good morning. welcome to a brand-new hour of msnbc live. . i'm carlos watson. right now, health care in question. hopes for bringing sweeping overhaul to the nation's system before the president's friday deadline grows dimmer as they plead for more time to get the job done. sarah palin officially resigns as alaska governor using her farewell speech to blast her opponents and media and even hollywood. we're live in alaska. skip gates said it's time to move on after reigniting the debate over race relations in the united states. is the recession over? if wall street showing new signs of life, is the worst of the economic meltdown finally behind snus good morning. i'm carlos watson. we have a power-packed hour lined up for you. savannah guthrie at the white house and norah o'donnell live

in fairbanks, alaska and julio castro is bus and pop cull expert and msnbc contributor toure. a lot going on. first, fast forward through the top lions headlines. happily sales up 11% to a annual rate of 384,000. up by the way for the third straight month. mexico police named a suspect in the shooting death of border patrol officer of rosas. he was reportedly carrying a border patrol issued pistol at the time of his arrest. police refuse to comment on four other men detained in connection with thursday' shootings. french fres sarkozy released from hospital. he spent the night there after collapsing while jogging. doctors say heat and overwork were to blame. well, for those of you who watch msnbc live every morning,

you know i love to have a terrific guest co-host for the hour and today i could be happier to invite back chrystia freeland. >> nice to be here, carlos. >> did you take a peek at "meet the press" over the weekend? >> absolutely. i thought the most interesting part was her effort to diffuse the controversy that the vice president had provoked. >> joe biden's barking comments on russia? >> as ever, joe is kind of a dangerous guy it turns out to have near a tape recorder, isn't he? >> i tell you what i was most interested ho hear her talk about china's potential willingness to help with north korea. because that's a big deal. >> absolutely. absolutely. and i think that if she could do that, then that would also be really important in establishing her as a foreign policy force. i mean, it seemed to me that her appearance over the weekend following some of the drama that we had around people reporting

on what she really a force in foreign policy or not, i thought that she was trying to use her appearance and her appearance maybe was orchestrated to establish, yes, she really is secretary of state, yes, she really is setting policy in some areas. >> let me take you to the economy. we're going to talk more about this in a moment. but you know, stock market up some 40%. actually positive territory for the year. north of 9,000. is it real? what do you make of this recent search? >> it's absolutely real and i think that there are two really positive things going on. one is the recession does seem to be coming to an end. >> you really believe that? you don't think that is hopeful that is pie in the sky, that's people, me included, looking for optimistic turn of events? >> it's definitely hopeful but i don't think it's entirely pie in the sky. if you look at the indicators a lot are signaling that the slowdown is coming to an end. now, i think the more pessimistic news is it looks as

if this would be a jobless recovery for some time and it's too early to judge how robust the recovery could be. it might, for a lot of people, not feel as if the recession is over for a long time. >> wow. when does the tree fall in the woods? or not? we're going to turn to other news. white house hoped that congress would be voting on a health care bill this week but leadership sources tell nbc first read that a vote is officially off the table. however, speaker pelosi will re-start negotiations today among democrats on the energy and congress committee. now, all of this comes each as a prospects of a bill in the senate are as far off track as ever. >> the only thing bipartisan about the measure so far is the opposition to them. >> look. there are not the votes for democrats to do this just on our side of the aisle. >> it's hard to get democrats together to agree on a bill, let alone republicans. >> nbc news savannah guthrie joins me live from the white house. i thought there were some

interesting sunday morning talk, including ken conrad, the democrat from north dakota, seeming to take the blame for his party, saying while we've got 60 democrats in the senate, we can't get organized enough here to pass the bill, you know, the president maybe should be focusing his attention on democrats. is that right? >> yeah. i thought that was really interesting, too. . we heard it not just on the senate side but also from congressman cooper on the house side and it really underscores even though the democrats have these large majorities, even though the president is still relatively popular with approval ratings in the high 50s or low 60s that this is still an extremely heavy lift. not because of republican opposition but because of the diversity of the democratic caucus and in trying to get everyone on board and you get one wing of the democratic caucus on board with one idea and that alienates the other wing. that is exactly what they are trying to get through. both on the house side and the senate side. we're waiting for the senate finance committee as we have been for weeks to put forward its proposal and then i think what they think on the house

side is that the committee work will get done this week but no longer any hope there will be a vote on the house floor and, obviously, not the isn't that true floor either before the recess. that keys up a battle when they are home in their districts, they're going to get an earful from constituents and all of the interests groups will be ourge advertise out there advertising so a real fight during this august recess. >> how woshyed do you think the white house is about this? because it seems as if this is the first really big political fight the president has taken on of his own volition. this has been his choice to put health care on the agenda, that he is going to do it this year. what happens if it doesn't work? what happens if he fails? >> well, you know, it's interesting. i think there is real concern here, but, on the other hand, in a way you look at it and you think there is going to be some kind of health care reform. the question whether it's an air, quotes, right? whether it's health care reform. i think you look at it and you see some things probably is

going to pass. it's just how ambitious will it be? how big will it be? they have put all of their cards on the table. they want health care reform so in a lot of way failure is not an option. something has to pass. the question is whether or not it's a major reform or something not as ambitious the president had hoped. >> savannah guthrie, thank you so much and look forward to talking to you again. >> sure. sarah palin may have made her final appearance as alaska's governor but will be skeb slightly seen a lot more in her future. she told a fairbanks crowd she is charging a new course to advance the state. >> it is because i love alaska this much, sir, that i feel that it is my duty to avoid the unproductive typical politics as usual, lame duck session in one's last year in office. with this decision now, i will be able to fight even harder for you for what is right and for truth. and i have never felt that you need a title to do that.

>> truth justice in the american way. nbc's chief washington correspondent norah o'donnell is live in fairbanks, alaska. good to make you smile! what are people saying now, some almost 24 hours after sarah palin has stepped down? is there new news or new thoughts about her opportunities going forward? >> look. this is alaska. most of the people here love her. i mean, she may be out of office but she is is not out of words and i think what is most remarkable about that farewell speech yesterday was how fiery that speech was and how she used it as an opportunity to take some parting shots, whether at her opponent, the media, or hollywood starlets as she said. i mean, one of the most striking things that she did talk about the anti-hunting, anti-second amend amount group she called the hollywood starlet. she said hollywood needs to know

we eat, therefore, we hunt. this was pure palin yesterday. >> drill, baby, drill. >> drill, baby, drill, that's right. she made clear yesterday that she plans to continue to be a voice. she did not say what she is going to do next. what i've been -- what i learned over the weekend she has raised over a million dollars for her political action committee, more than 300,000 just in the past three weeks when she announced her resignation. she is going to be likely going to california to the ronald reagan presidential library in just two weeks to make her first big political speech and she has also received some other invitations, including to iowa which is the site in the first presidential nation caucus. invited but not accepted that invitation yet. i think we have to see. i think we can still pick over this speech yesterday because a lot is there including the way she attacked the media. >> let's listen to the sound right now. >> democracy depends on you and that is why -- that's why our

troops are willing to die for you. so how about in honor of the american soldier, you quit making things up. and one other thing for the media, our new governor has a very nice family, too. so leave his kids alone! >> wow. i want to bring in chrystia freeland who is joining me for the hour. i'm among those who think that sarah palin has a meaningful future going forward. she will make significant amount of money via the book, radio, tv, speeches, et cetera. and i think that it's not in a world in which mike huckabee, who very few people knew prior to running for president could win the iowa caucuses, right? it's not amazing she could win a few presidential contests. >> i agree with you. i think sarah palin is an attractive political figure whatever you think of her politics. i think she could tap into something that is important for the republican party. and that is this sort of

populist working class, probably anger and frustration at where america is and if we see a jobless economic recovery returning to our earlier theme, people in that sort of a life situation are going to be really frustrated. someone like sarah palin, i think, speaks to them more effectively than any of the other prominent republicans. >> that is interesting to me. the notion -- you know, we talked in the '90s about the angry white male and angry white men. chrystia is advancing the idea instead of the face of that being a rush limbaugh or bill o'reilly that the face could be a sarah palin. what is your take on her political opportunities in the near term? >> no doubt. and i think that -- look. with no disrespect to pat buchanan, that is exactly her electorate and the people she is talking about. yesterday, these lines were tough. they would never make it in a general election campaign.

but to her supporters, it was exactly the kind of political red meat that people love. it's the kind of red meat that her supporters love. it's the kind of red meat that has gained her some 13,000 people that have made small donations that have helped her bank more than a million dollars. you betcha she has got a political future and you betcha she is out there traveling around. she is definitely got a following out there. she's got lots of invites. think the key question for her is can she manage an organization now? she is no longer governor and she is not going to have the security guards that kept the national media away from her yesterday. she is not going to have the drivers and all of the things or the troops that go along with being governor of a state. will she have the staff that will help her set up a lot of these things? the thing i found most remarkable being here over the past several days is she really has a very tight circle of advisers. in fact, it's pretty much herself. she didn't let her press people, very few people know about where she was going to arrive. she went in the back door

yesterday and didn't let anybody how long the speech was going to be. she wrote it herself. she is deciding for herself what is next. >> i was going to ask, how influential do you think her husband is? is he really her key adviser? >> i spoke with todd palin yesterday about her future. i think the most interesting thing he said to me was they don't know what is next yet, but he said as a national campaign, we don't know yet. and i said, but it was pretty tough on your family and he said, yeah, but the positives outweigh the negatives. i think that is the clearest indication i got from her husband that they like the campaign. despite all of the stuff that she blasted in this speech, the positives outweigh the negatives. so i think that that means that they could do this thing again and i think that is significant. i also talked to her father and her brother who said she's not going to disappear. she wants to continue to be a voice. i think that's part of the reason that she resigned as governor. she doesn't want the ethics

complaint and doesn't want to be tied down here. in her own words, she wants to be free. >> norah o'donnell in fairbanks, alaska, thank you so much and hope you come home soon. >> yeah. great to see you. >> straight ahead from recession to recovery we put the spotlight on how major cities are coming up with their own winning formulas and some are doing well. san antonio mayor swho who are calling the latino obama is joining us next live. for arthritis pain... in your hands... knees... and back. calling the latino obama is joining us next live. for little bodies with fevers.. and big bodies on high blood pressure medicine. tylenol works with your body... in a way other pain relievers don't... so you feel better... knowing doctors recommend tylenol... more than any other brand of pain reliever. 90s slacker hip-hop. ♪ that can strain your relationships and hurt yourody 'cause we'pride ♪ng a ride ♪ ♪ it's the credit roller coaster ♪

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welcome back to msnbc live. i'm carlos watson. fresh debate today over the effectiveness of the president's 787 billion dollar stimulus plan. >> i think the stimulus was a big mistake. i think we can fairly safely

declare it a failure. >> while republican senator mcconnell will say that, joe biden defending the stimulus plan and wrote the following. with me now live democratic mayor of san antonio, julio castro. good to see you again, mayor. >> go to be with you, carlos. >> so san antonio is one of the few cities that seem to weather this recession better than most. tell us a little bit about that and has the stimulus package made a difference in your mind in san antonio's economic fortunes? >> you're right. about a month or go the brookings institute released a study looking at how the hundred top metro areas handle the recession from the first quarter to '08 to the first quarter of '0 and san antonio ranked number

one among those metro areas and several reasons no that. one is we have a diversified economy heavy in sectors that have been relatively healthy in the last couple of years even as we've gone through the recession like health care and biosciences and education. a tremendous amount of military investment here. we're getting 2.2 billion dollars of investment at sam houston. san antonio is actually going to be the city that hosts all of the military medical training and a couple of months ago when we got the cybercommand of 24th air force, but to answer your question specifically about the stimulus, i do think it's going to make a difference and that it is making a difference here. and i'll give you a precise example of that. as you know, for big cities, one of the biggest challenges is traffic and congestion. and we have received over a hundred million dollars of stimulus money for san antonio to tackle a congestion at what

is the most challenging intersection in all of the cities. the 281 corridor down here. and that is money that had been looked for for many years in the community that we've been waiting for and that is going to be putting people to work in san antonio, creating real jobs for a project that is going to improve the quality of life and alleviate traffic. so it is working. i know that it hasn't gotten out to the cities as quickly as some wanted it to get there, but it is working. >> mayor, i'm joined by chrystia freeland, the u.s. managing editor of the financial times who wants to jump in on the conversation. >> i wanted to ask you, mayor, how does sonia sotomayor confirmation hearing played in san antonio and whether you think that is an important breakthrough for hispanic americans? >> well, i think that first and foremost, each supreme court nominee is judged on the merit of his or her body of work, of

their life and their experience as a judge, and i think that's why this was an example where you had someone who was both qualified, who had 17 years of experience on the bench, and, also, seems to have fit the bill in terms of somebody who had not been an overly activist judge, so i think folks are generally pleased. i know that these are the types of things that become part of partisan politics. one of the things i like, frankly, about serving in the mayor's seat is that we're in a nonpartisan context, but i think, generally, in the hispanic community as well, it's been seen as something of a break-through, a real watershed event and folks are very proud of her success and the fact that, again, you have somebody not only because she's hispanic, but because had he -- she is so qualified and throughout her life, she really has lived the

american dream. she's the best of success in terms of and that is great to see any time anybody can experience that time of success. >> mr. mayor, we only have about 30, 45 more seconds. secretary of state hillary clinton was on "meet the press" this weekend talking about a variety of international issues. one area that i didn't hear come up a lot was mexico, our next door neighbor. you, obviously, live there in texas and so interact in a number of different ways with mexico economically, et cetera. your thoughts right now on some of the troubles that mexico has been having in terms of the drug wars and also the question of immigration reform. should that be on the obama agenda this fall? >> oh, absolutely. and i was -- i've been so pleased to see the progress that the obama administration has made and the reaching out that has happened with secretary of state clinton to president calderon. as you can imagine, here in texas, that relationship is essential, not only because

there are culture and historical ties and geographic proximity, but because our economies are so interconnected, what we do here in texas and in the southern part of the united states affects mexico and vice versa. i know we are working on continued trade and working on developing better relationships and seeing what the united states can do to make sure that all of the crime issues going on there don't bleed over into the united states. >> mayor castro, good to have you, sir. the next time you're in new york, i hope you'll stop by and join us in person. >> thank you. take care. sure. coming up, skip gates says it's time to move beyond the controversy sparked by his arrest by the cambridge police but that may be easier said than done. in a few moments a live report from cambridge where the police will be speaking. it's coming up next. you're watching msnbc live. i'm carlos watson. undefeated professional boxer floyd "money" mayweather

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in just moments the cambridge police department will hold a news conference to discuss arrest of henry louis gates and also today we're learning new details about the 911 call placed by a cambridge woman that led to the harvard officers arrest. harvard professor's rather, arrest. attorney now for the woman says she did not mention race. that's right. she did not mention race in the 911 call. nbc's ron allen is in cambridge, massachusetts. what more are we learning at this moment after a fairly intense seven or eight days? >> that's putting it mildly, carlos. we're not sure what the press conference is about. we expect this 911 call which has been on the front pages of the papers today. the woman who made the call works down the street from gates' house about a hundred yards or so. not even that far and worked there for some 15 years and not a resident which might explain why she didn't necessarily recognize gates. she made this claim and put this information out there through her lawyer because she was concerned that in the media she

was being painted as racist people person who only called the police because she saw two black men breaking into a home. she said she saw only two men breaking into a home and she saw this going down when she walked by. i think it speaks how sensety people are in this community about these events and how people are being portrayed in them. again, what the police are going to say about all of this, we're not sure. it starts about noon. >> ron, governor patrick, has he had any more to say about it? i know he got critique and pulled back. has he said anything more. >> no. i have not read many comments with about him at all. i think the governor has deferred to the president. >> ron allen, thanks so much. in moments we expect to hear live from the cambridge police officers association. we'll have that live on msnbc. for more on the topics we're

discussing this hour, check out carloswatson.msnbc.com. are we too focused on domestic issues such as health care? while the rest of the world is boiling over. our focus on foreign policy is coming up next. you're watching msnbc live. i'm carlos watson. if we don't act, medical bills will wipe out their savings. if we don't act, she'll be denied coverage because of a pre-existing condition. and he won't get the chemotherapy he needs. if we don't act, health care costs will rise 70%.

and he'll have to cut benefits for his employees. but we can act. the president and congress have a plan to lower your costs and stop denials

welcome back to msnbc live. i'm carlos watson. let's fast forward through the hop headlines right now. al jazeera -- book advises taliban forces to avoid civilian casualties and win over the hearts and mind of local afghans and comes as president karzai wants new rules for the u.s.-led forces in afghanistan. toxicology results from the death of michael jackson now questions about the actions of his personal physician.

two women claiming to work for dr. murray removed several storage box from his private storage that had not been touched in months. katherine jackson discusses custody negotiations for the pop star's three children. >> the agrechlt is a custody agreement. whatever the agreement will be will not be based on money. >> does it involve money? >> the agreement is not a money issue. >> astronauts doing their fifth and final space walk. the shuttle will undock from the international space station tomorrow. secretary of state hillary clinton is speaking out in defense of the administration's policies on north korea and iran. during an appearance on "meet the press" secretary clinton said north korea must realize there will be no reward for bad behavior. >> we want to make clear to north korea that their behavior is not going to be rewarded.

in the past, they believed that they have acted out, done things which really went against the norm for the international community, and somehow then were rewarded. those days are over. >> gidyeon is joining us and we are also joined by chrystia freeland. anything surprise you as secretary clinton talked about the struggles that we have overseas? >> no. i mean, what was clear was an impression of america trying to do a lot of different things at once. there seems to be signs that -- beginning to play ball but not the case with iran. america is still trying to find a way to achieve the pressure on iran that will get iran to stand down on its nuclear program. >> are there practical options in your mind haven't been seriously explored by the administration thus far as it comes to iran? >> no. it's hard to say what else they could possibly do. it's trying to go down the route

of persuading iran in its best interests and i think talked about the defense umbrella but she left it rather vague on whether or not the defense umbrella, what it would entail, whether nuclear or conventional and it's all got up into rhetoric. >> i think really rather the surprising strength of the performers in the election has actually complicated the political situation for the united states. because i think it's made it both more dangerous to be really forceful vis-a-vis iran. playing into the hands of the hardliners and give them an opportunity to say, look. those reformer internal revenue services were the covert agents and look what these americans are doing so -- to us. i think it makes the situation more trick ri tricky, at least in the short term. >> as we know, secretary of defense, national security adviser both are in the in israel today meeting with some of their counterparts and,

meanwhile, there continue to be fairly heated debates over the settlement issue. more thoughts on where we go forward in terms of israel and the israeli/palestinian issue some. >> i think they are both important to america in this sense. the game now is going on between america and iran for dominance in the middle east. iran is trying to be the regional -- and displace america's influence and part of the way iran is doing that is going over the heads of the arab leaders who have strong ties with and going to the arab people directly to the street and saying we are the great champions of the palestinians and is trying to play that rhetoric game in order to make itself more powerful. >> doing that via tv or all of the social media stuff we assume works only for the reformers? >> it's everything. rhetoric to destroy israel and all that. israel placed that by sayingary in terrible danger of being destroyed and then it threatens a nuclear strike on iran and that all plays into the whole game. so i think from america's point of view, what it's trying to do

is show that it is on the side of the palestinians. it doesn't necessarily mean achieving very much and i'm not sure how much it can achieve in practice. >> chrystia, i tell you while all of this is going on and we're focused domestically at the moment, but a lot going on yaever overseas that we focus on the middle east. what intrigues me all that china is doing while we're focused on iran and afghanistan and pakistan and all of these other places, not just economically, but even when we think about the lengths. a terrific new book out "the new york times" on china's budding influence in africa. have you been following the china efforts closely? >> yes. absolutely. i think that is your connection between domestic and foreign policy for the united states. i do think that right now, the most important thing the united states can do for the rest of the world is put its fiscal house in order and one of the reasons we're seeing a much more assertive china emerging on the world stage is the chinese actually have managed their budget with much more care and

much more success than the united states has over the past decade. we're seeing the fruits of that prudence right now. >> easier when you're an authoritarian government. >> but not just the busch er weren't inevitable or necessary or the price of glx. democracy. that was time when the economy was growing and america took a political decision to lower taxes and spend lots of money. >> we talk about mexico and south america and some of the issues going on there. we know there is a difficult narco war going on there. your thoughts? >> this is in some way this is the backlack of the american attempt to eradicate drug flows coming from ko limb yeah. colombia. i think the idea in the u.s. that mexico is this state that is on the verge of breakdown has been overplayed. i don't think it's anything like that clearly there is a problem there and, ultimately, the economists policy on drugs has long been the way to deal with them is legalize them and not continue to create a market for

traffickers to exploit. >> libertarian love? >> oh, yes. thank you for joining us. appreciate it. with democrats asking for more time the republicans saying they want to go back to the drawing board, what is next for health care? we head to capitol hill for answers. you're watching msnbc live. i'm carlos watson. in honey bunches of oats the prize in the box. well, now there's a prize inside the prize. pecans! pecans! baked into crunchy oat bunches. taste the delicious surprise in every spoonful. new honey bunches of oats with pecan bunches. beautiful. my daughter was with me. i took a bayer aspirin out of my purse and chewed it. my doctor said the bayer aspirin saved my life. please talk to your doctor about aspirin and your heart. i'm going to be grandma for a long time. to stand behind all who serve. ♪ to deliver the technologies... vital to freedom. ♪ to help carry hope to those in need.

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or for a free information kit with complete details about hearing loss and how we can help you. call 1-800-336-4990 to take one of these easy steps toward better hearing. that's 1-800-336-4990 call now! welcome back to msnbc live. i'm carlos watson. house speaker nancy pelosi says she'll when it's brought to the floor but any chance at all of a vote taking place before congress goes on recess now appears slim. with more on where things are, we're joined by nbc capitol hill correspondent kelly o'donnell. kelly, what is the latest -- you make me smile every time i see put you. what is the latest? >> that's kind, carlos. we are watching for all different ways this is playing out. congress takes the august break. part of that, of course, they take a vacation but a lot of it is important especially for the

house side because they schedule a lot of events back home in their districts which are very much a part of their re-election strategy so changing that messes things up for them. so there is always resistance to work into the recess. but there have been some rumblings that they might work longer or perhaps work behind closed doors during the recess time to keep this going forward. there had always been hope they could get something done before breaking and now it appears more likely that it would be the committee, the committee that is involved with those blue dog democrats you hear so much about, perhaps they could get their bit worked out before the break, more than bringing it to the entire floor. that sort of is the state of play as we see it today. >> kelly, i'm joined here by chrystia. i have to say one of the things i wonder about is how aggressive some of the independent groups, whether it's moveon.org or others will be during this august recess. because the assumption is that the august recess will hurt the health care reform effort but i wonder whether there will be aggressive ads run, literally

millions of dollars work on the part of progressive groups who say do your job and get back in there and solve this four decade old problem. >> that is a point. maybe a real social movement. i think something that has been easy to lose sight of as we've seen the workings of the congressional machine and all of the details about health care which i think not that many people have an intense interest in following, is americans, overall, really do want health care reform. when you look at polls before the election and when you look at polls now, people really think this is a huge problem and they want it fixed. i think it would be a smart strategy on the part of those progressive organizations and, frankly, also on the part of the white house which was so good at using them to get obama elected to apply a little bit of counterpressure. >> kelly, is there any concern on the part of democrats that eventually people are going to say what our own chuck todd said at the president's press conference which you guys have

no skugs excuses. you have 60 votes in the senate and you got the white house. if you guys don't get anything done, you guys are chicken liver and you don't sterve the money that we're paying you, that you guys need to get has done and stop listening to what republicans have to say. >> certainly the republican approach to this has been expected, even predictal. really what has been fascinating to watch is what is going on within the democratic party. so they do have greater vulnerability there, because, obviously, this has been an issue for decades. this is an opportunity they believe much closer than ever before to push this through but they have prominent voices within their own party who know they will have to answer to their voters about what it costs and even though as you point out there is a desire for change, the specifics about how that change will affect individual lives becomes more of the discussion. will it benefit people who are already holding insurance policies? will it be supportive to those who don't have health insurance? all of those details which are in the more than thousand-page

bill on the house side and endless pages on the senate side, all of that that will have to be merged later on, it's those details that still raise questions and because democrats have the real heavy hand in this, they do have some political vulnerability if they can't get it together. and so far, those blue dogs, conservative democrats who are in considerable number on the house side, are definitely making this more difficult for democratic leadership. and, at the same time, they feel very strongly that they've got to hold that line for the long term, especially when you consider how much negative feedback they've gotten over the stimulus vote which was pushed through with a great deal of support and there are some questions now about how well that actually worked. carlos? >> kelly o'donnell, thank you so much. >> good to see you. >> good to see you. up next pop culture recession. how hollywood is getting a hard reality check in these tough economic times. you're watching msnbc live. straight ahead, live press conference with the cambridge police. and fees.

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i'm carlos watson. now art is reflecting life when it comes to hollywood and the recession. bank bailouts and home forecloses is prime time and on the big screen. in fact, case in point a trailer for michael moore's next film, a love story on capitalism. >> ushers will be coming down the aisle for collect your donations for citibank, bank of america, aig. >> that is from the big screen to the bottom line. is hollywood recession-proof? let's ask toure who is also an msnbc. also again i'm joined by chrystia freeland. hollywood must be surviving and having good times? >> no. >> you were singing during the break. >> no, not at all. the recession is affecting everybody, hollywood as well. there is a trickle-down effect. dvd sales have plummeted and

consumers not wanting to buy dvds anymore. >> that surprises me because i would assume you wouldn't go to the 12 dollar you wouldn't go t the $12 movie, but maybe you'd grab a dvd? >> people aren't wanting to take home that movie that they didn't see or loved so much, they're keeping their money with them. we see consumers not spending as much as they used to. dvd sales usually account for like half of a movie's profits. dvd sales have been plummeting since 2004. so that area contracting really hurts hollywood. so then you see them making fewer movies. the big studios used to make 25 to 30 movies a year. now they're making about 10 to 15. they're placing fewer bets. >> and hoping they'll work out. that makes sense to me as a consumer, because i feel like there are fewer things to choose from. so you're saying there are less things on the shelf. >> and also, what you would find, fewer things, hollywood is making blockbusters, your "iron man 2," "harry potter 8" rather

than -- they're shutting down their arthouse films. so an intellectual like yourself wants to see "the piano" or something like that, very smart, they're not making those films anymore. they're just making the big films that, i don't know, popcorn eaters want to see. >> and for kids. if you have kids, you're happy with what hollywood is offering right now. >> "g-force" is fantastic for a 6-year-old, not so much for people who are adults. the third thing you're seeing, then, is that stars are not getting their big quotes, not getting their big numbers like they used to. everybody's trying to figure out, who's a star, who deserves $15 million to $20 million for a picture? russell crowe, not having as easy a time in hollywood as he used to. eddie murphy, the same. he wanted to make a bio pick about richard pryor. eddie murphy starring as richard pryor. you think that would be great? hollywood didn't think so. brad pitt wanted to do an adaptation of "moneyball," they

were about to do it. sony had spent $10 million already, were about to start shooting, they said, no, we don't want this. >> brad pitt and michael lewis, that movie can't get made? >> they're working on it again with another studio, a new director. but you see the struggle. generally, i think, three years ago, brad pitt could have walked into any studio and said, i want to make a movie about "the phone book," and they would be like, great, let's do it. now, not so much. >> chrystia, i'm a little bit surprised because i know entertainment has always been something we've flocked to, generally speaking, but especially during tough times. >> there is the general lipstick, cigarettes, and entertainment suggestion, that those sins, small pleasures do well in a recession. and one thing that's been good for hollywood, people are actually going and seeing movies. >> so they're going to the cinema, might not not be --

>> might not be buying the dvd, but people are going out and seeing the dvd. >> i think the adult entertainment business is doing just fine, though. >> lipstick is working out, as always. the thing hollywood is going to have to do is spend less money, making the movies, which is possible, but difficult. you're seeing them try to do that by bringing stars money back, but the other thing they have to do is spend less on marketing, which is nearly impossible. they don't control the costs. we were talking about a billboard, an ad on nbc. you know, these sort of things, day don't control the price of an ad on nbc or the price of an ad in "the new york times". >> maybe they can be more creative in how they market. i was talking to a hollywood person last week who said, actually, those billboards, the actors love to see their face on times square, but does that really get people to go see the movie? maybe not. >> a different threshold, want to thank toure, chrystia freeland, thank you. want to turn to my daily big

thought, my "c" note. we were all fascinated on the gates debacle, but i thought a number of good things came out of that. henry louis gates said, he effectively said, so many people are going out of their way to figure out what in the world skip gates could have said to provoke this kind of reaction. they're not willing to ask the "what if" question, what if he just didn't say anything that would provoke the notion that a 58-year-old man would ultimately be led out in handcuffs. that, in my mind, is at the heart of the conversation. and this doesn't mean that the sergeant is racist, this may not mean that he was even racially animated, but i think there's a real need to ask the question "what if," what if there was nothing he could have said short of threatening the man's life that could have ended there. the second thing was the power of the word "stupid." i was one of those who didn't appreciate the full power of it. i thought it was an unwise

ending, but i didn't appreciate and i think the president didn't appreciate that using the word "stupid" certainly could be loaded and certainly could move the conversation to a different, to a negative place. so i'm among those who's glad he retracted it and i certainly appreciate that he could have gone to a different place. that's it for me today. thank you for tuning into msnbc live. don't miss us tomorrow. this is only going to get better. maxine waters joins us, sherrod brown joins. you don't want to miss it. i'm carlos watson, thanks to chrystia freeland, toure, and everyone else. dr. nancy snyderman picks up our coverage next. in fact, she's live in aspen, colorado. and any moment now, the cambridge police are expecting to hold a news conference on the arrest of harvard professor skip gates. stay with us for live coverage. the cambridge police and dr. nancy snyderman coming up next on msnbc. we're taking a ride ♪ ♪ that can strain your relationships and hurt your pride ♪ ♪ it's the credit roller coaster ♪ ♪ and as you can see it kinda bites! ♪

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