at this point. you have $3 trillion across all asset classes. whatever we need to talk about, we don't need to confine it to equities or bonds or anything since you're investing in it. what's happening in the world right now affects all of those. and i guess i'm wondering how you would summarize things if you had to look at europe and you had to look at our situation here with bernanke speaking at 10:00 a.m. i just saw peter mentioning that china cut rates moments ago, a one-year lending rate by 25 basis points. a lot of things happening all around. what is it telling investors? >> that we have great uncertainty, that we have politicians focused on the short term and getting reelected.

>> you're talking domestically in. >> i'm talking internationally. >> do political concerns come to the forefor you? >> i think that's one of the main changes in the investing world versus five, sectiix year ago. politics is playing a much more direct role on the markets. whether it is china with a new administration coming in october and the old strags right nadmin trying to hand off the economy on a strong note, not on a weak note. they've been doing this for ten years. they don't want to hand off an economy at their weakest point in their ten-year reign and in greece we have merkel's reelection next year, an election in france and we have something coming up here in

november. the political issues we're all facing and social issues related to austerity and deficit reductions plus overlaying that with some needs for growth or a lot of needs for growth, politics are playing a much larger role. >> i'm going to use this as a side. we have a lot of discussions about how to cover businesses and if i were to play that sound bite back right at the top, i started -- so politics playing a bigger role in all investment decisions of any time in the past? >> i don't know of any time in the past but certainly in the last ten years. and i think these are important issues, whether it's the deficit in europe or the deficit in the united states, unfortunately they play a role. whether it's an investor or ceo or politician, we're focusing on short-term cycles and unfortunately theo will have to play a bigger role in leadership and focus on long-term investing and politicians are going to have to focus on generational issues.

we're not seeing enough of that. >> michelle caruso-cabrera made the point earlier that if these guys basically around the world would understand they're not going to be reelected anyway so start doing the right things and stop worrying about being reelected. we've seen it over in europe already that -- how many governments have changed. so instead of look trying to appease the wrong people for votes, why not go ahead and do the long term since you're going to be out anyway? >> my response would be even if you're in, why aren't you focusing on doing the right thing for our grandchildren and our children. unfortunately people are spending more time trying to be re-elected. politicians are trying to keep their jobs. as you notice, the ceo terms are shrinking every year, down a little over five years, down to eight-year duration so we're compacting all this time frame and we're not seeing what i would call leadership and guidance and stewardship in terms of focusing on how to

build a better future. and i would say the populate doesn't understand this anyway. you had 20 years ago many more circumstances where politics talked about long-term issues. we're not hearing it. >> why is that? >> i think media has played such a powerful role if that. the new cycle -- >> beside cnbc. >> maybe. >> do you think it's the media as in tv or do you think it's actually the internet and democratization of everybody with their own bull horn basically? >> i think everybody has their own bull horn or everybody can have a mouth piece, whether it's through a blog and sometimes blogs become viral and they chang the course of the i guess of the conversation of the day. >> you know, larry, long term doing the right thing in europe

might be different for those politicians than what our politicians should be doing long term. that's another factor. >> but long term for germany may be different for long term for spain. that's the issue, too. we have -- europe has many more issues than the united states does because you have -- it's not a federation of countries like we are a federation of states. each country has its own jurisdiction -- >> and the same currency. what a brilliant idea. is there a way to allow governments to continue to borrow in europe and to avoid austerity? because it seems like, you know, the austerity crowd is getting voted out. just yesterday holland lowered -- not the country, i should say hollande. he said i'm doing this for social justice, it's going to cost a lot of money.

>> i think he had to do this. i don't think it have the right thing to do long term. i think people are going to have to be -- in every country people are going to have to be working longer. and by the way if you are a couple who is 60 years old, one of you are going to live to 92. so that's just demographics today. so the idea of retiring at 65 with 25 plus years left, that to me is quite scary. >> what about the 32 years left if you're in france. >> and the french are going to have to pay for that. >> but you're talking about one third of your life that you're not productive, that you're getting money from the state. so this is one of our messages at blackrock about this longevity issue that, we need to start focusing on it and making sewer that long evident is a blessing, not a curse. we spend so much time on health care, we focus on health care. up know, if we didn't care about

longevity, we would eat burgers every day. they taste good but we focus on what we're eat, we all try to exercise and take omega 3s and vitamins. >> the longer we live, the more it ultimately cost, "new york times" two weeks ago, cover story by michael wolf, mother i love you, i hoped you would die and i washyou would, too. it was really remarkable, a very sad story but it went to this exact issue. >> i believe you can sit with somebody and talk about simple math, how much money do you need a year to live? and if you retire at 65 and you have a statistical probability you'll live to 90, how much money do you need without inflation and all that stuff and work backwards, how are you going to get to that nest egg?

and more importantly now the 30-year treasury with a 22-plus year duration has more volatility than equities today. nobody is focusing on that. >> therefore what should be the role of government, what should be the role of of the so-called safety net if there should be a safety net for the middle class. >> we have no safety net on retirement in this country. the question is do we need one or should we have one. is that a social issue or should we force that responsibility back to the individual, maybe to their companies where they work, should they at least offer guidance? >> where was it said in the constitution that the government needs to provide retirement for the middle class, health care for the middle class? it's bizarre. anyway, more from our guest host blackrock's larry fink throughout the rest of the show. >> china has just cut interest rates, pboc -- >> they cut it half, 25 basis

points. as a result if you watch the future, that you have picked up pretty substantially. you'll see that the dow futures are about 60 to 70 points above fair value. when we come back, billionaire and facebook owner sean parker talking about the facebook offering and why he would be a buyer now. it's an interview can you only get on squawk right after this. 0 let's talk about the personal attention tdd# 1-800-345-2550 you and your money deserve. tdd# 1-800-345-2550 at charles schwab, that means taking a close look at you tdd# 1-800-345-2550 as well as your portfolio. tdd# 1-800-345-2550 we ask the right questions, tdd# 1-800-345-2550 then we actually listen to the answers tdd# 1-800-345-2550 before giving you practical ideas you can act on. tdd# 1-800-345-2550 so talk to chuck online, on the phone, tdd# 1-800-345-2550 or come in and pull up a chair.

major rally for the markets yesterday. the dow was up by 2.4% and this morning the futures are jumping after china central bank cut its benchmark lending rate to 3.25% to try to reverse an economic slowdown. this has people thinking there is some kind of coordinated move with the central banks around the globe to help the situation. banks will be able to lend 20% below the floor, greater than the previous 10% allowance. rook at the futures. right now they are up by about 64 points above fair value. >> the ultimate disruptor, sean parker, in the big apple it week

launching a new video chat service called air time. one of the other topics we touched on was facebook's controversial ipo. take a listen to what he had to say. >> it seemed like a necessary step the company had to make. we had to at some point register and go through the public offering and it's possible the timing could have been better and there were a lot of glitches along the way, which were unexpected and unprecedented. the nasdaq stuff, the volume, the initial trading volume was so incredibly high. the relief in going public was that the speculative mark, which was -- market, which was driving all the volatility had disappeared. it wasn't even so much that facebook failed in its first day of trading. it was actually did fine in its

first day of trading. it's just the expectations were so exaggerated and then the media kicked in and this anti-facebook press cycle kicked in and that spooked all the retail investors, which caused a rebalancing of the stock price. i'm not even worried if this becomes a fundamentals driven stock. i want this to be a fundamentals driven stock. >> would you buy more now then? >> yeah, actually. i think i'm definitely a buyer at this price. >> when you think about this ipo and you're on the boards of other companies that hopefully will have ipos and offerings in the future, is there a lesson in this offering, the next time morgan stanley or jpmorgan, who underwrote this, comes to you, are there different questions to ask? >> well, they didn't come to me. there were reasons the company had to conduct such a big offering. we wanted to have a bigger float

than typically seen. there were reasons to have a bigger float. this was a more legitimate offering than some of the other tech stocks that had a very, very small float. there were some problems in terms of how the allocations were done. and i don't know -- i'm not even sure can you point a finger at anybody. there's a standard way these things get done, they were done in that way. this was an extraordinary, is where perhaps they should have rethought some of the conventional wisdom. so i'm not even sure how relevant these lessons are to other ipos because facebook was such an anomaly. >> going public, a good thing or bad things these days? >> my preference is always to keep a company private, in part because we now have very efficient secondary markets with, you know, s.e.c. qualified investors, funds, hedge funds, family offices that are actually willing to buy private

securities. and those markets i think are efficient and mature enough that a lot of the benefits of going public are less clear. >> that was sean parker. i'm curious, larry, within one things he said was this idea he doesn't like the public market, he would prefer to keep them quiet. how problematic is that? >> i think it's a bad situation if people believe going public is the wrong thing. one of the great foundations of the united states economy has been a broad, vast public share business in our country. we have more companies that are public than any other place in the world. it was part of a dine a sich of our economy, that entrepreneuring could tack their company public and use it as a

multiple to build and build and build. so if we because of regulatory issues or the interference because being public and all the associated interference you have by being a public company, which is enormous, if that becomes the desired outcome we're going to stay private because we're going to want all that, that will reduce the dynacism of this country. i do believe most people have to go public if they want to have a dynamic company, if they want a company to be growing beyond the founder culture. that was one of the foundations why we went public, we needed to move beyond a founder culture and build equity for our employees beyond the founders and so, you know, i am very happy we went public. i think one of the big reasons why we grew as fast as we did was going public, that we had the ability to take this equity and utilize it. >> what about the idea, though, that retail investors got pretty

badly burned by it and this idea that the little guy once again got hosed by wall street. that can't be good for the markets overall. you've got to hear it from the people that you're dealing with. >> i don't think they got hosed. the demand from what i'm aware of from retail was enormous, was ten-fold. i think what is going on was the speculative nature, i think sean parker talked about it, there was just such pent-up speculation, if i remember even on cnbc, you had facebook moments every 15 minutes. i think it was this momentum that really built up the spectacle and that's what it was and most people were getting into it for a flip. if you're a long-term investor and if the company does -- exceeds street estimates and earnings a year from now, the

stock will be back up, the ipo will be justified. if people are going into it and feel like they've been hosed because the stock is down 30% and they were planning to be in it for a week, well, you know what, that's too speculative, mom and pops should not be in the equity market for speculation. >> but they have watched other people with other ipos and they couldn't get the shares and they've watched them flip those stocks and they think this is a game that's rigged, that only if you're on thein si inside can yt the really good ipo. >> i don't think that's true at all. we raised $6 billion, retail was a large component of our offering and our stock was up 10 points from the secondary offering to where it closed three, four days later. we're just -- people are trying to find an excuse with this offering because it was so visible but there are many

opportunities for retail to do well. hopefully those investors who have bought our stock up 10 points remain to be an investor. i think the biggest problem we have investing in equities should not be speculative, should not be short term. if you're in it for short term, you're going to have these events. if the fundamentals of facebook are strong and the analysts are correct in terms of the future outlook of facebook and they exceed those estimates over the next four quarters, this is not a great short-term outcome but the long-term outcome will be strong. >> coming up, more with larry fink with blackrock, including his thoughts on the fed with bernanke today and the retail investor. but up next, size does matter in housing, grab your hammer. oh, boy. detai details after the break.

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she says that a poor housing market, a weak labor picture and european crisis are among the reason as it the economy may need some help. yellen's comments come before bernanke's announcements this morning. and 230 years in prison for the ponzi scheme conviction. >> the man hand picked by the ballpark administration to serve as counselor to treasury secretary geithner joins us to share lessons from the financial crisis here and what europe can learn from it. lee sacks is the founder and partner of alliance partners.

previously he served in the obama administration as counselor of the treasury and head of the financial crisis response team. of course our guest host today is larry fink, blackrock's chairman and ceo. lee, welcome. it is a pleasure to have you here. >> thanks for having me. >> we are watching at what's happening in europe right now. i have to wonder if you look at what's happening there and think it's what was happening here in 2008. does it remind you of the same thing? >> there are quite a few similarities and quite a few important differences. i have great sympathy for what policy makers are going through over there right now. they watched and learned from some of what we did here in terms of what worked and some of the things that were a bit more challenging. the first lesson of fighting a financial crisis, you guys have

talked about this is the earlier you act, the greater act with which you act and the more comprehensively you act, the better the outcomes in terms of employment, growth of the economy, cost of borrowing for households and businesses and ultimately cost to the taxpayer. it has taken a bit longer than i think many would like for the europeans to follow down that path. they seem to be making some progress. there are some very important differences, obviously in terms of what they're facing versus what we faced here. they have 17 countries who have to come together. it was hard enough for us being one country with one congress. we had a handful of regulatory agencies that had to cooperate and work together and come up with a comprehensive plan. you had to deal with capital for

the banks, capital back stops, stress tests, programs to deal with liquidity and restart frozen markets. it was challenging enough for us and our predecessors frankly, and we only had one country to deal with. >> has the big problem been not addressing the banks or shoring up the banks directly sooner? that was something that you were able to do with tarp. >> well, sure. that's clearly one of the issues that they're facing there and part of any comprehensive plan has to include a recapitalization of the banking, much of the banking system in some of those countries. but you can't just recapitalize the banks. one of the lessons from our experience here is -- was that you can't just announce and do a bank recapitalization. you can't just do a liquidity

program, you can't just pursue programs that restart credit markets. you have to do all of them. and they will come up with a plan to recapitalize their banks. we've all been following what's been going on in spain for instance, which seems to be the current ground zero. there are some very important deferences between the situation in spain and what we faced here. for instance, we were talking about this earlier, you know, if you look at the spanish banking system, they have a number of their largest banks are in much better -- in much better shape than many of the banks in europe. the banks that at the kind of lower end, which you guys have talked about quite a bit, are really where most of the problem

is. the top four banks in spain, two, three of them are in quite -- seem to be in quite decent shape. it would be like if you rewound the clock here, if we entered 2007, 2008, 2009 and our largest banks, which you've written about quite extensively were fine, if the jpmorgan -- >> we heard that from bankers at the time, that they didn't need, a lot of them didn't need the tarp, that they were being forced to take it, it masked who was taking it and who want. >> they may have been saying that at the time. it wasn't clear that was actually the case and it wasn't clear that everybody believed it. >> larry, you have to hear a lot about what's going on just from the dealings you have around the globe every day. how dire is the situation right now in europe? >> well, i think the marketplace is at a point now where we're looking for some policy

response. i think yesterday's rally was or there is a view they're beginning to shape a policy response in europe and i think that is actually happening. we have a g-20 meeting coming you on the 17th of june. i believe there is going to be some form of policy response from europe before that in anticipation of the g-20. as lee discussed, i think the policy response is going to be some form of recapitalization of the banks. i think they're going to come to terms that some of the banks need capital. those are stress tests they did theoretically twice said they're going to meet their capital standards and quite frankly the marketplace is saying i don't think so. >> we've come up with i'm trying to think of in the last year how many times europe has come to some conclusion about what to do and we thought, okay, good, and

yesterday seemed even less. so i wonder what really happened yesterday. the market was oversold. suddenly qe3 is back on the plate here, that had something to do with it. you had bill clinton talking about a compromise. i think even wisconsin played into some of the things that happened yesterday. it was just a snap back from -- >> also the market rally began in europe. there's noise -- >> but it has before. >> the spanish auction went off better than we thought today. >> you should just ask yourself who is the buyers. it's mostly the spanish banks. that's not a fundamentally good data point. the reality is i was in europe a few times in the last five weeks and i had roundtable sessions with all the large investors of europe. most of them are saying they are not going to be rolling over their southern rim sovereign debt. i'm talking about european investors, i'm not talk about u.s. investors.

so we have a systemic problem there that these auctions are become more and more difficult to succeed. they're more reliant on the banks itself to buy it, you know. but getting back to this -- the plan that we are hearing about, there is a real comprehensive plan talking about the recapitalization of banks, some noise in europe that they're contemplating this idea of having deposit insurance. europe does not have that so you have more runs on banks as a result of that. the other things they're talking about, extending austerity programs for growth. there will be compromises that i think will appeal to the germans and compromises that will appeal to the french. i think they're coming together. the last thing we're told they're working on is some form

of long-term commission to focus on fiscal, you know, consolidation of some sort. >> i was going to ask you about the consolidation aspect. one of the things we did in this country was took the weak banks and merged them with the bigger banks and talked about these national champions in europe and whether they'd be able to give up their sovereignty if they will and get to a point where you're actually merging these national champions from different countries together. is that something you think will ever get on the table and should it? >> i think there's going to be movement towards that. i think the bigger issue as lou was discussing it is the problem in most of these countries are the smaller banks. this is also true in germany, the small banks in germany have weaknesses, have credit issues. the small banks in france have the same credit issues. >> is the first step to take the smaller banks and merge them with the stronger banks within one country and then we're going to see a larger consolidation?

>> i think you have to look at each of these country by country and i think in some places some of that will make sense, it will take some time but they started doing this in spain or they thought they started doing this in spain, they merged a lot of the smaller institutions and they'll have to recapitalize that, they've already talked about that. you would expect more of that to continue, sure. >> larry, will you repeat a point that you just made for people who weren't playing close attention. you've just come back with a lot of meetings with european investors who told you what? >> they're worried about the ability of the southern rim countries to finance themselves. so as the debt of ownership of the southern rim government bonds as those mature, they're

not rolling over and repurchasing that dead. european investors are saying as fiduciaries to our pensioneers and to our insurance clients, we are frightened of what we see and we're not rolling over and repurchasing government debt. >> that's a huge issue. how do you fix that as a policy? >> that is a huge issue and though there are some important deferences, i remember -- and you guys covered this on your show back in february, march, april of 2009, just after the new administration came in to office, you guys were talking about whether or not or how successful auctions of u.s. treasuries were going to be. i remember waking up one morning and seeing you guys talk about whether or not the united states was going to have, you know, a successful auction. and that causes all kinds of

problems, as larry was talking about, for the european countries. i think, you know, obviously we never had those -- we didn't actually have those problems. it was the fear of those problems that was troubling. now our rates are 1.5% and things are fine. what larry just raised i think is -- it's highly consequential and i think it is what is accelerating the efforts of the europeans to come together and put together a plan along the lines of what larry was talking about. >> at the same time we've seen weaknesses in the northern rim companies. the small and medium size companies are starting to have weaknesses. this is not just a southern rim issue. the other thing that i want to say, no different than what the u.s. said, it needs policy responses to stabilize and the stabilization with time with do

healing. there's some macro economic issues that you're seeing time is healing, you've seen in the last year a 3% increase in wages in germany whereby in southern rim countries you've seen about an 8% decline in wages. some of the fundamental problems how we got there are being modified by the time. so we're all focusing on the headline issues but we are actually seeing positive momentum to stabilize europe. it's going to take time. i think the market is now saying now we need a much more grand policy response and i think we're probably going to hear something of that nature next week. >> larry is our guest host. he's going to be with us for the rest of the program. lee, thank you so much for joining us. we'd love to talk to you again. >> look forward to it. >> coming up, stocks you'll need to watch before the bell rings on wall street and futures jumping at china's central bank cut its bench point interest

rate to 3.25%, the latest move to try to reverse an economic slowdown china style. and banks will be able to lend 20% below the current floor for banks. "squawk box" is coming right back. customers didn't like it. so why do banks do it ? hello ? hello ?! if your bank doesn't let you talk to a real person 24/7, you need an ally. hello ? ally bank. no nonsense. just people sense. all in one account. keep watch on the markets. or use our exclusive tools to help find ideas. it's powerful, easy-to-use technology for trading stocks, options, and futures. keep trading whether you're at home, in the office,

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>> smuker came in 11 cents above estimates. and another company that came in below estimates. lulu reported first quarter earnings of 2 cents above estimates. we're going to do this fast, andrew but i wanted to talk to you about it because you like that other guy's undergarments, the one that feels good. >> luluelemon, do you have

anything? >> just that pair of shorts. >> i had an experience where they told you you wear lululemon or you wear nothing at all. you can't wear like boxers. >> larry's nodding. >> i have some, yes. >> have you ever tried to wear boxers were the lululemon? you can't, you can't. >> my wife bought he some. she said i look good in them. >> i bet you do. you feel good when you don't wear anything but that, right? >> i can't remember how i felt. i thought it felt okay but i think i looked good. >> you worry more about how you look than you feel. >> now i'm going to go to men's

warehouse, missing profits, he says you're going to like the way you look. >> when we come back, we'll talk about what larry thinks of equities right now and where you should be putting your money. we'll talk about all that with the largest money management firm in two minutes. plus more with sean parker. we're going to find out what is grabbing sean parker's attention and where he is looking to invest next, too. squawk will be back. should be putting your money.

>> how do you feel about it right now? >> my views haven't changed. from my first call in october, it higher. it's probably 300, 400 points lower than the february numbers. it just gets back to my whole idea on longevity and building a nest egg for retirement. you're not going to ever achieve the necessary pool of money that you need buying bonds. if you're 35 years old and frightened of the world and sitting in 1.5% bond, the compounding is so important earl on to build the nest egg.

we have to start focusing on objective investing and objective investing is focusing on building that nest egg. on a relative basis, stocks are much cheaper than bonds and i'm not suggesting stocks can't go done if europe blows up. i want to focus our investors on the idea of investing for the long term, the difficult depend rates of stock are substantially higher. i talked about blackbox's secondary offering in relation to facebook. we had an opportunity to buy a block of our stock back. i was able to finance at an average price of 2 3/8. to me the balance between where interest rates are and long-term equity holdings of strong dividend stocks is pretty compelling. >> you remember the good old day

where it was fun, people liked to pick stocks, they'd look at -- they'd see something and get an idea. we had steve rattner come in and say in no way should an individual buy its own stock or do their own research. you run a firms that does this but will we ever see the individual investors come back, i'm going to buy some pfizer, they put together an individual portfolio and watch cnbc and make some money and everyone's happy? >> i think the average investor has learned the housing market is not that panacea. bonds are not that panacea either. >> people hate stocks them. >> stocks to me represent the best value in many, many years. the reason they're represent such value, they've

underperformed for so many years. for me it's the obvious time to be back in. >> ne can probably do half as well as the money managers anyway. you want to bring in the monkey -- >> i want to get the squawk chimp. >> he'll throw the darts at us. >> coming up, gary gensler will discuss speck live trading and the rise in wall street. st stick around for that and larry and a lot more. >> if you're just tuning in, you're two hours too late. >> these are not going to go away easily. that's why we've had significant lower ratings than others on the southern european companies. >> political concerns come to the fore for you -- >> i think that's one of the main changes in the investing world versus five, ten years

ago. >> going public, a good thing or a bad thing these days. >> my preference is always to keep a company private. >> the first lesson of fighting a financial crisis, you guys have talked about this, is the earlier you act, t greater force with which you act and the more comprehensively you act, the better the outcome. >> the third hour of "squawk box" starts right after the break. [ laughter ] ♪ [ female announcer ] each one of us is our own boss. ♪ and no matter where you are in life, ask your financial professional how lincoln financial can help you take charge of your future. ♪ in here, great food demands a great presentation. so at&t showed corporate caterers how to better collaborate by using a mobile solution,

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he's the head of the commission that regulates commodity futures and options markets. gary gensler will join us on set. >> before ben bernanke delivers his economic outlet on capitol hill this morning, we'll ask congressman michael burgess what questions he plans to ask in the hearing. >> the weekly jobless numbers are due out at 8:30 eastern time. the third hour of "squawk box" starts right now. ♪ bennie and the jets welcome back to "squawk box." i was doing my caricature.

we got to get andrew on here. >> i know. >> it's a caricature, andrew. look at the split in my teeth. you're worried about how you look. look at that. look at the split. does that look like me? >> that looks exactly like you. >> that's awful! that's awful! >> can you make a face like that? >> i did. people thought i was doing that to the viewers. i wasn't. i was doing that face. i'm joe kernen along with becky quick and andrew ross sorkin. we're working on andrew's caricature because we're getting new mugs and we had to send back the first one. it was awful. the second one is okay. >> larry summers, at this point you are a squawk master. we haven't got caricatures yet on all the masters. you think that's a good idea? >> on all the mugs? >> he manages $3 trillion. >> that puts him above market

master. >> what does that mean? >> that means you're a newsmaker. >> not much, you get the same crummy coffee in a paper cup. >> we got to get new mugs for everybody. >> spare no expense. the individual investors' fault. turn the tv up. up 80 points, as can you see on the dow, up 80 points. >> thanks to china. >> now we got everybody. we got europe ready to go, china, bernanke at 10:00. he's flying in. you sent your helicopter to take him, right? >> someone's got to do it. >> does jeeves fly the helicopter? >> jeeves drives you to the helicopter pad. >> i bet you have a female helicopter pilot, don't you? knowing you. >> let's get you caught up on the global headlines. we were talking about china. china's central bank cutting its benchmark lending rate to 3.25%

in the latest move to reverse an economic slowdown. banks will be allowed to lend at 20% below the current floor for lending rates. and we've also got a successful bond auction in span, the company selling 2.1 billion euros in medium and long-term debt. yields were slightly lower than at prior auctions. earlier this week the span, minister warned madrid was being cut off from the equity markets. let me remind you that the spanish auction which does look good in many ways may not be as good as we think in that so many of the bonds are being bought by spanish banks themselves, creating a potentially vicious cycle. let's get you caught up on this morning's corporate headlines. nasdaq will be offering $40 million in cash and rebates to

client harmed by its mishandling of market debuts. >> in terms of generic comments with respect to the psychology of the market, i can't respond to that. everybody's entitled to their own opinion. clearly we did what we had to do at 11:30 to get the cross offs, the confirmations were out and we had completed our role in the process, obviously not the way we wanted to. we apologize for that. >> the proposed compensation nasdaq is offering has drawn sharp criticism, complaining about rebates instead of cash and clients claiming losses far in excess of what nasdaq is offering. >> and janice yellen warning of risk to the u.s. economy at a speechboston last night. >> there are a number of down

side risks to the economic outlook. it will be appropriate to ensure against adverse shocks that could push the economy into territory where a self-reinforcing downward spiral of economic weakness would be difficult to arrest. >> yellen sig een citing risks k job markets and other problems. joining us with what he would like to ask chairman bernanke is representative michael burgess. congressman, thanks for joining us today. >> good morning. thanks for having me on. >> what is the most important question on your mind? do you expect to hear from chairman bernanke today that he thinks we need more accommodative policy? >> well, i do suspect he's going

to have some advice for congress, which is to stop scaring people. we might have the same advice for him. but your last segment leading in about the self-perpetuating downward spiral, i think there are some legitimate questions about what is going on in europe and although the spanish bond sale is encouraging, is there any danger to our financial institutions from the activity that's taking place in europe. if that is so, is there any cause for concern that that would initiate that self-perpetuating downward style, a lehman-like down grade that could hurt the economy in a way that o would be almost impossible to recover. that's the fear that i live with and obviously i'll be asking chairman bernanke that very question. >> if you're worried about that, would you be worried to have the united states step in and offer assistance in some way, whether that be money provided to the imf or the go-ahead to chairman bernanke to do more from an

accommodative policy to prevent that from happening? >> if indeed you were to have the type of scenario that was just described by the vice chairman of the fed, i would suggest that we do everything to shore up things here and make certain that we can deal with the problems here for our own folks before going over and trying to clean up or clear up problems in other areas. we all know going back to the tarp days that chairman paulson did in fact do just that. was it helpful? did it present additional problems? that's just hard to know because a lot of that has been shrouded in opacity and members of congress are generally not aware of all the activity that took place then. if it's going to happen, the chairman does need to be forth right and talk to us about what his requirements and expectations are and what he's trying to present and what he thinks he can help. >> again, though, is there -- you talked about shoring up things here. double this is a situation or a crisis where the united states

should play a role in helping europe or do you think this is a problem that europe needs to fix on its own? >> again, i think likely we already are, going back to 2008. there's a lot of similarities as we go into the summer back to 2008 and that is one of the things that concerns me. i do want to hear from chairman bernanke that he has the tools he needs to deal with any fall out of any problems here and make sure those bases are covered. if preventive medicine is necessary in europe, please talk to us about it. again, i would rather not have it shrouded in the opacity that we saw from the department of treasury we saw back in 2008. >> congressman, i remembered and i checked it quickly -- you're an md. it must be your bedside manner when we talked to you but i remember in the past we've spoken to you about obamacare quite a bit and you are an md. >> yes, sir. >> do you know anything about -- is it going to be a monday in june when the supreme court tells us what they're going to

do? >> unless it's a tuesday. >> supposedly they do things like that on mondays. do you know anything? are you hearing anything? what are you expecting? because it's imminent. >> it's imminent. we know it will happen in june. it is likely to be a monday be, unless it's a tuesday. a brilliant op-ed that was in the magazine the newspaper "the hill" yesterday by yours truly talking about the things we need to do immediately to shore things up and reassure people if the supreme court voids the entire legislation that the world is not coming to an end and bases are going to be covered. there's short-term policy and medium-term policy of the election and the long-term strategy of how things roll out next year. i think members of congress are well poised to play a role in that, whatever happens, because even if the supreme court says everything is jim dandy and they like the law as written, we know

the american people will weigh in as well. >> i missed "the hill" yesterday. >> i do what i can, sir. >> all right, but it's in "the hill." stay tuned. we'll have you back after we find out what happens, too. >> great. >> congressman, thank you very much for your time. >> thank you. >> coming up, more of andrew's interview with sean parker, including parker's thoughts on facebook's governance structure. plus the chairman of the cftc will join us on set, gary gensler live at 8:40 eastern. dchb

i got a chance to ask sean parker about the governance model in silicon valley, dual structures and what it manse for capital investment. here what's he had to say. >> i'm biased in this because i played in role in setting up some of those structures. when i started building

technology companies in 1999, the rules were very different. venture capitalists were in a position of leverage. venture capital deals, early stage deals in silicon valley were done by formula. they all looked the same. and the law firms that did them were much more loyal to the venture firms than they were to the companies. so trying to do anything outside the box was seen as, you know, sort of certain doom. you know, you were unlikely to get funded if you broke the rules. and then over time i was able to change the way these deals were written, you know, by doing things governance related changes. then firms like dst actually, you know, a big part of what they've beenable to bring to companies like facebook is they are open to being passive

shareholders. they don't need to take a board seat in order to chaperone their large investment. they're comfortable as shareholders as long as he have certain rights and privileges you would want as a share holder in a private company. >> valuations broadly. does the facebook or ipo value right now change thing, the chang the way you will not look at new investments? >> i don't make investments very frequently. i've only made one large investment at founders fund, which was spotify. so my -- at the time i did the spotify investment, you know, i was told the valuation was incredibly extravagant, there was no way the company would ever work, the label deals weren't going to get done and i invested because of the team, because i felt like i could actually help and i believe that ultimately, you know, the label deals were not some x factor

unknown, that they were manageable and so if i worked closely with the company that we could actually, you know, get those deals done while preserving the purity of the product vision. and we, you know, that worked out really well. i mean, the company is now in private markets, trading much, much higher than the price that we invested in. >> we're going to have more of that interview with sean parker in the next who have hour. of course, lots of big issues around corporate governance and democratization of the board these days. we'll have more from our guest host, blackrock chairman and ceo. larry, what do you think of all of this? in silicon valley, there is no shareholder democracy anymore. if you're mark zuckerberg, you open the company outright, zenga, same thing. so many of these companies have duel structures. good? bad?

does it matter? >> investors have a right not to buy those stocks if they don't like the governance structure. to me it's very transparent the way it's organized, if you think it's a great company and you have to rely heavily on that independent board, i don't think it's a problem. i don't really see an issue at all. >> i'll flip it around. is activism good then? that's where you have an opportunity to change things. >> i think activism has -- if it's done for the right long-term reason, activism is really good. if it's for a speculator to, you know, push a company to do probably, you know, short-term things that would be in quick for the long. term issues around the company, no, it's bad. overall activism has had positive results in terms of improvement of companies. >> peter fisher, the head of fixed income at blackrock has a piece in today's "finance times" where he thinks this idea of further qe, the fed is risking

diminishing returns with anything more that they do. do you think that's the case in. >> i would agree with that. rates are down dramatically, the yield has flattened dramatically. that's what operation twist did. i'm not sure what qe can do, provide more liquidity into the system? sure. are we seeing that transform into the lending market? banks have so many excess money right now, they would like to see more demand. i don't see what the impact the qe3 would do in terms of the improvement of the economy. so i'm printy dubious on the y on the impact. >> what they should do and what they will do, what do you i think? do you think they will do it? 50/50?

>> i think at best 50/50. >> what are they going to get out of it? >> nothing. >> what they should do and will do are two different things. they seem to be sending signals that maybe they're thinking about it. >> the long treasury has a 22-year duration. if they move up by 12 basis points, you lose an entire year's coupon. long treasuries cannot be a storer of value with that type of volatility. if we bring down interest rates more, i think it's going to fright i don't know more investors away from this. >> you think the fed knows this? >> of course they do. >> why would they still consider this? >> i think they have to as a policy maker consider anything, making sure the economy is stable. >> but we could disappoint market players today with what bernanke says then. >> i think he's going to have an open mind. i think he's going to talk about

we have our finger on the trigger to do something if we see more evidence on the economy deteriorating. >> is this the bazooka in your pocket type of argument at this point? >> i don't see qe3 a bazooka, i see it as a pop pistol. i don't think the chairman acts with the big stick. i think he does it in a very sensible manner and tries to explain their difficult position they're in. i any what the chairman is going to talk about is the need once again of our government getting back to our first commentary this morning. our government has to do things. we have the fiscal cliff, we have the sequester. these are things in my mind that are going to slow down the economy. think about the military companies that are looking right now at a $700 billion cut in defense spending starting next year. do you think those men and women are running companies, are sitting back idly thinking about

what should they do, adding factories, hiring more employees in front of this? i would think they're sitting with their board talking about action plans if the sequester does go through that they're goi going to have to start cutting jobs. >> i think some of them have said that. >> the chairman has to be in my view a little more vociferous, a little more stern in terms of having congress start focusing -- >> do you want congress to -- i don't know whether you're proposing that you want more stimulus or you're proposing that you want corporate tax rates lowered. which side of the aisle are you on? should we reform the tax code? >> yes. >> should rerepatriate all the corporate earnings that are abroad? >> i'm not sure what adds to our economy. >> so maybe we don't. >> i think corporate taxes have to be brought down. obviously we're going to have to cut a lot of loopholes. this is the problem we have.

so many companies are so dependent on the loopholes. i could tell you if corporate taxes went down, it would be very positive for blackrock and i would probably be more motivated bringing some business here versus other parts of the world. >> what's the effect of rate of blackrock right now? >> i think last year was 33.6. >> you're high on a relative basis compared to others in industry if you will. >> i think in the asset management business, we're right there. >> we're going to continue talking with larry fink. >> also coming up today, we have breaking numbers on employment. we'll get the closely watched weekly jobless claims. that's at 8:30 eastern time, just a few minutes away. and cftc chairman gary legensle

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welcome back to "squawk box." take a look at the price of oil this morning. you're going to see a spike right at the end of the chart. it came as china announced it was cutting key rates by a quarter point earlier this morning. not only did it send the futures

for the equity prices spiking but also oil prices as well. also, documents obtained by reuters reportedly show chesapeake employees did $3 million worth of personal work for ceo aubrey mcclendon in 2010. they're also said to show extensive use of corporate jets by mcclendon's family and friends. when we return, cftc chairman gary gensler will join us. take a look at the dow futures. they have been higher this morning. the futures at this point are indicating an open of about 74 points higher for the dow. squawk will be right back.

welcome back to "squawk box," everybody. we are just a few seconds away from the weekly jobless claims. the estimate is for 380,000 this week. rick santelli is standing by at the cme in chicago, economist joshua fineman is in new york and steve liesman is here in studio with us.

rick, we are looking for 380,000. that matches up with 383,000 from last week but of course these numbers continue to get revised. giv again, we're going to be watching what happens with the economy. we want all signs on jobs. rick, why don't you take it away. >> well, we're coming in a bit below the estimates, 377,000. last week's 383 now stands at 389,000. so we'll drop it an even dozen. if you look at 3.29, that's million. the market will like this a bit. the interest rates creeping up just a little bit in preopening equities are strong. but the real, real question is we've been getting good numbers, we've been looking at the four-week moving average coalesce right under 400,000 but

it isn't translating into three straight months of great job creation and that's really why we pay the most close attention to this weekly data point. i think that's what will be onwardly debated. >> rick, stick around. let's go to steve liesman and joshua fineman. >> i kind of disagree with rick on the markets. i don't think the markets should be impressed. we were hoping it was going to start ticking down to the 350 range. we were on the way there, that was aborted or otherwise diverted, and we've ticked back up to 377, entrenching into this 380 range. i would not be too concerned by the single digits, more by the rounding. i think 380 is about where we are right now. that's okay. could you still do 100 k jobs. we should be ticking down to 350

and falling from there. >> joshua, what do you think? >> i agree with steve. things look a little better for a while and then they stall out and partially reverse. it's hard for the economy to sustain momentum, to kind of shift into a higher gear and stay there. >> becky, i want to talk about bernanke on the hill today. we know we have those comments from williams, yellen, all pointing us toward additional qe. bernanke has to give his comments to a whole bunch of republicans in the house who don't some to be in favor of it. what he wrote is that there's no rule that deeply held -- i can't even read -- >> no rule that deeply held

political convictions have to make logical sense as far as the fed is concerned, what counts is that implementing more qe would drive the house majority into and owe plexy. >> he's going to get up there and give us signals except it would go in front of a bunch of house republicans. >> haven't they heard what yellen and williams and everybody else have been saying to everybody else? >> that to me create as somewhat different reality on the ground, if you will, for what bernanke may say today. he goes on to say he doesn't think the fed should do additional qe. what he's doing is he's countering the republican opposition to qe on hyper inflationary grounds. that's his point. >> don't do it but for different reasons? >> even though hyper inflation is a reason not to do qe, he says rates are low, what's it going to accomplish? >> that's what larry just said.

>> josh, what are we looking for from bernanke -- i don't know, it looks like there's a bomb either way there. either he tells us it's going to happen or if he doesn't, that's a message for the market. >> i think he's going to say they stand ready to act should it be necessary but not necessarily telegraph it. the hyper inflation terms with qe don't make sense. people have been ringing that alarm bell for years now and there's nothing there. the reason there's nothing there is because there's rel ve little credit demand -- >> of course there's nothing there because the economy has no horse power. what about three, four years down the road with all the money sitting on the side. >> but they were worried about that three, four years ago -- >> no, they were worried about higher commodity prices. there is a difference. and we see it -- just with saying qe we see higher

commodity price. >> but the higher commodity prices have not translated into higher inflation -- >> i'm not saying they are. people don't like higher gas prices, even if it's only once every other year and we're worried about hyper inflation three, four years done the road. >> is that a reason to make a change now, rick? >> of course not, why worry about big inflation three to five years down the road. it's someone else's administration. >> it's got to do with the fed. >> he won't be around then. >> it's insisted it will take actions to stop that inflation -- >> they said that in the 60s and 70s and see what happens. when you play in corn seeds, you get corn stalks. >> rick, i know you're real concerned about qe and long-term implications about it -- >> i'm not real concerned about it. i don't see it doing any good.

i'm not concerned. >> the market is coming back with the idea that central banks around the world are going to do more. what i don't get is when does that catch up to long-term implications and what is more of the supposedly good thing a bad thing in terms of the market's reaction to it? >> come on, read the wall street journal today. it doesn't last, it's not sustaining. after three, four, five cycles, sooner or later things are going to get better in the world and at that point two, three, four years down the road, interest rates probably going parabolic and so does inflation with the velocity, all the money that will eventually be put to work when the government figures out what the heck we're going to do tomorrow in terms of taxes and all the things that are up in the air. >> does the market need bernanke to say we need qe? >> i'm split on that. i think there's a lot of reasons

it went up yesterday. >> rick, thank you. josh fineman, thank you and steve, we'll talk to you again soon. >> coming up, gary gensler is making his way to the squawk set. we'll ask him about dodd-frank and the unintended consequences of regulatory reform. medicare. it doesn't cover everything. and what it doesn't cover can cost you some money. that's why you should consider an aarp... medicare supplement insurance plan... insured by unitedhealthcare insurance company. all medicare supplement insurance plans can help pay...

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[ female announcer ] you're the boss of your life. in charge of making memories and keeping promises. ask your financial professional how lincoln financial can help you take charge of your future. ♪ ♪ oh, oh, all the way ♪ oh, oh welcome back to "squawk box." cftc chairman gary gensler joins

us now on set. we've had chilton on so many times, as you have seen, and we've had some great discussions about size limits and things like that. one of the funniest things we mentioned here, i wonder how you'd respond, size in markets where you don't want the outcome you've seen, like the oil market is speculative, but what if you were to control the size that the fed buy it is in treasuries. that might be a problem, right? >> they have a role in the market. >> we don't talk about bad speculation when the outcokocom something we're pleased with, like low interest rates. it's think it's important that markets be free of fraud and manipulation and no one speculator has an outsized

footprint in it. that's why we've had position limits for decades in the agricultural markets and why it helps in the oil markets as well. >> is there evidence of fraud or one person having outsized influence on the oil market? >> there are from time to time. with 85% of the market being financial, whether it's hedge funds or swap dealers and others, i think it's important to have no one party have an outsized, large, concentrated position. >> i'm going to turn the conversation to financial terms and drerivatives and jpmorgan. the role of regulators and looking for example the jpmorgan bungled trade, should regulators be able to spot that in a way? clearly jamie dimon didn't spot that until perhaps too late. the question is should regulators be able to spot that? >> i think, andrew, there's going to be risk. we're not going to take risk out of the market. there has to be a freedom to

fail that, firms can even fail but we have to make sure taxpayers don't stand behind those failures and these large complex firms. cftc we're trying to bring transparency to the market, make sure the credit derivative markets are free of fraud and manipulation. can you see the taxpayers aren't going to stand behind risk. >> i don't know if you consider what jpmorgan was doing was an outsized risk. but should have one of the regulatory bodies of the many -- >> andrew, you're assuming they didn't know it. you should assume they were aware of it and that's why they didn't respond to it. and losing $2 billion for is not a big thing. i think unfortunately how they portrayed it and i think jamie has represented the bank fantastically but i think in this case i think he enlarged this issue. if this is -- quite frankly, if

jpmorgan lost $2 billion or $3 billion on hedging their mortgage servicing hedge, that would be considered the normal course of business. the fact that this was a -- part of the cio office, it was a trade that lost money, i think it became enflamed somewhat by the reaction by jpmorgan. i don't think it's a big issue. i think it may be more costly than $2 billion as they unwind it but we should not assume the regulators were not aware of these positions. we should not assume that this moment that this was an outsized position. it was a bad trade. >> but even jamie dimon said he wasn't completely aware of the extent of what the trade was. therefore if he didn't, are we supposed to expect regulators should? >> i don't think that regulators are meant to be on top of every loan or every transaction.

i do think that we have to make sure that this swaps market, which is a very complex market, which helped bring down wall street, aig and others during the crisis, you wrote about it, i think it needs the transparency. these trades were booked out of london. i think it reminds us that trades booked in london can bear terrible results back here. aig was certainly another example of that but there were others. >> do you worry about the hedge funds who have been on the other side of the trade? there's speculation they're the ones who wasn't to the media. do you worry about manipulation from any side? >> we do have an ongoing investigation so i don't want to wander into those territories, but i do think that it's important that these markets, just like markets for oil or other markets have an effective cop on the beat and credit default swaps are just recently coming under review. i'll keep it there, becky.

>> since we have never questioned other motives by hedge funds, i think -- >> we did back in 2008. >> that's in the realm of things. if they want to talk about a trade, they have a right to talk about a trade. obviously their hedge funds are trying to eke out a trade. i don't think they did anything illegal or unjustified. if there was an oversized trade and they want to talk about it, that's the market. >> you think it's the efficiency of markets. >> you spent your whole career on wall street and now you're on the other side of the business. are you surprised at the reaction you've gotten from wall street about some of the rules and regulations you've proposed? would you have expected this pushback? what kind of conversation do you have? >> well, the conversations i

have are always sort of recorded and there are other people in the room. but i think we just have different roles and i think it's very rational for the wall street firms to wish to protect their revenue source and maximize their profits. transparency shifts some of the information advantage to the buy side to firms like blackrock and other firms. blackrock has a large network. it shift it is to the hedgers, the corporate end users and so, yes, they're opposed to that. but i would say this, wall street failed america but the regulatory system also failed. we need to shift to more transparency. >> blackrock is very much in favor of these changes that the cftc did. we were a big promoter of that. you should not assume all financial services firms were again what gary and the cftc did. this is opening the door for more transpirncy.

ism think it will be a safer, fairer market for everyone but it is t does change the make-up of the sell side versus the buy side. >> you can imagine what -- corzine, mf global, money, where's the money, what's going on with corzine? any comments on any of that? >> no because of just what you said, that was 14 or 15 years ago. i decided once that broke and it was a situation that was about an individual enforcement matter and john corzine himself was involved, i thought it was the right thing to step aside. >> what about now? what finally happened s? >> let me say this, customer money 24 hours of the day, every minute of the day is supposed to be set aside and not touched. that is the law. i'm not involved in the investigation, really good

people to pursue that. >> everybody wants -- >> no, no, and look at the money, whether -- we have about 120 of these firms called futures commission merchants that are supposed to handle money, supposed to be held sacrosanct. that was the last. that was the last last year and it's the law now. >> thank you. gary gensler, appreciate it. coming up, becky? >> more of and druf's interview with sean parker. >> i'm going to toss to you to intro andrew. >> he weighs in on tech deals like the union of e bay and skype. stick around, we'll be right back. ♪ ♪ [ male announcer ] at scottrade,

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welcome back to squawk. we have green futures across the board ahead of the market and ahead of the bernanke speech that starts at 10:00 a.m. eastern time this morning. getting back to sean parker, he's launching a new venture,

"airtime" this weekend and one of the things i asked him was whether this deal was going to uppen skype. take a look at this. it's pretty interesting. >> when ebay originally bought skype, it was panned by the media, by the business press as a huge mistake because there weren't perceived synergies. i think the real reason, which has never been discussed publicly, why meg whitman and the team bought skype. ebay is a network-effect driven business. network effects are incredibly value in terms of retention and, you know, a marketplace has an inherent -- the sellers want to be where the buyers are, the buyers want to be where the sellers are. and skype is another business that, in my opinion, never built the best product but became a

huge and powerful network. now, that takes you pretty far but it doesn't make you invincible. >> of course, skype is now owned by microsoft. we're going to have to see what ultimately happens to that business. but it's an interesting one and microsoft trying to make something of that business. joe? >> andrew, coming up, final thoughts from our guest host, larry fink. >> announcer: a huge lineup on "squawk box" tomorrow. our guest host will be byr byron vein. mark grant and former treasury official john taylor. don't miss "squawk box" starting tomorrow at 6:00 a.m. eastern. the equity summary score consolidates the ratings of up to 10 independent research providers into a single score that's weighted based on how accurate they've been in the past. i'm howard spielberg of fidelity investments.

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this technology allows us to collaborate with our drivers to make a better experience for our customers. [ male announcer ] it's a network of possibilities -- helping you do what you do... even better. ♪ welcome back. our guest host has been blackrock's ceo. maybe you started with mortgage products but now you run a company that manages so much money. there's an old expression, you probably remember, please, god, let there be one more real estate boom because i didn't make enough money.

i find myself saying that about the stock market. i didn't appreciate the market from 1982 to 2000. we got as high as 14,000 and buy and hold really seemed to work and people were interested and and i feel like that's been lost. >> i think it has been lost. >> can it come back? >> of course it can. >> and where can the market go? 20,000 on the dow? >> it's not going to go to 20,000 with 2% growth. >> can we grow again in. >> i think there are many opportunities for this country to grow. you know, we originally talked about facebook. this is the country that created facebook and apple and google and this is a country that's been blessed with so much natural resources. you know, we can become energy independent. we should set that as a goal. when we determine that's the right thing to do with natural gas. we should be transforming our

gas stations with natural gas. we could do many things for jobs, we could do many things to revitalize this country. it's going to be necessary for us to do these things to get 3 plus percent growth. we're about a year away before housing starts picking up. >> a year away still? >> we're starting to see -- in texas you're starting to see that. overall, the supply we had went to somewhere from 3 and 2. we need 1 million plus new homes every year to replace immigration and replacement. >> does that mean we're still away from a year away from the housing market turning around? >> housing is one component of jobs. whoever is president in 2014 is going to be quite blessed with this -- we've had this stagnation with housing that's been a burden. it's going to start picking up. >> larry, did you see the cbo report yesterday?

we are at 70% of debt held by the public and it's going to -- do you believe that that holds back our growth rate? >> that's not what the issue is right now? >> the issue is confidence. there's trillion of dollars sitting in cash. there's uncertainty about the stock market. people are freezing and people are not taking a long-term view. >> because they remember what happened in '08 or -- >> i think it's still a very vivid memory but also let's understand for the average individuals owning a house, that was -- housing was a notion that was a pillar of strength. >> yeah. >> and that broke down. so there's been great disappointment, great wealth destruction and people are freezing and pulling back. that's why bonds are where they are that doesn't mean bonds are going to remain where they are. but i do believe the foundations of our economy are going to accelerate growth starting in 2014. >> i think you've enjoyed these