let's get you up to speed this morning. the global markets are getting a shot of confidence after reuters reports that central banks are prepared to react if the dpregr elections shock the market. steve liesman has been looking carefully into the story. he will tell us what he's hearing behind the scenes. markets in europe, green arrows right now. france up 1.5%. germany up about a percent. the futures in the united states are also in the green. the dow is looking up by about 7 points. the s&p 500 is higher by over eight points. >> let's talk corporate headlines. the last of the bailout loans made to aig during the financial

crisis have been paid off. the portfolio was created during the financial crisis to buy distressed businesses. the treasury department owns 60% of aig. at the moment they're in the green, not the red. mexican billionaire carlos slim has bought more than 8% stake in argentina's biggest energy company, ypf, and is said to be a stake in telekon austria. and microsoft has a deal for yammer, the price more than a billion bucks. we'll keep our eyes all over that. joe? >> steve liesman joins us. he's been digging into this reuters story about central

banks ready for action in case the outcome in greece turns nasty. the economy improves globally or we make it improve? >> let me start off with what we know. mare draghi making clear what i think the market knew. in the event of a make other market disruption created by the greek election, he and the ecb stand ready to act. >> the ecb has the crucial role of providing the sound bank in return for collateral. this is what we have done throughout the crisis, faithful to our mandate of maintaining price stability over the medium term. >> draghi adding that liquidity will be provided to solvent banks. this a day after the governor of the bank of england announced extraordinary measures to pump loans into the economy.

central bankers i spoke with downplayed a reuters report that they were prepared for coordinated action. they say they almost never announce actions ahead of an event, especially a political one like an election, and cite sources in the story, g-20 official, usually don't know about central bank actions, but it was a statement that was routine and obvious in the post-crisis world, the provision of liquidity in the wake of severe market disruptions. all of this with growing expectations that ben bernanke will take action next week to stimulate the u.s. economy. apost possibilities are more quantitative easing from the fed. as we have been reporting, there are intense discussions around a banking union in europe along with a way to recapitalize banks.

but no agreement. so this report comes out yesterday. this was one of the more fascinating things. i'm criticizing the report, then mervin king makes statements that were apparently planned for him to make for a year and this seems like it's confirmation of this story about central bankers acting. the overall framework is accurate. the central bankers will come in if there are market disruptions but are they saying rite now there's coordinated action? >> the weird thing is having this report out there makes it seem go ahead, greeks, vote however you want. we'll take care of all this and make sure we step in. that's weird. >> i have been reporting on central bankers for longer than i care to say, i have never seen them want to interject themselves into a political event. >> let's hope for the best, prepare for the worst. what i saw, they're saying

planning for 2008. just in case. that's the thing about 2008, we can't forget it. every context we're thinking uh-oh. at least we're thinking about it. now we know black swans are around every corner. >> which is probably rowrong. >> i was on the phone with a banker overnight -- >> official banker or private banker? >> private banker. >> your private banker in switzerland. >> an executive who you know the name of. >> you talk with bankers all the time because you are -- >> in terms of this disruption -- >> what did you say? >> i remember you on msnbc, they paint you as a -- >> is everybody going to agree on what the disruption is and what the tipping point is?

>> i don't think there's too much question about what a disruption is. what central bacnkers care abou is they want to make sure bankers can lend to each other. you remember reporting on the gc repo rate spiking up, the overnight funds rate spiking up. >> appropriate collateral. >> that's the big question. in general, during this crisis, one of the action central bankers have taken is agree to take collateral of lesser an lesser quality. that's been a way to inject liquidity. >> that's the other big question. what are we constituting -- we talk about solvent banks and what will constitute collateral -- >> gold. >> right. if we get to this point where there is disruption. >> is it fair to say the central bankers are dying that the story is out there and hate it?

>> i don't think they started it. >> right. >> from what i can tell, you know, i talked to some central bankers yesterday. it was not clear they wanted this story out there in this way. look. if they want to send a signal, they can do it easily and definitively. i will give you a quote from one guy who says we don't talk to senior g-20 aides. if they wanted to send a signal, there are people they can talk to, ways they can do that. this was not it. on the other hand, they're reminding us, look, this is what we do. >> i think it's nice they stand ready. i'm glad that they're there. >> someone is walking that walk the. >> how many nights a week do you have dinner with a banker? it's like every night. right? >> not dinner. now that i do the show -- >> lunch. >> more lunches. >> drinks. >> we will continue this

conversation with steven in a bit, but a new report showing pro bail-out party ahead in the elections, but the country has straight rules on what can and cannot be said about polls. hopefully we can find out more about these polls. >> the secret polling that goes on, they're not allowed to be published, but both parties conduct them. the two leading parties are neck and neck, within a margin of error, perhaps a shift to the pro bailout party. i was glad to hear steve's report throw cold water on the story, because here in europe they have woken up to the idea to front-page headlines that the central bankers of the world are frightened of what could happen here in greece over the weekend. the website saying the ecb

stands ready to act in case of greek turmoil. japan stands ready to act, the uk will be acting and europe will be lenient on grease but only if the pro bailout party wins. they are frightened of what is known as the syriza party, led by alexis. we have join melios, one of the economic advisers to tsipras. >> thanks for having me. >> when alexis tsipras shot nearly into first place after the last election, world financial markets plummeted. when we got news that the pro bailout party might win, world financial markets rallied. this morning on cnbc europe we had one analyst say i hope the central bank of europe is ready in case syriza wins.

should world financial markets be frightened of alexis tsipras? >> not at all. we are part of the left party of europe. we have contributed in our common program, and we are a party which wants the sustainability of europe and eurozo eurozone. we fight not for an exit of eurozone. we are the victims of propaganda that we are against europe and the eurozone. this propaganda has hit the country, hit the banks, hit tourism. we are going to show the financial markets, the people of greece and all over the world that we have a program which is meant to stabilize the country, to stir prosperity but at the

same time balance the budget by raising revenues, by bringing justice and democracy in the country. >> i want to push back. you and i talked about the program yesterday. you want to restore wages to previous levels, restore collective bargaining agreements. you don't like the idea of privatization. you dislike a lot of ideas that economic consensus says would make greece more competitive. when economists look at your programs and think greece will be less competitive and less able to pay back debts. >> this is not true. when the crisis started, the debt was 115% of the gdp. now it is 165. austerity has destroyed the economy and the society. what we say is that we have to stabilize the minuimum wage to the level it was before. not to restore all wages because now this is impossible. we have to boost growth, and we

have to fight corruption. the problem of corruption is that the number one problem in this country. and our political opponents are part of the old system, the system of corruption. we want to bring effective tax system to the level, to the level of the european zone -- the eurozone and europe. the eu. we are not externalists. we are people who want to restore the unjustties that has been done to this country. we have here in athens 60,000 people seeking food in garbage. this has to stop. >> obviously raising taxes and cutting spending in a recession is only more recessionariment

when you say you are not extremists. i want to show you a poster we saw in the office yesterday. it says it's not enough to be angry. fight capitalism 100%. what is the core spirit of what you believe in? is capitalism a better way to organize and distribute the resources of the society or is socialism better? >> this is a theoretical question. socialism is better -- >> tell me that again. >> i think that socialism is better, but now we don't fight pore sociali pore socialists. we fight to stop the catastrophe of the economy. like the occupy wall street movement, we are the 99%. we want democracy. we want redistribution of the wealth that is produced in this country in a way that we will

both boost growth and have social justice. the social question is not the question of the present moment. it's a discussion that can go on and as you know there are different ideas about socialism, soc sociodemocratic views, radical views. >> so the consensus among analysts is monday morning, the market reaction, if syriza wins, markets fall. but if the other wins, there are riots in the street. >> i find this approach a little simplistic. i think that if syriza wins, after one or two days we will see financial markets soaring

again, going up. because everybody is going to understand that we have a program of stability, a program of growth. european program. >> mr. milios, thank you very much. >> thank you also. thank you. ladies and gentlemen, back to you. >> michelle, my head is spinning. makes sense. redistribute the german wealth from all their hard work to the greeks that haven't carried their end of the bargain. >> you want me to ask him. >> one of our anchors says okay, redistribute all the germans wealth to greece who don't necessarily work as hard. >> it's not the german wealth. >> you don't have any money. >> we are talking about tax evasion. we have an enormous problem of tax evasion, because all the

governments, the corrupt system has taxed the poor we have to tack the people who have the money according to what our constitution says. >> 50% of zero is zero. >> who is going to leave? >> the wealthy. >> no, we are a service economy. services produced. the moment something is consumed. they will not go away. most of them are patriots and they will not go away. >> they're wrapping up because of a commercial break. >> okay. you have done a wonderful job. >> you got a good reading list for him. michelle, give him a reading list. you know what books to put on him. >> i will give him capitalism freedom by milton freedom. i'm sure he has read them. >> road to freedom. >> too big to fail. >> add that to the list. >> michelle, thank you very

much. >> man. >> a quick programming note. we'll have coverage of the greek election on sunday. michelle's greek tragedy airing sunday at 8:00-point lead p.m. >> that is mind boggling. we will put the greek election aside for another fiery topic, health care. on his way to the set is toby cosgrove of the cleveland clinic. he will vitalk about the health care debate. "squawk box" will be right back. are bursting with more flavor. [ crunches ] mmm. [ explosion ] [ crunches ] [ explosion ] [ crunches ] [ explosion ] [ crunches ] [ explosion ] [ male announcer ] pringles... bursting with more flavor. buy 4 cans of pringles, and get your speaker... ♪ [ cheering ] ... to turn up the flavor!

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the the supreme court is set to decide on the legality of president obama's health care reform the how will the court's decision effshs eshs krshs tshs the health care industry? doctor tobey cosgrove is here. you said no matter how the supreme court rules, the train has left the station. >> we have a huge population come up, 10,000 more people turn 5er day.

the financial debt is a big problem. half of the obligations are secondary to medicare. and without health care will not be able to manage the debt. >> the cost curve is something that the obama plan has been criticized for not attacking, the cost curve better. what needs to be done? how can we move towards trying to fix that problem in particular? >> i think lots of people have already started on this line. if you look at what we have done at the cleveland clinic, we have reduced redundant tests, we have taken costs out of procedures, out of purchasing. we have gotten more efficient as we gone along. we all recognize we have to do this for us and as the nation as a whole. we can do this. one thing besides getting a more

efficient delivery system, we need to decrease the burden of disease in the united states. >> what do you mean by that? >> you can't have people smoking and an epidemic of obesity and still maintain health care costs. right now a third of the united states is obese. that is expected to go to 20% of the health care costs by 02020. one thing disappointing about the bill, there's not a lot in it about personal responsibility and having people take care of themselves. we have to have people involved in their own health care. >> the role of insurance companies, should be what? >> insurance companies are an interesting situation now. they could do very well managing risks.

we would do well taking care of patients. we need them to have the efficiency and access to health care. >> are they doing that or no? >> there's a tremendous amount of difficulty now in the insurance industry and, you know, the things that they -- with pre-existing conditions and stuff. we can't have that going on. we have to have reform in health care like we have to have reform in the delivery of the system. >> the system is set up to pay for the number of visits, the number of times you see somebody and not the outcome. that's the biggest problem. keeping people healthy, there's no incentive for that. >> what we need to do is move from value for volume to value for -- or paying for volume to paying for value. >> how do we attack the obesity issue? do you agree with what michael bloomberg is doing, the soda? >> all of these are steps.

no one thing will take care of it. >> but that doesn't seem like personal responsibsponresponsib. >> we encouraged employees to have more exercise. we hahave given them free acces to curves, to weight watchers. >> those are to your employees. >> and we have lost 300,000 pounds. if your company is offering insurance, it's when the government takes on the onus of keeping everyone healthy that it becomes a nanny state. that's where the problem comes in, the much larger role of government. >> taking the lessons we learned, looking after people,

giving financial incentives for people to stop smoking, lose weight, we have been able to bend the curve of our employees. and the senate has introduced a bill to do the same thing for medicare patients. you can have these patients -- >> when it becomes the government's problem, the government tells people has to do. >> it is us. >> no, if someone wants to live that way, they can certainly live that way. i would never tell someone that you can't smoke a cigarette. >> no, i'm not going to pay for it. >> that's why he's arguing against health care. th >> doctor, i have a different question. we talked about it previously when i last saw you. the longer we extend life, which

many think should be the goal, potentially the more expensive is becomes. what do we do about that? it's a conversation we've been having. >> that's what's frustrating, you discover all these things and they cost $400,000. >> there's a lot of literature that suggests that if you prolong life you pay more taxes, you are more productive, all of that adds to the pototal gdp of the country. some people think 50% of the gdp increase has been linked to life. >> if you live to 90, you probably shouldn't retire at 60

like in france. >> i want to be here until you're my age. >> my grandmother has alzheimer's, for the last ten years, it's been very expensive, it's a difficult situation, unfortunately we will create lots of really long lives. >> i have two parents i lost, you're not the only one who had that happen. >> i know. >> alot of people in the country have that. >> i know that. >> the end of life is a big issue. we're looking at if we can put together a checklist for end of life, have you talk to people and their family about how they want to be treated when they're in a hospital. >> they're tough conversations. >> but these are tough conversations that doctors have all the time. >> i know, my mother turned down a feeding tube. you know when you do that you have a month and a half or so. >> i think we should have this

open discussion and put together some sort of plan for doctors to be able to regularly have these discussions with their patients. and the cleveland clinic is working on developing that checklist, much like we do before you go into surgery or take off on an airplanement. >> thank you for coming in. appreciate it. >> great conversation. coming up, ross westgate gets us up to date on the european market ahead of the greek elections this weekend. d. laces? really? slip-on's the way to go. more people do that, security would be like -- there's no charge for the bag. thanks. i know a quiet little place where we can get some work done. there's a three-prong plug. i have club passes. [ male announcer ] get the mileage card with special perks on united, like a free checked bag, united club passes, and priority boarding. thanks.

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welcome back to "squawk box" on cnbc. in the headlines, moody's has cut ratings for 11 european banks and says it will do so again. moody's downgraded five dutch banks, three in france, one each in belgium and luxembourg. some union, right? you have 17 -- one of the biggest countries, biggest economic powers. britain is like, no, i'm not going to join the currency. switzerland doesn't either. it's a mess. >> merkel in germany is saying we can't do this by ourselves. germany can't save the entire eurozo eurozone. >> i can't believe we still go, wow, when we see there might be a problem.

milton freedman had the early call. >> i can't believe it's still rating at 1.25 to the dollar. video game sales down 28% last month. what are people doing? they're not watching tv. they're not playing video games. i don't know. >> good, john. >> that was pack man. both hardware and software sales cited a drop. and facebook is reportedly set to file a motion to consolidate the shareholder lawsuits against it. that's according to the "new york times." facebook is expected to place some blame on the nasdaq for the problems stemming from its ipo, which -- did they already do an ipo at facebook? did that happen last month? was that -- did we mention that at all at cnbc? >> not sure about that.

>> how did it go? >> what the heck are people doing? >> i don't know. >> movie sales are down. >> i don't know how long it takes -- i don't know. my mind goes there immediately. >> what are you doing? >> i've been sitting next to you way too long. now my mind is there, too. >> let's check on the markets this morning ahead of the dprgr elections. d dow futures are up by 63 points. it's all coming as the central bank is prepared to step in should the election go badly and things fall apart in europe. look at oil prices as well. as we check all of these boards out. rite now oil prices are higher, up about 50 cents to 84.416789 the ten-year note at 1.608%. a lot of marketing waiting to

see what happens in greece over the weekend. the dollar now is higher against the euro. it's at 1.26. it's not 1.25. it's at 1.26. the dollar is down against the yen at 78.64. gold prices which have not moved a whole lot lately are up about $5.10 to 1,624.70 an ounce. >> and ross westgate has a look at what's going on across the pond ahead of all these moves this weekend. >> we have a firmer bid ahead of the weekend. advances outpacing decliners by nearly a ratio of 8-2. this follows a pretty flat session for europe yesterday. the ftse and dax down 0.2%. this morning the best point of the day we've been up nearly a percent for the ftse and dax. right now, just up over a half

percent for the ftse. the cac up 1.56%. ipex up another percent today. yields have been going higher, the stock market has been bouncing off the nine-year lows. nine-year lows you have to remember what about yields today? in spain and italy, both have come down as well. so spanish yields moving away from the 7% we breached last night. spanish yields at 10. -- 6.89%. sterling is weaker and gilt is down after it was announced 5 billion pounds would be auctioned every month, special liquidity measures. and there could be another 80 billion pumped into the economy

by the bank of england and the uk government as well. i venvestors are watching a waiting for the result of the greek elections. joining us is cliff corson and david. tell me what is tthe next profi run? >> it will be bonds in the united states. >> corporates? >> corporates and treasuries, too. people say is there any value there at 160? >> get your money back? >> get your money back. look at japan. yields can go lower if this thing gets -- >> if you drive to the institution where you are buying the treasuries, you just -- that's a year's worth of

interest in gasoline. >> in this environment that may be okay. >> you're saying return of capital is so important you don't care about return on capital. >> absolutely. >> what about growing stocks that have a 2% yield growing. >> i think the global economy is slowing down. >> why is the global economy slowing down? because of europe? china? >> both. but i think china is nor important in this equation. >> china is more important than europe. >> in terms of the global economy, yes. >> because of -- >> it's the major buyer in the commodity market, but industrial space, machinery space. they are slowing down. they are probably going to have a growth rate at the end of the second quarter in the sevens.

>> what do you disagree with? >> i think europe is the primary issue, it's the psychology of the world and the markets. >> what about the euro breaking up? that's a disruptive and messy event. >> the estimates are 10 x lehman. and the markets are telling you it's not going to go that way. >> are what is 10 x lehman? >> full-on breakup of the euro. >> what happens -- can you walk us through what you think happens if they leave? >> sure. you neimmediately have a contagn that has already jumped to spain just on the threat of a potential player, tsipras. just that threat has jumped over to spain and beginning to talk about italy. i think really it enters the consequence and the size of

greece, not such a big deal, it's the correlation -- >> you are talking more about emotions -- i was thinking are there certain things you think happen? greece leaves, banks do this. you see the steps i'm talking about? >> greece leaves. lots of mayhem, i think. no printing presses. they'll be barttering. it will be a rough run for greece. we'll see wheelbarrows -- >> did you see that guy in greece that she was talking about? >> i did. >> they seem to be saying that the only way that we'll accept cutting back on the lifestyle we can't afford is through devaluation. it's like the only way for these people to finally face reality. because they don't have money. germany has money. maybe other people have money. they don't have money. they'll have to have their

purchasing value cut in half by having dragmas which are worth half of what they were used to. >> there's another way, if you stay with the euro, you have to -- >> then the euro should be about 80 cents. >> i think the you'r euro is wa high. >> you have to raise costs. >> that's part of austerity that they won't accept. >> i think you have to accept that. i think austerity has been too steep. that's one of the issues. >> tyou're not there long enoug to govern with austerity. >> austerity has only been for the people, not the government. the government is still too big. you have to jump that shark. you have to cut government back. also on the tax front, this is a tough combination, you're

forcing austerity and raising taxes s taxes, what's not a great way to grow your way out. it's not a liquidity issue, it's a solvency issue. spain what are we going to do that? that's great. you have 100 to recap the banks. you mentioned the syriza candidate is a great master chess player. you think he looks at this and says no matter what, even if i get elected, i'll have to deal with the eu? there's not going to be this fiery rhetoric i've been coming up with. >> yeah. i think he's playing the role of the man who has nothing to lose. we all learned if you fight somebody who has nothing to lose, you have to be careful. the second he wins, he becomes a man with something to lose. even in that case, i think you become a buyer.

>> you're so scared right now, you're not doing anything. you think this will be a major implosion. >> i think the problem here is not -- the days ahead it's greece. but i think the eu has said, you know what? our problems are now much bigger than greece. the worry was always, well, we've got to save greece. keep them in the eurozone, market also turn their attention to spain and italy. they have already done it. spain's yields are under attack, they're at 7%. >> i built you up. big profit opportunity. and you gave me ten-year treasuries. >> big profit. >> you're scared to death. >> big is a relative term. just to get beyond that uncertainty of what happened over the next couple of weeks. i think down the road, u.s. equity market will look great. >> that's what everybody is saying. when the world is no longer

going to end, you can buy stocks. you just got to get through the end of the world. >> you're not governor anymore? >> no, i'm not governor. i'm in the private sector now. >> life after politics, excellent. >> david, cliff, thank you. ten-year treasury notes. all right. you might be right. >> you guys weigh in. let us know what you think about this question, where should you be putting your money? comments, questions, e-mail us squawkbox@cnbc.com. coming up, find out which country is now selling coke products, and which countries still don't. ca refu

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u.s. equity features at this hour. it's back. i was going to say we used a different chart today. green arrows across the board. we were talking about the xwrgr arrows in europe. i wonder if there's an upside surprise on monday -- >> you want to get ahead of it. >> but if it's a disaster -- >> but we switched from hoping things are okay to now hoping things are bad enough that there's central bankers all over the world. >> in the past it's been the banks have stepped in, the market has rushed up. but if you're buying on the rumor ahead of this, do you still have that -- >> you are no longer investing about the company.

you are now investing -- betting on governments. >> we are talking full qe now. we've had three or four of the ones close to bernanke saying i'm ready, almost. >> there's kind of a feel-good story. >> which one? >> you can almost buy the entire world of coke. coca-cola plans on start selling its drinks in myanmar for the first time in 60 years. that follows the government's decision to suspend sanctions on that country after its democratic reforms. myanmar has been one of three countries where coca-cola does not do business. what are the others? cuba and north korea. >> is it an only 16-ounce coke in myanmar? so you're freer now in myanmar than you are in new york city.

>> there you go. thanks, mayor bloomberg. >> all providing context. >> more freedom in myanmar. >> when we come back, we'll tee up joe in the joe in the chair e u.s. open. also a rare interview with lou gerstner. don't miss it, starts at 7:00 a.m. eastern time. thor's couture gets the most rewards of any small business credit card. your boa! [ garth ] thor's small business earns double miles on every purchase, every day! ahh, the new fabrics, put it on my spark card. [ garth ] why settle for less? the spiked heels are working. wait! [ garth ] great businesses deserve the most rewards! [ male announcer ] the spark business card from capital one. choose unlimited rewards with double miles or 2% cash back on every purchase, every day! what's in your wallet?

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we we are in the chairs and we've got to hear about sarah jessica parker's house. >> what was she wearing? >> i was not there. the president was there but i was not there. >> when we're not on cam camera, tell me about it but let me talk about the u.s. open, great course, i was thinking about how to get into this and i think about "i'll have another" that was a big disappointment. this is the u.s. open, a lot more coverage and the one person that can make it unbelievable is in it, 69, 1 under and looks so good. >> phil doesn't look so good. >> but look at the greatest players in the world.

luke donald shot like 79 or something, but this guy in listening to some of our commentary yesterday from johnny and others, tiger is unbelievable athlete, best swing all that but it's his mental thing that makes him the greatest that, maybe jack was greater but makes tiger the greatest but people say the look in his eye and the zone he's in is similar to what won him 14 other majors, and what a greatest. casey martin. >> he was with us, doing better than phil. >> the cut is today. >> i think he's 4 over. >> and who knows -- >> look at her bad self, knows all this stuff. >> i was watching. >> so i have seen some zombies. you're telling me there are not? >> a lot of people think there's a zombie epidemic taking place and you understand it from the gory news stories it's gotten so bad with the online chatter the

cdc has had to come out to say they don't know of any virus or condition that would reanimate the dead. cdc says not the case. >> who are these people then? >> i don't know what that's all about. >> they're not real? >> we've got an american business icon, we're thrilled to have him, lou gerstner, former chairman of the carlyle group and chief of ibm. >> he brought ibm back. >> mr. fix it, i want to talk about how he can fix the world and europe.

reaching the boiling point. >> should risk price stability emerge the euro system has

sufficient tools at its disposal to absorb excess liquidity. >> voters get set to go to the polls. ecb standing ready to take action, analysis from all angles here. loustner on what this means for america's economy, he's our guest host this morning. what traders are watching before that first transaction, the second hour of "squawk box" starts right now. good morning, everybody, welcome to "squawk box" on cnbc. i'm becky along with joe quick and andrew ross sorkin. the futures have been higher as we await the greece election this is weekend. dow futures are up by about 69

points. s&p futures up by almost eight points comes after market gains when the dow was up 155 points. central banks saying to be prepared for a coordinated effort in the event of a credit shock after sunday's greek election. mario draghi saying the bank stood ready to support the eurozone's banking system. >> the ecb has the crucial role of providing sound banking in return for adequate collateral. this is what we have done throughout the crisis, faithful to our mandate of maintaining price stability over the medium term. >> european markets rising on this news. the early trading volume has been heavy. right now greece has barely turned into the red, down by about a half a percent. italy up by better than 2.25% and other markets higher. the euro is gaining ground at

1.26. draghi pointing out europe will have to make political choices to strengthen the euro saying the shared country needs strengthened foundations. cnbc's steve liesman, the markets have been moving on every rumor. >> really exciting day yesterday, the dow jones industrial at 3:04 p.m., where were you, joe, watching cnbc at that moment? >> yes. >> you were watching at market at that time? i might have been watching nbc or espn. >> you mean like a golf thing. >> could be. >> if you had been tuning in to cnbc you see that little pop, 100 points up on the reuters report saying bankers were ready to provide relief. that story seemed to be supported by comments from ecb president mario draghi that the european central bank will provide credit when needed. yesterday afternoon when the market was up 100 points the

bank of england governor mervin king announced measures to pump billions into the british economy. bank of england spokesman said none of this had to do with confirmation of the intervention but sounded like coordinated verbal intervention, whether something more is in the works it's not clear. no comments from the united states federal reserve. there are growing ben bernanke e action next week. the possibilities range from i think the easy money or the conventional monies on extending operation twist and going further up the scale, more quantitative easing from the fed. g-20 meeting scheduled in mexico will begin on monday with some hope europeans will show resolve to address their problems. there are intense discussions around banking in europe but so

far no sign to any solution to the agreements. draghi is saying the political choices are more important than the monetary ones made. i'm pretty sure that's the way the central bankers around the world feel. >> we're trying to find out if the rumors are going to drag ahead any uplift to the market, if we already know this is what they're standed poised to do, the worst case scenario has come out, has it stolen the thunder and what happens on monday? >> i think there's two questions the market has to ask itself, beginning about what are we talking about here, right. if they're talking about interventions to unlock frozen markets that is not additive to economic growth other than avoiding something that's terrible. are we talking about additional coordinated quantitative easing? i'm not hearing that's on the

stage. i was told it had nothing to do with the coordinated thing. draghi, the fact he's saying it is significant. he isn't saying that much. we'll do what we've done all the time, lend to solvent institutions and what i'm hearing from other bankers, this is what we do. there's no news in this reuters story. quoting a g-20 official, a finance ministry official or officials commenting on central banks and i'm told by central bankers we don't talk to senior g-28s. >> what you're told is the idea of central banks coordinating to step in with additional quantitative easing that is not on the table in. >> i don't think that's on the table. i think individual countries will take individual decisions, the bank of england did and the fed is likely to do something next week but that's individual. the idea of coordinated quantitative easing, we have done coordinated liquidity. >> steve, thank you so much for that. steve i'm sure you'll be back, we'll be talking to you all day. our guest host is one of the

most celebrated executives in the past two decades, american business icon known best for saving ibm in the early 1990s but he's been with american express, mckinsey, rjr. joining us is lou gerstner, former ibm chairman and ceo. great to have you with us. >> good morning. >> on a crazy morning and i'm curious, just getting into the news of the morning and what's going on in the world and the portfolio companies carlyle has and your dealings running a multinational company walking into a weekend like this, how do you think about running a big company, a big multinational company at a time like this? >> well, i think in one sense you don't think any differently than you do at different times. running a company you cannot sort of decide well, gee, there's going to be a g-20 or

g-7 meeting this weekend and who knows what's going to happen. i better shut my business down on monday, do something different. focusing a business is all around serving consumers and figuring out whether your consumers are going to be buying more or less so i would guess the reaction of most multinational companies has been to figure out what is the downturn in europe going to do to consumer behavior or if you sell to the commercial market, to the institutional sales market. >> and what is your sense to the answer to that question right now? >> it is slowing down in europe. there's a slowdown in china, but it's still to a very nice rate, down from 9 to maybe 7,.5%. the u.s. economy has been sort of bumping along at about 2.5% all year. we hear news this week or that week but steady at 2.5 and 2.5

doesn't produce jobs, which is why we still have a job problem, and there's a certain amount of slowdown going on in india and brazil but there's still growth and opportunity. so when you're dealing with selling something the issue that banks have a liquidity problem and what are the central bankers going to do, you can read about it and think about it but let's go serve our customers tomorrow. >> you were very successful, maybe we could describe it as creative destruction, you walked into ibm at a time when it was in trouble, you cut a lot of jobs, it was a painful process, ultimately the company succeeded and succeeded with even more jobs. when you did that back then, did you do that thinking that the company was going to come out even meaning that you'd ultimately create more jobs on the other end or did you do that

simply because of preservation? i ask it in the context of what a lot of companies, frankly the government may be thinking about right now? >> well, ibm had too many employees when i arrived. now, ibm had been reducing its employment before i arrived, only it didn't want to tell people that it stopped this no layoff policy so people disappeared in other ways, but we had to reduce our labor force. we had too many people because our sales were dropping, our market share was dropping, our profitability disappeared, so in order to save ibm we had to take on some pain, and we had to take some up front pain to restructure the company and having done that, ibm then added 100,000 more employees on top of where we were at the bottom and the fact of the matter is, you do not get growth. you cannot turn around an economic problem without some pain in the beginning.

i wish our colleagues in washington would understand that. >> but they're up against the same kind of, the way that question comes is you had to lay off people. there are people that under any circumstances like right now what we're facing here don't want to go into that initial step because they feel they need to be compassionate. if you know you're going to have say 100,000 net more jobs it may be different people in a different part of the country, does that allow to you do it? >> that's why i was asking, did you have faith when you first -- >> you didn't lay off people just to lay them off. >> but the question was did you have faith on the other end it would come out better? >> why would you do it if you didn't want to help the company. >> i just wanted to know whether it was going to create jobs. >> i asked for video of dumb bow where the elephants are dancing because big elephants can dance, i've seen them dance in the movie and you did it with ibm,

the book "how to make an elephant dance." this is an elephant in this country, can it ever dance again? we're very despondent i think about our prospect. >> can i come to your question? >> okay. >> the situation at ibm was such that if we didn't do drastic things, if we didn't change things, we were finished. i mean, you may recall that the board decided to break ibm up. there were investment bankers planting flags, and divisions, they were naming these divisions they were going to spin off. i decided to keep the company together. i felt there was a role for ibm in providing integrated solutions. i thought there was a future for ibm but to get to that solution we needed to take some painful steps and did i know exactly then that it would be 100,000 more employees, no. but i did know if we didn't take some pain in the beginning, all

i ibm-ers would lose their jobs. >> there were communities that had plants that were probably shuddered and other communities might have benefitted from the expansion later. it's a sad thing but we see it happen again and again and again. you need to be able to make those decisions. >> absolutely. it was a question of ibm going out of business and 270,000 people would lose their jobs or we would cut 60,000 jobs, reposition the company, hire different people, go into different businesses and now ibm has 400,000 people. >> you see a parallel clearly between the ibm experience if you will or the larger experience? >> or people in europe, yes. >> i think it was joe who suggested the parallel, but there is a parallel in that when you have an economic problem like we face in the united states, we're going to have to

do some things that are going to be painful up front or we're going to have to make some sacrifices up front, and if we don't, we just kick the can down the road. that's all we do and it really troubles me that we had a plan, simpson-bowles was a good plan. these people were both democrats and republicans, they studied it for months. they came up with a plan, i think it was 11 out of 18 people voted for it, and what happened? it didn't -- now let me ask you something, would we be better off today if we were working under simpson-bowles than we are today? would it be perfect? no, but perfect is the enemy of good. >> right. >> and we could be modifying simpson-bowles if some of it didn't work out, but we would have cuts in discretionary spending, lower tax rates. >> what do you do about this political, this horrible political environment we live

in, which is to say i'm not sure the democrats would have voted for it, i'm not sure the republicans would have voted for it. clearly that's why we're where we are, at some level. you're looking at me like i'm crazy. >> no, i'm not. you're asking me a question that i really don't know the answer. i don't know why, i don't know why we have people in our government who are willing to accept what we're going through now as being better than having implemented simpson-bowles. >> lou, could either party have done it? you remember in the past when there's a guy who sort of rides over both parties, the president and it was commission and we the opportunity at that point don't you think? sometimes you need that leadership from the only guy who can do it, don't you? >> yes, i mean, there's no question that the absence of fundamental change in washington has to be laid at the feet of we

don't have leaders who are creating the kind of change we need. >> right. >> but i'm not going to pick one lead eveer or the other. >> to get it done in 2013, you're going to need someone, i hate to go back to reagan or tip o'neill, but those guys were able to somehow bring all the parties together, right? >> that's true but you know, what i don't understand is, this this should be easy. it should be easy. do they really think that what we're doing now is a program of success? what we're doing now is a program of disaster. >> did clinton and gingrich somehow work together? that's when you were, you had some wind at your backs, your back at the '90s. >> i'm just an old retired computer salesman. i don't like to get involved in politics. there's enough blame to go around here for everyone. why is it that people can wake

up every day in washington today and say, gee, this is great what we're doing here. we're on great program here. we're going to crash in december, we're going to sequestration, we're going to have the taxes roll off, we're going to have the payroll tax holiday rolloff, all of these things are going to happen, and what are we doing about it? we have 46 million americans on food stamps. that's one out of six americans. i mean, how can these people ever leave washington without fixing these problems? >> we haven't had a budget in how many years, three or four years. >> at least. >> and they were going to spend another full day with jamie dimon, when is that, next week? >> right. >> they lose 2.3 billion a day in deficit but we spend a day -- >> jobs, if you were in charge, you are the mr. fixity ceo, if

you could redo what's going on beyond simpson-bowles, what would you do? >> well, i think that, and this is well stated, that we need to create some economic certainty in the country before people are going to expand their businesses and so that's all around us. some certainty around taxes, some certainty around government spending, so we do need a simpson-bowles. that's one of the conditions to create jobs. the second thing we need to do is we need to create in this country a sense of economic competitiveness that, in the 21st century, economies are going to be driven by skills, in most cases, highly educated skills, knowledge skills, okay? it's not going to come on the backs of shovels and it's not going to come from manufacturing

people, moving pieces of machinery around. we need educated workers. guess what? we don't have educated workers, so we got to fix k through 12 education and we've got to develop training programs for workers. >> lou, i want to slip in a break and we're going to talk more about the education plan that you have up your sleep after the break, if you'd indulge us. if you've got comments, questions about anything you see lou talking about or other things going around the table shoot us an e-mail squawk@cnbc.com or follow us on twitter. @squawkcnbc is the handle. we have martin wolfe back what he's expecting from the markets. "squawk" is back in two minutes. for me, it's really about building this extraordinary community. american express is passionate about the same thing.

they're one of those partners that i would really rely on whether it's finding new customers, or, a new location for my next restaurant. when we all come together, my restaurants, my partners, and the community amazing things happen. to me, that's the membership effect.

uncertainty over greece and hopes for a central bank uncertainty over greece and hopes for a central bank rescue will be driving the markets this morning. joining us from london is martin wolfe, chief commentator for "the financial times." the markets have been moving this morning and yesterday on rumors of central banks standing by and being ready. do you think this is something we'll follow through that will keep us no matter what happens over the weekend this will be something that will keep the markets afloat on monday?

>> i think there is so much uncertainty now that the markets are moved on a whisper, but it's clear that the central banks are preparing to do something i think. you've got the g-20 coming up, we'll want to come away with some sense they're in charge but at the same time some events are out of their control. they don't know what will happen in the greek elections and depending on that, that will determine really how the markets look at the scene by monday. >> your best guess as to what happens. earlier in the week we talked to you about worst case scenario. you think the most likely scenario is what? >> my impression is slightly more likely scenario is that new democracy wins, that you've got a government that goes through the motions at least of carrying through the program, that that gives enough confidence to keep the show on the road for a little while longer, but it's

really borderline stuff, and since i don't believe the program itself can work, we're going to be back in crisis again fairly soon. meanwhile, there are very severe liquidity problems for banks and that may mean the central bank has to do something. >> when you say do something, what do you think is the best proposal for the ecb as the central bank you're talking about? what should they be doing at this point? >> there aren't any good ones. their fundamental problem is that they can provide liquidity, but as are central bank governor mervin king said yesterday we've got a solvency problem of governments and a solvency problem of the banks that have lent to them. there's a limit to what the central bank can do in this situation. it can obviously provide funding to banks. unfortunately, that is used in part to lend to governments in difficulty like those of spain and italy, that increases the connection between the banks and

the governments and it makes the underlying insolvency problems of both no better and in some ways certainly for the banks worse. central bank can keep the thing afloat but it can't solve the market's real question about whether the debt is sustainable, and that's a a fundamentally good question. >> the bank of england's moves, mervin king's moves, is that enough to keep england isolated from this event or i guess what i'm trying to get to, are we all in this together including the united states, including england, including the rest of the world? >> well, it depends what "this event" is. if the eurozone sort of keeps its show together enough for the economy, it doesn't collapse, there's not a collapse of the eurozone, not a depression in europe, any of the sort of horror scenarios which they can't manage, as long as the run is avoided then i imagine what the british government and the british central bank are doing

together should be enough to prevent serious deterioration in our economy, but remember, we are flat lining. i don't expect it to do much to raise british growth but as long as the eurozone doesn't get into terrible trouble the uk and u.s. should not be very badly affected. they have their own problems, however, i think we've been talking about and these problems are very deep in both cases. >> martin, there's a tendency to think, you know, we should get this out of the way. you seem to indicate even if they've, vote the right way over the weekend and going to pretend they're going to live up to all the agreements but sooner or later it happens anyway, is that a better outcome? does it give the world time to prepare for what finally happens or should we just rip the band-aid off the scan right now and just do it? >> well the question is what "do it" means. >> exit, go back to the drachma,

leave the union. do you think that's likely? >> i think it's very unlikely. the short run it's unlikely, though if the far left government came into power and basically demanded a renegotiation, which the rest of europe wasn't prepared to concede, that could happen and it's not inconceivable. i would say that's a definite chance but if they don't get to that breakup point the difficulty all along if it were just about getting greece out of the system and nothing else, no one would be worried. it's a tiny country, not the issue. the issue is it's going to create huge problems else where in the system which they do not have the money to manage, as long as that is the situation, they can't just pull this little plaster off the scan and hope that the wound will heal. it won't. it will get much worse. they have no plan to manage the crisis as a whole, and merkel has made it clearer yesterday that she will not finance

open-ended support for southern europe and that means that the crisis goes on. >> martin, we appreciate your time today. thank you very much. >> it's a pleasure. >> when we come back we'll head to athens for the latest on the greek elections happening this weekend. plus we have much more from our guest host, lou gerstner coming after the break. "squawk" will be right back. om#a#a#a#a#a'9#a+=#a#a#a#a#a +g#a

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welcome back to "squawk box," first in business worldwide. i'm andrew ross sorkin. the futures ain the hour, we have green arrows across the board, dow looks like it would open up 81 points ahead of the market. central banks around the world reportedly preparing for a coordinated effort in the event of a credit shock after the greek election this is weekend. michelle caruso-cabrera is in athens and has more on all of that. michelle? >> and the polling numbers that we have heard about suggest that the two leading parties are neck and neck. to be very simple, there is a pro bailout peter and anti-bailout party and what we have seen when the anti-bailout party when it rises in the polls

the financial markets around the world fall because they fear that a greek exit from the eu eurozone would be eminent. when the pro bailout party moves higher, the financial markets move higher. we spoke with the economic adviser of the sirisa party, john melios, adviser to the young 37-year-old who has become a big fiery leader in greece. i asked how should financial markets feel or what do you say when every time your party does well, they plummet. here's what he said. >> we are going to show to the financial markets, to the people in greece and all over the world that we have a program which is meant to stabilize the country, to stop austerity, but at the same time to balance the budget by raising revenues, bringing justice and democracy in the

country. >> so let me give you some details of what that program is. they want to restore the minimum wage, they want to raise taxes on the wealthy, alexis tsipiras wants to redistribute wealth and nationalize the banks, the economist wants to restore collective bargaining agreements. i said listen these things to many people in the financial world say that this is something that would make greece less competitive, not more competitive, and would make it more difficult for them to pay their bills. this is his response. >> we are not extremists. we are people who want to restore the unjustice that has been done to this country and to stop the humane disaster which starts. >> when you say you are not extremists i want to show a poster i saw in the office yesterday when we were visiting t says "it's not enough to be angry. fight capitalism 100%." what is the core spirit of what

you believe in? is capitalism a better way to organize and distribute the resources of society or is socialism better? >> well, this is a theoretical question. >> i think it's a very real question right now. tell me that again. >> i think that socialism is better. >> so the things i would point out to you are he said afterwards we're not fighting for socialism right now, obviously he thinks socialism would be better but what they're fighting for is to reduce austerity. the other point, you just had martin wolf on. he called that party center left. things here in europe are different. you just heard that gentleman and that is considered center left. it's not considered extremist here in europe, so just to show you how the perspective is so different from the united states. joe, back to you. >> yes, it's so true, michelle, and i think they're too close to, i don't know. it's hard to see the forest. there are some problems because

of just exactly what we saw there. let's get some more thoughts from our guest coast, lou gerstner, just talking off camera, senior adviser to carlyle, former ibm chairman and ceo and having been around as a stockbroker, in this business for so long, i remember before you, long before you came to ibm and i remember the epitaphs that were written and i watched companies like westinghouse, which is a similar company to ge in the '80s and went one way, ge went -- i see what a ceo is able to do, i see what happened to xerox or kodak and ibm, somehow you found a way, to we had a zombie story earlier. you were able to reanimate ibm by building on its strengths. you didn't change it completely either, did you? >> no, we certainly didn't change it completely. we kept a lot of the strengths at ibm but i think the reason that ceos fail to turn around

companies is not usually they don't know the strategy. do you think kodak didn't see the move to digital photography? of course. >> i'm thinking of hewlett-packard. i want to hear what you'd do at hewlett-packard. >> i want to say to you that the challenge for a ceo turning around what had been a successful company that had run into trouble, the challenge is understanding the culture. you've got to get the culture realigned with a new strategic direction. people don't want to change. and so i had to spend an enormous amount of time, there was plenty of talent at ibm, plenty of good products but we've lost touch with the customer. we had lost touch with connecting to the outside world so we had to get people focused outside the company instead of focusing inside the company. >> every quarterly earnings report, revenue growth all through the '90s, revenue growth not really enough, the only

reason earnings per share is growing is because you were buying back stock and tax rate going down, factors moved around. do you remember the criticism as the stock was being declined. people missed that because it was written off to financial engineering. >> i also remember the year i arrived ibm reported the largest lost in the history of corporate america up 'til that point, so the fact that we started making some money was not just financial engineering. >> i know. but that was the criticism. and revenue growth really never went back to the glory days of ibm really, although it came close i think. >> it never did, back to the '50s and '60s when ibm was growing 20%, 30%, it never could. you know, joe, analysts are born to criticize. >> right. journalists. >> they're like journalists. no journalist goes to watch a

plane land. they only go to watch planes crash. >> right. >> the same thing is true of analysts. you know, they're going to find the things that aren't just right and they're going to talk about them. that's their job, but the fact of the matter is, we rebuilt the company around a new strategy and a new culture that said we're going to win delivering solutions. >> and services, too, right? >> that's a a part of solutions. it's a part of a solution, it's hardware, software and services wrapped into a solution for a client, as opposed to taking hardware, inventing it, throwing it over the wall saying this is what you need. >> you bring up a good point, can i go back to the culture idea. you make it sound so easy, you have to focus on the culture and it's really difficult. how do you change the culture and how do you focus the culture, how do you lead people who don't want to change in. >> changing culture is really hard and it's not about communications. when i got to ibm, the first question i got was 60,000 people

in the first three months was hai hey, lou, the culture stinks. what are you going to do about it? i said what do you want me to do, write you a memo and say culture's great and you're all great and everything's wonderful here? they can read the newspaper. they can see our earnings are falling. they can see the analysts are criticizing us. they can see our competitors are beating us. i can't do anything about more ral. wh morale. let's focus on beating our competitors in the marketplace, and so changing culture is about looking at every single process in the company and saying does this process line up with our strategic intent? my strategic intent was to integrate, provide solutions. we had to integrate inside the company. how do we pay people? we pay on individual performance. how can we have teamwork if

everybody's being paid on individual performance? so i called everyone, my senior people in, and i said effective immediately 100% of your compensation is on ibm in total, not your unit. they went crazy. they went crazy. i don't want to be tied in with that guy over there, never made any money, don't put me with those guys and we cascaded the compensation system to the whole company and so by reinforcing a rewards program that reinforced teamwork, we got to work on an integrated solution for customers. >> did you lose star players as a result? >> did we lose what? >> did you lose any star players as a result? you said they came in and went crazy. >> we didn't lose any of our star players for that but i did -- >> sounds awful. >> -- that we all work as a team and the star player who ran the biggest operation in all of ibm in europe, and my communications person came to me after about six months and said to me, your memos going out to the european

employees, 200,000 of them, are not getting to the employees. i said you got to be kidding me. all my communications to the europe, middle east and africa, employees are not getting there. i said why? he said well the guy who runs europe, middle east, and africa, doesn't think they're appropriate for his employees. >> oh, man. >> back then we had a batch system we would load my message on a server and it would go to paris and had to be reloaded to go out to the europeans. i called him up and said i need to see you in my office tomorrow. i said look, you don't understand. you don't understand. we work as one team here. you don't have employees. no one has employees. we're all working together and if you can't operate as a team, then you can't be here. now this was the number one performer in the company. i gave him a chance to fix it, and he couldn't do it. so i fired him. and the whole organization said, oh, lou means it. we are to work as a team.

and so that's culture, changing a culture is a very visceral, very direct, very operational activity, and it takes a lot of work. >> did it hurt that business? that decision? >> no. there were plenty of good people in ibm, we got someone else to take his place, but it really went right through the company. you cannot be a loner. you cannot not work with others at ibm. so it's an example of how you drive cultural change. >> we got to slip in another break here, and then we'll get to the education question. >> i want to talk about that and equity. >> i want to talk about when you run a country whether there are parallels to running a company. sounds like you need a ceo type but a lot of people think ceo types don't work well running a country. takes leadership. >> when is the last time we had a ceo running the country? >> i think w. they thought of

him as a ceo because he was an mba, he had an mba. >> we'll slip in a quick break. >> your point is well taken. >> how much a child born last year will cost you. dow futures up by 80 points. we'll be back quickly. we have a programming note for you as well, sunday night special coverage of the greek elections and what it means for your money and the global markets. michelle caruso-cabrera will be reporting live from athens. [ duck yelling ] [ male announcer ] find out more at... [ duck ] aflac! [ male announcer ] ...forbusiness.com. ♪ ha ha!

we're back. checking futures we have green arrows across the board if we could get them up on the screen it would help a little bit, maybe we could see those green arrows but maybe we won't. we are excited to add a new market board to the mix this morning, check it out, you can see that right there, but maybe we can't either. i think we're having a little bit of tough time on live tv this morning, trying to get the futures boards up there. >> that's okay. they've been in the green all morning long because the thought again is that things are going to be okay as we get into this weekend if the central banks step up no matter what happens in the greek election. >> lou gerstner, talk a little bit about private equity. you spent a lot of time as chairman, former chairman,

senior adviser now at carlyle. we talk about private equity. romney in the news all the time. what do you think private equity gets a bad name? is there something private equity is doing wrong or doing wrong to market itself? >> i think that if we didn't have a candidate who would work in private equity, we wouldn't see -- this is all about politics. this is an attack on romney because he was in private ek wilt and so i think it's very, it's just caught up in the political world we're in right now. private equity has been around a long time. private equity is a powerful business and it has a very, very strong economic underpinning. 64% of the investors in private equity are pension funds, endowments, foundations. the people who win when private equity win, are middle class people, hoping to get their

pensions. >> why has the industry, if you will, had such a hard time articulating that message, around this table we get it, i think a lot of our viewers understand that issue but the larger public, you know, sees private equity in a different way. >> well, i guess i can't answer that question. i don't know why. i haven't seen that data. i guess if you demonize something long enough in a public way and particularly a subject the public doesn't quite know what private equity is, you're going to see those reactions. what private equity does is very important. private ek wilt for the most part takes orphan companies, troubled companies and tries to make them better. dunkin' donuts was a nothing company inside a liquor company.

they didn't know what to do with it. hertz was in a car company in trouble, allison was a troubled car consider, ariq was a consortium of airlines, carlyle bought those companies and has invested in them and those companies have all done better and they're succeeding, and what happens when they succeed? when they succeed the pension funds get some higher return and they can get in the regular market and while private equity is not in the business of creating jobs, that's, you know, that debate was kind of silly, private equity is here to create profitable companies but which companies do you think hire workers? unprofitable companies or profitable companies? >> why do you think romney articulates that message? it became the story about job growth as opposed to what you just said and ultimately it's the story of ibm. it's you may have to cut to ultimately get more on the other side but you got to be patient to get there. >> right.

no great company goes, holds it stove private equity. no most cases they're a neglected company, troubled companies or in some sayses like montclair, the company we invested in italy t needed a capital, didn't want to go public. china pacific life which we invested in, in china, needed management help in thinking about expansion. these are companies that need some form of assistance and if we do it right, taken doesn't always work but if we do do it the company is better off at the end and if it does grow, it adds job private equity our business is to grow successful companies and successful companies hire people. >> we have to slip in a little break. >> i think romney does, i think he articulates that. it has to be picked up by media

and put out for it to become -- and there are other members in media that will put up the straw man about private equity as frequently as possible so it's a constant battle. >> up next, could united technologies get ready to shed some of its businesses? we'll talk about that, after the break. ttd#: 1-800-345-2550

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welcome back. our guest host lou gerstner. we've been getting e-mails coming into our e-mail box, one of them writes in, wanting to know what you think about whether the u.s. economy is poised to dominate the world once again? what do you think? >> i don't think so. the united states hasn't dominated the economy for 30 or 40 years. we were dominate through the '50s, the marshall plan was critical to bringing the european economies back up to speed. we had not seen the rise of china in the '50s, but today we are a smaller part of world gdp than we've ever been because of the success of other countries and to a certain extent, a little bit of decline on our own

part, so i think we got a lot of work to do to stay equal to hang on to what we've got. >> we're going to have more from lou gerstner, he has ideas about how to fix some of these things. former deputy treasury secretary roger altman will be joining us to talk about europe. ♪ on the road ♪ and we know that it goes on and on ♪ [ 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 [ creaking ] [ male announcer ] trophies and awards lift you up. but they can also hold you back. unless you ask, what's next?

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the situation at ib marx was such in we didn't do drastic things, if we didn't change things, we were finished. the issue that banks have a liquidity problem and all the stuff about what are the central bankers going to do, you can read about it and you can think about it, but let's go serve our customers tomorrow. >> there's a limit to what the central bank can do in this situation. it can obviously provide funding to banks. unfortunately, that is used in part to lend to governments in difficulty like those of spain and italy, that increases the connection between the banks and the governments. >> the third hour of "squawk box" starts right after the break. optionsxpress, where you can trade your favorite products,

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in your fight against bugs. ortho home defense max. with a new continuous spray wand. and a fast acting formula. so you can kill bugs inside, and keep bugs out. guaranteed. ortho home defense max. he's credited with changing the culture at ibm. >> do they really think that what we're doing now is a program of success? what we're doing now is a program of disaster. >> 30 more minutes with our guest host, lou gerstner. this weekend's election in greece could determine the country's future in the european union.

our countdown to father's day continues with a dad and son known for their experience in investing in economic policy. we're going to talk to lightyear capital chairman don marin and son donald marin. the third hour of "squawk box" starts right now. welcome back to "squawk box" here on cnbc, first in business worldwide. i'm joer can nan along with becky quick and andrew ross sorkin. our guest host is lou gerstner, former chairman and ceo of ibm. equity futures had a surprising, big gain yesterday and another gain today, even as we head into what everybody is calling a weekend with some uncertainty, and some trepidation, but things change so quickly. it's a weekly basis in greece, who the people seem to be favoring and now the socialists

are out of favor again. >> at least that's what we're expecting from the secret polls we get the answers to anyway. the global markets are getting a shot of confidence after reuters reported central banks are preparing for coordinated action if the results of the greek election shock the market. this morning, ecb president mario draghi saying the central bank is ready to provide more liquidity if needed and willing to support eurozone banks further. >> should risk price stability emerge the euro system has sufficient tools at its disposal to absorb excess liquidity. >> earlier steve liesman said central bankers he spoke with downplayed the reuters report and said they almost never announce actions ahead of an event and especially an election. again though the european equities have been in the green because of the reports. italy is up by almost 2%, france is up by 1.6% and greece is also in the green. >> of course one of the big problems at the root of the greek debt crisis is the government's inability to

collect revenue. cnbc's michelle caruso-cabrera joins with us a special guest from athens. michelle? >> hey there, good morning, guys. we always hear about greek tax evasion, the notoriously high levels of greek tax evasion. let's find out more. joining us is harry theo harris with the ministry of finance. he's in charge of helping them increase tax collections. he's a guy who also understands wall street very well because he ran i.t. for the equity derivatives desk at lehman brothers in london so he speaks our language. i tell people i cover greece, they say the problem with greece is nobody pays their taxes. is that accurate? >> well, yes in some sense it is accurate. however, there's a lot of exaggeration in terms of how big the problem is. greece has about 3% to 4% less tax revenues than equivalent countries so it needs to increase. however, we have for example about 5.5 million out of 8.2

million that file their tax returns that are salaried people, either pension or employees. that means they cannot easily hide what they earn. >> it's automatically withdrawn from their paycheck and yet you said there's roughly 8 million filers, 5.5 are salaried. at least 3 million that file and don't pay taxes, correct? >> that's correct. they do pay taxes. we're talking about doctors, plumbers, electricians, talking about self-employed people or people that have small companies, or other means like rent and stuff like that for living. those people vin creased ability to hide what they earn or increase their expenses to pay less than what they should. >> that's where a the tax evasion comes from you think? >> correct. >> so is it accurate to say the level of tax evasion increase is notorious? >> well, whether it's notorious or not, it's really a matter of perception. the reality is that i think the

level of tax evasion is something that we need to tackle, but it's not as, you know, reported. >> is it a culture of tax evasion in some ways? >> well, to be fair, in the whole of history, people are pretty ingenious in terms of evading taxes. the number one priority, avoid paying the taxes, greece is no exception to that. really what's been lacking is those efforts and especially organized concerted efforts with things that other countries have done in the past and done successfully, we're replicating that, making a lot of progress, a lot of changes, using ingenious ways, cross-referencing, getting data. >> technology. >> more and more technology increasingly and that is helping a lot. >> harry, thank you so much. >> thank you. >> just to give you one sense of what's happened with taxes in greece, it used to be if you made up to 12,000 euros per year you didn't pay taxes, went to 8,000 and now 5,000 euros so

people will have to pay retroactively, they have to pay taxes even if they made 5,000 euros. >> we'll have coverage of the greek election this is sunday, michelle's "a greek tragedy" airs sunday 8:00 p.m. eastern time. tracking the potential market impact of overseasityers, jack malvey is a market strategist and former u.s. treasury secretary roger altman of evercorps partners. roger, you should get an apartment near our studios down there just for commenting on europe. here we go again. i thought we fixed things in spain. now we have greece. what is your latest thoughts on all of this? >> well, joe, i agree with martin bofl's observation a few minutes ago that in economic and financial terms, greece is tiny, and it's not the core question.

the markets are transfixed with it and yes there is contagion risk should greece exit, but fundamentally the eurozone does not have the rescue tools and the protection tools which are necessary in a situation like this, and i think the market is fundamentally focused on that. the sovereign rescue fund, the esm is neither ratified and deployable right now nor is it large enough. there isn't a reliable system as we all know of deposit insurance, and a central deposit insurance backup. they don't have a reliable system for bank examination and supervision and they don't have a unit like our t.a.r.p. for injecting equity into banks, which is what so much of the european banking system or at least the weaker parts really need. the spanish banking rescue was

quite sadly flawed. it consisted of senior secured loans when equity was necessary. it was provided in the form of an overall loan to the state of spain which already it was overborrowed, and the market took one look at it, and realized how flawed it was and it obviously didn't accomplish very much. spanish yields are much higher now than they were right after the rescue was announced. so there are in other words so many design flaws that are on the, that we can see now that are on the table, and so central to the situation right now. i think that's why it's on the brink. >> jack, earlier we on the intro to a guest said he'll give us where to put your money and the best idea for going into this weekend and he came one the ten-year treasury and i just think that's sort of indicative of just about every weekend where we go into, it's tough to

buy stocks when every weekend something like this is happening. what would you tell clients to do, jack? >> it's tough to buy the ten-year treasury as well because of the whip saw, we've backed up 20 basis points this month alone so depending upon the reaction of the market to the sounds like super salvo of salvation from central banks you could have a further backup here. i think over the short haul the best thing to do depending on the type of investor is to be cautious and more inclined to be wait and see which means sidelines. >> yeah, ten years there's risk in a ten-year one, but you go shorter than that, you're saying basically to be in cash right now, jack, or would you take a long-term view that europe in the long run is not going to be the key determinant for weather stocks are cheap in this country? >> well it's going to be a big determinant but the yes is timing and given as roger highlighted there are so many imperfections in various plans, it's just uncertain how this is still going to turn out, so

jumping in over the near term here probably is not yet prudent. >> do you think that this is allowinging jack, and i'll ask you the same question, roger, is this allowing policymakers and bankers and traders, everyone to sort of get ready for even the worst outcomes? is it better to drag this out, so that, you know, you get your ducks in a row, so that you're not surprised by it? >> i don't think it was prudent to drag it out. the remedies would have been less severe if we addressed it more significantly up front. >> what about you, roger? >> number one, joe, i think europe is much worse off for having dragged it out. i think investors may be better protected because they've had so much advance notice and so many, for example, corporations which i know have reduced their exposure to europe, in fact taken all their cash out of the

weak countries but from the point of view of europe itself it's not better served. >> if greece is -- we hear of greece eventually leaving and here we go again, now it looks like they're going to, you know, the party that wants to stay is going to win and so that just means it's going to take longer. i'm wondering whether they just exit and get it over with. >> joe, the preparation, too, we look at the housing crisis by 2003-'04 there was a multiple of housing bubble stories but a lot got caught offsides. >> we appreciate your time this morning. coming up, much more from lou gerstner and in the next half our our countdown to father's day continues with lightyear capital chairman done marron and his son donald.

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welcome back, everybody. more from our guest host lou gerstner, senior adviser to carlyle and former ibm chairman and ceo. we've talked about the problems facing the nation and the globe today. you have some real solutions particularly for how we need to think long-term and fix things here at home. why don't we talk about education, which we know is a problem.

how do we fix it? >> well, i've spent 45 years working on trying to fix public education in america. i started when i was 26 years old, and i'm very frustrated, and people say to me, why don't you stop? you're never going to fix that thing, and i say, well, if i stop, what happens to the kids? we've got to do something. so next year is the 30th anniversary of the seminal report a nation at risk and often quoted statement "if a foreign country imposed the school systems we have today on america, we would consider it an act of war." now, we haven't had a foreign country attack us for education. what we've had is the adults in america have declared war on the ki kids. how about the fact that 0% of high school kids don't graduate with their class.

70% do so 30% do not and of the 70% that get out of high school on time, the head of new york's public school system, the chief academic officer said two-thirds of our students who graduate on time are not college ready. do you know there's 100,000 students in seven community colleges in chicago, 100,000 students. how many of them do you think graduate at the end of the two-year period? 7%. >> 7%? >> 7% graduate. so we are creating a problem in our country of an uneducated populous that is an enormous issue going forward. 75% of young people between the age of 17 and 24, 75% cannot qualify to join the military.

snok three-qua okay? three-quarters of young people cannot join the military. >> you have a pretty interesting solution to all of this. >> i think the answer, we know the answer if we could get the adults to agree to it. the answer is four-fold. we need to have high standards, and agreement and commitment that we're going to teach every kid to reach those standards. secondly, we need better teachers. we have some wonderful teachers in this system, but we also have some teachers that are not performing, teachers don't get paid enough. they don't have a meritocracy, they don't get trained correctly coming out of ed school, so we need to reform teacher training, teacher retention and teacher evaluation. thirdly, we need choice. we can't condemn children and their parents to a terrible school. they've got to be able to move their child to another school. and i'm not talking just private schools. we need choice in the public school system. fourthly, we need more time on grade. we just need to spend more time in the classroom.

we send our kids to school about 100 days a year. the europeans 110, the asians 120, which is not innately more smarter than they are. standards, better teachers, choices, more time on grade. are those things hard to do? they're not yet we don't do them. >> npr is doing an in-depth story on a school in newark targeted for closure if they can't turn things around. they interviewed everyone from the principal to the teacher answer some of the teachers say they are just, they have reform exhaustion at this point because it seems like every year there's a new plan that comes through and someone else who wants them to do something differently. how do we get everyone at the table to agree on one plan like you just laid out and stick to it. >> that's the problem, becky. the problem is we have 14,000 school districts in america. if i had to turn around ibm and

it had 14,000 divisions, believe me, i would not be on this show. i would be a nobody. you would have never heard of me. it is very difficult to turn around an institution that has 14,000 profit centers. >> lou, what are your ideas, get rid of that system? >> yes. not one. i don't think we can get the one. my idea is we should have 80 school districts, 50 states and 30 cities, 80. you can get all of those people in a room, those people can decide, we're going to pursue the following standards. here's what we're going to do about creating great teachers. they can work together to share expenses on purchasing school supplies, textbooks, they can work on online programs, if we just could put 80 people in a room, not a federal government takeover, this is states and cities and this is not hard to do, but i don't understand how

governors can sleep at night, especially in june, when 30% of their kids are leaving school, and they are doomed. they're doomed to a life of poverty or prison. >> lou, one of your thoughts is around standardized testing and trying to standardize the system. one of the issues you hear that comes back from teachers is depending on the location, right, the inner city versus the suburb that it often, you can have the best teacher in the world but if you have students who don't want to learn and you don't have families who are there and supporting it, that it makes it that much more difficult and how can you therefore measure the teacher's performance? it is a big challenge. how do you square that? >> first of all, any kind of measurement or testing is only one input in determining success of what's going on in that classroom. so if you've got a class that is fallen behind and you put a good teacher in there, the base that you're looking at is the fact that those kids are behind.

you start with that. and so the performance you measure is relative. it's not against all the other third grades or fourth grades in the world. it's, hey, i've got five, i've got 15 human beings here. i know what level of education they're at. has this teacher, nine months later, has he or she moved them forward? whether they're at the end of a year the same level as a class of smart kids is irrelevant. the issue is, can you get these kids to move forward. >> you saw new york city's trials and tribulations over the last year with teacher evaluations and whether they're made public and every day there was something in one of the tabloids and cuomo would say this and people would say it would be backtracked and the head of the teacher's union, randy weingarten would say this. it makes better teachers but in practice when you do it the constituencies on each side are

very intractable, i'm talking about teachers unions to some extent here, that's the elephant in the room, isn't it, they seem to resist evaluating teachers? >> the adults are working against the interests of the children. it's not just the teachers' unions, it's a bunch of other people as well. let's stick with your point. there's no question that the unions are opposed in many cases to measuring either student performance or teacher performance >> right. >> what we've got to convince them of is that having data on how well somebody's doing is not necessarily a criticism automatically of that student or that teacher. it's a very important ingredient in figuring out how do i do better? i mean, we do this in almost every other profession. we measure whether people know

what they need to know, and if they don't know it, we don't kill them. we don't say okay -- >> i've seen studies if you get rid of the 5% worst lowest performing teachers it almost is leverage, it's almost log rhythmic what that does to the performance of the actual school and people know all these things but that doesn't get us any closer to accountability and to be able to deal with these situations. >> you know, joe, i was running something called the teaching commission about eight or nine years ago and i remember going into a meeting with a group of teachers about 20 of them from the new york city school district, and they were really senior, pretty experienced teachers, and i remember saying to them, what is your biggest problem, and i thought they were going to say compensation, which in most cases if you do that in the business world you say what is your biggest problem? i don't get paid enough. what these teachers said to me

was our biggest problem is there's always a teacher in our school that is not pulling his or her weight and that creates enormous burden for the rest of us. so the teachers in the system understand what the bad teachers do, yet the contracts, the union contracts make it almost impossible to get rid of those bad teachers. >> it's not the teachers. it's the union leaders a lot of times, lou, right? >> and so if -- we know that great teachers matter more than anything else in the world in education. mckinsey did a study of the great education systems, finland, south korea, singapore, and in every case the best school systems in the country have the best teachers. sounds simple, doesn't it? don't you agree? and yet we have not made the investment in our teachers that we need to make. we have not made it a real meritocracy where they can make a lot of money if they're really good but at the same time, they've got to allow us to take

this low-performing teachers out of the system. and we've got to have credentials for teachers. do you know a third of the teachers who teach biology in our public schools today haven't even minored in the subject? let alone majored in the subject? what would you think the american people -- you're out at an airport and over the p.a. system comes, well, we couldn't find any qualified pilots today but we found some people out back and they're going to fly the airplanes. >> and they're tenured. >> and that's what we do to our kids every day, put them in classrooms in front of teachers that have not any basis to be teaching that course. so the teachers colleges are part of the problem. they're part of the adults declaring war on these kids and you know, we're going to wind up in this society into a country of educated people and uneducated people, and i don't want to tell you, i don't have to tell you the consequences of that. >> i got a question for you.

warren buffett often likes to say if he could be born anywhere in the world, he would be born here, that he still believes that this is where the greatest prosperity, the greatest opportunity exists. we asked you the question about business earlier in terms of the declining fortunes of america. would you want to be born here today? >> oh, this is the greatest country in the world. this is the greatest country in the world. listen, the problems that we face, let's list five problems. energy dependence, educational shortfalls, social security, health care, that's four, let's stop with four. we've had those problems for 30 years. 30 years we've known about those problems and what have we done about them? nothing. nothing. there are solutions to these problems. we are lucky in this country that we have the resources, we have the capacity to solve these problems, but we don't solve them. we don't have the political will to step up and say we can fix social security, we can fix energy interdependence, question

fix the public schools. >> you knew that was the answer, right? that was just a rhetorical question. >> i was setting it up. i wanted to hear him say it. >> you agree. >> of course. >> this is an exceptional place. okay, good. >> thank you for being here, lou. this was terrific. you got to come back. >> you're welcome. >> you'll be back. you'll be back. >> will i? >> we hope you there. >> we only have 400 e-mails saying "run for president." >> that means for sure i'm not coming back. anyway, thank you. >> thank you, we appreciate it. when we come back we'll talk europe ahead of sunday's greek election. global ceo william de viylder will be joining me after this.

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welcome back to "squawk box." joining us now, william -- i'm always going to get this wrong, de viljder, is the global chief investment officer at b&p power investment partners. first rick santelli? >> reporter: june read 2.29, we're expecting in the teens, we're coming off 17.09, 2.29 is the lowest level going back to, wow, november of last year. the market response is as you

would expect, interest rates lower and the pre-opening dow futures looks like an ekg, bouncing around, lightly positive, baaing to you. >> thanks, rick. william, do you have views on the numbers as we walk into the weekend? >> the view that we have looking at the u.s. from europe is that all in all, relatively speaking growth is far better in europe and we think it's a matter of being patient and gradually getting more traction and looking beyond the numbers. >> when you say looking beyond the numbers, how do you look beyond the numbers in a weekend in terms of positioning yourself in the markets? >> it's a binary event so we can't do anything. you can, i think what has been happening this week has been a lot of short covering, people have made a lot of money or just taking profit, and then you just neutralize your positions and waiting for the binary event. >> your handicap on what the binary result will be? >> the problem with that is that

it's asymmetric binary event. if the traditional party is winning people say fine, it's a non-event, we should have expected that anyway and that is going back to the more fundamental issues which have already been commented on the show earlier on today. if of course the central left would win as it is now labeled, then people would say my goodness, what is going to happen and plunge markets into more uncertainty so there's more downside than any upside. >> and as a result, what should investors be doing? we have investors all the time who are wondering am i going to miss out with the train leaving the station if i don't get in ahead of this and turns out that it's okay or if there's more risk to the downside, should you still be standing by on the sidelines? >> because it's binary it just cannot do anything. it's almost like lottery. you can put in some money and see what it makes, but not really risking too much. about the train leaving the situation, my view for a long time has been that it will leave the situation very slowly.

people kind of feel when i'm talking to clients there's going to be a wake up one morning and the sky is blue and all it clear. it will not work like that. it's a slow process and we're working toward something but we're not there yet and it means there's a bit of time. what is interesting is that people have a kind of nth degree think being it. some say we force the rest of europe to come up with something forward and this is something we cannot exclude and this is the tug-of-war taking place in europe, people who can make the big gesture which is really germany and angela merkel, meaning providing more solidarity and on the other hand giving over sovereignty and this is the battle which is going on. >> we spoke with martin wolf from the fte earlier and his point was angela merckle is continuing to say wait a second, germany is not going to back stop all of this, we're not going to pay and write out

endless checks. is that the most important player to watch in all of this? >> yeah, that is the most important player because the richest country, highest rating and so on. let's not forget germany will have elections in the fall of next year. it's still a way off. let's not forget this is all a matter of negotiation. everybody has one card to play, say the periphery has the card to play. i want some money but at the same time going to give up sovereignty. this is a bit of a shortcut, in return germany wants commitment. >> angela merckle is more willing to give than her constituents are. voters in germany, 60%, 70% want greece to leave the eu, don't want to pay for this anymore. >> that's a fair point. however at the end of the day, you're voting for what a party or a government can stand for. i think people are a bit tired

with all the rumors and the news on the greece difficulty of tax collection and what have you. it's unsurprising the average german citizen is saying why are we paying the money to these guys? >> we'll walk into the week westbound those words. thank you very much. >> welcome. i have tweeted today. i have followed two new people. >> who? >> jerry seinfeld and charles krauthammer and i've gotten rid of a lot of people that signed me up. >> did you kick me off? >> i did not. >> did you block me? >> i don't think i've ever followed but. >> are you blocking me? >> i've blocked you. >> i unfollowed you. >> good, good. >> andrew's got a lot of followers. >> i don't care. those are the people i don't want following me, i think, those 400,000. there are more than 400,000. >> like half a million now, aren't you? >> we're getting up there.

coming up, what clothingmaker should you buy ahead of the greek election, the gr gregxit. >> they started saying spannic. >> span ick? >> gregxit to spannic. >> don't miss the election coverage, that's a good name, on sunday "a greek tragedy" remeres sunday. is

welcome back to "squawk." a possible greek election stock play, jeffreys is suggesting investor buy shares of clothing maker guess, which it rates a conviction, once the elections are done, names with european exposure will likely get more positive attention. what do you make of that? counter intuitive. >> it's interesting if you dig through and look through the stock plays it's interesting. the problem is there are troubled economies over there and i don't know how much of this is riding on the euro or the problems that go with that and how much is more of an economic play. i don't know if i buy into the theory but it's an interesting one. i have to give it a little bit of thought. we'll talk more about it and some other names we've been hearing about, coming up, one of our guests was telling us they're calling us the greekend.

>> there could be some spannic. >> could be some spannic, could be grecic. it's not only greekend, also a countdown to father's day. we continue with a dad and a son who keep close watch on the markets and the economy, don marchron is chairman of lightyear capital, his son donald former member of the president's council of economic advisers, both will join us after the break. ♪ [ female announcer ] you're the boss of your life. in charge of long weekends and longer retirements. ♪ ask your financial professional how lincoln financial can help you take charge of your future. ♪

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we conclude our countdown to father's day with a dad and son duo with experience in investing, as well as economic policy, joining us now, don marron, chairman and ceo of lightyear capital and from washington his son donald marron, former acting director of the cbo, former member of the council of economic advisers and director of the urban brookings tax policy center, and i'll start, you're in studio, you're the elder marron. >> i guess so. >> and the wiser one. we'll talk, we'll be the judge of that. >> nobody's the wiser today. >> in this context. this thing is happening over the weekend so we got to start with that. >> yes. >> and spain and the whole eurozone. what do you make of it watching it from the sidelines? >> first i got to say to me it's exciting to be on a program with my son. it's the first time. hi, donald. it's absolutely great. >> hey, dad, this is exciting.

>> very proud of my son for all the things that he's done. >> you have a husband who is a father. >> first of all this is a challenge to socialism broadly speaking. can you ask the 65-year-old retirees to finance the country when people who can retire at 55? that's the oversimplified at the heart of one of these things and the second thing going forward now is you're playing a game of financial chicken at such a high level that there really isn't room to get it wrong or to take your hands off the wheel. >> i wish i -- you probably didn't see michelle speaking with a representative in greece earlier today, he talked about social justice. did you listen? >> i listened carefully and i didn't understand a word he said. >> i understood what he said. i just can't believe anyone would posit that with a sear justice look on his face. >> i don't see how you could believe that's the way to run a country. >> looking at any historical precedent whatsoever. >> i can't believe his audience

thinks that, high unemployment and the next guy says people don't pay their taxes. >> you heard the social justice and then olan -- >> thank you, thank you. >> when olan went down to 60 from 62, even though france can't afford it, the reason was social justice. that word gets thrown around a lot. it seems like social justice ends up hurting everyone when you try to orchestrate it. >> it's a challenge to socialism. the government is so big a piece of people's lives, it can't get any bigger. >> thank god it's not going to ever happen here. >> no chance of that. >> no chance. donald, i guess your father taught you well or would you disagree with anything? >> i've learned a lot from him. the one thing i would add is the other big issue in greece is competitiveness. it's not an economy that functions. it doesn't make sense for it to be stuck in a currency union. in any normal situation, it would go through the normal process of a currency devaluing and eventually strengthen its

economy to get its situation under control it needs both to fix its government and to have growth, and the challenges that when it's roped into the euro that's hard to do. >> so okay that's greece and then what about the eu as a whole, donald, what do you think? we just got a new word called spannic, which is a spannic panic i guess and greekend and whether it comes to a grexit. does the union as we know it exist in five years, the eu? >> i think one or two members probably leave because it doesn't make sense for them to be in or maybe they find some way for them to leave and then come back at a new revalued rate. but it's, economists predicted this 20, 25 years ago that it's difficult to have a unified currency in a place where the economies are not in perfect sync, and where it's difficult for labor to move across countries.

>> we want to fix this country now, too, donald. you want to start or should i go to your father? we've got like plenty of time, like two or three minutes left to fix our problems here. >> sure, i'll take ha first crack. our list of challenges is very long. i think the number one, one we need to get to is for the last year and a half we've been doing government by crisis. last year we had first the government shutdown showdown, then the debt limit showdown, then the attempt to have a super committee showdown which ended up being a kind of fake crisis. now we have a looming fiscal cliff and the debt limit comes back again, and eventually i hope in the aftermath of the election we'll go back to having policymaking done by leadership rather than crisis, so that we can make good, long-term decisions about tax policy b spending policy and about strengthening the economy. >> don? >> let's take some specifics. consumers, individuals, we're spending too much and not saving. we asked them to change, they

did. they're now net savers. that's been a great thing for them, it's been a bad thing for the economy, the first thing. second thing, with he had a housing crisis, probably bottomed out, not going up now but the cost of the housing crisis isn't just a decline, it's a change in people's view that's an element you can save. in the third thing 50 million people with 401(k)s that are watching every day what all of these things have done to them. put that together and one clear thing, this country is built on optimism, that optimism is being challenged, and when you had the crisis last year, it became clear not only in this country but in the rest of the world that our government can't get itself together well enough to rebuild the optimism what grows this country and grows jobs. washington's got to get its act together or nothing good is going to happen. >> almost sounds like animal spirits, talked about optimism in ceo land probably ends up in

people getting hired, if you're pessimistic you probably don't end up hiring many people. >> the business was smart, they used this crisis, every good ceo used the crisis to shrink down the labor force to good people that can be affected. that's been done. now he's think being how fast it can grow, one foot on the accelerator ready to go and one foot on the brake ready to stop. all it means putting the can down the road any smart ceo is trying to postpone a decision as long as he can. the other side of that, look at balance sheets, they're stronger and stronger, we're net savers, we have lots of capital, ready to go. they need a sign that america can get its act together even if they don't agree with the act and that's i think where we are right now and that's what you see in the markets, every day the accelerators are a little better and the brake a little less or the reverse. >> we have to go, donald, final ten-second thought, happy father's day, i don't know? >> happy father's day, dad. it's a treat to be on with you. >> thanks, son.

>> that was fun, great, thank you. thanks for coming in. >> donald, good to see you. next time you come in to studio. i saw him on the train last night. >> come to the studio, it would be more fun here. >> a lot more fun, thanks. >> i hope you'll see each other see each other on thursday. coming up, the european debt crisis. the upcoming debt crisis. we're going to head down to the new york stock exchange, coming up next.

in your portfolio, find out next. >> monday on "squawk box," we'll break down the results of the greek election with guest host jillian taft, u.s. managing editor of the financial times. plus, interviews with the council member of the european central bank. the former u.s. ambassador to

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>> yes, yes, it's true, the stock of the day is ypf, argentina's biggest oil and gas producer. carlos slim, one of the coolest names for a billionaire. is he the tops? he's very close. >> he is the tops. >> acquired an 8.4% stake. talk about wealth disparity. ypf was made public last month. a 51% stake owned by spanish oil company repsol. >> i don't know what to do. >> i'm very excited about the outcome here. >> kevin costner has come out a winner in a lawsuit versus fellow actor steven baldwin. costner had been accused of

cheating baldwin in a multi million dollar deal to sell cleanup devices to bp in the wake of the 2010 gulf oil spill. baldwin and his business partners made about $17 million. costner claims baldwin was not entitled to anything because he pulled out before the deal was struck. >> costner was mad that baldwin got out and sold these shares and took the profit away from him and he hadn't invested anything into it. >> i remember reading that kevin said that when an actor goes around and says, i've got a machine that's going to clean up the bp oil spill that it's hard to be -- >> taken seriously. >> and i think it kind of did work and i think they ended up selling some. >> i think they sold 80 of them. >> and it worked. how many baldwins are there, do you know? >> i don't know. there's a number of them. >> adam?

>> alec, steven, daniel. but there's one that's not -- >> billy baldwin. >> who is cute, the women love him. daniel who has had some issues running around naked in hotel rooms and stuff like that. then there's one other one, adam baldwin who i don't think is related and they're all from long island and we're all richer culturally because of the baldwins. >> we should take another look at the futures this morning. the odd story has been that both yesterday and today, the stock market has been looking at green arrows the whole way across, as we expect, or that we hear, at least. the central bankers may be stepping in if something goes wrong with that greek election. right you to, the futures are up by 42 points. that's mott the highest levels of the morning, but it's up from yesterday. >> going into the weekend with lehman brothers, if you think this is that weekend, and i'm not sure it is, we all thought the government wag going to do something. i hate what happened.