>> neil: a ll >> neil: r as charlie gasparino reported all eyes monday morning on the u.s. markets. what will be remarkable the two markets we are watching.

we focus on the stock market, as we rightly should. my next guest says there is another market to focus on. perhaps for your money far more important that would be the treasury security markets, interest rates are decided. former vice chair of goldman sachs joining us robert kaplan. you are looking for a bit of a dichotomy, right? >> i think in the treasury market people may be surprised how little reaction there is monday. the reason is people will still want to own treasuries we have a slowing economy which may drive rates down. >> neil: that's the best thing going for us. >> i'm afraid this downgrade may not have a market impact but it will have a psychological impact particularly on the household sector. if you are thinking about spending and you see the u.s. just got downgraded people are going to be inclined to wait. i think we still in the middle of as we talked last week,

this revaluation of the stock market. we have to see that continue to play out. >> neil: we lost 700 points, we have to reevaluate lower or what? >> you saw yesterday a lot of gyrations up and down. i think the market is trying to fan a level. -- to find a level. i wish i knew but i know these revaluations are sloppy. they are not smooth. they tend to go up and down there's margin calls and short covering which conflict with one another. >> neil: technical there. would it be any different if there was a unanimous decision? if fitch and moody's had ginned s&p to say, hey this -- had joined s&p to say, hey this turkey stinks? >> probably not. i think the markets had already anticipated this. >> neil: they believe s&p not necessarily moody's or fitch? i think people thought if there was no change it was a matter of time.

i think this was going to happen, just a question of when. >> neil: this notion that money finds another home. all these people who have been supporting our debt, they have nowhere else to go, is that true? >> they have gold to go to. we will see how gold trades. as they say, u.s. is still the best house in maybe not such a great neighborhood. it is all relative. in economies i think people still want to own treasuries. >> neil: better than my view, we stink, they stink, far more harvardish. robert kaplan, thanks very much. he's been pretty uncanny on this a different reaction one for the treasury markets where they are fairly sanguine and okay one for the stock market where they are barney fife. do it right this time, republican jack kingston demanding his colleagues do that.

congressman from georgia joining us. if my last guest was right, you don't need to be scrambling like this, what are you saying? >> i think we need to use this as a reason to come up with a long term change. the market confidence is very important in order to turn the economy around and get more jobs. right now low market confidence this is one more blow. there's too much uncertainty. investors want to stay on the sidelines. congress should do its part, going back to washington, finishing up the appropriation bills and renegotiating with the white house. the white house is blaming s&p and arguing with s&p on the methodology -- >> neil: nothing is going to be done. the deal you guys came up with, i know you were looking for much more in terms of cutting. the deal you go is analogous to one of my diet props, i will gladly start one -- promises, i will gladly start one tomorrow in this this case seven years from now. mark zandi, top economist at

moody's says that is find with him. to me that doesn't look like big cuts. >> neil i'm in agreement with you. i did not support this final agreement. if i'm overweight take the full bag of cookies don't just take one cook i think the speaker, harry reid and the president should start renegotiating and do something along the lines of cut, cap and balance. leaving the current agreement in place and saying we bought a little time, during the machine of august, why den the three of -- during the month of august, why don't the three of us sit and reassess what we did and see if we can come up with a better deal. i think the speaker should immediately appoint the super committee people. these are 12 members that aren't going to be appointed until september. they should immediately be appointed and have to go to work during the month of august and say whatever recommendations you guys come up with let's not --

>> neil: wait, you want them to work in the month of august? that's worse than my diet analogy, but i'll play along. robert kaplan mentioned something interesting. we have an environment where the economy is slow enough that interest rates will stay low because of that. is there concern to cut more spending in an environment like this, that the economy will work against the appetite for doing that? >> i think in terms of the spending that we've done in the last three years the stimulus, bailout of fannie mae, freddie mac, tarp, obamacare. i think we've may the statement with spending that it didn't work in terms -- we've made the statement with spending that it doesn't work. now we have to get into cutting. one thing not discussed, tax simplification. most economists have said if we could simplify the tax code we could have a boon, some believe as much as five trillion in terms of getting investment back for job creation. to me that would be one thing

we could put on the table that democrats and republicans can agree with that will create revenue. at the same time it spreads the tax code out in a more equitable fashion. we spend 170 billions a year for tax compliance trying to figure out what we owe uncle sam. >> neil: it is a mess congressman, thank you. >> this development out of s&p has actually spurred political charges back and forth. this is unusual. we are going to hear from one presidential candidate, herman kwaepb who says a lot of people have to -- herman cain, who says a lot of people have to go. beginning with the treasury secretary. m halle berry, and as a new mom, i can tell you that childhood is a magical time. but for children with diabetes, life is not quite so carefree. the barbara davis center for childhood diabetes is fighting hard to find a cure. know the signs: irritability, excessive urination, weight loss. if you have any of these signs, please call your doctor.

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♪ hah @ >> neil: s ethi >> neil: something has to change monday. herman cain says if he were president he would be shaking things up on that economic team. would that be herman first off with the guy who leads it the treasury secretary? >> yes, it would neil.

it really pains me to say nat best days of this presidency are behind us. simply because, the president has put no policies on the table, such as, reducing taxes for corporations and individuals. reducing eliminating taxes on repatriated proves and taking capital gains taxes to zero. the economic engine, the business sector is not getting any fuel that's why we are in this mess. now, the debt deal was supposed to avoid default, but it didn't. the stock markets started to signal that over the past couple of days. they were saying kicking the can down the road, by reducing the increase in the growth was not enough. so i think that more speeches are not going to help. another tour to listen to the wrong people is not going to help this president. >> neil: herman, i listened to ed henry very tied into the white house. the gardner barely talks to me there.

i'm leaning one is the official, we stand by treasury secretary geithner, yada, yada the other is the rupe morep: department where names like former new jersey governor jon corzine come up was a -- as a possible replacement. what do you think of corzine coming in to replace geithner? >> i don't think would it do any good. corzine would be another crony of the president. cronyism isn't going to turn this around. when he brought in daley, who took over his chief of staff, we didn't see a chang. we didn't see a change in direction. we didn't see a change in aggressiveness on tax policy. i don't think bringing in corzine is going to make a difference. at this point throwing geithner to the wolves, as the scapegoat isn't going to we need new ideas, as it relates to putting fuel in the engine. this president and his

administration are simply incapable of putting those bold ideas on the take. >> neil: herman we have a slow down, that is fairly clear. the one thing ha has got us to a aa credit rating. we -- we share with new zealand, a lot of the harry potter movies were filmed there, so it is not a bad country. i wonder now what herman cain would do in this situation? you have to do something dramatic. what would be one big thing you would do, right away? >> you know first of all, with the herman cain presidency, we wouldn't have been in this mess. be that as it may, the first big thing i would do would be to immediately ask congress to lower the top corporate and personal tax break to and eliminate the capital gains tax, take it to zero. tack the take on repatriated profits -- take the tax on

repatriated profits and make them permanent. it would restore certainty and confidence. if we make them permanent, i believe that one move would begin to turn things around while we fix other issues. >> neil: all right herman, good seeing you again. he said could you show my picture over what would be the oval office? >> i hope you did that? [ laughing ] >> neil: herman, thank you my friend. now the stocks in the u.s. were tanking before the downgrade, monday after the gown grade, then what? charles you were nodding your head when -- when we were hearing herman talk about dramatic attacks. what would the -- how would the market respond to that panacea? >> i love the repatriation of tax profits. i've done the math, at the lowest end even if corporations gave a lot of

that money to shareholders, which corporations obviously are obligated to do, we would -- it would be a stimulus to this country of minimum 60 billion probably 240 billion that wouldn't cost anyone watching this show a nickel. >> neil: what about people watching other shows? >> no one is watching anything else but this. the president has taken a lot of plans that make sense and they've hijacked them. the repatriation they want to do an infrastructure bank with that. it is nuts neil. >> neil: too convoluted. >> obvious they want to take corporate profits and do things to spend corporation money. it is not going to work. >> neil: charlie gasparino and robert kaplan and other guests have said look for two reactions. treasury markets will be okay with this. people who trade notes and bonds and bills okay with it.

not so stocks what do you think? >> bad reaction with stocks, potentially gold could go up. you could even see a rally on treasury bonds come monday morning. i know because you are a nerd, huge geek -- >> neil: i don't think that is necessary. >> i'm going to be tkpwaebgy as well -- >> neil: why couldn't you say you are a geek and leave it at that? >> the u.s. has a lower credit rating that could force many funds to sell, lower quality investment grade corporate bonds below investment grade if you see weakness there that is bad for companies. >> neil: you are with those commodity traders they tend to jump, early, fast and rapidly with abandon. what are they going to do at the first second they have an opportunity to trade? >> i'm getting red i for a deflationary -- ready for a

deflationary meltdown, the downgrade, a lot of traders her the rumors and reacted. i think dagen is right, they are going to run to paper. >> neil: and runaway from what? >> runaway from risk? >> neil: what is risk? >> everything! right now my mattress is paying more money than the bank of -- >> neil: what happens to gold? >> i think if we see problems in europe, if it look like that situation is under control you could see gold down five to ten dollars maybe more. oil prices maybe down five to ten dollars on the opening. stocks may be dramatically lower. 100 points lower on the dow. if it looks like europe steps in to save the debt crisis over there, the market could be relatively calm. i'm not betting on that now. i'm going to prepare for the worst and hoping for the best.

>> neil: charles? >> down on the dow, it will be a -- [ talking over each other ] >> in a certain way, in an odd way, this is the wakeup call perhaps. it has been in the making for a long time. we through this was going to happen. no one thought it was going to happen friday. >> here's what we don't know how do the people of the country react in terms of spending? how to -- how do investors act? the best performing group all year long term government bonds. if people decide -- [ talking over each other ] >> politicians are going to try to hijack this as hurting the recover. people aren't buying houses, auto loans at 0%, people aren't buying cars. the notion that interest rates is going higher going to hurt the recovery is bunk. i hope politicians don't try to twist this. it is another big warning. >> neil: they will ignore it.

>> we've to clean it up. >> neil: we have no reaction at all. >> when we come back an entrepreneur, who is very worried. it has been a long week. take a chill. e announcer ] kiss everything you know about cookies goodby new newtonsit thins. real cranberries and cranberry citrus oat... crispy whole grain. newtons fruit thins, one unique cookie.

>> neil: early monday morning, you don't whether you should get into stocks, you don't know whether you should even be breathing. it is not that bad. any way chairman and ceo helps investors of all stripes. what would you tell folks? >> cash is king. cash out of everything and horde cash. >> neil: you wouldn't go into treasuries? >> nothing. right now i want as much as i

can do so i know what i have in my bank accounts that is the only truth we know. everything that everybody else is going to tell me is going to be a lie. you are going to try to manipulate me to put money here, hire people, you are going to lie. that's all that going to come out of the white house to get the most amount of money and people to do what you want us to do. versus what i can rely on and what i know in history, cash is king. >> neil: how long is it king? >> well, we continue to be downgraded it is not doing well for us. i would say until we get true leadership into this country, which means build a plan the definition of confidence means i can rely, right. i can't rely on anything. everything so far has been a myriad of lies and manipulation. none of it has been true this is what the business community has been saying for over a year. saying we don't have leadership. the information coming from us

is this is what you tell me today and then you do something different tomorrow. that the downgrade was coming. the business community said there is no way we are not going to get downgraded. the political people kept saying, absolutely not. they would never do that to the united states. the business community said this two round tables ago. >> neil: what will happen now in the business community, many fearing recession or worse? you are right, they are not going to be hiring. what are they going to do? >> why should i take the risk when nobody else is taking the risk? why put that on me. >> neil: why are you yelling at me? >> we pay most of the taxes and you want to call us what? why not a thank you note to be in that boat. who else is in the boat? you want me to hire, take risks, go farther in debt, cosign for stuff. >> neil: can i go out on a limb and say you are not a fan of the president. what do you think he has to do monday? if he were to address the nation, what should he do?

>> i apologize. apologize. because i did not lead this country to success. he's the first that i know of, to have this. he's not going to be known as the first black president. he's going to be known as the president who has a downgrade. >> neil: he will argue he inherited a mess. >> he did. i inherit a mess everyday as ceo of my company that is my job title. to fix problems. to get people to work together in harmony for one common goal. he can't get the people in the white house, i don't care if you are red or blue, your job is to make people work in harmony for one common goal. the goal is this country is safe, secure country. this is the american dream. what are you doing to our country. get these people together, not on vacation. understand how you bill a plan. what is the plan? what are the steps? how are we going to get there? >> neil: good luck coming out

of your shell. the white house if you are watching, i know you are, listen up. michelle bachmann is coming. i have a feeling she agrees with some of amelia's points. ... woman: day care can be expensive. so to save some money, i found one that uses robots instead of real people. 'cuz robots work for free. robot 1:good morning... robot 1:...female child. sfx: modem dial-up noise woman: flaws? yeah, um, maybe.

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