hi, everybody, welcome to "wall street journal report." i'm maria bartiromo. the fed says it will step in and revive the economy. the markets smile. is the ride for real. a man who advised presidents from reagan to obama where we're headed next. and he's a legendary investor. a billionaire. financier, foreclosu philanthro conversation with george soros. >> to extent the tax cuts to the top, it's simply the wrong policy. >> what's on the menu for danny meyer? the man behind shake shack is hungry for more success. "wall street journal report" begins now. >> this is america's number one financial news program.

"wall street journal report." now, maria bartiromo. here's a look at what's making news as we head into a new week on wall street. the federal reserve reiterated its willingness to step in and help boost the economy in the minutes released this week. the fed's open market commit heee said accommodation may be appropriate before long. interest rates that the fed directly controls are already about as low as they can be, to the fed may buy government debt and mortgage securities. the fed hopes it would drive down interest rates on mortgages, corporate debt and loans which would stimulate spending, strengthen the economy and chip away at unemployment. the markets climbed up 75 points wednesday, took a breather thursday, friday the dow fell. earnings season kicking off with big companies reporting profits for the third quarter. google, intel, general electric beat expectations.

ge, the parent of the company that produces this program? retail sales jumped more than expected in september, up 0.6, increases in electronics, appliance, auto sales drove the number. sales are watched because consumers make up 70% of the america's economy. and the winners -- the mow bell prize in economics awarded this week to a trio of economists. americans, peter diamond and dale mortenson, won the work with how buyers and sellers look for each in the marketplace. diamond nominated to become a member of the federal reserve. big news about the economy, the markets and the fed this week. what does it all mean? what could the next few weeks bring us join me is martin feldstein, former chairman of the council of economic advisers. wonderful to have you on the program. welcome. >> good to be back with you. >> the federal reserve is planning on more quantitative easing, buying treasuries and mortgages to boost the economy. good idea? any downside to this?

i think there's a lot of downside. i think most of the good ideas behind us, they signal that they're going to be doing this, rates have come down, boosted the stock market a bit, but i think there are a lot of risks with that kind of what some people think could be another trillion dollars of buying by the fed. >> so should they not do it, then? >> boy, they're going to disappoint the markets if they don't do something. i don't think there's much doubt that they're going to do something, but i don't think they have to go to a number as big as a trillion dollars. i think they should start, do a small amount, and then think twice. >> what does it say about the economy that we need all of this stimulus and the fed constantly say, we will be there if things deteriorate, even further? >> well, the economy's very weak. you look at the last employment numbers, payroll employment down almost 100,000, housing prices

are coming down, exports are down. so this is a weak economy, but unfortunately, even those who are big proponents of quantitative easing don't see it as something that's going to give any kind of a substantial boost to gdp. >> i mean, that's really the question, because part of the goal of the quantitative easing is to create jobs. do you think, in fact, it will do that? what can government do at this point to stimulate job creation? >> well, i think quantitative easing is the only thing left at this point for the fed to do through monetary policy, but i don't think it's going to have any significant effect. 0.1, 0.2 on the unemployment rate might be a big victory from that kind of a policy. i think the government really has to tackle the more fundamental problems, like our mortgage problem with a third of homes underwater. >> i mean the foreclosure problem seem to be getting worse. as we heard this week.

there is a significant amount of foreclosures still in the pipeline, which really haven't hit the economy yet, right? >> something like 4.5 million homes, 4.5 million homes are either in foreclosure or are 90 days in arrears, which is to say they will soon be in foreclosure. so it's a very serious situation. and that's just the tip of the iceberg. there are a third of all homes with mortgages that are -- that have mortgages that exceed the value of the house. so there could be a lot more as house prices start to come down. >> on a fiscal level, the bush era tax cuts are set to expire at the end of the year. congress will not act on a possible extension until after the elections. you think they should be extends for everyone? >> i think they should be extended for everyone for two years. so i think this would be the wrong time to raise taxes on anybody. i think at the end of two years, we can look and see, does the

economy continue to need stimulus? has the administration and the congress made some progress on bringing down fiscal deficits? if they have, well, then we can have extension, maybe not at exactly the same rates, but i wouldn't commit as the president has suggested, to a middle-class tax cut forever because i think that would add $2 trillion to the national debt between now and the end of the decade. >> marty, what about the dollar? of course, it's been tumbling recently against other currencies. it helps exports because it's making those products cheaper around the world. but is a devalued american currency a good thing? >> there are pluses and minuses. if you're a consumer, it's going to make prices of products that you buy, the imported prices, are going to be higher. you're an exporter, as you said, or if you're a company that competes with imports, and that

includes everything that includes mcdonald's, that includes companies that are selling services in the united states, this is going to boost the demand for your products and for your services. >> yeah. >> so i think it's inevitable the dollar come down. after all, we're running almost $500 billion annual trade deficit and an even larger current account deficit, so the dollar has to come down to bring us back into balance. >> well what about the midterm elections, marty? there are, what, three weeks away. what are your expectations? what effect do you think they have on the economy? >> well, everything that i read tells me that the house is going to move into republican hands. the toss-up as to whether the senate does. then it will be a question of whether or not the congress and the president can find a way to work together to bring down some of these longer-term fiscal deficits to deal with some of these problems, to give some more confidence to the public.

i think the jury's out on that. >> marty, great to have you on the program. so appreciate your time. >> good being with you. >> see you soon. martin feldstein joining us. up next on "wall street journal report," one billionaire who doesn't want a tax cut. my conversation on politics and policies with legend george soros. the hamburgers and impatient new yorkers are willing to wait in line for. the food entrepreneur behind the city's best loved bites. as we take a break, take a look at stock market and how it ended the week. [ male announcer ] taxes.

so who called prop 13 a "fraud" and a "rip off?" jerry brown. who raised the gas tax as governor, and pushed for higher sales taxes? jerry brown. who tried five times to raise property taxes in oakland? jerry brown. who supported higher statewide income taxes?

jerry brown. and who says, if elected, he'll ask voters for even more new taxes? jerry brown. governor jerry brown, again? hide your wallet. well, when it comes to extending the bush tax cuts, george soros is one billionaire who says, no thank you. the investing legend famously

liberal in his politics, and recently i asks him about the need for government stimulus to kick start the economy. >> the session has been shorter and shallower than it would have been with the old countries cooperating and providing stimulus. it really worked. so you had the rebound, but now with the stimulus running out and all of this rhetoric about the balancing budgets, we are now in danger of a second downturn. the original stimulus mainly worked in restarting or maintaining consumption. now, that is not sustainable because we consume too much. we consume nearly 70% of the gdp

goes for congress supsumption. in china that is 30.56%, half. so china has to consume more, we have to consume less. and, therefore, the stimulus has to go to build up our productive capacity rather than consumption. now, it would be time to rebuild the road system to have an intelligent electricity grate to have high-speed railroads those would pay for themselves and create employment. >> now we need to see policies enkujing, incentivizing investment? >> instead of the bush tax cuts because if you extent the tax cuts for the top 2%, you don't have money for the investment program. so it's a choice between

creating the employment or tax cuts. >> what do you say to the people who say, look, at the end of the year taxes will go higher if you don't extend these tax cuts, and that may put more pressure on people, and push them not to spend money, and hurt the economy. >> but think what obama is proposing, is to extend the bush tax cuts to the middle classes, only those above $250,000 -- >> you agree with that? >> absolutely. now it's not in my personal interest -- >> i understand. >> -- but it's the right thing to do. >> over the short term everyone's talking about unemployment. >> yes. >> how do you get businesses to create jobs? how do you get the unemployment story turned around? >> well, that's the problem that business actually is having excellent profits, but they're not investing it but increasing

liquidity and eventually they'll devour each other, they'll make bids for other companies to use the money, but not creating employment. >> so what are the implications two weeks before the midterm elections that politics drive the agenda? >> that is right. and i think it is tragic because it seems that for the republicans it's more important to get their top contributors satisfied to that they get their tax cut, then the interest of the country. they are really putting the narrow interest, and they manage to get the whole public to buy into it. >> you have said that the banking system is too xartmentalized. this is an interesting comment. we have fin reg with fixing too

big to fail, yet we've got too connected to fail still, freddie, fannie mae, jpmorgan, why is this a danger? what should be done? >> the u.s. legislation you had the volcker rule which meant to separate the saving from deposit banking and that is incorporated but it's already diluted. and it left to the federal reserve to implement. >> and interpret. >> and interpret the regulations. and you can be sure that the republican congress, the regulations will not be very

well introduced. so the principle here is recognize in the international negotiations, it's recognizing principle but nothing has been done. >> my thanks to george soros. next on "wall street journal report," serving up profits and hospitality. with the restauranteur behind the most successful spots. from union square to the road. find us on ♪ americans ate more than 9

billion hamburgers in 2009, amidst weak consumer spending. diners rekindle the love for comfort food. burgers are big business at new york chain shake shack. the customer waits sometimes an hour to support the trend and the bottom line. the owner, it proves diverse portfolio is a smart move in any economy. join me now is the ceo of union square hospitality group, danny meyer. great to have you on the program. >> thank you. >> you are a legend. 25 years since you open the your first restaurant, union square cafe, at age 27. one of new york's consistently highest-rated restaurants. congratulations. >> thank you. >> a beautiful spot. now over a dozen restaurants, and everything from fine dining to barbecue and burgers.

what do your straen restaurants bis the economy? >> they tell one story. we have everything from places that serve barbecue to burgers to, you know, black truffles. and i think that in any economy people want to fell well-cared for, they want to feel welcomed. we try to do that at all of them. in a rough economy, as 2009 was, the places that were on the less expensive side, like shake shack and blue smoke, did even better than the fine dining restaurants. >> what are you seeing now, in terms of people going out to eat? >> 2010 has been a fantastic year for us. and one thing that we've seen is that in new york city where a little bit different than perhaps the national economy, for two reasons. new yorkers need to get out to eat. new yorkers are a self-selected group of people who live in small apartments and they're social creatures who need to be in restaurants so that helps us. the other thing that helps us is traveling tourism has had a

strong year in new york city, so we've done well from that standpoint. >> so it feels like it's getting better. food has such celebrity right now. whether it's chefs, tv shows, magazines, does main street interest in this world change what people want to eat or change the way you operate? >> i think so. i think you've got to be really aware of trends. the amount of interest of which people follow restaurants and chefs these days is almost like sports teams. what i find fascinating in the old days you have a chef who is purely about his or her point of view in terms of what they'ring cooking. now that chef has to be awir of what dishes are in the newspaper, on the blogs, magazines because these trends sweep through quickly. what we try to do is astay trene eating and stick with hospitality. >> i can see that. that comes across. in the middle of your first

brand expansion right now. >> we are. >> is that right? you've got shake shack, popular burger chain in new york city. in now miami and soon washington, d.c. so many companies have been holding back in this recession. how are you managing to grow? >> there's two reasons that the bad economy has given us to grow, especially something like shake shack, which has not needed a robust economy in order to thrive, and that is the fact that you can have access to a better talent, the labor pool expanded during the past couple of years. and the second thing that has freed up a little bit is real estate. instead of landlords clamping down looking for the highest possible rent really nice spaces have started to make themselves available. in a place like shake shack, it can really benefit especially when you find places where there's a lot of pedestrian traffic. >> you mentioned hospitality. what does the idea of hospitality mean in business? talk to us. >> we launched hq for hospitality quotient.

what we're doing is help companies who are already the best in the world at what they do, whether an investment firm, whether a veterinary clinic or a dental firm or a hospital, a big retail chain, they're already the best in the world at what they do or what they make, but now they want to be best in the world at how they make their stakeholders feel. one of the things that we think is highly transferrable from the restaurant industry is that we know that we may think we've got the best roast chicken in the world, but guess what? 15 other restaurants think the same thing. so where we need to compete is not only with having the best chicken in the world but how you feel when you're in our restaurants. >> i know you're not a chef. you're a restauranteur and a very successful one. what is your favorite place to eat? where do you like to eat? >> ply favorite place to eat is at home. my wife is a great cook. my kids are great cooks. i would say anywhere but my own restaurants. >> why would you say that? >> i love being at the table

with someone. when i'm in my own place i spent my whole time looking around all of the things i wish i could do a good job of addressing and i end up being a bad job of being with the person i'm with. >> thank you. >> a pleasure. >> zdanny meyer withus. >> the news this upcoming week that will have an impact on your money. on the avenue, celebrating the hard work and success of enterprising italians since 1492. [ female announcer ] why settleor plain bread

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guests check out wsjr.cnbc.com. investoragenda.cnbc.com. hope you will check it out. stories coming up in the week ahead that may move the markets and impact your money this week. a slew of earnings releases from dow companies including bank of america, coca-cola, johnson & johnson and ibm. at&t, mcdonald's, verizon and caterpillar reporting earnings. monday the index of industrial production gives us a look at activity across that sector. tuesday, the number of new residential units that began construction last month. the beige book will be out that details the health of the economies in different regions across the united states. so in 1492, columbus sailed the ocean blue.

in 2010 i rhode a maserati. i was honors to be grand marshal of the columbus day parade. the new york celebration of italian achievement start in 1929. the newspaper mogul was the first italian-american millionaire. my thanks to the columbus citizens foundation and all of the parade organizers. that will do it for us for today. thanks for joining us. my guests next week, world champion skateboarder and entrepreneur, tony hawk. have a great week, everybody. i'll see you again next week weekend. [ male announcer ] carly fiorina. as ceo, she laid off 30,000 workers and shipped jobs to china. china. india. russia. poland. i know precisely why those jobs go. [ male announcer ] because fiorina shipped them there. to shanghai instead of san jose. bangalore instead of burbank. proudly stamping her products "made in china." 30,000 workers gone

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