work on his family farm. he said graduating from high school is an honor, and he should know. see that medal around his neck? he received it for saving his platoon in france in world war ii. i'll be back with a spokeswoman of the american red cross as they recover from disasters. "your money" starts right now. /swelcome to "your money." steve is an editor of the wall street journal. can a fear of the depression, whether it's warranted or not, cause consumers to cover this depression we're in.

>> i'm with you. we're not facing another great depression, thank you very much, so we don't need people jumping out their window. people are in a state of real fear, there is no question about it. if you look at the statistics on the economy that have come out in the last month, they've almost all been negative. but sometimes things are bleakest before the dawn, and i think that's the case right now. but you're right, the big problem is because people are in such a state of fear, they're not spending, businesses aren't investing, and that's actually -- so it's becoming a self-fulfilling prophecy. the economy shrinks as people become more afraid. >> we have all sorts of examples of people who would know. ben bernanke expressed optimism that the recovery will gain some momentum in the next six months. >> growth seems likely to pick up somewhat in the second half of the year. overall, the economic recovery appears to be continuing at a moderate pace, albeit at a rate

that's both uneven across sectors and frustratingly slow from the prospect of underemployed and unemployed workers. >> former "new york times" columnist bob heard. ben bernanke acknowledges that the job situation is far from normal. in fact, those are his words. americans are telling cnn that just above half live in a household where someone has lost a job or are worried unemployment will hit them in the future. bob, americans are simply afraid right now. what role does that play in holding back this recovery? >> i don't think fear holds back the recovery so much as the problem that we're talking about, and that is employment. not enough americans are working. and what we're finding out is, the corporation in america right now are producing much more than they did before the great recession hit, but they're doing it with 7 million fewer workers. corporations don't need as many

workers as workers need jobs in this economy now. >> and that's a trend that's been going on for years. >> yeah, but we need to have a conversation to figure out what our policies are going to be going forward, because even if we have modest job growth and the economy recovers, which people seem to expect, a lot of americans are going to be facing what is an extended recession, and we don't have employment for those folks. ultimately, a consumer society can't work if the consumers, if so many of the consumers are tapped out. >> chief national correspondent john king joins us from new hampshire where he's going to moderate monday night's republican presidential primary debate which is right here on cnn. john, voters are giving president obama low marks on his handling of the economy. what do you expect the republicans to offer to counter that? >> well, the republicans are blaming the president, number one. now, president obama makes the case that he inherited a horrible economy from george w. bush. it's better now, though not great, better now than when he

began office. that's the president's case. the republicans are saying the obama administration has too much regulation on the economy. most of them don't like the wall street package that was passed by the congress and signed by the president. so it's an anti-obama, anti h anti-democrat message you get from the republicans. they said they would cut spending. whether cutting spending is the right thing to do when you want to increase employment is the question, but debt is driving the economy right now, not so much employment. iowa and new hampshire are two states that have an unemployment rate higher than the others. >> bob, this debate is going to hinge on whether or not, as we're talking about, maybe other leg down in the economy. forget the depression talk, but there is some talk that things might weaken a little bit. this idea of cutting spending right now, it really flies in the face of what democrats are trying to push. >> most economists i talk to,

and not just liberal economists, think that is exactly the wrong thing to do right now where the economy has weakened, employment has not picked up the way people wanted it to do, so if you don't have spending in the private sector, you need to get it from government. if government is going to cut, it's just going to depress the employment statistics even further. >> steven? >> i don't agree with that at all. i think we've had this kind of experiment over the last two years where we've flooded the u.s. economy with money, we've flooded the u.s. economy with government spending and the economy is still really flimsy. this has been an anemic recovery. i think the case the republicans are going to make next week as this presidential campaign rolls on is that we need to get back to the kind of reagan formula. and i think this is a very good analogy. the last time we had a horrible, horrible recession like we do right now was in the early 1980s. reagan didn't flood the economy with money, he actually slammed the brakes on the money supply, got inflation down and we did tax cuts. and by the way, ali, over the

next 20 years, we created about 35 million jobs. we know how to create jobs in this economy, and by the way, we did that even as employers got much more productive in terms of their producing of goods. >> john? >> well, ali, look at the reality of it. you're having a great debate between bob and steve about whether you should cut spending. it's not going to happen. the president has said let's cut spending on research, let's look at the house majority who says cut spending, cut spending, cut spending. the house majority just isn't going to go along. it will be mostly small ball. don't expect anything big right now. i talked to david axelrod, the president's top adviser the other day, and he said that's why you have elections. we'll have big dedates in the 2012 presidential election, but what about the millions of americans who are unemployed and underemployed in the meantime? >> let's talk about the president's opinion research.

the cnn research poll shows the president's approval rating has dropped since late may. it's down six points. 48%, you know, we were talking after the killing of osama bin laden, john, about this bounce that the president got, and people saying, well, he's walked into his next election victory. nobody really thought it sensible to predict in may of the prior year whether that was going to be sustained. but the reality is it does seem to be coming back to the economy. >> it is all the way back to the economy. now, there could be some world event. there are global challenges, afghanistan, libya and beyond that could come into play as we get closer and closer to the election. without a doubt, everybody serious about this election. they believe the number one, number two, number three issue will be the economy. steve just mentioned ronald reagan. the unemployment rate was 72% when ronald reagan was reelected back in 1984. he was able to convince the american people that things will get better.

george h.w. bush. back in 1992, unemployment went up 8%. it started getting steady around election year. george h.w. bush was telling the truth when he said numbers were getting better. the voters here in new hampshire and around the country didn't believe it. they didn't feel it, and they said goodbye, mr. president. that's what the worry is in this stagnant economy. the five most important issues to voters have one thing in common. i'll tell you what on the other side. ♪ you love money

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a we don't go lower than 130. ts a room tonight for 65 dollars. big deal, persuade him. is it wise to allow a perishable item to spoil? he asked, why leave a room empty? the additional revenue easily covers operating costs. 65 dollars is better than no dollars. okay. $65 for tonight. you can't argue with a big deal.

the economy remains issue number one to voters, the only one that half of the republican voters say will be extremely important to their vote for president next year. but look at the rest of the top five. unemployment, health care, gas prices and the federal deficit.

they're all about your money. you need to go to number 6 before you get to terrorism, and down farther than that, we're showing you to find hot button issues like abortion, illegal immigration and gay marriage. bob, what exactly can a voter reasonably expect from a president in a presidential election when it comes to fixing unemployment or lowering gas prices? >> in terms of lowering gas prices, nothing. hardly anything at all from the president. but i think john was correct in the prior segment when he said we're not going to get much in the way of investment before the election next year because republicans hold the house and they're just not going to permit anything like that. so i think we're going to continue to have a stagnant economy, employment is still going to be depressed, and ultimately, i mean, i think that's going to be harmful to the president's reelection efforts. you know, he's not invulnerable, and i thought it was really interesting the reference to george h.w. bush's reelection

bid. >> steve, give me some sense of whether or not we have unrealistic expectations of the presidency and from government when it comes to the economy. >> well, you know, what's the old saying, the economy is stupid, and that's going to be the theme of this election just as it has been almost every presidential election that i can remember, ali. for better or worse, presidents get blamed for bad economies and they get the credit when the economy does well. and look, after four years if a president hasn't turned the economy around, i think it's time to fire that person. if the economy is better next year, if we get that unemployment rate down to, say, below 8% or 8%, then i think the president will be on much firmer footing. but it's going to be hard for president obama to make the case if we still have 9% unemployment, if we're still running a trillion and a half dollar deficit that he deserves four more years. >> john, the problem steve has is he's too young to remember the last time we dangerously pulled up on spending in the middle of a tentative recovery

in the great depression. it's ironic people are talking about a great depression right now when in fact that was the example of a place where we didn't spend the right way and pulled up a little too fast. they've scored a lot of points with the tea party in advocating trillions of dollars in cuts as part of a way to end this debt, but do you think any republican in monday night's debate might back away from severe and deep cuts to this economy? >> no. in a word, no. and why? ali, it's the only rule in politics, you wage this campaign based on the last campaign. remember, these republicans are competing in a primary first. we're not in a general election, they're not appealing to all of america. they're appealing to conservative voters in iowa, they're appealing to conservative voters in new hampshire. those same voters and conservative-minded independents were concerned about spending, spending, spending deficits.

that's where they're attracting they're appeals right now, and any spending of the economy would be through cutting taxes, not through spending, and they believe they need to frame themselves against president obama. >> steven, you're a dying fiscal conservative who is not running for anything. do you think it's reasonable for somebody who is running in the general election, forget the primaries for a second, for a conservative republican in the general election to say maybe we shouldn't be as drastic as we're suggesting being right now? >> you know, first of all, john, i think you nailed it. i think you're exactly right. the republicans are going to be talking about which one can cut spending the most and which one can cut taxes the most, and that will be the most appealing candidate, i think, in this republican primary. i just think this model of spending, spending, spending hasn't worked very well, and ali, i take issue with this. i think if the president and this congress could come guard with an incredible plan to bring

the enormous debt down, i think that would unleash the animal spirits of this economy and we would get growth. so i'm making the case that debt and the deficits are holding back this economy, they're not stimulating it. >> bob, can there be something that unleashes the animal spirit in this economy, because that is exactly what we need. >> yeah, and it would require investments. if you want to grow the business, you have to make investments in that business and we're doing just the opposite. i think your reference to 1937 when fdr and the congress pulled back prematurely on spending and caused the economy to plunge again is a terrific example. we're in danger of doing something similar, not on the same scale because we're not facing a depression now, but we're in danger of making the same mistake again. >> guys, it's a good conversation. thanks for joining us for it. steven moore, editorial writer with the wall street journal, and john king, our chief

correspondent and the article john king usa. be sure to tune in monday night at 8:00 p.m. eastern. john is moderating the republican presidential debate from new hampshire and we'll have full coverage of it all day. how much money is your friend making? from engineers to teachers and everything in between, we'll reveal just what you, and everyone you know, is getting paid, next. north america actually has one of the largest oil reserves in the world. a large part of that is oil sands. this resource has the ability to create hundreds of thousands of jobs. at our kearl project in canada, we'll be able to produce these oil sands with the same emissions as many other oils and that's a huge breakthrough. that's good for our country's energy security and our economy.

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[ male announcer ] want to pump up your gas mileage? come to meineke for our free fuel-efficiency check and you'll say...my money. my choice. my meineke. how can you cut 10% of government employees without handing out any pink slips? i'm joined by christine romans, head of cnn's bottom line, and pete dominic, host of serious xm stand-up. welcome to all of you. listen to this. a new bill from house republicans aims to slash the

government work force by 10% over the next five years without laying off a single employee. how? for every three government employees who retire, the government would only be allowed to replace one. christine, if the government isn't hiring in the name of cost, does that give the government sector the green light to behave exactly the same way? >> the public sector doesn't need the green light, ali. that's exactly what's happening. i think what we're seeing in the economy right now is another jobless recovery. in some ways that's great because it means the private sector is becoming ever more productive. you know, people are investing in new equipment, in technology, and that's great for american companies, that's great if you're a shareholder in those companies, but the devastating consequence is the job situation is really, really dreadful. >> what do you think about it, christine? >> it's right they're paying for new equipment and not new employees. they know they're going to need the new equipment, they're not sure they're going to need the new employees in the next year.

in terms of the government and this massive attrition program, the government would like to do this quickly. they would like to get the federal work force whittled down, but it's not much different than what they recommended. i think the bottom line here for the big federal work force is that it's going to be -- the belt is going to be tightened, just how tight and how quickly. >> the way you look at the federal government is different than it was 50 years ago. pete dominic? >> let's think of a couple great-sounding, catchy names that don't make much sense. the fda is inefficient? that's because you're gutting it. it's a narrative that government is the problem. reagan started it 30 years ago. let's have that discussion. analyzing bin laden's thumb drives right now, i don't think we should remove those guys right now. >> point well made, pete.

what's your college degree worth once you're actually in the work force? let me give you a sense of it. we have a chart here on the wall. basically that orange line through the middle is $55,000, right? so these are various different occupations. the red part at the bottom of each one of them is the 25th percentile of what you earned once you're in that profession. the blue bar at the top is the 75th percentile. this is done by georgetown university center on education in the work force. take a look at that cluster right in the middle. computers and mathematics. 28,000, the top of that, 100,000. move over one to education. we're talking a lot about teachers. the 25th percentile, 32,000, the 75th, 55,000. christine, you and i talk about engineering all the time. 53,000 right on the line at the 25th percentile, 73th, 102,000, and health care, an industry

that had been growing despite the economy. >> to get that college degree, you might have a lot of debt and look at education versus engineering or health versus some of these other ones. their top earning part of that field is at the bottom of some of these others. i look at social sciences. this is one that kind of surprised me. inside social sciences, there is something called economics. you know what? this economy is rewarding economy. $85,000 is the top earning quarter of that profession. why? because companies and industries have to figure out how to make money in a very difficult economy, what could be a difficult operating environment for some time to come. that's another interesting place, economics there. >> does anything on this chart surprise you, christine is this. >> what i think is really striking about it is the winner

take all phenomenon we're seeing in each profession. if you take out, for example, education where you're going to lose out no matter what, which, by the way, isn't that devastating? isn't there an education crisis? shouldn't teachers not only be honored and respected but well paid? if you take out education, the difference isn't between the different degrees, it's between the top and the bottom of each degree, and this reflects something we're ciega croseein the area. >> pete, what's your comment? >> ali, all your charts and statistics about how much money you're going to make, that's all great if you're taking into consideration that money is what makes you happy, that money provides you personal satisfaction. >> hold on, there's one up there, arts, the second one. there are a whole bunch of people going into that not really thinking they're going to be all that prosperous, but

they're doing it. >> right. that's the idea. you can go into investment banking if it makes you happy and if money makes you happy. but if you think you're going into a profession just so you can make money, you're probably going to end up unhappy. you're looking at a guy with a two-year liberal arts degree. he's got his own show, a great family life and a really big, gum my grin. >> all we're trying to do here, pete, is give people some information. like chrystia, i think there should be lots and lots of teachers and we should show we respect them. i'm glad teachers in training ignore that kind of thing and still go into the profession, otherwise we would all be in trouble. >> that's the idea, teachers -- yeah, they have such easy jobs. i mean, teachers don't go into it for money. clearly, they go into it because it's a calling. enough with the passion of teachers. >> i hear you.

regardless of this struggling economy, americans are sometimes glass half full kind of people. many of those glasses are half filled with alcohol. alcohol sales grew by nearly 10% over the last 12 months. pete, surprising or did predict? >> i'm actually intoxicated right now because i just saw your charts and graphs. totally predictable. i want to throw another curveball here which is to say the thing we're not able to measure is how much illegal drugs people are using, specifically marijuana. if we were able to tax that and not spend so much money to fight it, you would bring a lot more money into the economy. >> here we go, pete. are you for legalization of marijuana? >> who isn't at this point. >> chrystia? >> as it happens, i am also, and on this alcohol consumption, ali, you know, as well as i do, this is the classic recession

phenomenon. they call them sin companies, so the classic was lipstick, liquor and cigarettes which i guess speaks to pete's drugs category. and, you know, clearly when things are not so great, we turn to those small comforts. >> isn't it interesting that now you can find a beer or glass of wine cheaper than a gallon of gas, so you might as well buy the beer and not drive the car anywhere. >> hold that thought, because when you're ready to pay an extra dollar for a gallon of gas, that's one idea a ceo of general motors has. charge you an extra buck and why, after this. [ male announcer ] some are quieter than others.

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at the end of april and beginning of may, prices soared to $113 a barrel, and that called for opec to boost output of oil. over the past week, prices are back down -- we're relieved -- down to just around $100 a barrel. chrystia, it will be three months before opec considers out putting oil again. if they go too high, prices soar, if it goes too low, opec doesn't make money. where are we in terms of oil? >> i think the oil hike is over. china is getting rich. india is getting rich as the emerging markets start living more like people in western developed countries, they are consuming more energy. and, you know, fossil fuels are so prices are going to go up. it's classic supply and demand. >> christine, in the united

states, consumption of oil has actually been relatively flat over the last decade. so people say if you conserve, it will bring prices down. not about us. >> we've been consistent in our consumption of gasoline over the past decade, too. but i think whether you're a company, a president of a country, or a president of your household, there are two things you nid to know. emerging markets are on fire and oil prices are high and could go higher. if they go low, good. but if they don't, you need to be prepared for it because this is the theme song of the next decade. >> it's the new normal. >> did made me want to pull my hair out, pete, and yours, when i hear people angry, whether it's this president or the last one, about gas prices as if the president has something he could do about this. >> right, 2008 is the last time we saw these kinds of gas prices, but chrystia is spot on

about the unrest in china and libya. the saudi prince admitted on television the other day he needs oil to go back down so we don't look for alternatives. we're not looking for alternatives. we are spoiled. we are wrapping a rubber band around our arm and pumping crude into this. we are addicted to this. we have to find alternatives and we have to start finding them now. the belief we could find more oil as a solution? come on. >> sometimes high gas prices do the job because they spur that in novation innovation. in fact, one person who might be happy about the high gas prices is dan ackerman. ackerman said high gas prices would help his industry, not hurt, it he prefers a $1 a gallon gas plan hike. i have saidov over and over aga high gas prices cause people to conserve, it causes people to look for alternatives.

i didn't really think i would have the ceo of gm on my side in this situation. does it make sense he thinks there should be higher gas prices? >> it's clear he means in terms of higher standards. a lot of these automakers are doing whatever they can to find the new reality, or the new normal, for the kinds of cars they're making. are american consumers ready for that new normal? that's what i mean that you've got to start thinking that higher gas prices and roaring markets are going to be here to stay. even in your families, you have to make these kinds of choices because you don't want to spend $80 to fill up the van. >> people are saying, do you understand what i pay to fill up my tank and we've got way more unemployed people than we can handle in this country? it's tough to suggest an increase in gas prices might be helpful in the long term. do you think it could be? >> absolutely. and actually, as you say, ali, it's a great paradox, but higher gas prices, and i absolutely

agree, a gas tax is the way to do it much more than fuel efficiency standard, because what it will do is create an incredibly powerful incentive for detroit to produce cars that are more fuel efficient and for all of us to buy those smaller cars. and guess what? in a few years, people may find, okay, maybe their gas bill isn't smaller than it is now, but it doesn't keep on going up even if the price at the pump does keep going up, which it will do. >> and whether it's the tax or the prices keep going up, from a consumer and manager perspective t has a similar result. ford is boosting its production by 50% over the next four years chlyears. i sat down with the ford president, and asked him where he planned this to come from. >> it's going to go to 112 million over the next few years. tremendous growth industry, and, of course, as you pointed out, ford is really positioned well.

for example, to your point, in india we're going to go from three models up to eight models. in china we're going from five models up to 15 models by mid-decade. we are going to have 60 to 70% of the entire market. >> pete, general motors sells more cars in china than it sells in the united states. ford upping its production of cars in india and china and brazil. is america no longer the land of opportunity when it comes to an iconic american brand like ford? >> yes. and that's because in america you'll never see a large man get into a small car. in all those countries you mentioned and in europe, they do. i go to italy every year, you have giant men getting in tiny cars. why? because as we talked about earlier, gas is so much more expensive there because of the tax on it. it's interesting to hear the head of gm whine and claim and say, i want a gas tax. be creative and compete with your foreign competitors on those fuel economy standards which should be higher and the

law of the land. americans, i know you're big, but we're going to have to get rid of some of our kmfrcomforts. >> alan, isn't a bigger growth an emerging market, but the cash cow of those companies is still here. >> that's why those cars will become less popular. >> chrystia, what do you think? >> i agree with everything. i think ali's point about the growth in emerging markets is really significant, and this is a wider shift. america's business, and ford is a perfect example. the ford motor company was built on the u.s. middle class and was built on the notion -- henry ford doubled his wages in his factory because he wanted the workers to have the money to buy his products. >> hthey kept the middle class going and they sold their product to the middle class. >> there is a shift going on right now because the americans have decided that the u.s. middle class is no longer its base. it's the middle class in the

emerging market and rich people in the united states. that is a sea change and it is having political consequences that i don't think we're talking about enough. >> which is why i'm working on a book called capitalism is not patriotic. chrys tirks a is totally right and these companies are doing all the right things so they compete in the world market, but thi don't need to be selling their products to anyone else but americans. it's important they can sell them somewhere else besides america. the government says there's no evidence that cell phones cause cancer. the companies say be careful. and my next guess says there's reason for concern and she can prove it. top speed of 100 miles an hour. that's one serious machine. but you can do this. any socket can. the volt only needs about a buck fifty worth of charge a day,

and for longer trips, it can use gas. so get psyched. this is a big step up from the leafblower. chevrolet volt. the 2011 north american car of the year.

can your cell phone kill you? the question on everyone's mind after the report from the world health organization that cell phones are possibly carcinog carcinogenic, meaning they may cause cancer. they were thought to be safe by the fcc but not anymore. debra davis is the president of the environmental health trust and the author of a book called

"disconnect. the truth about the cell phone industry and the truth." what is it the cell phone industry is hiding and not telling us? >> they know they're two-way radios and you should never hold them next to the brain or the body. they also know these radiofrequency signals from cell phones can damage the liver, brain, eyes and skin. >> not to be naive, but if it's true what you're saying, what would it do for the cell phone companies not to tell us? i say this because it's not the same as cigarettes where if you find them dangerous, all you can do is stop. with cell phones, there are other alternatives, not to hold it next to your brain. >> some people might decide not to use them at all, and that's

why in europe they're resisting the idea that you can have on/off switches very easily. which is what we need. we need the ability to turn cell phones off so we can turn them on quickly. >> again, a solvable problem. those who claim that cell phones are safe say the sort of radiation you're talking about that's being emitted is not dangerous and not cancer causing. you found other cases. >> well, as a matter of fact, the radiation from a cell phone is too weak to cause damage like x-rays do. it's called non h-ionizing. even though it's weak, it's pulsed. studies have shown that the weaker signal from today's modern phones can actually be more damaging than the signal from earlier phones. the signal disrupts the membranes, weakens, the membrane barrier, and that's why it can damage dna. >> one thing you point out in your book and a lot of people don't realize is the cell phone

industry is issuing warnings about this, but they're in very fine print. take a look at this one from research in motion which makes blackberrie blackberries. use hands free methods if possible and keep the phone at least 9 to 12 inches away from your body including the abdomen of pregnant women and the lower abdomen of teenagers when the blackberry device is turned on and connected to the wireless network. why isn't the government getting more involved in posting these warnings? >> the government right now, as you well know, is overwhelmed with things to deal w. they've taken advice that's been provided over the years by committees that have been dominated by industry. i think those days are over, and that's why i'm really glad for the attention you're bringing to this issue and that cnn has done a very good job on. my book "disconnect" makes it clear. we know now to take simple precautions. we don't need to stop using phones, we just need to be

smarter. >> which is why i think this can go the wrong way for the cell phone industry or the right way. if they know something, tell us, and we can change it. unlike smoking, as you said, we can figure out how to use cell phones more effectively. the studies that have been conducted so far based on the adult male brain, your web site states that children absorb more radiation than adults do. the reason i talk about this is because millions of kids are using cell phones. i'm guessing the penetration for kids is greater than it is for adults, and yet there is not a single peer review study looking at the dangers of cell phones in children. why? >> because a way of looking is a way of not looking and we've not even wanted to think about this possibility. because, again, cell phone radiation is weak so it doesn't work with the power, it works because of the erratic nature of the signal. you take a rubber band and pop it once, it's fine. you keep popping it over and over again, eventually you'll break it and that may be why the 3g phones look to be more dangerous than 2g phones when

tested in laboratory studies. >> what's the end result for those watching this right now irrespective of what the industry does and what government does. what do you recommend people do? >> i recommend they do what i do, which is to use a headset, use a speaker phone. don't sleep with the phone on your body. for goodness sakes, don't give phones to young people to use as pacifiers. think about the fact that distance is your friend. you can use a phone safely if you use it with a speakerphone and earpiece, and don't give phones to young children as toys. it's a bad idea. >> debra davis, thanks for joining us. debra davis is the author of "disconnect" and the president of the environmental health trust. there's bulls and bears and there's the man that says the dow is going to 20,000 by 2013. but he says maybe you shouldn't be invested in it. i'll tell you why on the other side. a guy named his own price, wants a room tonight for 65 dollars.

we don't go lower than 130. big deal, persuade him. is it wise to allow a perishable item to spoil? he asked, why leave a room empty? the additional revenue easily covers operating costs. 65 dollars is better than no dollars. okay. $65 for tonight. you can't argue with a big deal.

take a look at the dow over the last year. look at your investments, your 401(k), your i.r.a. might look a little bit like this. up about 20% since last june, for all the people telling you

had bad it is. but this week the dow fell below the closely watched 12,000 mark. the month after may has been rough. our next guest says don't worry about it. by this time next year we could see the dow close to 20,000. james, make your case. pure simple terms. why do you think the dow is going to go up to 20,000? >> well, there's a lot of reasons. i mean, for one thing stocks are dirt cheap. you have a company like apple with 100% earnings growth that's just traded for 12 times earnings. now, typically that's almost as cheap as a utility company. that's never been seen before. microsoft at ten times the earnings. intel. eight times earnings. these are cheap stocks. another very important reason. everyone's talking about quantitative easing and federal stimulus. the reality is, that federal stimulus, that $600 billion in federal stimulus has not even

hit the economy yet. it takes 6 to 18 months once the dollar bill leaves the printing press, it takes 6 to 18 months before it even touches the economy. so we won't even be seeing the effects of the federal stimulus until the end of 2011 or early 2012 at the very least or the end of 2012. at that point, i don't know, we might start seeing bubble-like proportions on the stock market. >> let me ask you this. why is it that you recommend most investigaors completely st away from stocks. >> you have to figure you're not buying stocks yourself in a little arcade or whatever. there's really violent people out there who want to slit your throat on the stock market. bears like warren buffett want to take every dollar you have. he's a very smart guy. you can't go around day dreaming and buying investments or stocks. if you're going to buy stocks, don't do the same thing that 95% of the people do, buy high, sell low.

because the psychology makes you sell when you start to panic. turn off -- basically, close your newspapers and stop picking up on the panic that's always out there. close off your stocks. be like warren buffett. hold all the way through the hard times. even buy when the mis are the most scary and the most dangerous. if you see an earthquake in japan, that's when you want to buy stocks. if you see a pandemic, that's when you want to buy stocks. buy every single time you panic, otherwise the psychology is going to make you go broke. >> james, good to talk to you. thanks for joining us. he's the managing director of formula capital. well, ditching your mortgage just because you can, more and more people are saying that's a good idea. i'm not one of them. i'll explain in my x, y, z next. boy, i'm glad we got aflac huh.

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time now for the xyz of it. i know it is a roughhousing market out there. we track it every week right here on this show. prices are still dropping. nearly 11 million americans owe more money than their home is worth. it's especially tough for people who took out second mortgages. nearly 40% of them have mortgages that are worth more than their homes. these dismal numbers have more people opting to walk away rather than keep paying the mortgage on a home that has lost value and may still lose value. fannie mae reports 27% of homeowners would consider this. that's up from 15% last year. if you're one of them, i've got to be honest. i can't even believe this is seen as a legitimate option for people who are not in dire financial straits. i get it if you simply can't afford to pay for your house. to walk away just because you want to is reprehensible. you made a decision to buy a home at a certain price. you can't just walk away from that obligation.

we often buy things that decrease in value, a tv or car. making a commitment to pay is the bedrock of our capitalist society and, yes, i know that you've seen businesses walk away from their spornlt responsibilities, but that doesn't make it right either. and if you don't want to hear the moral or legal argument. let me give you a financial one. walking away can have disastrous consequences for your pocketbook. first your credit score will take a huge hit. we're talking about more than 200 points in some cases. second, you won't be able to get a mortgage again for years. if you're thinking, that's okay, i'll just rent, don't you think your landlord is going to see your credit report? might not be so easy to find a place. bad credit will also hurt your ability to get credit cards and auto loans and it could even hurt your professional life. more and more employers are looking at credit reports. you could lose your home and not get the job you need. and it doesn't just affect you. it hurts the value of your neighbors' property. it makes us harder for those of us who take our lumps in the