what are we going to do about it? is it time to start worrying about a real financial national security threat? we have dagen mcdowell, moving a few inches away... >> no, not true. >> neil: we have ben stein. >> i'm happy to see dagen. >> neil: the next 30 minut, ou free beo you and welcome to all. ben stein, on the guy i like to call, lord faulroy. >> he's nutty as a fruit cake but he's right, our national debt is so large it is a national security threat and the reason is, one, it makes us look stupid and impott and as if we can't corol our investing and at some poinwill require us to cut or defense spending, we have to pull ourselves together an act like statesmen about it. it has gone on way too long, it

is ridiculous. >> neil: dagen, he's trying deflect d, look who is judging us kind of deal and say look at these clns, rig? >> two an extent, but, if we don't heed this warning, i don't know what it will take. because as a nation, i don't think -- i've said all along, i don't think that until americans feel really pain in some way, whether it is significantly gher interest rates or double-digit inflation which we had in the 1970s and 1980s we'll decide to do something about this. i don't know what it will take, ybe us not being able to defend oursees or take a tional security crisis where we don't have the money to protect the nation at some point. >> do you ever notice the guy is a bad dresser? >> neil: before the united natio nations, wouldt kill you to wear a tie. >> he wears members only jackets as well, i have seen them.

memberonly. >> neil: cosmetic... >> it distracts me. listen -- >> neil: i understand. >> there is not much that he says that makes sense. the bottom line is this: we are still t tallest midget in the room when it comes to buying debt. >> neil: how reassuring is that. >> i'm telling you, as long as that is maintained and it will be for a while, there wille no institutional pressure from the markets for us to change. of course we have the fiscal cliff coming up, mandated by law, if they don'tome to a deal, you get massive cuts. but unless the maets change there will be no outside pressure for us to change. >> neil: a lot more on the cliff thing, what do you make of this guy calling us out? saying, look, a fine one to judge. the security of the -- or the stability of any nation. i don't think we should be taking any tips from this guy. come on, you guys. look at iran. their currency is down 30% against the dollar since obama

got to office, the unemployment rate among young iranians is 1 in 4. the "financial times" -- >> neil: wait, that is whatur is! >> neil, come on... >> neil: they are 25, we're 24 -- we bet 'em! ahead. >> the "financial times" reported 1 in 9 checks that gets written in iran bounces. the forex reserv are drying up, thanks to the sations. i hope he's not watching the show and getting any good business advice, the sooner the economy collapses the better. >> neil: it raises a national security issue, dick cheney when i say had him on and other talked about the idea, when you are in real economic dire straits, it does hurt your credibility around the world, or to charlie's point, as bad a we

are, the rest of the world is worse. >> it hurts our credibility and makes people think at some point down the road they will n be able to pay for to enormous defense establishmentnd we'll wait them out and when they ka no longer afford it we'll go after whatever prize we want. >> the economic thing is really worrying to me. we'll have -- they'll probably raise taxes to dea with this stuff. and particularly, if president obama is elected. >> i hope so. >> i hope not. >> nl: it is argued that that is what will happen. >> that will be one of the worst things for the onomy. if that happens, when we raise taxes, i'm not talking plugging loopholes, really raising marginal rates on a family of four that makes $200,000, and lives on long island, hardly a billionaire, as the psident likes to call them, i think will really slow down the economy and i think in this country we'll have to get used to 10% unemployment, like anorm. >> not only are we fools for not demanding congress and demanding our lawmakers do something about

the debt, 2/3 of the $16 trillion is owned by u.s. investors, it is owned by its -- by the social security trust fund, we are esstially -- weeds are the problem. we as a nation are the problem. >> neil: wait, you are saying we owe it toourselves. >> yes. >> neil: then we don't have to pay it. >> china owns less than 8% of our national debt and that includes the federal reserve, 2/3 of that... is u.s. investors -- >> that is bad. >> neil: why is that ba because... >> we're the ones, if we are willing to buy it, we'll continue to drive it higher. >>t is funneled back to the treasury and a lot of people buy the scam theres no -- >> it is a scam. the dollar means nothing. >> it's the fed, social security. >> investors, but -- that is what i jus said. it is bad... >> neil: at that point, it is a scam and it is ours. what do you make of that? in theend, that is what it

comes down to, the world is onto our scheme and we are onto the ponzi scheme and it seems to be working and has been going smoothly. and, waiting for godot, do we put it off and don't worry about it? >> it is a long wa off and what is not -- >> neil: what is a long ways off? >> some kind of a -- an economic llapse based on treasuries, e treasuryubble bursting, i think i agree with dagen -- >> neil: wait, wait, wait. i hear a long ways off. a long ways off, could be when i'm hungry, can be like, tonight. >> look at japanese interes rates for the last 20 years, you know? people -- >> 20 years? >> yes, sir. >> neil: 20 years. >> 200 years. >> neil: that sounds as reassuring as joe biden saying the iranian threat is good four years off.

>> the iranian economic collapse is only 6 months off according to -- >> neil: unemployment, 25%, among young people. all right, we'll take a quick break here, when we come back this is it. the final psidential debate coming up monday night and, all on foreign policy and we are all over it. as we always have been, and, like we were for the first three debates. the most imptant names in business and politics and the most iortant consequential election of our time, and we keep plugging that and if we were doing it during the depression we'd say the same thing, they didn't have cable in the depression a, if they get angry at each other, in boca raton, maybe they throw like, glasses of chblis at each other, and it continues on through midnight and the guys in the spin room get punchy by that hour and that is when we get 'em. and a lot of people say, neil i love fox news and fox business,

what should i do, bill o'reilly says dvr here he dvrs himself to watch me. catch fox business and stay on us, dvr him and... 50 times during the night, at least, up ne, do any of you remember this? >> the market analysts are steadfastly refusing to mention that word, crash, to dcribe what is going on now, instead say look at it as a correction that still has to work itself out. but they don't know, and worry about is how far down the correction really has to go. how long it will takeand, exactly how many more people will be hurt in the process. before the market decides, if it decides, to turn around. >> high schoo >> neil:25 years ago. before puberty. an epic market crash. today, that's fine, the market looking crash-proof, looks can be deceiving.

my toupee wasfoxnews.com, you a

watching the most powerful name in news, foz channel. ♪ -- fox news channel. >> neil: looking at history and won wondering if we'll repeat it, the ack monday, the dow losing a quarterf its value, the equivalent of it losing 3,000 point today and a lot of things happening, 25 years ago, leading to the melt down including a growg housing bubble and growing government debt, the

dimensions of which we couldn't appreciate and today record high debt and many say a bubble in interest rates. thanks to the federal serve printing money on steroids, looking too similar to charlie grass pre gasparino. >> when i was there, i was at the university of miouri, and back then, we were worried about the deficit and had gram ruddiman, and, whatever cuts they did, clinton ce into office, and he raised taxes and did it cure the deit? look at the numbers, it did. but what killed the deficit, economic growth and whene have these discussion about raising taxes and cutting, the one think we're light on is th fact whe you grow the economy, deficits -- >> neil: youan't boom your way out of it. >> if we knewow to create a bomb we have won it but the crash of 1987 was not

macroeconomic phenomena, it was micro economic phenomena, portfolio insurance, when you guys were in elementar school... >> neil: everything is sparked by something... >> portfolio, they sold the fures -- >> neil: i'm well aware of that why di't it happen at any prior moments. >> there was not massive portfolio insurance and it was not triggered. >> neil: no, no, the degree of professional insurance out there was higher in 1986. my point is, there is always a trigger that tests the computers. >> whatever the trigger was, it was portfolio insurance, the mark recovered, ve, very quickly. there was no economic crash. >> neil: there was no depression, you are right and dagen the fears we'll see a world economic winter was proven wrong but -- >> but that was -- that was a -- >> neil: a couple years later. listen, we had an s and l, what are we missing, the s & l

crisis and the junk bond crisis. >> neil: i'm notlaming it on that. >> by 1989 we're in a recession. >> twoears later. >> markets are forward predictors. >> thacrash... that crash, 25 years ago, was... >> neil: won't change your mind. >> it is totally right. >> neil: we'll see about that. i think i know -- you saw me, in my pre-puberty stage, pontificating okay, please. you were dng hollywood movies, you were clueless. >> i remember theiscussion with alan greenspan. >> dave: what year did you do bueller. >> 1985. >> the economy slod down -- >> here's my point, that was a stock event, an equity event. what we have now, with the bubble, in bonds and particarly in treasuries and how dangerously expensive they are and what could happen is much more grave, potentially because we're $16 trillion in debt. >> neil: that raises a very --

that is where it comes into play, how it could be different, this go-around. it would be an outside catalyst maybe in washington, and the gig is up, so to speak, that the -- that hits everyone at the same time, and i don't know if it is a fiscal cliff or whatever, what do you say. >> listen, i agree that very, very low interest rates, they are unjustified. i also agree it is a real problem and the problem, scary thing is that it will hang around for the next fiv or ten years and a l of older americans whare invested in treasuries are actually going to miss out on income, they should be moving out of those gently, into better investments. and, tha is actually... >> neil: like wht? like what. >> mid grade bonds and preferreds. >> that is and somewhat of an absurd statement. >> no, it is not. >> neil: you pointed -- >> here's why, the stock market is being buoyed, pumped up by 0% interest rates, the thing you said shouldn't happen, they should raise interest tes.

once interest rates -- >> stocks are cheap right now. >> wn stocks -- will they go up or down when they raise interest rates? they will be raising interest rates. >> metrics... >> they are not going to -- the stock market will not be correlated to it, whether the fed raises interest rates? >> the fed will not raise interest rates for a long, long time. don't worry about it. >> it depend on who is president, romney is president, pressure on ben bernanke -- >> if you can edict the future of interest rates, youan do something nobody in the htory of the world has ever beenble to do. >> i like t peter bdy moment, where your voice changes on camera. i want to see that again. >> you looked like wayne newton. >> neil: you are all having... >> all right. >> sticker shock at the grocery store, americans are feeling the punch and these guys... up next,

here, are you ready to jp off the fiscal cliff? apparently the white house is ready to veto a fix and take the plunge, we report, why republicans and their reaction might want to make you hide.

playing chicken within economy. a report says the president is ready to play hardball with republicans over the fiscal cliff, threatening veto a bipartisan plan if it doesn't include tax hikes on the rich. bringing everything to a halt. forget about coming together, ben stein. it looks like they're driving further and further apart. >> we don't know but i would not like to say it would be good. a tax increase, spending cut, uncertainty about the future not good for a fragile economy and it's a disgrace the president and congress cannot work together. if it's mr. romney they'll be able to work it o. mrobama, he's too dug in. >> he's backed off this before and extended the bush tax cuts. >> if he's reelected he won't.

>> can we blamboth sides? ey d didn't want to do hard math and pay for them so we keep moving idown the road. >> i think that is a-- i'm from -- i agrewith this. this is obama' way of dealing with the defit. tark particularly in democrats pick up seats in the senate. >> he talks about a mandate. >> he's going to say i'm done, you don't want to raise taxes on the rich, deal with the deficit this way. we'll have recession for about a year and things might look better >> do you think the likelihood -- i know your answer but hope springs eternal you'll surprise me. that the chance for real tax reform are better under a republican than a democrat because the president is more of the same. that might not be bad but it -- do you think you have a better shot as serious tax reform under a republican? >> i think there will be a better shot at tax changes under republican but unfortunately

they won't be help. by the way, the best evidence is that everything's calling this a cliff. it not -- there will be a deal. >> we'll get a bipartisan -- >> you don't think it's the end of the world? >> no. >> none of you? >> if it's the end of the world, we're covering it first on fox. >> i want t

three picks from ben stein make sure you don't ruin your

financial life. >> the first one is one that i've talked about lot. vti, a very broad worldwide stock index from vanguard. next, splv, a low volatility index fund. they tend to do well. sdy, a high dividend stocks. it'sen an ind fund that does well over long periods of time. that's what we're doing. >> neil: would you play all three together? one is stronger than the other. >> no, they're not -- they could all be strong at the same time. what would will and i am playing themll at once. >> neil: you argue for fun. >> unless your name is buffett. >> or stefan. >> god bless ben because he's responble but the fact is people are tuning in for cool stock picks. you can learn a lot from owning

individu stocks. >> neil: what about anof those choices he just blurted out? >> my complaint is he's telling ople to buy stuff they already own. most of us, if you own large mutual funds, you own the market already. >> neil: he's targetinghese sectors. ly managed fnds dothe sectors not out perfo. >> that's true. >> with just 17 days left until election day, gas prices are at an all-time high. more than double where they were when president obama took office. when the president took office, the price of gasoline in nausea county was $1.86 a gallon. now it's 4 bus a gallon. >> he said when i took office the price was $1.80. $1.86? why is that? the economy was on the verge of collse. because we were about to go through the worst