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am i home? nope. but it almost feels that way. homewood suites by hilton. be at home. bottles and bottles? tonight's season premiere of "american greed" meet a 20-something playboy who fooled banks and made millions by securing loans on a fleet of yachts that never xik existed. the shockingly simple way he stole more than $50 million through fraudulent loans. tonight on cnbc, beginning of "american greed." i like to say there is always a bull market somewhere, and i promise to find it just for you, right here on "mad money." i'm jim cramer, i will see you tomorrow. i'm larry kudlow.

this is "the kudlow report." we're about seven days from the budget cutting sequester. but don't worry, america. all is going to be well. the sky is not falling. the lower spending and limited government sequester will help grow the economy not harm it. and guess what today? president obama actually dialed up republican leaders john boehner and mitch mcconnell to talk about the sequester. this is good. it's called communication. we'll have a full report coming up from our man in washington robert costa. remember how we told the other night about how federal workers are still getting pay raises despite a so-called pay freeze? it turns out federal worker pensions are facing huge unfunded liabilities that could bankrupt them and force a new taxpayer bailout. but on the whole, folks, have no fear, america. help is on the way. this is "the kudlow report" and it starts right now.

all right. first up tonight the sky is not falling. even the president's own press secretary backed up president obama's sequester threat of mass layoffs. take a listen to jay carney. >> we agree with the consensus estimates here again from private outside economic firms from the congressional budget office that say we would lose, the country would lose up to 750,000 jobs if the sequester were allowed to be implemented. >> talking about hundreds of thousands of job losses the first week. >> no but there will be job losses. >> let me repeat my contrary view. it's not perfect. cutting spending and splitting government is a good thing. show me a smaller government and i'll show you a stronger economy. show me government austerity and i'll show you free market private-sector prosperity. get this, the numbers here are miniscule. the spending cuts in 2013 come

to only $44 billion. one quarter of 1% of gdp. not a problem. that $44 billion so-called budget cut is just one and a quarter pennies on the dollar from our $3.6 trillion budget. this cannot be a problem. it cannot be economic armageddon. do not believe these exaggerated worse case scenarios. it's just federal agencies playing politics. we cut spending under clinton and reagan and we did it after world war ii. we did it under calvin coolidge. in every case it was pro growth and private prosperity. let's get the job done asap. our cnbc contributors have some thoughts of their own.

i want to talk about mr. costa, i want to go to mr. costa first. i want to hear about this big sequester news the president on the phone with john boehner and mitch mcconnell. i didn't even know he had their numbers. what's going on here. >> the relations between capitol hill republicans and president have been quite icy for the past few months but the president called mitch mcconnell and john boehner but according to my inside sources those calls were unproductive. impasse about the sequester continues. >> no deal? >> no deal happening. republicans don't say to the president we're not going to raise taxes regardless of the kind of political pressure you put on us and the scare tactics you have about the potential job losses. >> will we see last minute negotiating? >> i think so. it will go right up to that march 1st deadline. >> question, this comes from john boehner's press secretary.

republicans are open to closing loopholes. as long as the savings are not used to finance deficit spending. now i didn't know the republicans right now are open to closing loopholes and if we close the loophole i would like to take that money and put it into lower marginal tax rates. what is boehner's man saying. why so hinting they would open to close loopholes? >> what he's talking about -- i was going to add he doesn't have any authority to raise taxes. boehner will lose his caucus if he's for any tax increase. >> hi, rogers. good to see you. >> sorry. you said talk. i thought you said talk. >> go ahead. bob costa, tell me this isn't true. this can't be true they are not talking about another tax hike. >> they think they got burned about that fiscal cliff tax that at least let some of those new revenues come in with the bush tax rates expiring.

what boehner spokesperson is speaking about the tax reform. nobody expects major tax reform happen in the next week. to your opinion, at least it's a good thing. >> a great thing. keith boykin do you have any problem with my sermon on the mound? do you have any problems with life in general? >> i like bob costa. he's a good guy. it's a helpful sign if boehner's people are saying they are willing to close some loopholes that's what obama is talking about. >> he's got you at the achilles heel. >> you're talking about two sides that haven't talked to each other. i'm glad they talked to each other today. they need to get together and work out some kind of an agreement. the president is looking for a compromise. he's willing to have some spending cuts. republicans don't want any revenue they only want spending cuts there's no way to

compromise if one side doesn't give somewhere and that's the perfect place to start. >> because keith boykin is such a smart guy he picked up on my quote from boehner's press secretary. i'll read it again. republicans are open to closing loopholes as long as the savings are not used to finance deficit spending. i don't know what that means. any loophole closing should be accompanied my marginal tax rate reduction. i think you were saying if the republicans have another tax hike the party will split in two and destroy itself. >> not many republicans in congress are sweating the sequester. reckless rough spending reductions, some spending cuts are better than no spending cuts. and these reckless rough spending cuts or so-called reckless and rough spending cuts are better than any tax increase. a penny of tax increase i don't think would get 50% of the republican caucus and nothing

like 100% of the republican caucus. >> jim, what's going on? what do you think is going on with this phone call today? >> first, about the closing the loopholes which by the way those are tax hikes. depends on what you want to do with the money. do you want to use it for lowering the tax deficit. it will increase the tax burden. that's a stunner, that would even come up. i don't think that's going to happen. republicans are a little worried which is why there's talk of passing some sort of bill which would give the administration greater flexibility to manage these cuts. but that aside, i'm pretty confident these cuts are absolutely going through. >> okay. let's look at this. what about all this rhetoric. ed rogers you've seen a few of they. i've seen a few of these government debates. military is going to go on strike. border patrol, fbi, courts,

criminals, child care, education, meat food inspection. this is the same old usual crap isn't it? this is what these agencies come up with in order to avoid -- you know what? it sits not even a budget cut. it's not a real budget cut. it's just a lower baseline increase that's all it is. >> it's the parade of horribles and the worst scenario possible. the president is already using police officers and first responders as props. the cameras will find somebody somewhere that's miss ad meal as a result of this, get the most sympathetic victims they can. this time it's different. the government won't shut down. no delay in social security checks. you won't see a chain around the national park. so this time it's different. like i said republican members of congress rank-and-file are not sweating this. >> what's strange here is we saw jay carney sort of miss these job cuts, they will happen over a per of time.

listen before the fiscal cliff, those tax hikes were supposed to cost 700,000 jobs. the administration didn't care a bit about. now it's 700,000 jobs loss and we're supposed to keep on spending. >> let's get this right. tax hikes don't lose jobs but spending cuts do. >> or else they don't matter. >> i don't get that. >> only job loss and spending cuts. >> robert costa were you going to say something? >> you have to look at the big picture of politics. what is the president doing? he's banking does republicans especially house republicans that represent the defense industry, military bases he thinks they will break ranks in the next week. that's why he's calling boehner. >> do you think that's right? >> he's exactly right. rob is such a smart guy. the republicans are divided. and even though there's a consensus from the right-wing and tea party group and people like you and jim that want to go ahead with the sequester the

reality is a lot of republicans are afraid of the consequences of this. if they go with this, there will be some repercussions and they are afraid of taking that on. i don't think the president is in a bad position politically. the republicans have to figure out what their position. at the end of the day the president is in the stronger place. >> at the end of the day when we have these cuts and the economy doesn't collapse it will transform this debate. the boogieman will have disappeared. >> you take an argument in your miss, the president is not saying the economy will collapse. he's saying there's a reduction in gdp growth. >> 700,000 jobs loss. >> same models that said the stimulus would produce a boom. >> see, what i hear, robert costa is that the appropriations committee, the appropriations committee, who is that, what's the name. >> hal rogers from kentucky. >> they are going to meet and they are going to put up a new

continuing resolution. all right. a temporary budget that will take them to the end of the fiscal year. no government shutdown. in that budget they are going to give the defense department and maybe some other agencies some additional flexibility to meet these sequestration spending cuts. they will give them some flexibility and keep the government open and trap president obama because the next day the sky won't fall, the economy will be fine, the criminals will not be let out of prison and this nonsense from the defense department about losing 800,000 civilians to furloughs will not happen. none of this will happen. it's just politics. >> that's a great strategic point. that's the buzz on capitol hill. republicans want to move away from these pentagon cuts and put pressure on the president to come up with new cuts. karl rove recommended that today in the "wall street journal." >> pentagon is 20% of our federal budget. if you're going to make cuts in

spending that's not entitlements you have to -- >> ding, ding, ding, that's not entitlements. can we make entitlement cuts? >> sequestration doesn't deal with it. >> the president will never do entitlement cuts. >> here's the reality. we saw the gdp growth numbers decline in the last quarter of 2012 because of the contraction in federal government spending. >> that's primarily in the military. >> the private-sector economy has grown 5%. they weathered these cuts. >> ed rogers i want to go back to one fundamental point regarding my sermon on the mound. i really believe that any time you can cut spending and limit government that is good for the economy. that is why fundamentally apart from the numbers and getting in the weed for all these debates i think that this is a pro growth move and that's the reason why i

want the republicans to hang tough. i think any time you can limit government, and i'll give credit to clinton and gingrich and reagan and harry truman after world war ii, limiting government is a good thing. that's free market capitalism. that's why i want this sequester to go through. >> yeah. we don't have a problem that's solved by bigger government. our economy is too small or government is too big. if we have some cuts or something that even looks like cuts it will add certainty to the business climate. it will make a meaningful difference. in a few months obama will take credit for what will come after the sequester. >> we'll leave it on that pearl of wisdom. folks if you insist on panicking about something consider the huge cost of all those federal government government workers. you won't believe how much their unfunded pension obligations are. they are going broke and there may be another taxpayer bailout in the cards.

and once again don't forget free market capitalism is the best bath to prosperity. "the kudlow report" is coming back with more capitalism. don't worry, folks, help is on the way. >> remain calm. all is well. all is well!

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it's gone largely unnoticed but a new report today warns federal retirement pensions could go bankrupt. they could. get this. the unfunded liability of the federal government's pension system surged to $761.5 billion in 2011 and that's up 139 billion from its deficit in 2010. let's discuss this. we have steer moore, keith boykin. steve they are down $760 odd billion. how will this get resolved. it's like social security. >> yeah. by the way, washington, d.c. pension deficit is better than california's. that's a big number you're talking about here. i want to emphasize one thing to the viewers.

this has nothing to do with the budget deficit that you guys were just talking about. this is an addition to the trillion dollar deficits we're running. these are not officially on the books. it's money that the federal government owe these federal retirees. i would make two comments about it. number one, as you know, you covered this, the federal pensions are so much more generous than the pensions that any private-sector worker gets and that's a big part of the problem. they made these promises they can't keep. the second point is a point you make all the time. why are we bringing any additional new workers into the federal workforce under a pension program that is defined contribution or define benefit. everything should be moved 2401 k for all federal workers. >> on that last point, they pay according to this report 0.8%. that's all they pay. >> unbelievable. >> if you have a defined contribution, you know, they would pay 30%, 40%, something

like that, maybe 50%. that's the problem. very low interest rates has reduced the return on these pensions so i don't know what they are going to do. i think the taxpayers have to come up. >> i live in washington, d.c. i'm in the belly of the beast. i live among federal workers and federal retirees. they are all retiring at 55, 58, 60 years old. they get generous benefits and retire early and live 20, 30 years on the federal dole. >> has the president increased the -- >> he has. has to be increased much more. the numbers larry was talking about, private employees that have -- by the way there aren't many defined benefit programs left but those that do they contribute three or four more times more than federal workers are, keith. >> go ahead, jimmie. >> i'm a little confused. i thought the whole point of these public sector workers is

that they would get somewhat lower pay, benefits wouldn't be as rich because they had greater job security. it seems it's just the opposite they get better job security, better benefits and better pay. it's supposed to be the other way around. >> i was looking at those numbers. you're right. if you look at the pay and compare the pay with private workers and public workers and federal workers. the disparity is in the pensions and the health care benefits. and those are large. even the general accounting office says the average federal employee pension is about 50% larger than what a private-sector worker gets. >> one reason why this is becoming a problem i think you mentioned it. we're hiring more federal workers. so, therefore, the liability grows because they are not hardly paying anything into it. the president's proposal is right, that's way too small. they are deep in the hole. i don't see how they get out of the hole. they need 10% interest rates.

>> it's dangerous if we move to what steve was saying where you move totally to 401(k)s. we saw the disaster with the stock market crash in 2008. we don't want people in government or private industry totally beholding or dependent on the stock market as opposed to -- >> that's the old model. defined benefit model won't work. it worked in some way. >> it only works when the demographics are right and growing at 4% a year like you were in 1950. that doesn't work today. >> there was a social compact with people. where if you worked for an employer or the government -- >> that model bankrupted you. >> now you need -- >> here's the problem with that contract. >> or you're going penniless. >> guess what those programs are going bankrupt and i want to throw it right back at you. who is going pay for this $800 billion unfunded liability?

private-sector workers that get pensions that's much more generous than public sector workers? >> we'll have more growth in the economy, more people who will be contributing also higher investment for each individual. so if you take a number of moderate reasonable steps you can fix this problem. >> to quote bill clinton it's about arithmetic. >> don't throw out the baby with the bath water. >> they have to -- what's going to happen here in the short run is the government is going to increase its contribution into the funds. >> that means the deficit spending. >> that's correct. that's exactly right. the deficit gross and the debt grows and in effect taxpayers are going to finance the early stages of a bailout for these federal retirement and civil service contracts. >> maybe the federal government can declare bankruptcy like cities are trying to do. >> we'll look at that chapter

11. steve moore you're great. now american ceo who bashed a french work ethic. we have that story and more from mary thompson who is coming up next.

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and nearly 1,000 improvements. introducing the redesigned 2013 glk. see your authorized mercedes-benz dealer for exceptional offers through mercedes-benz financial services. key senators making immigration proposal that could affect you. cnbc's own mary thompson has that story and other top headlines. good evening.

>> good evening. at least eight senators a bipartisan group are supporting a bill that could force every u.s. worker to carry a biometric i.d. card. it's for citizens and noncitizens proving you're eligible to work. they can use fingerprints or some other identifier and the goal is to prevent companies to hire illegal workers. some are worried about privacy. senators are open to hearing other ideas. more pressure mounting against chuck hagel. 15 republican senators sending a letter to the president asking him to pull the nomination. h hagel has a history about controversial statements about israel. >> american airlines won't fly the 787 dreamliner until june. they were scheduled to start using them next month. but the dreamliner has been grounded for a month after japanese airlines had problems

with the planes. and a story you touched on last night. american ceo who blasted french workers in a letter to french officials. he's maurice taylor. he was on "closing bell" earlier today. >> what i said was true. and they admitted it. they laughed about it, okay. that's where this union president, this michael, i call him spike because he's got his hair all up in a deal, and they are devout commies and said it's the french way, you have to do the french way. i said i'm not going to do it if it loses money and that's what you'll always do. >> very strong words, larry, from mr. taylor. >> did he just call him a commie. >> he did. do you know he ran for president in 1996 and i'm won'ting is this his work, laying the ground work for 2016. he's from chicago. so i was reading up on that. >> i remember that.

>> there wasn't a lot of support for him but maybe with that kind of rhetoric he'll -- >> whoa. that comment commies. could i ask you a question. mary was talking about immigration. good news story late in the day. business groups including the chamber of commerce and some unions are coming together and give the illegals work permits. for the first time. work permits. now businesses always wanted that. unions have always opposed that. what's is going on here. is this a break through in this coalition for imgrag. >> they have been talking about some sort of guest worker permit. the key is to make sure they are not tied to those employers. it becomes like a debtor servitude. they are not locked into those employers. that's a key red line i would like to see.

>> if you get verification. do you think we'll get an immigration deal this year? >> absolutely. zmu? i do too. i'm for it. i'm very much for it. pro immigration reform. a lot of people aren't. republicans are split. democrats are split. >> there's a consensus in the country people want this. the republicans and democrats. look at the majority of them. they do want this in the house and senate and the president wants this. so the balls are all moving and aligning together. i don't see how this can't happen. it would be bad for the president, bad for the house, bad for the senate. good for everybody if they do something. >> it's not for political reasons that i favor immigration reform it's because i think it's pro growth. if you have the upper end, train them let them stay here, you have the lower skilled people, a lot of work that can to be done i think it's just good for our economy. >> it is. you want them contributing to the tax base as well. that's hat you need to get them in there. we're a nation of immigrants.

we should welcome them. get this right this time or at least as near as right as possible because as you said not everyone will win. the democrats and the republicans are going to have to give up something. >> think this union chamber of commerce thing is very good. we'll watch it. many thanks to mary thompson. we appreciate it. we'll see you again in just a few moments. the doomsayers keep saying our roads and bridges are in disrepair. this is more sky is falling pessimism. we're about to reveal the results of a new study that says the infrastructure in this country is getting better and better. in the future we don't need as many roads. we'll come right back to cover this infrastructure story. [ indistinct conversations ]

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president obama wants to

spend another $50 billion on repairs to our infrastructure. do we really need it? that would be on top of the over $100 billion for the nonshovel ready projects back in the 2009 stimulus. remember that? there's a new study that says we may not need it. our roads and bridges are not crumbling and are much better than they were 20 years ago. how about that good news? david harkin is the lead author of that study. he's a professor at the university of north carolina charlotte. david thank you for coming on. i read the reports here. let me get this right. throughout the country in real terms adjusted for inflation, state control, highway spending has increased by 60%. 177% in nominal terms. 60% in real terms. they had good results. >> we were quite surprised when we looked at the numbers. the highway system has gotten

better on all seven measures we looked at. accidents rates are down. even the pavements have been improved particularly for the interstate system. even congestion is down too. so this isn't, i think, generally common knowledge. most people think the infrastructure is crumbling or falling apart. we found just the opposite. >> so let me ask you. you got a couple of states here, texas, florida, california, oregon. you got -- they had 100% increase. they doubled their transportation money. you say that the bridges are better, the roads are better. why does washington then so manic and obsessive about pouring more and more infrastructure money. why? >> well the fundamental problem here is that the states control how that money will be spent. some of it comes from the federal government and some of it from the seats. so the feeling in the states and in washington is that we just need more and more and more. but in fact the numbers don't

support that. the numbers suggest that we're making progress and that's very good news for the public. so, in terms of where the issue should go here we ought to look very carefully at whether these requests are really needed. >> i have a question four. have you been on the new jersey turnpike? >> yes. >> i'm sure a lot of the bridges and roads are actually doing quite well. some of the streets i've been on in new york and new jersey are crumbling and i think that there's a need for more investment. the new york city streets are horrible. >> you are so mean and cruel. >> but it's not just the maintenance of the current bridges and roads it's the need to build new bridges and roads, for example. the bridge or tunnel to connect new york and new jersey. >> david, here's the thing, what is the relationship between -- all right there's always going problems.

keith is right. there's bad roads in new jersey and some in new york. how do we know what the spending should be and why should it all be federal spending. where is the state spending. where is the privatization. where is the toll booth spending you have for private companies the way they have it in indiana and some other highway states? >> well we have increased the toll booth spending over the last few years but still a relatively small share of the total. the feds contribute about a third. the states contribute about two-thirds of the total so most of the money comes from state gasoline taxes and other fees that the states impose. so together all of those contribute to the system that we now have. the upper level system, those the interstate system and the primary system are in pretty good shape. but it's also true that the local systems and particularly the municipal systems have significant problems. authors typically not funded by the federal government, or in some cases even by the state

governments. so those systems do require work. >> maybe they don't want to. keith is so harsh the new jersey turnpike -- >> you want chris christie to come back on the show. >> the new jersey turnpike is in such fine shape because of its governor. >> here's where the infrastructure mania comes from. with you have all these politicians flying to china, beijing arraignment, it's gigantic, a lot of china envy. the big infrastructure report comes from engineers. civil engineers who would benefit from infrastructure spending. that's like asking a fireman if he wants more fire trucks. we need to update the power grid. >> it's internet and wi-fi. the possibility of modernizing -- >> i'll buy that. >> i think that's what the president is talking about. >> no. >> we don't need high-speed rail. >> david, here's one of my big

beefs. this is highway money and bridge money. davis bacon, the prevailing union wick, once you use federal dollars and it's true for these big union states like new york, new jersey and california, once do you that you got to pay the davis bacon prevailing union wage rate which is at least a third higher than if you did it privately. that's my biggest beef about spending all this money. >> well, in our study we showed the cost for doing this work are much higher in a few states compared with the rest of the country like california, new jersey, new york are very high cost states relative to the other states. to go back to the earlier question regarding whether this is just a problem of the interstate system or whether the civil engineering report is correct, you know, let's remember the civil engineering report looks at only one year and is based on opinions from local experts. but it doesn't look back in time to see whether we made progress. that's what my report does.

>> we got to leave it there. again i want to say the new jersey turnpike is fabulous. david harkin thank you ever so much. congratulations on your study which blows the lid off all this infrastructure money proposal coming out of washington. now, california literally sitting on the solution to all these economic problems. it's called shale and shale oil and there's a lot of it, natural gas and shale. question is will the state wise up in time to actually take advantage of it? our own jane wells is live in california and she looks ready to drill, drill, drill. more than two years ago, the people of bp made a commitment to the gulf. and every day since, we've worked hard to keep it. today, the beaches and gulf are open for everyone to enjoy.

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bring it up to 90 decatherms. how bout ya, joe? let's go ahead and bring it online. attention on site, attention on site. now starting unit nine. some of the world's cleanest gas turbines are now powering some of america's biggest cities. siemens. answers. california could be sitting on two-thirds of the recoverable crude oil from shale in the entire united states. but are they willing to go get it? even with thousands of jobs on the line are they willing to go get it? jane wells joins us now live from california. good evening, jane. drill, drill, drill. >> larry it's got to be profitable, you know. this test well behind me is owned by narj. it's an llc owned by affiliates

of shell and exxonmobil. california face most. half of it is imported. i am standing on a game changer. as you said two to three miles below me is two-thirds of the nation's shale oil reserves that are still on tap. take a look at this graphic. if you look at the eagle ford shale in texas, it has an estimated 3 billion barrels. north dakota bakken has 4 billion but monterey shale has 15 billion if it can be tapped economically. it could be huge for the economy and gas prices. unemployment here in kings county averages 15%. then there are the tax revenues. government would get 12.5% from sales of any produced on land. it would be good for us. last year in 2012 we brought in $190 million. we share half that revenue with the state of california. >> you're seeing any benefit

already? >> what we're seeing a few local jobs and some spending in the local economy for quite a bit of exploration. but those are relatively small dollars compared to the potential of what could be. >> now but and there's a big but the sierra club want as moratorium on all of this until the state comes up with fracking rules and they don't have any. we're near fault lines. the sierra club is suing the state for not enforcing the rules it already has. hang on jane. we have our contributors here. did you have a question for jane? >> jane this sounds like a fantastic idea. how far called president obama with this release the supplies, getting rid of the regulation? >> you know, really the blm out here is happy to auction off the

mineral rights to these lands, and the oil companies are approaching them in more heated fashion to do it. the problem is the geology in california isn't like the bakken shale. we have fault lines. the rock is very dense. it's very hard. the oil is in pockets. what you have right now is the 21st century version of wildcatting where these oil companies are secretively drilling holes in the ground seeing if they can find some oil and how much it will cost to bring it out. >> be careful those wildcats, capitalists. >> jane wells thank you very much. drill, drill, drill. we appreciate it. stocks took a slight dip down today but existing home sales very strong. we have a bull here with my friend here but let's enjoy a little political commentary from jay leno. >> over the weekend president obama, you know, president obama played golf with tiger woods and tiger said the president was a

very good golfer for a guy who only plays five days a week. that's pretty good. and you know the president's handicap now? doesn't understand economics. that's the handicap. someone help me!!! i have a flat tire!!! well it's good... good for me. what do you think? geico. fifteen minutes could save you fifteen percent or more on car insurance.

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...it's mbut i am your to lookrmarket data. i know what you're looking for. i'm not chained to your desk anymore. i'm faster and smarter now. and so much less expensive. i am your market data. and if i do say so myself, i have never looked better. superderivatives introduces dgx. data done differently. let's continue my sky isn't falling theme. sheep on the way. take a look at these numbers. year-to-date stocks are on a tear. dow is up 6%. s&p gained over five and nasdaq up almost 4%. markets right across the board these past two days, but

consider this a very healthy correction. the bull run is alive and well. let's bring back our panel. people are telling me fears of the budget cutting sequester are giving problems in the stock market. i don't believe a word of it. what's your take? >> in fact the currency markets reflecting on this is quite bullish. you cut spending why that currency is worth more today. >> imagine that. >> yeah. i think that's what the real constipation out there strong dollar deflates economies. somebody who looks that on a one year basis or five year basis may get confused. if you look at the construct of money printing, the low was in 2011 all time high in commodities was 2011. 2012 we had things like all time high in food prices. bernanke said we never had inflation. if you get this there are to be strong whether through spending cuts or getting the fed out of the way and these are very bullish catalyst not just for

the economy but for the market that will deflate the inflation and let stocks go higher. >> mary, i'm a hard money guy. i believe in king dollar. i would like to see the there are linked to gold commodities. i'll be very iconic here. people are worried about the federal reserve and the minutes that came out yesterday and they said they indicated a tightening. i would say this if the fed surprised everybody and actually tightened interest rates i think the stock market would absolutely collapse, absolutely collapse and i hardly would ever make that statement but i think globally and in the usa conditions are too sensitive even though i'm not a fed fan i think it would collapse everything. >> i think it's a concern out there. i think what you tend to see in the markets is once the idea is placed out there the more you hear about the idea the markets get used to it and ad just to it. i'm not sure a collapse would really happen if indeed it did happen. >> we saw a tightening.

those minutes by raising the specter that might end early that was a de facto tightening. that's exactly what we saw in 2008. we saw a passive tightening. >> you can see, your dollar is very strong. your gold prices are coming down. your oil prices are coming down. i thought it was a de facto tightening. from an economic standpoint this is a fledgling recover. i know you're pro obama i appreciate that. do you want your central bank toez up or do you want it home to tighten up? >> you're making an argument for mormon tear stimulus. the president has been proposing that. that's what the fed is trying to do. if you drawback on that there's a fear that they will put our economy back into trouble. i think we need to have more of that. i think we need fiscal stimulus. >> the ideal combo here is a very tight fiscal policy with an

easy monetary policy and that's how we'll deal with the fiscal problem. no tax hikes, spending cuts. >> you get both out of the way. you have to at some point and i agree not having qe as an expectation is a tighter policy. that's point number one. point two it's very old wall i need stimulus and i need spending. if you go back to reagan, clinton, go back to eisenhower -- >> strong dollar was consistent with great stuff. >> strong dollar is the most pro growth signal you can find. >> those were golden dollars. these are not golden dollars today. >> the average oil price both clinton and reagan, '83 to '99 was dollars a barrel. take oil out. that's the big catalyst. >> can i ask you a question, please. we have a weak dollar right now

relatively speaking and we have a strong stock market. what's causing that then? >> think again you can't mistake the strong stock market for a strong economy. look at japan. japan has a ragingly strong stock market. they are burning their currency at the stake. we tried this bush and obama. you get away if that. you go back to as jimmy said. you have to have some kind of sobriety on the fiscal side and get the fed expectations out of the way and that oil price will be the biggest stimulus that nobody has thought of. >> strong dollar cheap oil. mary, really lousy numbers from europe today, purchasing managers for service really bad. not surprisingly france looks like the worst it all. what's doing over there? >> well, again, we have a weak situation that was reflected in the fourth quarter gdp numbers that we got out of the eurozone. it's a concern. it's a concern going into this weekend in large part because people are watching the italian

elections coming up. there's fear if silvio berlusconi wins a majority that koend up -- >> i forgot. the italians are pretty loose -- they don't care about anything. i know i'm asking a good notre dame girl with good values on this point how in the hell can silvio berlusconi run for italian governments. >> how many governments have they had in the past 40 years. that's a data point investors are watching. if he's elected that's a setback to the italian recovery. >> that's a setback to humidity. setback to morality. did you know silvio berlusconi was running again? >> he made to it 7:55. >> but you're going -- >> you're not usually so bullish. >> i have not seen -- this is a

fleeting chance. we've not seen an opportunity for the u.s. dollar to actually break out in ten years. i mean give me a bone here. this is all i want. i want purchasing power in my back pocket. i want government out of the way and i want to see how that works. >> if the dollar keeps rising and becomes king dollar again i have to back obama. i have to. >> let's state one simple fact never is a long time and never has the u.s. economy not rocked and rolled with the dollar strengthening. >> sequesters, sequester is good for the dollar that was your earliest point. i'll hold that point. i love that point. mary this silvio berlusconi thing, i'm going to have to get back and read the "financial times." i have to understand this. >> not safe for work. >> not safe for anybody. keith, mary, jim, all kind enough to join us tonight. that's it for the show.

i'm larry kudlow. i'm still hung up on this silvio berlusconi thing. kudlow report will be back tomorrow night. help is on the way.