himself, lou dobbs. keep it right here fox business. lou: good evening, everybody. president obama conducting his annual year-end news conference. not surprisingly he declared this year to be one of his very best. what a very accomplishment and success without note of the historic wave victories in the midterm elections. the historically low number of democrats who will be there on capitol hill in the new year. president obama began his press conference by acknowledging that north korea was behind the breach of the sony pictures computer system. he admonished sony for canceling the release of the new film "the interview."

obama: sony is a corporation. it suffered significant damage. there were threats against its employees. i am sympathetic to the concerns that they faced. having said all that, yes, i think they made a mistake. i wished they had spoken to me first. i would have told them: do not get into a pattern in which you're intimidated by these kinds of attacks. lou: i have to give the president credit. he's never given a direct answer to a question. the irony of his criticism of sony's response that was frankly very much the same as his response when iran's leaders announced they were offended by a web video that mocked muhammad and ridiculed islam. it was mr. obama's white

house that then asked google to remove the muhammad video from youtube's video service. insisting he means to stand up to north korea. this time the president said he will give a proportional response aimed at north korea. he didn't elaborate further. reports suffered that the president is considering retaliation. he's actually thinking about putting north korea back on the list of state sponsors of terrorism. that designation would put north korea along syria, cuba, and iran. a designation that so far has done nothing to stop bashar and the president two days ago beginning his attempt to normalize relations with raul castro and cuba. when asked about the long-term effect of his unilateral action, the president had nothing concrete to say. obama: i think it would be unrealistic for me to map out

exactly where cuba will be. but change is going to come to cuba. it has to. lou: it has to. the president also asked about working with a new republican congress next year and the looming battles over his rule by fiat. mr. obama had one suggestion for the republican leadership: he thinks it would be democratic, progressive and in harmony if they would simply pass the bills he tells them he's willing to sign. obama: if executive actions on areas like minimum wage or equal pay or having a more sensible immigration system are important to republicans, if they care about those issues, and the executive actions are bothering them, there's a very simple solution. and that is: pass bills. and work with me to make sure i sign those bills. lou: now mr. obama off to hawaii

for 17 days of vacation with his family. our first guest says president obama's final press conference only affirms his contempt for the separation of powers. joining me, host of huckabee on the fox news channel. thank you for being here. >> the christmas gift is that obama is gone for 17 days. we won't have to hear anymore of this stuff. lou: did he not look like the dourest figure? he looked like he was desperately in need of at least 16 of those 17 days for rest. >> well, he did. but it was a disappointing press conference for this reason. here's a president that could have called sony. instead, he said why didn't they call me? he could have said to the entire nation, we don't let tinfoil hat despotts in north korea tell us what movies we can watch. instead he said, well, they never called.

i don't know why they never called. they did something wrong. i wish they would have talked to me first. lou: within it all, he rationalizes it with his own pass ivity. and then he says his response will be to consider maybe putting them on a state sponsored terrorist list, which they were taken off by george w. bush. >> sounds like the parent that says don't make me come up here. the kid knows he won't come up there. that's what the world dictators are doing. whether it's raul or kim jong-un. the complete un the loon as we might want to call him. lou: the other part of this is: this is the exact parallel. he sits there and criticizes admonishes sony for not releasing

the movie when it was his part in 2012 in which he played the part of sony. he actually asked google not to put that video up on youtube, one of their properties. i mean, he was rolling over for a tin pot ayatollah. >> you're the first person drawing that connection. more people should connect those dots. on one hand, our government was trying to censor a video because it might offend someone. now we're offended that someone has produced a video that might offend the north koreans. well, when is it the responsibility of the artistic community to not offend people. i get offended all the time as a conservative, as a christian. i don't go around saying we need to censor the material. that's the price i pay for living in a free nation. i'd rather live in a free nation and get my feelings hurt than to

eat lawn clippings like in north korea. lou: the president has a different choice. he can choose to live in a bubble. he decided as being an autocrat is the same as a democrat. he's making it clear to the rest of us, they're not the same at all. the washington post this week, they're doing something -- i'm still not comfortable with it. they're actually criticizing this president. they've served for so long as the house organizorgan.hearhammer him on n to open up cuba. >> this is a president who thinks he's similarly more intelligent and more thoughtful and more insightful than the ten presidents before him combined. all of whom saw that cuba should not be treated with some sense of kid gloves because

they've been brutally oppressive to their people. taken over the property of many, many individuals who had to flee to america. (?) i think some of the most wonderful people in america are cuban-americans. these are people that cherish freedom. it's a slap in their face to say, well, let bygones be bygones. easy for obama to say. not easy for people who have families that had the snot beat out of them in cuba. lou: this man knows his own superiority. he's very self-aware, if not self-involved. he is so understanding of racial issues, that he is willing to look out upon the nation, and all of us lowly citizens and announce we're all racist. that our culture is racist. that it's engrained in us. what bothers me is not his garrison, his utter

incensibility to his role as president, it's the fact that he doesn't expose an ounce, one iota of gratitude that he's the product of this very society that he's denigrating. it's astonishing. >> lou, i don't think you fully comprehend that this will get better because al sharpton, the official white house spokesperson. not josh earnest. he will take everything from cuba to sony to issues with the police forces across america. and the best thing for al, he doesn't to have pay his taxes. he feels like that he's off the hook because he's doing so much for the country, that we should be grateful and forgive those tax consequences that the rest of us poor lackeys have to pay into. lou: thank you for that wonderful present here this christmas eve. all right. thank you very much. governor mike huckabee. watch him on huckabee on the fox news channels saturday and sunday nights.

8:00 p.m. eastern. two days after reopening diplomatic relations with cuba. he didn't expect the move to bring a quickened to the us embargo. obama: you know, this is still a regime that represses its people. and as i said when i made the announcement, i don't anticipate overnight changes. but what i know deep in my bones is that if you've done the same thing for 50 years and nothing has changed, you should try something different if you want a different outcome. lou: despite his remarks, the president will reportedly unilaterally weaken the embargo using his executive powers as early as next month. as for a president castro visit to the united states or an obama visit to havana, the president says, we're not at a stage where that's in the cards as he put it.

for his part, raul castro enjoying a surge of support over this announcement. his brother fidel hasn't been heard from. fox correspondent is in havana tonight and has our report. >> no reaction yet from fidel castro on the new relations with the united states. fueling speculation the 88-year-old may be incapacitated. the reaction of the cuban people has been loud and clear. >> while thousands of cubans have expressed joy over the changes. the country's bugged entrepreneur class already wants more. >> open internet. that's what we want. what are they afraid of? maria and her husband jorge run a two bed and breakfast. for them, open relations with the us could mean the ability to take credit cards as payment. to remodel the rooms with flat screen tvs and maybe something more. >> what we really need is the ability to speak

honestly without fear. that fear has always been there jorge says. their hope, to grow their own business, own their own house, and leave something to their daughter. a dream familiar to neighbors 90 miles away. >> expectations here are high for the first time in a long time. managing those expectations could be a real challenge for this government. in havana, steve, fox news. lou: president obama may not be going to cuba any dime soon, but at least he got, well, at least he got a whiff of a cigar when a gust at a hanukkah reception handed it to him. what a moment. we're coming back. the fbi now says north korea carried out the cyber attack against sony. president obama however says it's sony that made the mistake. we take up the president's position on all of this herehá

lou: the fbi placing the blame for the sony cyber attack on north korea. warning there will be, quote, costs and consequences for the attack, but giving no details on how the united states would respond. joining us now is bruce, former cia deputy

division director for korea. now a senior fellow at the heritage foundation. good to have you with us. thank you for joining us. how serious is this situation, and why is there even though the fbi has placed the blame squarely on north korea, holding them responsible, is there no clarity in how the united states will respond? >> well, i think, first of all, it's a very serious threat. a lot of people have been surprised that north korea was fingered as the culprit. they didn't realize that north korea has very extensive cyber warfare capabilities. army affiliated organizations have cyber cyber warriors as they claim them to be. they've engaged in cyber attacks previously against us government agencies in south korean agencies and private companies. so it's a very real threat. lou: and that model is almost approximate to that of the pla,

the people's liberation army of china, and some are saying that this looks as though it were a coordinated cyber attack with china. >> it might be. we don't know the details. but north korea is capable of doing such operations by itself. it's been linked to previous cyber attacks. and it's got 5,000, perhaps even 10,000, these people in the cyber units in the military. maybe in conjunction with china. very well could be done by north korea itself. lou: to your point, bruce, last night talking with ambassador bill richardson who knows as much about korea than any politician in this country, in my opinion, he was surprised that the extent of their capability in cyber warfare. and when he's surprised, you know, it's -- it's impressive. it's also disturbing that our officials have -- have no real

rejoinder or strategy or apparent path to respond to this attack. >> exactly. i'm concerned that as part of the part earn with presidenpattern withpresidl see firm rhetoric pledging to do something proportional and strong to north korea, and then not carry through with actions. we've seen that with sanctions on north korea. north korea is not the most heavily sanctioned country in the world. the us has done a number of things to iran, syria, even zimbabwe, they all did pervasive stronger sanctions against iran than north korea, even though north korea popped nuclear weapons and said its nuclear program is for military purposes. lou: we know that the unit 121 during the 1920s was working on

sending four groups, four teams of covert special operations forces to this country, specifically to attack our nuclear facilitates. with that capability, if they have indeed created and sustained that capability, is that influencing us policy toward north korea, in your judgment? >> i think the -- it would be far more likely that north korea would do some kind of attack in the south. i don't think they would have carried out attacks against theaters in the u.s. and in that sense, i think the sony pulling of the film was a mistake. as well as some of the other -- movie companies that have pulled other films related to north korea. obviously, we have to be, you know, vigilant against north korean attacks. but i think it was an overreaction by sony. lou: as i've pointed out on this broadcast, it is an exact, it seems to me, parallel to president obama's white house begging google to take down the

anti muhammad anti islam video on youtube which google owns in 2012. this time, of course, it's a mistake. then it was national policy because the president was the one asking. bruce, we thank you for being with us. come back soon. >> thank you very much. lou: time for a look at our online poll results. we asked whether you believed a military strike against north korea would be an appropriate response to cyber attacks. 67% of you said no. if you believe on a matter of national security the white house should have called sony pictures rather than wait for sony to call them, cast your vote on loudobbs.com. the state department confirming our nuclear arson is down 89% to just over 4800 nuclear

weapons. by comparison, russia has about 4300 warheads. they're spending $140 billion to improve their nuclear weapon systems. we're not. china's arsenal, the number of warheads is unknown. china is believed to be raising those numbers. us government officials say that that china will have about 100icbms that could threaten the united states within the next decade. up next, president obama conducts his year end news conference. it was a hoot. some of the questions that were asked. and you can assess both the questions and the answers. here next. há

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lou: new government figures show the wars in iraq, afghanistan, the global wars cost this one a combined $1.6 trillion since the september 11th terrorist attacks. in comparison, the six-year long world war ii cost $6.9 trillion when adjusted for inflation. some comments on the press conference today, which lasted a very long time. the president's answers

were at times it seemed endless. there was time as a result for only eight questions over that entire news conference, which was merciful because most of the questions were deadly boring or magnificently off point. those questions were worse than the president's answers. the president refused to take a question from the front row where the networks correspondents hit. he was holding petty -- because they refused to carry his immigration speech last month. this is what passed for our question. >> looking ahead to your work with congress next year, you've mentioned an area of possible comprise tax reform. so i'm wondering, do you see a republican congress as presenting a better opportunity for actually getting tax reform next year?

lou: now that was a bad question. and we're not going to -- the answer was worse. but this question is worse than the previous question, just not as boring, in a confusing sort of way. >> i wanted to see what is your knowledge of whether fidel castro, did he have any role in the talks? when you talked to president castro, raul castro, fidel's castro name come up? did you ask about him? how is he doing? lou: turns out the president had not seen fidel in a while. darn the luck. one of my favorite questions was the one shouted out in the end. obama: we'll take this up in the new year. >> any new year's resolutions. lou: the only thing missing from today's press conference, well, it was a laugh in, and this t lacked a lap track.

>> josh has been giving me a who has been naughty and who has been nice. what belgium needs is a version of politico. [laughter] obama: i've been using up a lot of time. the one thing i will say, and this will be the last thing i say -- lou: president obama's vacation starts tonight. he needs it as you can tell. he deserves it after tirelessly working his way from the hard-hitting question from the adversarial press core. ho-ho. now the quotation of the evening. this from american linguist, mit professor and world class liberal noam chomsky. any dictator would admire the obedience of the us media. we're coming right back. merry christmas all.

>> new york city mayor bill de blasio escalating his war against the police force. could his racial politics radically backfire? we take it?

lou: president obama today claiming that black america is better off since he has been in office. but the issues to persist in

part because of our troubled racial past and the president of you. >> like the rest of america, black america in the aggregate is better now than it was when i came into office. the gap between income and wealth of white and black america process. and we have moral work to do on the front. i have been consistent in saying that this is a legacy of a troubled racial past of jim crow and slavery. lou: the next guest says that pointing to jim crow divides the races rather than answers the questions. the president and founder of the brotherhood organization joins us now. it's great to have you with us. i noticed that the president, as he reiterated that statement, he

labored as to what is a very simple thought, blaming everything, it seemed to me, on jim crow and 150 years ago slavery. >> very christmas to you and yours that and your family members. thank you for having me on as well. and you know, i write a weekly column and when this situation happens, and barack obama sent three representatives to michael brown's funeral, i wrote this article and the headline is the black leadership is committing black on black crime and is a point that i wanted to make is that see the black on black crime happening on the street and in the urban areas where young black people are killing each other but what is not recognized as the black on black

crime committed by the black leadership, for years latin america has been told that the white man, that white officers hate them because of their color. this is what obama is doing right now, it is a perfect example of that. and first of all, the income level in the black community has gone down. it has not gone up, making the white folks, it says that they are making a little bit less, but obama has made it difficult for people to make real money and it has nothing to do with racism. but the reason they keep pushing racism is because they want to keep black people angry. and when you keep the black people angry and hating their fellow man, because their soul to die. you kill their spirit. it separates him from god. and they are doing this so that they can use black americans to

redistribute the wealth and other countries and that is what barack obama is up to, that is what the black leadership has been up to for years. and it's really sad and pathetic to see the resident of the united states of america to grade this country and the world rather than unite us, he is dividing us with lies for his own personal gain. and i am ashamed of barack obama. lou: barack obama is a man who has suddenly decided to take on the entire nation and say you are a bunch of racists. that there is a legacy of racism in this country. and i wouldn't be quite as caught by surprise if he had any sense of balance or fairness or reference to fact and what he said. but he never does.

and i don't understand why there would be this initiative to attack our law enforcement agencies and police officers and to call out the country a racism that he knows is not ubiquitous, it is not pervasive and it is, in fact extraordinarily rare in our society. and i think that the man is waging a campaign of ignorance. i truly do. >> he knows exactly what he's doing. i grew up in alabama. i grew up in alabama and i grew up on jim crow laws and black americans did not have the type of hatred and destruction that they have today. when barack obama ran in 2000 and eight i tried to warn america not to vote for this man very i said that he is no different than al sharpton, jesse jackson, and all of this. except that he is worried because he is not an honest man.

but he wants to destroy the authority of the policemen that they have, he wants to destroy the head of the cia and the military so that he can change the format of what is going on. and then he brings in other liberal blacks and be slaves that with those type of people. he knows exactly what he is doing. he is not a dumb man at all. when it comes to destroy america as we know it. the one we appreciate it. >> one other quick points. lou: gore had real quick. lou: michael brown was a target he committed a crime he decided he was ready to die. rather than repudiated that i'm setting a better standard for black americans, they blame the

cop for it and that is evil and absolutely wrong. lou: reverend jesse lee peterson, thank you so much. >> thank you. to everyone, and happy holiday as well. >> he said now students, we will have mr. johnson say the pledge of allegiance. and it had been i don't know how long since i said it, i'm a trial lawyer and i'm not usually at a loss for words but i now know how to say the pledge of allegiance. lou: coming up next, wall street rebounds after early declines to recover more than a trillion

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the dow jones up only 27 points and the s&p up nine points.

volume on the big order come up 5.8 million shares. and it's a second highest for the year. the s&p up more than 3% from the nasdaq gained 2.5%. the wilshire 5000 gains at $825 billion. that's after more than a trillion had been taken out initially. the talk about recoveries. here with his outlook for these markets on the economy, john lonski. this has been a week for the folks. >> from gloom to boom. ever since they supplied the statement, the market added $1 trillion into value. does it make any sense? >> it seems like exactly what we need. >> i think what happened here is that the fed didn't deliver any

batters. and they basically restated the status quo. lou: here as we discussed, you and i were discussing us, it's going to raise interest and it's madness. those statements about being patient for all practical purposes by janet yellen led to the explosion and it was a relief. a trillion dollar relief rally. >> a year ago at this time we were thinking that the 10 year treasury yield would be a 3.5% if not higher, where is it today? less than 2.2% despite the fact that we have had this reality and so you would think that there would be more of a shift away from treasuries into this.

lou: there's nothing in the data that would suggest that there's any reason to raise rates. every reason to be accommodating and to be somewhat leery of this economy. >> inflation is declining. lou: however we call that disinflation. but if we broaden our scope and broaden our horizons, we see a lot of weakness overseas that might yet be felt by the u.s. economy. especially in terms of lower-than-expected prices if not price deflation. lou: there is the word that i was kidding you about earlier. deflation is a real prospect for many parts of the globe. >> when you look at them, it's not being said is that many younger european workers now are being forced to accept wage declines were least they are entering into jobs where in the

past the salary would've been 10% higher and now it's 10% lower. lou: the reality in this country is that because of business practices and government policy, over the last 15 years are middle-class and working men and women that have been forced to accept price adjustments as well in the cost of labor are down with wage deflation. >> yes. >> and so why is it that our national media is not being honest about what happened? >> unfortunately ever since 2007, i believe, we have had a 13% reduction in the median family incomes. and at the same time wealth of middle-class america has been diminished by home price inflation and all they could get on their savings was something

less than one 10th of a percent. >> the baby boomers are retiring and each year it is just an assault on their standard of living. >> making matters worse will make the large number of baby boomers who will want to downsize housing in the process in these higher priced regions of the united states, they will be selling their home in putting renewed downward pressure on home prices and that is not going to help the housing situation much. lou: particularly if we don't see an increase in immigration and the birthrate and an increase in household formation. >> we are looking ahead to next 10 years, the working age population growing by one half of a percent per year. that translates into real economic growth perhaps two to two and a quarter percent. lou: john, it's always good to

see you. >> same here. lou: merry christmas and happy hanukkah and happy holidays. be sure to listen three times a day on salem radio network. up next the government declaring north korea responsible for the massive sony cyberattack but getting no tangible or discernible response as to what they call a serious national security threat. we will take it up here next. you heard me right, that heart, what's going on? i'm leaving. why? what did i do? not enough. the pressure is too much. i quit! i get it. i can do better. just please...don't leave! [narrator] don't let your heart quit on you. get your uncontrolled high blood pressure to a healthy range before it's too late.

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lou: joining us now is matt and mercedes schlapp. >> we actually might hold hands. [laughter] >> it's good to be here. lou: let's start with the news conference that the president held did you come away inspired reassured in the policy direction of america? >> he started off strong, he was defending his record on the economy, talking about u.s. leadership internationally. but then when he went after sony and said they made a mistake, it's sort of derailed the whole press conference. as you know afterwards the ceo of sony came out and basically

said that i call the white house and i've been talking to the white house. so somewhere in the white house i can assure you that there were people scuffling and saying that no one told the president or the president didn't know that we were having conversations with sony and that became the new story of the day. so i think the president seems way too relaxed and i said earlier, he needs to have more press conferences because he sounded a little rusty. >> he can't talking and talking and talking. it's strange, usually want to give an answer. lou: that is his modus operandi and that seems to be his way. he questions over the course of time. >> yes, most of us have never heard of august before. he did this and i don't know what the symbolism and was

there. and why would you not call on them? and why would he not call on people who answered the tough question. for two years he wanted to open up normalize relations with cuba but then he's considering considering north korea that on the terrorism list. so it makes no sense when he laid out together. lou: what about his ultimate hypocrisy, being increasingly self-aware, pouring narcissus not to be self-aware is strange. but he did not even reflect in passing about the irony that in 2012 he will die asking google not to show this video on youtube. and the results, by the way, are very similar. >> yes, it is. what is unfortunate is these mixed messages of how to deal

with dictators. let's go ahead and deal with castro and others and get this brotherly relationship that these two communist in cuba have. but then he doesn't even know how to respond to the north korean dictator and what has happened. and this is a national security threat that has not been dealt with. >> look at what it led to the country needs to wake up if this can happen to a country like sony, you can have your government. >> the reality is that this is happening every day. we're talking about a million cyberattacks on this is the new head of nsa and this is a

national purity thread and no one pays a darn bit of attention. >> there is bipartisan legislation that never went through and we have this big problem that has become a bigger issue. >> the president has to learn to work with congress, there are things that have to get through congress. he accused president george w. bush of being a unilateralist on domestic policy. he wants to go at it alone from the oval office and that's not respect love the constitution. lou: he is a unilateral strong form policy as well. it's aggressive and forceful and it's the only way that he wants to function to be relevant in the debate. lou: we thank you both for being relevant in being here. >> would you like to come over to dinner? [laughter] lou: i would love that. merry christmas. now the wrapup, the presidents

wheezing for ending more than a half-century of embargo on cuba, mr. obama said it's the right thing to do. >> today we are making these changes because it is the right thing to do. today america chooses to cut loose the shackles of the past. lou: he got passing health care reform was the right thing to do. >> it's the right thing to do for the country. >> it is the right thing to do a. >> is. >> it's the right thing to do for the economy. >> we do that because it's the right thing to do. lou: he said it is the right thing to do and use this on every topic and issue from the economy to education to taxes and so-called green energy and a lot more. in 2010 he used the line 18 times in one speech. but how could so much have gone so wrong if president obama

actually understood the right thing to do. so i will leave that question to you. that's it for us, thank you for being with us and stay tuned for neil cavuto. have a great weekend and good night fr it covered for you. meanwhile "the willis report" is next. gerri: we begin with news that the federal government promises it will respond in kind to the hack of sony pictures. the fbi today officially blaming north korea for the hacking and president obama this afternoon saying sony made a mistake in pulling the movie "the interview." with more on this former white house chief information officer teresa peyton and ambassador john bolton, former ambassador to the u.n. and now senior fellow with the american enterprise institute. welcome to you both. i want to start with breaking news just moments ago crossing on the ap. staples announcing they had an exposure of customer data previously announced in october, but only now are we