hi, everybody. welcome to "wall street journal report." president obama's new ideas to stimulate to economy, cutting taxes, breaks for business, my one-on-one with treasure secretary timothy geithner about plan and what's next. what's the best place to put your money now? i'll talk to one of the smartest guys on wall street. we'll talk stocks, bonds, dividends and keeping your money safe. and two years after the financial crisis, what have we learned? is wall street any wiser? i'll walk to a bank ceo who watched the crisis unfold from the front lines. the "wall street journal report" starts right now.

here's a look at what's making news on wall street. president obama reveals his administration's new plan to jump start america's sagging economy this week. in an address in cleveland, the president laidó[ out his stimu proposal. it includes $50 million to pay for infrastructure projects to help create new jobs. he's also asking for tax credits and increased loan availability for small businesses. and extending the bush tax cuts to all but the wealthiest americans. those making more than $250,000 a year. the measure would have to be passed by congress. the market snapped a four-day winning streak on tuesday. the first day of the holiday shortened week. the markets bounced back on wednesday and climbed again on thursday. on friday, the markets continued higher. it's a knockdown, drag-out fight over mark herd. herd was fired by hp's board of directors. herd was then hired by oracle and now hp is suing herd and

oracle, charging herd may reveal trade secrets in his new role. encouraging news for america's economy this week. the trade deficit narrowed significantly in july. exports climbed to the highest point in two years. with summer behind us and midterm elections ahead of us, president obama hit the road this week to sell the administration's renewed focus on the economy. i spoke with treasury secretary timothy geithner about the plans the president announced this week to spur business innovation. >> i think they can make a very powerful impact. the first order of business is for congress to come and pass this set of very important tax breaks for small businesses. so they can start to hire people back again. once again, be the engine of job creation in this country. second thing, congress can extend the tax cuts that go to middle-class americans so they know today their taxes are not going to go up. those two things themselves are the most important things he can do right now. as you highlighted, you heard from the president today we want to work with congress to put in place a set of additional

incentives to encourage investment not just in research and development in the united states but here today and start to rebuild america's infrastructure as well. those things are very important to long-term growth by reenforcing investment today, we can help make sure we're digging out of this hole much more quickly. we put americans back to work much more quickly. >> secretary geithner, as you know, leader john boehner is calling for a two-year freeze on the bush tax cuts for taxpayers. the president said he's favor of freezing the tax, but only for the middle and low-income taxpayers. if the tax earners include small business owners who create jobs, is allowing the bush tax cuts to expire on that group dealing a blow to the administration's job creation effort? do you worry that those people get hit negatively? >> absolutely not. there's no basis for that argument and for that concern. the most important thing congress can do is to provide tax breaks to small businesses today and to provide clarity and

confidence and certainty for the american people. tax cuts that go to 98% of working americans will stay where they are today. again, we'd like to -- we'd like washington to come together. we'd like to see republicans join us in supporting proposals they've supported in the past to encourage investment in the united states. again, those are sensible, good policy for the country. now, where we disagree is many republicans in congress want to extend permanently the tax cuts that go to only the top 2% richest americans in the country. now, that requires -- to do that, requires us to go borrow $700 billion from our children from investors around the world, and that is not a responsible thing to do. if republicans believe that this economy needs more support now, the most effective thing we can do again, besides making these tax cuts permanent for middle-class americans and giving small businesses some additional tax breaks, is to give businesses greater incentives to invest in america today.

and start to rebuild america's infrastructure. >> it's absolutely the issue on everybody's mind. how much of an urgency do you put on cutting into the deficit and how much of an urgency do you put on making sure you get the right stimulus out there to ensure that we see job creation? >> that is the key question. you phrase it right. that's the most important thing. the most important thing we can do now is to make sure we're acting to get more americans back to work, to strengthen growth and recovery. that is the most important thing. it's bifar and away the most important thing we can do to go back to living within our means as a country and repair the damage caused by this recession. of course, we have to do these things, these additional incentives for businesses, in a way that is responsible. we have to make sure they don't add to our long-term deficits and we'll do it in a fiscally responsible way. >> let me get your take on the infrastructure plans. these are plans that people can really get their arms around and understand how the jobs are created, putting people to work.

when congress passed the $787 billion stimulus package, infrastructure projects such as repaving the roads and the bridges were one of the highlights. the president spoke about another $50 billion put toward infrastructure. where did the original money go in the stimulus package that was earmarked toward -- toward infrastructure? and are we as taxpayers getting our money's worth? >> you're starting at the right place. any american recognizes that we are suffering from a long period of underinvestment in our basic infrastructure. now, you're right to say that recovery act had a substantial package of investments. a lot of that is still in the pipeline. but this is a long-term need. we're not going to catch up in just a few months or a few years. what the president has proposed is to accelerate some future investments, to add to that pipeline of future commitments so we're doing more sooner to strengthen infrastructure and improve our long-term growth prospects and get americans back to work more quickly. >> the average guy wants to know

why is it taking so long? how come we're not really seeing the momentum that one would expect at this moment in the cycle of recovery? >> this was a terribly savage recession. and because people were so scared about the consequences of financial crisis, they cut savagely. we are still living with the scars and the damage of that basic crisis. and recovery by deaf scissionfi always going to be harder. it's going to take us a while to dig out of this. we've been growing for more than a year. we've seen more than 3/4 of a million private-sector jobs come back. that's a pretty good beginning. the big global companies in the united states that export to the rest of the world, americans are very innovative, productive, good at doing the things -- producing the things that the world needs. those are encouraging signs. but it is still very tough out there. >> my thanks to treasury secretary tim geithner.

up next on the "wall street journal report," a sputtering economy, a weak jobs market, what does it mean for your money? we'll talk to one of the smartest men on wall street. and looking back at the september season that shook wall street to its very core. two years since that weekend that changed everything. is the street any wiser? with orbitz, i know what to expect from my vacation.

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with the economy weak and jobs in scarce supply, many equity investors are staying on the sidelines out of fear and caution. but is that a smart course to take now? joining me now is bob doll with blackrock. bob, great to have you on the program. welcome. >> thank you. >> the markets have been acts as if the threat of a double-dip recession is off the table. do you buy that? >> yeah, i do.

i think that while it's not a zero probability, my view is -- let's call it 20% chance. i think the markets were looking at 60% to 70%. but the rally we've seen over the last bunch of days, taking markets up 6%, 7% from their lows is about -- less bad. not good, just less bad. >> what do you want to do in that environment? less bad. clearly, jobs remain a major issue. you say even modest economic dwroe growth is positive for equities, correct? >> yes. valuations in the market are suggesting worse than muddle through. if we muddle through, that's a bullish scenario. which i think is another reason why i think equity prices could be modestly but nevertheless to the up side because nobody is expecting that. >> let me get your take on catalysts for the market. is it fair to say that midterm elections in about a month probably represent one of the

major important catalysts for this market right now? >> absolutely. i think the election will -- when we get there -- remove a negative. not necessarily give us a positive, but it's going to create a more balanced government. and i think that will say to businesses who have struggled to plan because they don't know what the government is going to do, they'll conclude, you know, the government may not do a lot and, therefore, i can plan my business. >> so you're -- >> i can go make capital expenditures. >> so you are assuming then that the gop takes the house and we get lessl onerous regulation fo business? >> that's correct. >> should i wait until the next couple of weeks and then be a buyer in thismarket? wait for weakness? how would you play it? >> if it was way underweight or didn't own equities, i'd buy some in here. this trade is not over. the market feels like it wants to go higher. conversely, if i own a fair slug of equities, i'd be patient and

wait for pullbacks to add to it. >> many strategists suggest putting many in dividend stocks since yields on bonds are so low. you own a lot of dividend payers, right? >> yes, we do, coupled with the importance of positive free cash flow. a big, fat dividend all by itself doesn't do it. i want a company that's showing positive growth on the free cash flown line so that my dividend can go up. >> which sectors or names do you like most in it ups of dividend and free cash flow then? >> some of the health care areas are reasonably good. some health care services names. energy has a number of companies they're playing, reasonable dividends. i think in selected areas of technology, you can find positive free cash flow. some of the consumer names. so it's a wide variety of stocks. look for the dividends, yes, but look for the free cash flow. >> we're talking about the weekend that changed wall street coming up in the program.

i guess one of the changes since that weekend when lehman brothers declared bankruptcy and so much changed on wall street is that people are hoarding cash. they're saving more money. you've got a savings rate up to 6% from the individual. and even institutions are sitting on, what, $1.8 trillion in money. what is it going to take to get that money into circulation, bob? >> it's confidence. right now, people are scared. they don't understand what's happening. they don't know what's happening. therefore, the path of least resistance is i'll just sit with my cash with a smile on my face. my guess is that as we move forward and some of those uncertainties are cleared up, the election being one of them, the question about double-dip the other, some of that cash will be put to work and we'll have some better news out of the equity market. >> bob, wonderful to have you on the program. thank you. >> thank you. >> we'll see you soon. bob doll coming to us today. up next on the "wall street journal report," wall street and the world. changing in just a weekend.

two years ago this weekend, since the start of the stunning financial crisis. i'll talk to one bank ceo about his front-row view of the new normal and where we stand today. become a fan on facebook. you'll find us

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what have we learned as the global financial system tries to work its way back toward recovery? this week, my new book is in bookstores "the weekend that changed wall street." as we reflect on two years since the fall of lehman brothers, my special guest now, robert wolf. robert, great to have you on the program. it's so good to see you again. i really wanted to talk to you about the panic two years ago because really it did feel like the economy and the financial system was on the verge of collapse. so you attended those marathon meetings, that famous meeting at

the federal reserve with hank paulson and other ceos, the week before lehman brothers declared bankruptcy. what struck you most about that gathering? >> we walked into a room at the fed. you sit down and you see, you know, the ceos of all the u.s. bank and the regional ceos of the foreign firms there that was about -- my guess is a 10, 12 ceos there. and then i think everyone had an idea. it was about lehman. but certainly, you know, we didn't know that before the close. i think it was an environment that was a bit like, oh, wow. i can't believe we're all sitzádrq)e and what's the expectation? and really the first thing that came in is when paulson walked in with -- at that time new york fed chair geithner and kris cox, the said of the sec, and bsaid, you know, we're going to work together and on sunday night, you know, lehman, there will be an announcement that lehman has

a purchaser or, you know, then we're going to go into a different mode. >> one thing that i wrote about in the book and i tried not to only focus on the weekend but the year and a half later and the results that happened. now private debt became public debt. you had a european debt crisis. so i guess my question to you is has wall street changed? >> the biggest change is there's been an absolute derisking and deleveraging of our industry. not only our industry, but to the consumer. firms that were levered between 35 and 50 times, you know, now the leverage in wall street is probably 15 to 25. today people looking at their -- everyone's ratio. how much equity is underpinning the risk? that wasn't really looked upon as much in the past. balance sheet has been down significantly. you know, those firms that had a balance sheet of 1.5 to 2.5 trillion now have 750 to a

trillion. so you've had a deleveraging by 60% probably.zom and you've had a capitalization that has put all of wall street in a wbetter situation of havin true equity underpinning our risk. i think that's what you've seen over the last year. and then most importantly, it's been a very humbling environment. i mean, you know, our ethics have been challenged as an industry. our management has been challenged as an industry for all of the right reasons. and,io you know, we owe a lot t the public for helping us get back on track and we have to make sure the products and services we're giving them are best for them and to make sure our shareholders know that we're doing the right thing for the general public. >> earlier on the program, we had treasury secretary tim geithner on. he defended the sluggish environment and said that, yes, it's a sluggish speed of recovery, but -- but, you know, we've had massive losses and it requires time. >> you know, i'm an optimist. you can say it's half empty or

half full. i'd say we're about halfway full. we had 22 months of private-sector job loss and now we've had seven or eight months of private-sector job gains. we had a stock market that has gone up, you know, halfway from the lows but it's ñrhalfway fro the highs. so it depends how you look at it. the question is going to be growth and employment. and, you know, normally post-recession, there are three things that get gdp going again. the consumer, housing and industrial. >> do you think the president has a better relationship today with the business community or not? so many times it comes up that business thinks the president is anti-business. >> you know, it's -- you know, it's the age we live in. everyone has a soap box. >> yeah. >> whatever is the most exciting is what everyone -- is what everyone seems to focus on. you know, listen, we have private-sector dwroegrowth. the business community is better off, but we're not where we need

to be. i think if you heard the president, he would say we've come a long way and we have a long way to go. my guess is their view is, you know, we're going too slow and we need to figure out how to go faster, although it's going to take time from my perspective. i looked at an industry that i'm in that was on the, you know, right on the edge. and without government involvement and central bank involvement around the world and help providing liquidity, you know, i think this country would certainly have been worse off. >> so you're a free markets guy, you're a capitalist, and you still believe in the bailout. so some people will -- i have this debate about this all the time with people and people say you're a free market person or a capitali capitalist, absolutely. but do you think hank paulson, tim geithner did the right thing? i say yes. because at that moment in time we needed intervention. is that where you are? >> yes. i absolutely agree that at that point in time, we needed to

somehow bring liquidity back into the system. >> i mean, if people are starving, you don't say, sorry, you're on your own. you give them food. >> i think one of the big debates is -- is the perception of wall street, what was done after the public helped us out. i think that's what troubles a lot of people. >> robert, great to have you on the program. >> fantastic. i can't wait to read the book. i love the cover. >> thank you. you were great to talk to me in the book. thank you, robert. >> you're welcome. up next on the "wall street journal report," a look at the news this week that will have an impact on your money. and a lost viking artifact rediscovered.

for more on our show and your guests, check out wsjr.cnbc.com. you'll also find a link to my blog. now a look that stories coming up that may move the markets and impact your money. sglrnl monday, both house of congress reconvene after the august recess. there will be a look at the back-to-school shopping season. thursday, the ppi is out. the measures the cost of consumer goods that wholesale level. and then on friday we get the companion, the consumer price index, the cpi, tracking inflation that consumer level. and the university of michigan's latest reading on the consumer sentiment is also out on friday. finally today, gold is rising and it's more than just the

price. a fisherman in denmark made the unusual catch recently. a five-ounce gold bracelet dating to the 19th century from a viking trade route. the bauble has been donated to the danish national museum. a hard ast for more than 1,000 years. that will do it for us for today. thanks for being with me. next week, oliver stone will be with me. 20 years later, is greed good? keep it right here. have a great week, everybody. i'll see you next weekend.