buy, sell, or like? there's only one question to ask as facebook goes public in a week. should you buy it? welcome to "your $$$$$," i'm ali velshi. facebook stock begins trading on friday. the ipo price is expected to be somewhere around $35 a share. but you have to be in the top 1% if you want a crack at that. for the other 99% you're looking at an initial price that could be $90 or $100 a share. we could talk endlessly about facebook the company, its growth prospects, how it will manage as a public company. but the question you should be asking is, will you make money if you buy the stock? that is the question i'm posing to three guys who should know. ned reilly is the chief investment strategist at reilly asset management. nanette, executive vice president at vpu investment. craig shapiro with the collaborative fund, an early facebook investor. all right. so there are four kinds of investors vying for a cut of this ipo. early stage investors like craig, they got involved a long time ago. institutional investors, the

people who will buy it before it goes public. high net worth retail investors, you know, relatively rich people who trade often. and then there's everybody else, the average joe retail investor. that's likely most of you out there. starting with ned i want to go one at a time. ned, good to see you, my friend. we'll talk later about whether one should or shouldn't buy this. what do you think a retail investor who gets on to their trading platform at 9:00 on friday will be likely to pay for facebook when it opens? >> you know, you said $90 a share, i said a 50% premium. this is one of those situations where it depends on how much stock is shorted -- by the way, craig, i want to congratulate you. this is incredible. you must be waiting for next friday. as a retail investor i wouldn't approach the stock on friday or the next monday, tuesday, or wednesday. i wouldn't go near it. would not go near it.

>> so you think 50 bucks, somebody gets it for? a 50% premium? >> 50, 60, you're talking about $6 billion in flow. i wouldn't be surprised if that trades three times in the day. >> ned says maybe around 60. do you buy it on the first day? ned says no. ned, what do you think that does in a year? take a guess. where do you think it goes? >> i think it will be lower. i think it will be lower than the highest price we see next friday. and without going into the fundamentals, it's just another new kid on the block that eventually will burn investors and the prices in the new offerings and the ipos are absolutely ludicrous. look at linkedin and the others. yeah, they're selling a little bit higher than the original, but a lot of them haven't. and if you look at the history of ipos, it hasn't been have var good bet to go out there and buy on the opening day. >> now, ned, what do you think it opens out? what do you think somebody gets to buy this stock at at 9:00 on

friday? >> i think wyou're going to be more in the 70/75 range when it opens. it will trade somewhere in that neighborhood all day. maybe it ticks up from there. but that's a tough one to buy first trading day. >> you're a no on day one as well. where do you think it is in a year? i just reminded our viewers, google is one of those company that's almost triple a year from the date. >> it's a good question, and it's going to depend on a couple of factors. how are they going to monetize the business? everybody knows facebook is a cool company, 800 million subscribers plus. if the market's doing well and they can monetize and sell ad revenue, i think the stock can go a lot higher from there. >> your guess is probably higher, under normal conditions. it's a good point, though, markets do have something to do with this. it may not just be about facebook. craig, you are one of those early stage investors, a venture capitalist. you get involved in start-up

companies, some of which do very, very well and return your money, some of which probably don't do all that well, so you're hoping for the big one. what do you think somebody buys it at on friday? >> i think it's going to come out strong out of the gate. my hunch is somewhere in the mid-40s to 50. i'm not quite as optimistic that it's going to shoot up, just at the valuation, even where it's pricing at, it's fairly rich, but i think it's warranted. >> so to ask you the question about whether one should buy or not is a tricky question, because you were an early investor, you've got facebook stock. but if it weren't you and it came out at 50 bucks, would you put an order in? >> yeah, and to clarify, i would buy it regardless on day one. i learned a lesson with google's ipo. it felt rich coming out in the '80s, and i thought, i'm going to hold off. >> and your general view -- and this is a key point for our viewers. you may still be able to invest

in the stock, it may not be important that you invest in it 9:00 on day one. >> so you said it felt rich, are you saying you would or you wouldn't buy on day one? >> i would, yes. >> let's change that to a yes. i would say that the answer to that suggests that you think in a year the stock will be higher than it came out at? >> yeah, i think for sure, over the long haul, with they're a team to bet on. i think the executive team there and touching nearly $1 billion is extremely powerful. and ned is absolutely right. if they can figure out how to monetize that effectively, there's incredible room to grow. >> so you all have reasons to think that. it seems like people are gambling. people are saying, should i cash out this and buy a whole bunch of stock. nadav, how do you as a retail investor, my viewer, calculate

whether it's a fairly priced stock and how much you should put into it of your portfolio? >> evening get es back to the individual investor. for me and my clients, i deal with the retail population that's rather conservative. i'm going to have to see a couple good quarters of earnings growth, and then to continue that earnings, and again, as i mentioned earlier. if you can monetize, it's a great company, and i would agree with the last speaker. their team's as good as any team out there. fwo google, obviously, is doing it. i own google and apple for clients and portfolios. and i would love to own facebook, and i will own facebook if, in fact, they can monetize it. and the valuation side, i get, but the reality is that there's a lot of momentum, social media's here to stay. and again, if they can monetize this thing, it's going to be a really good investment. long-term portfolios should own

it, if, in fact, we see the earnings growth. >> ned, final question to you. you're not hot on the tech ipo concept, but if at some point this stock settles into a little range, you said you wouldn't buy it on the next friday, tuesday, or wednesday. at some point do you think it's a good stock to get into? >> i would like to see the management a little bit optimistic about to switch to mome mobile. when they come out and amend their statements and say, look, it's hurting us already, i get a little nervous. they're telling you at the outset that maybe the earnings aren't going to be good at shorter term and i'm paying 100 times earnings. i don't know what the heck i'm going to pay for it. what does bother me, i've been a part of so many stalks that have had great potential, 1999, and 1998, and went to the ashes. and there was no phoenix rising from a lot of those stocks. i'm not saying that facebook isn't the greatest novel idea in the world. a billion subscribers. but that also opens up the

competition out there. you had the linkedins of the world and a lot of other social internet-type companies and there's no barrier to entry in this -- you know, facebook was there. they did a great job. i'm not knocking them for that, but the competition is going to be intense as you go forward. and making money, you guys were right. monetization of the product is going to be really financial. i don't know how they're going to do it if they don't know how they're going to do it now. >> craig, answer those questions. the idea that facebook ---io iy know, everything's going mobile. everything's happening on your device and it's tougher for facebook to get the advertising that's relevant on to a phone. >> two things that have me feeling optimistic. one is that in the business that i'm in, early stage investing, i see the cap table of a lot of start-up companies. mark zuckerberg's name is never on a cap table. and that's unlike virtually any other executive founder, certainly in silicon valley. it shows me that he's laser focused on growing this

business. and the second is, you know, i read yesterday about kind of mark's influence in bing's redesign, and integrating social into search. he participates in the hackathons at facebook. and it really shows me that he understands the product and the business and where it's going. a very different story from yahoo! or some of the other businesses that are available to investors. >> craig, thank you so much. it's interesting -- yeah, go ahead, ned. >> one comment, and craig, i don't know if you were there or not, but i knew another inventor, and i would call mark an inventor. another inventor, many years ago, got laser vision on one particular product and drove the company right into the ground and that was somebody called dr. land back in polaroid when he had the concept of coming out with a pocket camera. amazing, 30 years later, he's right. but he drove that company into the ground because he spent so

much on the product and he couldn't make it work. >> all right, interesting that the guy who's invested in this, craig, thinks it's going to come out at the lowest price. here's what you've got. you've got 60, 75, 50. last week we had matt mccall saying you may not get it for less than 90 on day one. ned and nadav say don't buy don't buy it on day one. and ned thinks it's lower a year later from the first day, the two other guys say yes. you'll have to make your own decision as to whether you put your money in the stock. coming up later, mark zuckerberg courts wall street's billions and does it in that hoodie. is it a sign of the times or is this immaturity? up next, it's been four years since the financial crisis, and already wall street is is betting bigger than ever. it seems that lessons were not learned. there's no one better qualified to answer that question than my next get. shelia bair is credited with saving the banks during the last financial crisis. she's up next.

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jpmorgan chase is the country's largest banks. it's also one of the banks that emerged from the crisis in 2008 from relatively good shape. throughout the crisis, jpmorgan made a profit every quarter. jpmorgan's ceo jamie dimon has led the war on regulating the banks, but his stunning announcement that jpmorgan has loss $2 billion in trades over the past six weeks and could face an additional $1 billion of losses made some jaws drop on wall street. >> the new strategy was flawed, complex, poorly reviewed, poorly executed, and poorly monitored. the portfolio has proven to be riskier, more volatile than we thought. >> the admission by dimon and the bank will hurt jpmorgan's reputation as one of the best risk managers among the big banks. what does it say about our financial system overall? shelia bair is credited with saving the banks during the last

crisis. she's the former chair of the federal deposit insurance operation. currently a senior adviser at the pew charitable trust. shelia, good to see you again. >> thank you. >> there's a lot of things going through my head on this, but when i heard it, it took me back to september of 2008 when i had to struggle to understand this thing about credit default swaps and aig and how they were engaging in fwhbusiness of insug themselves against risk without loss. i thought, is this happening again? >> i don't think it's happening on a broad scale and i would attribute jamie dimon with saying that his bank made mistakes. it was in contrast to 2008 when people said, it wasn't my fault, other banks were doing it. he's owning up to the fact that this appears to be something spectacular to his institution. they made some serious mistakes. it does make you wonder, though,

this is one of the best managed, larger banks in the country, if this kind of thing can happen, what's going on in some of these other institutions. >> it brings us back to the question of regulation. that's now a big deal. senator carl heavlevin has alre said, it's the banks that are faile that are now engaging in risky behavior. let's talk about the regulators. this is always a problem. where the banks are going to hire the highest priced people that can work their way around this stuff and regular urtors f it very difficult to keep up with this kind of regulation. >> they do. and the top of my reform list has been getting more entities into capital banks. you'll always have unexpected losses and bank managers at well-managed banks, things happening at those banks that are stupid and generating unexpected losses. if you have a thick capital cushion to absorb those losses, you'll be able to stay ahead of

it. but trying to micromanage institutions, or even with hoards of examiners going in there and hoards of regulations saying you can do this, you can't do that, things will all fall through the cracks. i think, also, regulators immediate to put a high priority on simplifying these banks, their legal structures, dividing a commercial bank from the security firms. having intermediate boards and managers there to provide more oversight of these institutions. i think that would be a tremendous boon to better management and i think that would help shareholders also understand what's going on inside of these institutions. i was speaking to a fairly sophisticated investor group recently. this is before all of this came out, obviously, and i said to them, i said, raise your hands, who in this room understands what's going on inside jpmorgan chase. and not one of them raised their hands. so i think shareholders have also an onus to put more discipline on the institutions and find out what's going on inside of them. >> we should tell our viewers,

because i think many of them will not understand the highly complicated world of credit default swaps. this was done by what was call a proprietary trading desk. in the old days, investment banks made their money by matching up investors and people who needed money. these trading desks, they're a relatively new creation and they have traditionally made a lot of money for the banks. >> they have. and obviously, wis this core of what the volcker rule is trying to get at. which is trying to ban taking directional bets on the market, just to generate profits. not accommodate a customer, but generate profits for itself. i'm still learning about this, but it appears this was a hedge, or an economic hedge. it was a hedge designed to protect jpmorgan chase against broader economic risks, that it confronted in the market. the volcker rule, at least as it's currently proposed, may have actually allowed this. but a lot of advocates have been saying that the fed and the other regulators need to narrow

the hedging exception in the volcker rule to make sure those hedges are tightly correlated to the underlying risks they're trying to hedge. if you have a good hedge, you shouldn't have this happen. if you have a loss on one side, you should have a gain on the other to offside it. a $2 billion on one side of a hedge is quite problem mat ibat is going to lead to a lot of questions. fl and you have an article coming out in "fortune" about the discussion we've been having over the last several weeks about interest rates and what the fed will do. i'm going to tweet that out to our viewers and we'll continue that conversation. shelia bair, always great to see you. thank you so much. >> nice to see you, thank you. coming up next, could governor romney's about-face brag about saving the auto industry cost him the key bat e battleground state of ohio and maybe the election? for three hours a week, i'm a coach.

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[ male announcer ] new icy hot arthritis lotion. powerful encapsulated menthol gets icy to dull pain, hot to relax it away. power past pain. republican presidential candidate mitt romney told an ohio tv reporter last week that he can, quote, take a lot of credit for the recovery of the u.s. auto industry. >> it was the uaw and the

president that delayed the idea of bankruptcy. i pushed the idea of a managed bankruptcy. and finally when that was done, and help was given, the companies got back on their feet. so i'll take a lot of credit for the fact that this industry has come back. >> romney was a vocal opponent of bailing out the auto industry. in 2008, he wrote a "new york times" opinion piece entitled "let detroit go bankrupt." in it, he wrote this. "if general motors, ford, and chrysler get the bailout a their chief executives asked for, you can kiss the american automotive industry good-bye,." well, the government shelled out $81 billion to gm and chrysler, ford didn't take any money, and that money is credited with helping them through bankruptcy and many experts contend avoiding liquidation, potentially saving millions of jobs in places like michigan and ohio, where auto is king. now, perhaps democratic strategists and cnn political contributor james carville summed it up best. >> and i mean like today, this

auto bailout thing, i thought that was an onion headline when i first saw it. >> joining me now from washington, cnn's chief national correspondent, john cking. john, i have a thesis i want to run by you. mitt romney has already lost this election because of this. voters in ohio, autoworkers and union workers are alienated by his status on the the bailout, because it is gm country in large part. they will hand that state to president obama and without ohio, probably, romney doesn't get to the white house. what do you think? >> you're absolutely right about the last part, without ohio, romney most likely doesn't get to the white house. no republican has won the white house in modern times, ali, without carrying the state of ohio. and if you do the math, how do you get to 270? for mitt romney, he has to have ohio. yes, there are other ways, but it's much harder. he needs to get ohio, he needs to get florida. auto is king in ohio, it's the number two state, behind michigan. it's about 75,000 jobs in the state that are tied to the auto industry, not just

manufacturing, but the parts and supply chain and all of this. governor romney needs to get off of this. he makes that point that the unions got a sweetheart contract out of that deal if and if you would have gone straight into bankruptcy without that deal, with they would have come back. would've, could've, should've. this is not a winning argument for him. he needs to have a broader economic argument. he needs to get away from the all bailout industry, and more to make his case, higher taxes, more regulation are putting the economy in a straight jacket and keeping the recover from blossoming. if he's debating the auto bailout from now to november, it's an even proposition. if he thinks or he's trying to convince himself he's right on the facts, he's not going to win that one. >> union workers make up about 12% of all workers. they're shrinking in number, but they're still a force. would it be better or is it too politically dangerous for mitt romney to change course on this and say, what i said back in 2008, i was wrong.

>> he's had that chance. throughout the primaries, i asked him about it. if he was going to change his mind, he's had his chance. and his point is, yes, in the end, they did go through a bankruptcy. again, you're arguing the semi-colons and the middle paragraph. in the big picture, the auto industry is back. and president obama will travel to those states, surround himself with those workers, and it's a fascinating dynamic. if you look at american politics, go back to ronald reagan, a lot of them were those union auto workers. their unions traditionally back democrats, but maybe they own guns or are conservative on social issues, so they voted for republicans in the past. romney needs some of their votes, so they can't be arguing about their job today. he has to may the argument about the broader economic conditions and make his case that he would give you a better growing economy and create more auto jobs and more everything jobs, if he's debating this bailout to november, one state, in one state, it could turn the election, and without that state, he probably can't win. >> i expect we'll both be

spending a lot of time in ohio in the next coming months. thank you for that. stevphen moore is an editorial writer for the "wall street journal," joins me now. james carville put it well. it did seem that was like an article out of the onion. >> i think that was a dumb thing to say, but ali, i disagree with you. i still think the auto bailout was an economic loser and more importantly, a political loser. there are a lot of auto workers in the state of ohio, as obviously there are in michigan, but you know, let me tell you. i live in the battleground state of virginia. do you think that the auto bailout is very popular in the state of virginia or another battleground state, north carolina? so i would make the case that for mitt romney to win this race, what he has to say is, look, the other guy, you know, barack obama is president bailout, and if you want free market policies, if you want an

end to the bailouts, elect me. i think it's a very populous line that mitt romney could take. >> but you know that frankly the auto bailout was more detrimental in your communities because of car dealerships and things like that. because of advertising and things that they did. i'm not sure that anybody looks back on the last four years and says, this was a mistake. do you really believe the whole thing was a mistake, despite what it says about what government's role was? it did work? the auto industry is back. >> i agree with you entirely, the auto industry is back, it's booming. a big percentage of the gdp growth we had last month was the result of us a sales, and auto production. you're right about that. but where i disagree with you, i just think the american people outside of washington, d.c. and new york where you live think that the word "bailout" is a

fo four-letter word. i don't think it's a good policy to say, we're going to bail out every failed policy, every "fortune" 500 company when they get into trouble. one other point that i think is important in this debate, ali, the auto company that's doing the best right now is ford, the one that didn't take any money at all. what i objected to, and i think a lot of people object to, is the way they went about the bailout as well. as you know, the people who really got shafted in that deal were the bond holders, because, essentially, what i think the president did was he put the interest of the union members ahead of the bondholders, and by the way, who are those bondholders? you and me and anyone with a pension fund. >> stephen moore with "the wall street journal", thank. use the auto industry as an example. what was the right thing to do, bail them out or cut off their lifeline. same debate. in europe, same debate here, austerity or more spending? [ woman ] oh, my gosh -- it's so good! [ kristal ] we're just taking a sample

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from paris to washington and seemingly everywhere in between, it's the same question, is it time for governments to spend more or save? it seems there's no magic formula. stimulus can produce growth. austerity can produce growth. cutting taxes can produce growth. now, austerity happens when governments cut back on spending in order to get debt under control, but voters generally tend to dislike cuts, because they get less. so governments typically don't impose austerity, in many cases, until it's almost too late. that was the case in greece, and to some extent, in france. the voters in both countries pushed back last weekend and voted out their pro-austerity leaders. on the other hand, stimulus is when the government pumps money into the economy in order to stimulate demand and aid business. the obama administration used stimulus in 2009, as you know,

but at the same time that the federal government ramped up spending, state and local governments can cut back. so in effect, we tried stimulus and austerity at the same time. ben barber is a distinguished senior fellow at demos, will kaine is a senior cnn contributor. let's agree on something, the debate isn't austerity versus growth, which is how it's been painted in france. those two things aren't necessarily opposites. but let's talk about the best way to grow an economy. and that is where economists, and americans, disagree. take a look at this guys. a recent poll from cbs news and "the new york times" finds that 56% of americans believe spending more and raising taxes will stimulate growth. 37% say we should lower taxes and cut spending instead. those are opposites. well, governor mitt romney, governor mitt romney supports paul ryan, the budget chief's ideas, in terms of cutting the budget. and they represent in an

american context the austerity side of things, to some degree. has austerity ever created a job? >> well, yeah, man, what kind of question is that? does north korea have more jobs than south korea? who has a more vibrant economy. when you ask me, does austerity ever create jobs? that's the logical inpoint of that kind of argument. but the real question -- >> you meaning the logical end point is austerity should create jobs. >> and by extension, does the private sector create jobs? i think by this point, we all clearly know the answer to that. the real answer to your question, though, is it depends. it depends on the scenario you find yourself in. if you find yourself in a session with low private debt and high public debt, austerity would make sense. and we did after world war ii. but if you had the reverse, high private debt and low public debt, you'd have a hard time arguing for austerity. in europe, you have a tough

situation, because you have both, and the bond holders are like, look, you may need to borrow to stimulate, but we don't trust you anymore. in the united states, it's more complicated. the long-term seems pretty clear. >> just to be clear, in greece, the voters have said, we don't want austerity, but the people upon whom they depend to lend them money have said, we don't really care what you want. you're not getting the money if you don't do it. ben, help me out. in times when private enterprise doesn't do what will has described, does it not fall to government to do that? >> you haven't talked in europe about the third partner in this negotiation. the greek leaders are not saying, screw what the greek people think. they're saying, we're going to get screwed by the bank if we don't do the conditionality that they're asking for. so they don't like it, and what's happened with the socialists, they're saying, we're not going to do it anymore. and even merkel is saying in germany -- i know we want to talk about the u.s., but it's very important. we're in a situation right now where america is trying to be

more like germany and europe was for the last few years. and europe is trying to be more like america is supposed to be. but the answer to your question, does government have a role, of course it has a role. the federal government is the constitution of last resort in times of crisis. if this isn't a crisis, the recession that we're in, the problems we're having, if it doesn't have a role in getting jobs moving with stimulus, with tax revenue increases, if that's necessary, in cuts, in the more fat parts of the budget, not the kids, not food stamps, but then the federal government isn't doing its job. and you know what, 56% of the american people agree with me. >> will apparently doesn't. >> i do not. it is not the federal government's role to create jobs. it's the federal government's role to create the conditions for job growth. and toihistorically, the condits for job growth is low taxes, low spending, clear confident, low-regulation environment as possible. as possible. that's the best conditions for

growth for the private sector. >> will and i agree on that, but let's take detroit. there's a perfect example in the difference between the parties, because romney said, let's have a structured bankruptcy, fine, and obama said, yes, everybody agrees. romney said, let the market pay for it and there was no money in the market. bain capital didn't put anything in it. the only people who can fund that structure was the taxpayers and the federal government and that has now, first of all, the government's been repaid everything, so the taxpayers got back their money. second of all, we now have a world in which american motor companies are very, very competitive, and in which 800,000 plus jobs were saved in detroit. i agree with will, they didn't create those jobs, but acted in ways those jobs were recreated and saved detroit. >> so the thing that most everybody agrees upon is that we want job creation. whatever we do, we want job creation. europe, it's substantially worse

than it is, but it's bad here. the next biggest thing that people concern themselves in this debate between austerity and nonausterity are taxes. when we come back, that's what we're going to talk about. is it time to cut or raise taxes. and later, rare insight into mark zuckerberg. we'll look at the man who remains an enigma.

you know, comparing to europe, we're discussing the best way to grow the economy here in the united states. will cain and ben barber are back with us. president obama wants to raise taxes on the wealthiest americans and allow some companies to pay a much lower rate. governor romney says we need to make the u.s. tax code flatter, fairer, and simpler. like president obama, he wants to reduce corporate taxes, but to an even lower rate. so, ben, how do we lower taxes to stimulate growth without at the same time killing the economy because the government doesn't have enough money to do what it has to do? >> well, as always, the question is, revenues from who, austerity for who? and my problem with the present discussion, with republicans, is

that it's austerity for kids, austerity for the poor, austerity for the disabled, they're all cut back in the budget proposal passed yesterday in the house. it's more money for defense, which is already 56% of discretionary spending in america, more than half the budget. the next 17 armies don't make, including germany, france, don't put in as much as we do, and that is a full 26% of the budget. i say let's take some of the fat off the defense budget, let's leave the money for the kids and let's raise revenues marginally in places where people can afford it. right now we're asking families to give up their food stamps? kids to give up their school lunches while we refuse to tax millionaires a little bit more. that to me is absurd. >> the defense spending in this budget would top $2 trillion and our polls indicate that americans find that jaw dropping. for everything we're talking about, it does seem like a strange priority? >> it's a source where you could

find some government cut baback. but your original question about taxing is interesting. i'm going to bother a phrase from the father of stimulus. he talks about getting consumers brave and ambitious and motivated to spend and invest in a society. how does that apply to the tax code? i would argue that the best way to get people ready to move, invest, and spend is to simplify this tax code. i want to curse before i say tax code. to simplify this thing. you can both raise revenues and create a more conducive environment for growth by simply simplifying this tax code, dropping rates, getting rid of loopholes. you could end up with more and higher growth. >> i think that we can agree on. >> and that's not on the table. >> -- at the end of the year, going off a tax and spending cliff by the end of the year, will be packed into the last two months of this year. >> a country that wants to raise

defense spending on the backs of children, the disabled, and those most vulnerable in a society is really barbaric. and i think that's why 56% of americans say, we've got to get more coming in so we don't have the cuts or the disabled and make those horrendowhhorrendous that will make it impossible for poor people to go to the emergency room. and we're not doing anything on that part of the budget that has all that fat in it. i'm talking about our 11 carrier fleets. i am talking about nuclear weapons that were developed, icbms for the cold war, for which there's no use and which we spend billions every year just in maintenance. i'm talking about cuts that will not affect america's ability to fight war. >> there's some room for cuts in the department of defense. >> i love it when you two agree. >> can you imagine a world in

which the tea party join forces with occupy wall street? >> i think we are on the verge of a political movement that says, essentially, we're going to take back the economy, take back democracy. we're not going to let the big guys run everything. >> hmm. that sounds like odd bedfellows. it sat down with former labor secretary robert reich next on "your money." on that list. in 25th place. let's raise academic standards across the nation. let's get back to the head of the class. let's solve this.

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[ all scream ] obscure space junk falling from the sky? we cover that. moving on. aah, aah, aah, aah. [ male announcer ] we are insurance. ♪ we are farmers ♪ bum, ba-da-bum, bum, bum, bum ♪ "time" magazine named robert reich one of the ten most effective cabinet secretaries of the last century for his time heading the department of labor under president clinton. hi n his new book, "beyond outrage," is dead indicateddedicated to ol street. it has raised the volume in the debate over fairness in the upcoming election. so i had a very simple question for secretary reich. what is fair? >> when somebody kind of ask

themselves, is the economy fair? what they're asking themselves is, am i doing better? am i working harder? am i seeing the results of my work. but also, are the gains from goet growth being distributed in such a way? my company, my ceo earning million, my job son the line, my benefits are decreasing, my median wage is decreasing. that feels unfair to me. and that sense of unfairness cannot help but infect somebody's attitude. >> the problem is it becomes subjective. what is fair? how much should that ceo be earning? what should the 1% be doing? where do we fit into figure the answer out? >> there are two ways. we can look at the past, and think, this is wildly different from what it was over the last 50 years. we could also look at the economy overall. i mean, the problem is that when you have the top 1% getting so much of the economy, there's not enough purchasing power in the rest of the economy to keep the economy going. the top 1% would do better with

a smaller share of a rapidly growing economy than a current large share of an economy that's basically struggling to grow. >> would that happen if we distributed economic wealth better? i know that's a touchy topic. but if more of the 99% got more of the money, would they employ it more effectively? in other words, would we see more economic growth? >> well, we would. because the demand side of the equation is the problem. business people agree that the reason they're not hiring, they're not expanding is that there's not enough consumption, there's not not consumers with enough money in their pockets. if you did that, if we had a distribution of the gains from growth, again, not at a zero sum gain, just a distribution, similar to what we had in the '50s, '60s and early 1970s, we would have a more robust economy. >> in this country, there are people on the left and right who feel the richest have stuck it to them. that there's wealth that's too concentrated, yet we with can't make that into a broader

movement. we've got people in the tea party who have that view, as many of the occupiers do. this is that serious a problem, why has it not created greater cohesion in terms of a political force? >> i believe it will, ally. i've talked to tea party members that say we're still outraged by the bailout and the subsidies going to the oil industry or big agriculture, or insurance. we want government to get out of the job of essentially providing tax base and subsidies to the industry. think of the overlap. a lot of people on the right in terms of the tea partiers say the problem is not the size of the government, it's the amount of money, big money that is controlling government. a lot of people in the left say exactly the same thing. i think we are on the verge of a political moflt that says essentially we're going to take back the economy, take back democracy, we're not going to let the big guys run everything.

>> former labor secretary bob reich. eight years ago, he had no job, no car, no house. he's ranked number one on the most powerful people list, zuckerberg is 35 on the most valuable list. are you still sleeping? just wanted to check and make sure that we were on schedule.

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mark zuckerberg, the face of facebook meeting with potential investors in a hoodie this week. divided opinion on whether it matters as he takes the company public. some find it cool, hip, the new thing. the ceo of business insider wrote this week's cover story for new york magazine on zuck. at least he showed up in new york. he blew off his meetings in baltimore, boston and philadelphia. henry, this stock is likely going to sell itself. i'm hearing all these rumblings about people who think he's unorthodox and should put a tie on and all this stuff. do you think it makes any

difference? >> no, i think it is going to sell itself. it's a great company. great growth prospects. everyone's been excited about it for a long time. however, very symbolic moment, the hoodie moment. it's gone viral. it's the culture clash between silicon valley and wall street. part of wall street's frustration with it, i think, is their frustration with facebook, which is that mark zuckerberg has full control of the company. he really doesn't care about wall street. wall street nors thknows that. most people suck up to wall street, but not mark zuckerberg. you're asking for $10 billion. okay. maybe you could put on a tie. >> all right. pom line, though, a lot of these startup companies as they start to do well, far earlier than facebook got into this, and hiring of a grown-up. there's some people worried he's not that. >> that was the model in the 1990s.

you've got the quirky founder with the bad hair and sandals. they're great at programming, but they can't run a company, let's be serious. so you bring in a professional ceo. what a lot of people in the valley have observed over the last ten years, a lot of those companies lose their way. apple dispensed with steve jobs and they almost went bankrupt. the new model is, you keep the founder in charge, if they learn what they need to learn and you build in a great professional underneath them. cheryl sandberg. >> she's widely lauded. if you're teaching the young guy something, to some it's symbolic, that you can teach him to put a tie on. >> to mark zuckerberg, i think the point was, i have said very clearly that my mission here is a social mission, not a business mission. if you are not listening to that, that's your tough luck. >> right. and i'm not going to alter my routine to suck up. all right. i think most investors will either get past it or not, right? nobody who thinks this company's going to do really well is not going to invest in it because of the hoodie or the presentation.

but they might be concerned about the amount of control he is going to wield over this company. should they be? >> absolutely. this is a bet on mark zuckerberg, period. i think most investors sort of generally have an illusion of control that they don't actually have with most companies. in this case, there's no illusion. he has 57% of the voting control. so anything he wants to do, he can do. you can scream. but that's it. as long as he listens your screaming and blow it off, they'll be fine. >> most retail investors are used to the idea, you're just betting on the success of the company. >> it's not really that different. i think to sort of bolster mark zuckerberg's view of this, he's seen a lot of companies ruined by ceos making short-term short-cuts to please wall street, by boost earnings, by firing people and cutting investment. he said, i don't want to ever be forced to have to do that. if you buy into the long-term vision, this could work out very well for you. >> henry, good to see you, as always.