>> now, neal cavuto. >> welcome everyone. fox on top of the world trying to not bottom out. greece is skid now italy is scrambling. thousands of people in rome are protesting. it is the biggest crowd we have seen in months calling for prime minister berlusconi to a arriverderci. they were being baby sat by the international monetary fund to get the budget together and soon.

that does not sit well with the italians. greek opposition leader said no, he has to go. calling for immediate election and nubbing prime minister papandreou call for power sharing. he the bypass papandreou and meet with the greek president tomorrow. >> saudi arabia, at least for now the chique not hitting the fan. rising a percent and the first read on the market since the vote in greece. it is what it is. and the eu debt not only hitting european markets, but stocks here and world leaders are pounding out a fix for greece and monitoring what could be a mess in italy. so much to fix and so little time and so little money . here with the thoughts on all of this is robert caplanformer

vice-president in goldman saches and you seem to have done fine and not embarrassed himself in other endeavors. robert, good to have you. >> that was a joke. >> i understand. >> not really. what do you make of what is happening here. we are watching greece, greece, and then italy. what is going on here? >> the good news happened this week, we avoided chaos in europe because greece looks like they will agree to the bailout. it is going to be a mess and ey will have a fight over their elections. italy is a problem, and it is going to be a problem for a while. i would argue that the trick and the challenge in europe to avoid something chaotic and in the meantime, it is going to be a messy muddle and we'll be in this muddle for weeks and monthings. sarkozy and merkel have done

an excellent job being steadfast and holding their ground and staring down papandreou. it is messy and a muddle. but the world can deal with a muddle but not chaos. >> maybe the world cannot deal with the euro thing and not worth the struggle and expense and fight and the idea of getting a united states of europe didn't make sense on paper and hard to execute in reality and by the very criteria that the european union uses, only germany fits it perfectly . france -- so it is sort of like the fancy golf club that keeps cutting membership fees to get you to join to stay in it. is it really worth it? >> i think all of the european countries had to vote again, they might not do this. it is too late to turn back now. >> why?

>> it is big reason is, many of the european banks including german and french banks bought the bonds of the weaker countries and so i am afraid the euro is pretty much is tied together and i don't think you can turn back now. you have to move forward and make this work. >> that reminds me of the old story, someone in a pit deeper and deeper and one point you realize just put the shovel down. are we at that point or is it too late and deep. >> i think throwing in the towel would dig the hole deeper. i think there is a way forward. it is going to be a mess and scary and greece will stay in the euro and we'll muddle through this and europe ultimately maybe the countries will fall off but europe will be stronger.

but it is too late to turn back. they need to stay. sarkozy and merkel. believe me, if merkel thought there was a way to exraicate themselves she would have grabbed it. but she realizes it is too late for that. >> i have you here going back in the goldman days. what do you think about the corzine thing now that he hired a criminal lawyer? >> i don't have brilliant answers and i read in the newspapers. i have been surprised from the outside that the firm was leveraged 35-one. that is the biggest surprise actually that they were highly leveraged and didn't have more capitol and they made a big bet on europe. i don't have an answer why that would have happened. it is so far out of the bounds of how financial institutions

arey leveraged. >> do you think he was overrated? >> no . i know jon. and i think highly of jon . i can't explain it. if i were on the inside there, i would have more answers than i learned. i learned in my old age here when you are on the outside and can't explain i don't know. >> you could never be a financial tv anchor. robert always good to see you. >> good to see you, too. >> professor robert kaplan. >> and the latest on the situation in greece. fall out from greece could pale in comparison with the italian melt down in the bank system. how big is this getsing? >> if you look at greece economy it is small. italian economy is large. one of the biggest in the

world and look at what italy has done in terms of borrowing and the amount of debt on the balance sheet it is huge. and the problem is, kaplan pointed it out. they eat their own cooking. the banks own the sovereign debt of the imperiled country. >> italy has more debt and so they do. and here's where the global contagian comes in the u.s. banks, we think. underwrote the insurance policies on that. if there is a real triggering event and real default. 50 percent here and cut the greece solution is not a triggering event. but if there is a default, they have to make that money good and that's when the u.s. banks have to pay for this. it is so critical to avoid and muddle through and go to panic mode. panic mode is when there is a real default. >> panic mode is bailout,

bailout. >> that is muddle. >> i agree with them. and your long-term points we are digging a deeper hole. when it comes out the bailout and band aids don't get to the fundmental issue. we have welfare economies that rob the private sector. how do you pay off this stuff? you have to grow . and one of the reasons the chinese give us money without concession they believe in our economy. our businesses are doing good. our government is crazy, but we have an economic engine. people are still entrepreneurs in this country. >> wouldn't that hard ship help us. short-term, the money would go here, right? >> theoretically. here is becoming like there. and you know, we are 10 years, we could be there if we are doing what we are doing. you had bernie marcus.

one of the founder was home depo. he said he couldn't start home depo now. too many regulations, that's what you have in italy. >> is it your sense finally that it is going to get worse and we are looking at a melt down in europe? >> yeah, this is the problem with our banking system. it never recovered that much. we have muddled through. one of the reasons we haven't muddled our economy has. we are in a recession . but two and half percent growth people are not working and those loans are defaulted on. and that's the problem we have. and i tell you, if it gets worse over there and that's why we have to muddle along. it could be bad. on top of that, our banks will have to make those credit default swaps good. >> there is a reason why no reporter is quoted or envied or hated more on that. charlie, star of fox business

network. you don't get it, demand it. >> that is a saturday demand. all right. unemployment barely budging and at nine percent and home depo founder bernie marcus here on why he's worried unless things change. nine percent will look good. where there's magic. and you now understand what nature's been hiding. ♪ at dow we understand the difference between innovation and invention. invention is important. it's the beginning. it's the spark. but innovation is where we actually create value for dow, for society, and for the world. ♪ at dow, we're constantly searching for how to use our fundamental knowledge of chemistry to solve these difficult problems. science is definitive. there is a right answer out there.

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>> you have to remember back in 1978 and the '80s middle of the '95s, we cannot have the regulations we had today. we didn't have strong epa, the way we have one today. we didn't have the regulations coming out of washington. >> so you are saying you could not have done today what you did then? >> no, i don't believe it. i really don't. i have tried to put myself back in those days and honest to god don't believe, neal, if

we started home depo today with the environment being the same and no big stores with the way our stores work we could not have gone past 10-15 stores. it is impossible. >> home depo co--fowner bernie marcus said u.s. regulations are creating a mess and make it impossible for him to form one of the biggest retail businesses. only 80,000 new jobs. and chief economist. mark, to that point that regulations aring businesses and at the very least slowing what could be more robust hiring, what do you think? >> i think that is fair . the regulatory environment is uncertain and fluid and that creates problems for business people. i started my own company 25 years ago and the thing i learned, i can get used to regulations as long as i know

what it is . clarit yecertainty. we can debate the aspects of the regulatory environment. but business people need clarity with receive to what that is. >> a lot of them are saying, and protest to them are saying they want dirty air and that stuff. they want to protect that kind of stuff. but 10 regulations added to the books every day. that is overpel. should we have a cut back or what do you say? >> i think most business people are very interested in the same thing that everyone is. a clean environment and safe food and well run financial system and corporate gopherance . everyone is on the same page. but what worries them the most. it is changing rapidly and

there are many regulations that they don't understand and are not nailed down. until they nail it down, they can't plan or invest. most people are looking out three-five years when they make investment. if they don't know what the environment might be. they will not make that investment. >> your name came up once or twice this week with something that got people talking. this is from nancy pelosi earlier this week. >> i tell you this, it is president obama and congressional democrats had not acted we would be at 50 perct unemployment. >> i talked to a number of congresswoman who agreed with her. it would have been a 50 percent or higher had not been for stimulus. did you say that and do you believe that? >> i think if policy makers

did not respond to the great recession and financial panic and that is a threthora of responses. what the federal reservice did and sic and congress and administration did in respect to the stimulus. yes, unemployment rate would have been in the 15 percent. >> stimulus alone or all of this other stuff. by that measure. we would have to be facing the possibility of losing 10 million more jobs to have gotten us up to that level if not for stimulus and congresswoman was saying and others say alone. we would have looked at 50 percent unemployment. is that true? >> no. not according to my work. if there no stimulus and everything else had been done and the fed did what it did and the treasury did, unemployment would have peaked out 11 and half to 12 percent.

no, no. i think that is way too far . they didn't understand the results as we are discussing. >> i don't want to get in the pol tibs of both sides quote you when it suits their point of view. i know what that is like. and i do wonder if the pitch is going to be sure things are bad now, but they would have been a hell of a lot worse if not what we had done. >> telling people facing a nine percent unemployment rate and barely job growth at all. it would be depressionary if not for what we have seen. do you think that that is a promising pitch? >> let me say, what really. it doesn't mean it is not true. in my view it is true. >> but mark. that is like saying on pluto i would be snow.

right now, i am on earth. >> i don't know the merits television from a political perspective. i am an economist and i can say about economics. if we didn't have the stimulus and not kind ofave policy response we would be in measurably worse. >> but not 15 percent unemployment worse place? >> no, that is if we had no policy response and no fiscal stimulus and everything else it would be len and half to 12 percent. not bad but still worse. but not as bad as 15 percent. >> all right. i always enjoy you coming on. thank you very much. after gee whiz. g-20 and president acting like the adult in the room despite america's diminishing role. >> a primary challenge in

my mother said, "well, maybe we ought to buy this hot dog cart and set it up someplace." so my parents went to bank of america. they met with the branch manager and they said, "look, we've got this little hot dog cart, and it's on a really good corner. let's see if we can buy the property." and the branch manager said, "all right, i will take a chance with the two of you." and we've been loyal to bank of america for the last 71 years.

>> all right. president obama will be back home this morning after a fruitless trip to france. get ready for the squeeze as he refocuses on running for reelection and not just by these guys. former presidential candidate ralph nader calling for a democrat challenger to step up against the president. ralphthat be you, sir in >> no. >> why not. >> you have to be a democrat. secretary of state of new hampshire just pushed up the registration for candidates for the new hampshire primary and pulled out the rug for

anyone who wanted to and to give obama an agenda challenge for a few weeks and without the new hampshire primary it is hard to pull it off. >> so that would rule out for the time being a immediate democrat challenge. what about a third party challenge in >> i am not interested this year. the green party will have their challengers in 35 or 40 states and maybe more. libitarian party and it will be similar to past elections where small parties will try to challenge the two-party dictator ships that freezes them out of the debates and challenging. >> and the argument would be you have to hold your nose with the lesser of the evils. a third party entry on the left would tip to the

republican nominee. you agree with that? >> not necessarily. my votes come from hispanic and libitarians. look at the convergance that we talked about for between ron paul and myself on things like criminal wars of ark gression. >> there is a commonality there. >> and you know, whether the people agree or disagree on the issues, you and i chatted about this. you were ahead of them and saying this stuff long before other said them. you did have an extra jump on them and so why not jump in the race? >> i did warn about excessive corporate power and over government and corporate state, and that certainly borne out. that was part of the teparty revolt. you can't get anywhere if you ever not a multibillionaire.

we litigate won a lot of cases and wrote books documenting it. unless you are bloomburg or perot, you can't turn it in a three-way race without fundmental reform it make a competitive democracy to give choices to the voters. >> you can if people are sick. michael bloomburg and others told me, it would be a herculean point. we have seen teddy roosevelt bolted from president taft. and darn near took it and woodrow wilson won. there is anger probable that a third party candidate could do it you don't think we are at that level. >> it is it a less level playing field than it was in teddy roosevelt's time. money is the big factor nd

differencial acess to television. they didn't have presidential debate that is blocked third party reaching the people. we'll try to generate more presidential debates and should be over 20 presidential debates from cities and community all over the country and saying to the candidates in september and october. it is our turn to shape the presidential campaign. what do you think of is that? >> not bad. i love it. >> that would get rid of the red and blue state nonsense and address local and regional questions and really get more people voting instead of the commission on presidential debates where it is a private corp created by the republican and democrat parties to control acess. >> you are right about a lot of them. ralph, it is always a pleasure. >> we'll talk about the wall street speculation tax soon. >> look forward to it. >> and in the meantime three year in the presidency and bad

economy. ronald reagan inherited. and can what reagan did teach this president how to do it all over again. art said yes. >> if he listens.