good morning from new york. i'm ezra klein. over 500 protesters marked the six-month anniversary. police announced they were clearing the park around 11 cloak p.m. and took dozens of protesters into custody. in one incident seen here police officers appeared to slam a protester into glass door shattering it. on the one-year anniversary of the beginning of nationwide demonstrations in syria, activists said pro-government forces launching a crackdown and arresting opposition leaders there. right now joining me today we have alexis goldstein, current member of occupy sec. william company had an, author

of "money and power: how goldman sachs came to rule the world." a contributor to bloomberg view. noam scheiber, author of "the escape artists: how obama's team fumbled the economy." welcome. 6:40 wednesday morning in london greg smith sent an e-mail to his bosses informing them of his resignation to the firm. 15 minutes later he announced his resignation publicly in an op-ed in "the new york times." smith wrote about the goldman sachs saying, quote, i can honestly say the environment now is as toxic and destructive as i have ever seen it. to put the problem in simplest terms the interest of the client continue to be sidelined in the way the firm operates and thinks about making money. the bonfire sparked by the bridge burning shines a harsh light to financial world,

goldman sachs stock fell wednesday losing more than $2 billion in value. and smith's op-ed open ad conversation goldman sachs and others are beginning to close. whether the mega-banks were for or against the clients and more broadly whether they are working for or against the broader economy. bill, one thing about the op-ed i just -- the part of it that i couldn't swallow is in 2005, goldman sachs was inflating a housing bubble that would go on to crash the global economy and in 2006, they are get betting against that housing bubble and, you know, selling off their -- access to people which, again, did not do anybody any -- that much good. can it really be worse now after that crash? is this just what it has been like for ten years and smith similar has reopen ad conversation ongoing? >> as for the hate one when i say this but if you looked at the history of the firm, it has been like this for a very long time. i had a piece in "the washington post" today, very good paper,

yes, almost as great as bloomberg view. great paper and -- you know, basically what happened in 1969 and 1970 leading up to the penn central transportation corporation bankruptcy then the largest bankruptcy of all time goldman took care of itself and got back $10 million of commercial paper it sold from the company and while its clients who also bought the painer from goldman sachs suffered during the braps. something going on a long time. no. this isn't goldman's dna. nothing particularly new going on in the last few years. >> what about the argument something has really changed since roughly, say, 1999? there has been an uptick in the degree of it which is what many people would say, it is much worse now even though it has never been perfect. >> i would say it is probably worse. when you have easy access to capital all sorts of mischief can take place that couldn't

take place before when you had limits on capital. john white had the greatest -- partner of goldman sachs. for many years is 90 and doing well. used to say it was better for goldman sachs to not go public and have limited capital, have to make tough choices about the way interest spends money in in this era where they have unlimited capital, get their money for free, play all day long with other people's money. >> you were on wall street for theup in the bubble. when the crash came did you detect a change there that maybe it has gone away? were people sort of able to somehow rationalize that away and keep on going with business as normal? >> during the crash there was a huge amount of fear going on. i think there was a real fear at least where i was the bank would be nationalized. i was at merrill lynch shortly after bank of america. i think that -- it did unravel quite quickly. there was this intense -- where we knew without it happen and everyone was quite scared. then after that, the justification started to come in.

one of the things i remember discussing with someone i knew that work order the street was how will the public ever forgive us, for these bailouts. and the response of this colleague of mine was the public has a very short memory. this has happened before. you know, savings and loan crisis. it will happen again. the public always forgets. i think what we have seen with occupy wall street is the public hasn't forgotten and, in fact, i think people are almost angrier than ever. >> what's odd is it seems to me the public has a much longer memory than wall street does. you definitely get the feeling when i report on wall street and see how folks behave and bonuses and other things, that they feel look, this is done. the -- financial crisis is done. it is time for everybody to just sort of move on here. the public, as you see, with the -- the reaction to the op-ed wants to have the conversation. wants to talk about goldman and talk about wall street. feels that, you know, back when there was a financial crisis, everybody had to somehow treat the folks with kid gloves because as much as they had done a lot to cause it, if they

collapse the economy would be worse off. the fact that people are ready to move on, wall street has been ready to move on more quick lynn the public glass wall street is movi moving on. you know, suing the agencies over cost benefit analysis. i think not only does wall street want on move on, wall street has moved on and behind the scenes they are trying to push the political process towards that. >> this gets to -- an interesting point. there is this rule coming in you have done a lot of work on the volcker rule. what can volcker rule does is make it tougher to the banks to gamble with that money and do trading on their own behalf. goldman has already shut down two desks. did it proprietary trading. obviously there are still a lot of efforts to gut it. you did a lot of reporting on the financial bill when it was come through. if this rule came out people talked about culture changes. oftentimes culture changes in response to the actual conditions of the business, would that rule change a business enough that the culture

swro to follow? >> yeah. i think there's -- will's something to that. the extent to which the banks can evade the volcker rule still very much an open question. i mean, they -- you know, people on wall street screamed about the fact that the rule reflected this misunderstanding between, you know, what the firm does and a lot of what appears to be trading and appears to be betting for their own book is market making and it is what greg smith did were not doing enough of. the lines are still fuzzy enough that i think -- it is probably not going to be a strict enough rule to produce this sort of culture change. >> exact. >> i with goldman, the truth is as you were saying in the opening, 2006, when they decided to make this proprietary bet against the mortgage market, that was a proprietary desk in their mortgage area. query whether the volker rule will prevent that any more. that case saved goldman. if you want to care about

goldman being saved and made them $4 billion and made $17 billion pretax, goldman is right when they say they came through the crisis better than anyone else and, in fact, that proprietary trading helped them do it. >> an interesting thing about the volcker rule. the perception is that it forces to you stop this trading. that's not the case. if you just want to cease to have access to the federal safety net, which is -- you know, emergency landing during a crisis and -- you know, some of the other guarantees, the perks of being part of the network, you can do that. you can keep trading as long as you want to give up that access. so -- you know, i think that the thing outrages people is the fact we the taxpayer have the backs of the this. it is not just that -- you know, they are treating their clients badly. they are relying on a taxpayer's subsidy to do that. >> we are also in the new world because it is true that the savings and loan debacle was

something news people thought about a lot. the public was outraged for 20 minutes, 25. we moved on because there was than the kind of technology we have now where there can be something like occupy wall street where there is an anger stoked and kept going by something ordinary people can see on their screens all the time. and it can be made into an us versus them kind of narrative that gets people really upset. in this new world, the culture could change in a way that would have been less possible 20 years ago. >> because it is a bigger -- we are going the keep going with this when we come back. anger -- eden prairie, minnesota. in here, the landscaping business grows with snow. to keep big winter jobs on track, at&t provided a mobile solution that lets everyone from field workers to accounting, initiate, bill, and track work in real time. you can't live under a dome in minnesota, that's why there's guys like me. [ male announcer ] it's a network of possibilities -- helping you do what you do... even better. ♪

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alexis, you were going to make a point on the s&l crisis. >> we haven't seen the department of justice go after and throw anyone in jail for the

crisis it made. >> there has been no -- no public accountability of that which maybe is why people are so -- thrilled at this op-ed. >> it gave voice to what, you know, from the inside which is so important here. because lots of pundits have been saying this about goldman for years, including senator levin from his position in washington. but here inside and then to get a sense okay, this is spot on and there has been no accountability and why the justice department or sec does not pursue these cases, mystifies me. trust us, we have seen the documents and seen the evidence. have you it. to which i say release the evidence and it will us all see and it judge for your if you are not going to prosecute it. they can't do that. that would be gaens hidden rule they have. >> i want to play a clip of senator levin interrogating goldman's ceos during the financial regulation process. >> you are trying to sell [ bleep ] a deal and it is your top priority.

come on. should goldman sachs being trying sold -- it sold it, a lot of it, after in a date, should goldman sachs be trying to sell [ bleep ] deal? can you answer had a one? can you answer that one yes or no? >> when you get senator levin, a portly guy, dignified guy, a senator of the exalted grand chamber of the u.s. government, to start cursing on camera during testimony, you have people pretty upset. yet, during the financial regulation, you are talking about that fuse -- so easily. it never got lit during the regulation. financial regulation, i would say both parties worked hard to keep it from being punitive. it was supposed to be nonpunitive. supposed to be updating the world but not about paying the banks back for what happened. >> correct me if i am wrong, but i seem to remember that basically this legislation was clearly almost dead until these hearings. and then it got -- rejuvenated again and then passed relatively quick thereafter. >> that's right. there were several moments where the -- the air seemed to be

coming out of and it this -- this was one of the major revelations that -- >> lawsuit. >> sec lawsuit. in fact, on derivatives, you know, one of the more steered corners of financial regulation. we were really moving in a much less stricter action the lawsuit against goldman ignited this firestorm in congress and blanch lincoln, nobody's idea of a populist, proposes incredibly strict derivatives reform and no one could stop it. there was this -- this moment where, you know, wall street was on the defensive and they were completely petrified that you had something that was essentially force a lot of banks to stop trading huge swaths of their derivatives. that gained a lot of momentum as a result of that. i think it did reflect this bill in -- intensity of feeling that had been bottled up and just hadn't been tapped yet. you had these moments where you saw it flare up but no one on either side wanted to harness that. >> the only guy standing between them and pitchforks.

the part of the bill that made them spin off that which had been very, very tough on them, mind? sing with ibuprofen support, there's legislation now in the house to gut that and it is one of the -- sort of unpleasantries about the financial regulation bill which i think, again had a lot of good stuff in it but so much of it was left up to regulators. so much of it was we will have a regular la tore write process and nil in the blank later. that filling in the blank goes on behind the public's eye and goes on in rooms that very, very few people know what is happening. that's where you began to focus, alexis. that's why i think your group has been so interesting. have you been going to the meetings and got a sense of what that process is like? what have you learned? >> we have a little bit. we are scheduled to talk to the regulators next week and following week. there were 300 to 400 letters from the industry. there were 13 public letters. so those are the numbers that we are talking about. >> volcker rule. >> just on the volcker rule. i think we saw more public letters on the volcker rule than we see in the rule making

process. that's just the letters. after the letters you see the industry going in and like a -- you know, drip, drip, drip water torture almost. where the regulators, i think, no longer know -- am i thinking this? is that what the base wants me to think? they are always arguing their case and we at occupy sec we are volunteers. not paid to do this. we can go down there and we can -- advocate for the public but -- we are fighting against massive financial lobbyist. >> is there a -- gordon gecko greed is good person or small group of persons behind this? or -- is it, as you seem to be implying, a group of people, many of whom are rather shortsighted, just doing their jobs, and this could come -- becomes in a body a way of working in favor of getting rid of as much regulation as possible? is will evil here? or just kind of creeping -- >> i think there's greed. i don't know about evil. i think this is a huge -- orchestra it is a hugely profitable business for the

banks. and whether you call it marketing making or prop trading in context of market making laws you take on positions which is also proprietary trading. they don't want to lose that. i think that -- you know, they are out to make money and defend that tooth and nail no matter what it takes and have the money and people and power and the resources to do that and because there isn't this public spotlight on that part of the process, they can do it quietly and without criticism while congress may be make some concessions and points their finger at them. behind the scenes it unravels and tub missouri that's what's happening. >> irony of this is that these -- processes, right, where you can go into a room and talk with the regulators, they are supposed to allow the public in. transparency at work. in fact, they are just -- just so complicated what's happening and quiet about it. they just have become a series of ways of lobbyist vas lot more activists. even though the rules set up for opposite reason. >> exactly. it is the administrative procedure act that gives tuesday detroit this. what it turns into is the

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every inch of hair needs to be on point. ♪ you were going to make a point the way the regular will torre process regulators let it into it. >> absolutely. this was entirely foreseen during the financial debate in congress. carl levin, who we showed and jeff markly, were the two senatorial sponsors of what was essentially volcker rule and the whole point of writing it into statute was so lobbyists would have these easy access to regulators while they were writing the rule, they wanted to write it, you know, very brightly, bright line in the statute and the administration and treasury basically thought that it would be better because of the expertise that regulators have and to defer to them and i -- that's how it shook out. this is not a problem that is sneaking up on maybe. it was litigated and the guys who wanted to write it into the law in very bright letters lost.

>> one of the things that's been, i think -- i agree with all that. i remember there is a whole asking you over do you want blunt crude regulation or complex? any ideas those can be more flexible in the long run but they also get, you know, turned when you have a bubble period, bubble psychology, regulators begin to identify with banks and satisfy how we stop in the future but kind of what it -- even how goldman sachs is being defended now, mayor bloomberg who -- runs the -- owns bloomberg here which you and i -- he sort of said this about the goldman issue. >> you i thought the news coverage was -- ridiculous isn't quite the right word. not up to what we should do. and i -- will say those -- bloomberg view, the editorial part of bloomberg wrote something which i had nothing to do with when i read it i thought dash the guy that wrote it had it exactly right. he said surprise, surprise,

goldman is not -- make-a-wish foundation. they are a company that's here to make money. that's what they do. >> when i read that op-ed, editorial, you thought my god, goldman's defenders are worse for it than the attackers because what a lot of folks said and at "the washington post" my colleague said look, how can you be attacking that? are you surprised when a car salesman tries to put new a car nobody else wants? if the argument in favor of goldman is -- of course they will rip you off. of course they will do anything to make a buck. that's a real fall in public persona in p.r. terms. this organization. >> says the -- they have their 14 principles, ezra. and they make a big deal of it. at one point i think they really believed in when john whitehead wrote them like 25 years ago. i think that the -- these are like the -- you put the client first. put the client first we do better if they do better. talent is so important. it has become a pattern because they don't do that. i mean, you know, we -- find

people like -- pete rigger who was a partner. if we put clients first we do it because it is a business decision. we do it important a reason. so -- you know, i think the contrast between those two, juxtaposition between the corporate, you know, happy talk and the reality of the way they do business, is what, in fact, i think was mr. smith was getting at here in his editorial, why it struck such a cord. >> i mean, i -- i think -- what greg smith was complain being is -- i mean, will was a time on wall street where we couldn't -- didn't have metrics and couldn't measure exactly who produced what and how much money they made for the firm. as a result you had these hazy judgments like this person has big character and seem to take care of the clients well and clients seem to like them. in the last several decades, we moved through this world you can see how much money you bring in for the firm. and surprise, you know, people respond to inthan senttives. i think -- incentive.

>> you said except that i think -- wall street has always been very good at tracking what partners of people do contribute. there are always people. 80/20 rule. people that brought in 80% of the business as opposed to those -- one person bringing 8 on% like felix and lazar, for instance. i think they have been very good at tracking that. they were always superstars and now have the technology to track tonight much more detail. >> larger sum of money involved in the changes that change the entire equation and make it less personal in the seat of the pants, david brooks column, sort of -- that you are talking about. >> i think what's unfair about all of this is that post financial crisis, even goldman sachs who is relative to the other companies while position got to enjoy all of this fed lending program like the term securities loan facility and all of the secret fed lending programs we only learn about because bloomberg filed a free

move. why is it maybe it was okay before there was this huge amount of government backing and these banks are essentially utility companies at this point. maybe it was okay before to be greedy and rip the face off of your clients but post all of this government support, that should not be allowed and that's a big part of the volcker rule. >> i absolutely agree. it is not as taxpayers -- you know, we shouldn't care so much about what goldman does with its clients, between goldman and its clients really. these aren't, you know -- as taxpayers -- really upset when we essentially are subsidizing this. >> it is important to say that these fed lending facilities, this is beyond t.a.r.p. people think about the bailout as t.a.r.p. it got paid back. there was a massive amount of gear and keys and other types of support given by the federal reserve. >> you know -- these -- goldman sachs and morgan stanley -- september 22, 2008. and they still back up to the fed and get their money for free and use to it gamble with every day. >> right. >> i was going to say so i think

what the -- this was than news to anyone on the street. i mean, people -- my colleagues regularly said why does anyone trade with goldman. goldman is going to rip your face off. it was sort of this thing that nobody understood. but i don't think the general public knew that. what he did was spoke a big great truth. i have spoken to people that worked at goldman way before greg smith that said finally someone that's telling the truth about this. >> they are. goldman sachs wouldn't even exist today if not for the facilities of the bush administration, obama administration, and federal reserve put into force to save them during the financial crisis. for this we will talk to noam scheiber. e scene, netflix coming soon extra butter tickets, swoon penguin journey junior mints moviefone evil prince bollywood 3-d shark attack ned the head 5% cashback right now, get 5% cashback on movies. it pays to discover.

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artists: how obama's team fumbled the economy." i want to say first, i read a lot of these efforts to report the obama team's economic decisionmaking and actually written one myself and yours is very good in terms of what they were getting at. i highly recommend to it anybody that wants to know the choices they were wrestling with. right there in the title, they fumbled the recovery. i want to ask, compared to what? because they -- first stopped at depression. i mean, which is -- sometimes i think it is actually underplayed. the fact we did not have a great depression like fall of 25% unemployment in this country. and then -- you know, a lot of their -- con strints them were congressional. there were different decisions they could have made but seems to me even if you run that out a different way and mostly affects changes on the margins. you give them sort of a lot of advice in your brook. if they followed all of your advice, how different do you think unemployment would be today and how confident are you in that? >> 3%. your point is well taken. i try distinguish between rescue

which they did which you can hope. you are write, contracted by 9% of the fourth quarter of 2008. and -- if that's -- >> thought it was 3%. >> we thought it was much less in time. turns it out it was 9% p.m. if that's left to snowball, we are talking about the depression style numbers. actually deserve credit for arresting that fall. it is with, you know, i think they took the patient out of the emergency care you don't know and in the rehabilitation portion of -- that i think they stumbled a bit hence the subtitle. i think, you know -- you are absolutely right. there were constraints they faced in congress. you know, you have to -- 60 votes in the senate to do anything. i think they probably left between -- you know, $500 billion on the table in the first two years. i think they could have gotten another 200 billion in stimulus out of the gate by -- you know, playing that differently. not trying to sort of put, you know, their final offer on the table from the beginning. trying something a little higher and then negotiating towards a final solution.

because i think that the moderates and the senate, olympia snows and susan collins are just going to take whatever they proposed and slice a couple hundred billion off of and it say essential they do that. i think that they left a little on the table at the beginning and i think there was a moment that -- the biggest thing i sort of fault them for was a moment that in the spring of 2010, we had -- the recession stopped and the economy rebounded and by the time we get to the spring of 2010, things start goad bad again. there is a lot of anxiety. a moment there for -- for some kind of big second stimulus package whether it is -- you know, payroll tax cut which he eventually proposed, you know, something the republicans had been on -- on the record supporting, and i think something big like that could have gone a long way. you do bash back calculations, $500 billion on the table, $600 billion of stimulus over two years would have translated to about percentage point and a half off the unemployment rate. you know, we may be talking kind

of upper 6s rather than low 8s. you know, which is -- which is significant. that's a lot of people, lot of jobs, what we are talking about. i think that's the biggest thing that i would criticize them for. >> and so -- when you talk about that sort of late spring 2010 period, this was after scott brown won in massachusetts. this is after the turn of the republican party. they see sort of victory coming. one of the remarkable things about that period is how little they were able to get done. bring up the payroll tax cut. and the white house at that point i spoke to david axelrod about this, they kept the payroll tax cut off of the table and specifically didn't talk about it in order not to poison it. they can get tonight the post election. which is what happened. the reason i sort of wonder about a lot of the sort of arguments about if they had done this strategy or that political strategy, these guys are all political professionals and i don't know to say they did everything perfectly. nobody ever does a maintenance fix. i agree. i'm not sure. pit sort of wonder, i mean, for instance, you say they campaigned in maine against

olympia snowe and susan collins. maybe that would push the support of more stimulus or said what are you doing? they would become -- really aggressive points of the agenda and not compromise on the sometime sxlus shave it down further to get other looks. >> no, i think it is possible. ultimately senators vote their self interests. we saw this during the bush tax cut in 2001. where there was an initial opposition among democrats. he went out and, you know, campaigned in 22 states. lit a fire under the feet of the mary layo ma ma mary landreies. if you can stir up public opinion in their states and remember, pennsylvania and maine were two states that obama won handedly in 2008. i think that you can really move them to come your way in -- particularly in this is the first few weeks of the administration. obama's approval rating was very

high at this point. you know, i think the moderates -- the moderates would -- >> one other point you bring up which a number of folks in the administration look back on to some is health care. you say look, in 2009, early 2010 they spent the entire period of focus on health care forum and they could have spent that period on jobs economy. obviously as you can see here this was a fairly common critique in the political system. >> this s isn't what the american people want. they don't want a takeover of the american health care. concentrate on the real things that are affecting, real people in the communities across this land. that's the economy and jobs. >> first to get if economy on track and create jobs. >> 219 liberals on the other side of the aisle may have passed the government health care takeover but the american people still have a voice to tell their law makers to repeal these job killing mandates and finally focus on job creation proposal. >> we also must repeal obama

care. and a $1 trillion bomb dropped on the taxpayers that only hampers businesses and job creation. >> that there mainly republicans but you know, you hear that from some obama administration veterans, too. ask him okay, give me the counter factual and '09 the stimulus hadn't been done yet. most of the time health care. we were still recovering in early 2010, turn came later. i think well, the cost of all of that, cost of now focusing on jobs, health care survives the health care, it is 30 million people getting insurance. i sort of think in the long run whether obama is remembered as a great president is going to hinge on health care forum. i'm always sort of surprised when folks say if he had done that could have got $150 billion more sometime us no, look, i agree. i think that this is kind of the fundamental question and i -- wrestle with this in the book. which is -- to -- certain extent, for us to not have gone

through 9% unemployment for 2 1/2 years which is essentially what it was, obama needed to accept the fact that he would be a great president. that -- you know, it is day-to-day, you know, economic situation was just going to trump his long-term goals. health care, cap and trade. foreign policy goals, israel, middle east. he pleaded to just say -- i had these ambitions but the economy is going to displace some of these ambitions. i think he was unwilling to do that and i think, you know, we will argue about it. we will argue about whether that was the right move. i have a quote from larry summers, you know, in the book where he tells me look, i admired the president's willingness to say -- in 50 years, people aren't going to remember how fast, you know the speed of the recovery. they will remember, you know, he gave them health care. i think, you know, that's great. if you are one of the people that will -- 2 1/2 years, you -- probably will remember. >> we are going to talk to jared

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"the escape artists: how obama's team fumbled the economy" of noam. joining us now is my friend jared bernstein, former chief economist and economic adviser to vice president joe biden. good morning. >> good morning. >> you have listened to as a matter of fact discussion. and you were there for all this. when you look back, how different do you think it could be? do you look back and say we did sort of the best job we could have done under the circumstances? do you think there were large missed opportunities? >> i think that more the former. a little bit of the latter. had's always missed opportunities. one thing i want to point out -- it was -- you guys touched on it in the conversation. we actually did go back to the well more than people think. i made a little list while i was sitting here. the highering act, three rounds of unemployment insurance extensions, two payroll cuts, small business bills. state fiscal relief. so -- it is not like there was a stimulus and that's it. and i have a hard time really

imagining getting the unemployment rate down as far as noam suggested. definitely missed opportunities. one thing thai found in the earlier discussion that i disagree with is that if you had gone and campaigned pro-stimulus in 2010 in some of the states that you were talking about, one of the problems we had is that we passed a sometime lusz, unemployment rate went up. ezra, used the word counter-factual before. that's the idea of -- of what would have happened and if you hadn't done the economic intervention, of course. by 2010, a lot of people saw two things. stimulus happened, unemployment went up, and, of course, the republican rhetoric at the time was that that means it didn't work. well, you know, it did work because unemployment would have gone up higher. that's very hard to get people to wrap their heads around. you know, the climate was not particularly inviting in that regard. >> i always think the timing issues is when people don't think about it enough. fdr, people say why isn't -- when fdr came into office the

great depression had gone on for three years, unemployment was 25% when you came into office the great recession had been going on a couple of months and unemployment in the 6% range. obviously we were, you know, 700,000 jobs a month. so then things began to get worse. the -- because it worked -- because of what you did to some degree worked to stave tv prices and administration did in the federal reserve did, the -- things never quite as radical. i feel like the people back -- why wasn't there more radical -- >> you know, i heard the president himself express that view. so -- you are right. you know, i guess one thing where i would say -- when you talk about missed opportunities, i actually think that -- there has been too much attention to things like the size of the stimulus which, you know, i -- would have liked it to be bigger. given the constraints, the largest we could get. i think it is the composition of -- when i look back i think it is the composition of the stimulus that could have been more effective. i mean, to have a third of it be tax cuts, tax cuts -- for tax

cuts to work in a case in -- keynesian sense, they couldn't use them to pay down debt, deleveraging going on, to buy imports that leaks out and sometime late other economies, i would have tried to structure things -- did try to structure things differently. but you mentioned susan collins. she pulled out and -- an infrastructure program to fix the public school. something i have been advocating a while. so -- the -- composition could have led to a more effective package, i think. >> >> i wanted to ask you a question. some seemingly wise people say unless you are fdr and it is 1932 through 1936, a president cannot create jobs in any meaningful way and, therefore, a lot of discussion as to whether or not obama could have had

significant impact on the unemployment, rhetoric over what actually could have happened, what do you think of that argument? could you guide me in had a? i'm not sure who to believe. >> i think that what's really going on in that argument is a distinction between direct job creation and indirect job creation. the most direct way to create job is direct job creation. there's very technical economics for this morning. and -- that was on the table in the '30s and in many ways off the table today. you can argue that we took it off the table. i think that's a very interesting and important argument to have. but it is a different economy. there are a lot more rules and regs when it comes to direct job creation. so the president has a hard time directly creating employment in terms of let's send, you know, tens of thousands of people here to build a dam. but there's a lot -- basically at the root of your question, does keynesian economics still work in the sense the government steps in temporarily when there is a private sector and the

answer is very much yes. i would -- i would argue and i think that -- objective analysis of the impact of the stimulus would prove that to be true. >> we will continue talking economic recovery and the policies with jared bernstein and noam scheiber. -cutter retire ttd#: 1-800-345-2550 you get at some places. ttd#: 1-800-345-2550 they say you have to do this, have that, invest here ttd#: 1-800-345-2550 ttd#: 1-800-345-2550 you know what? ttd#: 1-800-345-2550 you can't create a retirement plan based on ttd#: 1-800-345-2550 a predetermined script. ttd#: 1-800-345-2550 at charles schwab, we actually take the time to listen - ttd#: 1-800-345-2550 to understand you and your goals... ttd#: 1-800-345-2550 ...so together we can find real-life answers for your ttd#: 1-800-345-2550 real-life retirement. ttd#: 1-800-345-2550 talk to chuck ttd#: 1-800-345-2550 and let's write a script based on your life story. ttd#: 1-800-345-2550 ♪ feel the power my young friend. mmm! [ male announcer ] for excellent fruit and veggie nutrition... v8 v-fusion, also refreshing plus tea. could've had a v8.

do you have any thoughts of that? is it just too hard to sort of tell a single story about

congress? >> it is, yeah. and for sort of a narrative purposes. you do try to streamline the narrative a bit. look, you are absolutely right. i mean, this was in the power of other people and certain points, you know, people understand more power than the administration. no question about that. my critique of the white house congressional relationship in the book is i think had a sometimes the administration and -- it is not just in 2009 and 2010 but 2011 as well, they outsmarted themselves a bit. by trying to game out what congress may or may not do and then in -- while anticipating that, you know, design their packages, i think sometimes you know the best strategy do what you think is best. and -- you know, make the case to the congress and worry about how to pass it. i talked about this with the stimulus where, you know, they -- the first meeting that larry summers and rahm emanuel did and nancy pelosi and harry reid in the senate, you know, they are really, really anxious that when they tell them they want $775 billion, no, that's

way too high. in fact, you know, they give them the $775 billion number and nancy pelosi and harry reid is like sure, fine. i think they sometimes psych themselves out a bit. and it is just a lesson that -- you know, for the same reason we don't write about congress a lot, it is one reason the administration shouldn't try to game it out. there are a million moving pieces and hard to game it out. you should go with what you think the best policy is and then try to sell to it congress. >> i think that -- you have to remember, right, that when -- treasury secretary went to nancy pelosi on his bended knee and hank paulson said i want $700 billion, people had coronaries and you can see the faces and blood rush from their faces. part of it is that -- to your point, that they have to be careful how much they can for. spigot was running dry. the other thing i would be curious about, jared, if i can

call you that. >> i think we can. >> don't you think you should ask me that? >> no. >> please, call me jared. >> it seems that unemployment rate is going down. everyone who doesn't have a job or no longer looking for a job, that's a serious problem and my heart goes out to them. but i mean, some of the things that was put in early in the administration in the stimulus actually seems to be working or having like a -- rejuvenation not just because of spring but it seems like whether -- these loans -- >> talking about green. >> hit the ball out of the park economically here. >> right. i know it is spring but i don't want to hear green shoes. three years ago last week was the green shoe with ben bernanke. you know, we also talked about in the book, i know you have a lot of thoughts on this as well, deficit side of the issues and i want to play for you sound from congressman chris van holland during the meetings of the deficit reduction super committee as it was called. >> just to be clear, if this committee were to adjourn today,

and the congress were to adjourn for the next ten years and go away, we would actually achieve greater deficit reduction than if we went and took the advice and went big is that not right? in other words, we could get over $4 trillion over that ten-year period? more than the $4 trillion a lot of people talked about, right? >> yes. that's right. >> you write in the book at one point they had like an idea that got a little bit of momentum and didn't really end up going anywhere how to get rid of the bush tax cuts. bush tax kruts expiring at the end of the year. do you want to aabout that? >> yeah, absolutely. this meeting in november, 2009, the idea with the white house liaison to capitol hill -- >> very important guy. >> very important guy. >> very few people know about him. the idea was -- get rid of the upper income tax cuts right now. extend the middle income ones obama said he wants to extend forever and extend them for two years. after two years paid for either with spending cuts or offsetting tax increases.

everyone internally the knew that means -- going away. congress will never dig up the $2 trillion it takes to pay for them. proposes that -- white house budget director peter orszag gets excited about it and wants a meeting in the oval office with the president to discuss it. they finally give him the meeting. they lay it out. intrigue bid this and asks a lot of questions. he's very encouraging and intrigued by the political benefits as well as the substantive benefits and thinks lit make republicans take ownership for the cost of the tax cuts. you know the political -- get very nervous and if he goes back on the tax pledge, it is going to be devastating politically. it just fizzles out. he absolutely was interested in this idea of letting all of the tax cuts expire. it would do a lot to help the deficit. >> we are going to talk more about this idea when we come back. you know when i grow up, i'm going to own my own restaurant. i want to be a volunteer firefighter. when i grow up, i want to write a novel.

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from new york, i'm ezra klein in for the great chris hayes. with me this morning, alexis gold stein, william company had an, noam scheiber, author of "the escape artist." john mcwhorter from theroot.com. jared bernstein, former economist and economic adviser to vice president joe biden. we are calling him jared. >> i wanted to ask you a question. i think that early on in the obama administration we really had an opportunity where with the bank bailout we could have demanded more from the banks and demanded changes in management and perhaps something to do with compensation. i don't think we saw too much. we gave them a bailout and step back and let them go back to paying bonuses. i'm curious about what we sudden have done differently. >> i agree with you. i think that there are things we could have and should have done

differently and they are very much in the camp of demanding more. certainly on bonuses and that's a good point. but probably more to the point one of the things that we really needed, of course, was to get the credit system running again. you and bilko had bill companh eloquently about those. something that noam captures well is a view that some members had inside the debate of the fragility of the banking sector such that if you did anything more than a bailout, you have -- you would be buying yourself bigger problems. they wouldn't -- essentially start to get back on their feet if they had conditions put on them. and -- i don't -- really buy that. i think there's less fragility there than probably some people thought at the time. >> the fascinating point you make, tim geithner gets this reputation, people think he worked with gold plan sacks on

wall street. he never walked on wall street. career public servant. very admirable thing. you sort of say -- odd that -- odd fisher in the administration is that the people who have worked on wall street were actually more willing to put conditions on wall street than put pain on the banks and thought they could take it. lot of the folks that haven't worked on wall street were much more sort of take wren by the idea you had to treat them with kid gloves during this period. >> i think that's exactly right. in the book i talk about adviser, one guy named steve shackman who worked at the dreaded goldman sachs, willing to do some aggressive things that geithner was unwilling to do. another guy had come from the wonder kid. they both thought that bank bond holders which geithner thought you should never do. you couldn't look in that direction. they could take some losses and take losses over the taxpayers would have to. geithner looked at them and said -- in particular, you know, i stared into that abyss and we are not going anywhere near them. i lived through lehman brothers. don't tell me about, you know, haircuts for bond holders.

and -- did a zblsh with one exception. the one exception where bond holders got haircuts was in the -- in the auto -- you know, it is like -- haircuts on the blue collar side. >> what was interest sing geithner had a term for people who lived through the term with chicken pox. >> back to the bush administration where people say the folks that want goad to war. >> exactly. if you 00 lived through those moments you should not lecture him about what could be asked of bond holders and what could not be asked of bond holders. >> i asked tim geithner, you know, were was it -- this is before lehman collapsed, why didn't give you a haircut to the bond holders of bear stearns? he said you know, we just didn't have the time. we just didn't -- you know, such an obvious thing to try to do. why say -- you give 100 cents to the bond holders at bear stearns and gave $2 and $10 a share to the shareholders. default swaps on bear stearns. bonds got hammered because they

didn't -- got -- he said we just didn't have time or think about it. things were moving too fast. i don't know understand why they didn't do it on aig or lehman. >> i think this has a lot to do with tim geithner's -- as i said in in the beginning, job to be save wall street, you will make damned sure you save wall street. you think these guys -- i mean, they always say that. i know these guys. >> they can get haircuts. >> i had drinks with them. i'm on the other side of the bargaining table. they make up son stories. i heard these son stories a million times. you understand when they are bs'ing you and take them seriously. >> we didn't ask wall street to make any sacrifices. we have seen -- aig was bailed out and awful these banks who had the -- paid 100 clontz the dollar with that. we have seent and despite of the fact we saw economic numbers coming out and seems to indicate we are going to continue to recover like at the very real level, people are still suffering. that's a big part afterwe still see people out in the streets. i mean, this is still something people are feeling the pinch on. >> you wonder why the bankers

got 100 cents on the lar and got bailed out. bonuses pools were huge. i mean, in 2009, goldman sachs made $20 billion pretax. >> part of the thinking on that was the polling. it is -- i'm not saying i agree with it. just to elaborate. you know, equity can gee to zero. that's the market working. contracts must be respected. the bond is much more contract and equity is a bet. the reason i think -- the reason i -- reason i disagree with that is because -- this was a -- 100-year flood. exceptional time, there is something called creditors take haircuts when insolvency is out in the air. >> when you say a creditor takes a haircut means you don't get paid back. >> obama's top economic adviser, we joke during this time. you know, it is fine to haircut,

big bond holders. i they fire their executives. when we talk about banks, i.q. falls 50 points. we suddenly -- can't do all these things that are perfectly normal when we talk about auto companies. you know, i think that was probably true. >> amazing thing, republican primary, you often hear the big problem they have with the auto bailout it was would -- too nice to the unions and gave everybody -- a bailout. meanwhile, wall street regulation, repeal dodd/frank and sarbanes/oxley. the degree to which folks feel wall street got treat today harshly in this period, strikes me as maze. >> given the amount of information we didn't even have at the time. congress didn't know about these secret front lending programs. you look at the data, take bank of america. 2007 to 2010 bank of america had an average daily balance of $20 billion from the secret fund lending programs and in 2009 they paid themselves $4.4 billion in bonuses. you know, you look at -- the

auto bailout, willing to take haircuts but not willing to take haircuts on the bond holders why are we treating wall street like you said with kid gloves? >> suppose wall street got really punished and let's say lots of people got close haircuts corks that happen to an extent that -- we could move on? >> this is an intellectual question? could it be that -- there would be dash seen to have been enough pain inflicted on these entities that it would be time to move on with a sense that, you know -- is that possible? can that narrative actually happen? >> well, i don't think the narrative can happen. did you want to -- jump in here? okay. i was going to say, i mean, i think the narrative could have happened -- >> let me hear what they are saying. >> alexis. >> express a little bit. you know. we didn't do anything. so -- >> i agree. >> you are saying can we do anything now to let the -- move on? >> right. >> i think what i would like to see personally is -- the federal

reserve has the power under dodd/frank section 121 to break up any risky institution. we are not seeing anyone do that. >> you know, what i was -- what i would say -- and -- occupy sec, it -- a lot of this is backward looking. like -- will are things we can do now. for example, the implementation of dodd frank and volcker rule, i don't know if you talked about that yet today, occupy sec, amy has been doing fantastic work on this. we actually have an opportunity, a, to -- invoke -- implement this rule in a way that would make a big difference going forward. and b, to highlight the fact that -- you talk about how every candidate wants to appeal the affordable care act. they also want to repeal dodd/frank. and so this is a huge move backwards. i think that this kind of a conversation should be as much forward looking as backward looking. >> we having five major goals that control the entire system. so i do think if we could start

to see some of these banks break themselves up, whether it is momentarily or whether it is through the -- exerting their power under section 121 of dodd/frank, maybe we can start not see too big to fail anymore but also not see too big to succeed. i do think that we would see the public start to come ruined. we haven't seen it. we have seen in the leak of the cries advertise banks got bigger. >> one of the difficult things in the -- in the immediate financial crisis because is -- how do you break up a bank and take down a bank. operates in 38 countries and -- >> lehman's -- >> not so long ago in the 1930s. it was called -- you know, glass seigel act. had you a choice between being commercial bank or investment bank. that's how morgan -- got formed. it can happen. scrambling an egg. >> alexis makes a good point. but it is true that lehman was than the biggest bank on the street. it was -- it wasn't all that large. it was very interconnected.

>> the problem is this. you know. you can say that -- the lehmans of the worlds were not allow -- not the largest banks. problem is less -- the size for financial and and economic reasons than political reasons. it is impossible to effectively regulate a citigroup, bank with $2 trillion balance sheet. it has too much political power. too many executives who make millions and millions of dollars to give donations to congress. if anything, it is more of a stronger political case than economic case. >> jared bernstein, former chief economist and economic adviser to vice president joe biden. thank you for your time this morning. >> thank you. are higher gas price as sign of good news? up next. we have charts. ok! who gets occasional constipation,

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i have become frustrated with the discussion over gas prices. yes, they are going up. that does cause pain. but the question is why? and the answer to that question matters quite a bit for the rising gas prices is a bad thing or whether signal as coming of a very good thing. in the bad category, mideast tensions add a price premium. you can look at the graph which tracks oil prices against the intrabetting markets prediction of an air strike against iran. on the other hand global economy is recovering. and when big economies grow faster, demand for gas goes up. and so do prices of that gas. that's part of the gas price story now, too. and the u.s. and china and india are all producing more and all buying more. that's a good thing. even if one side effect of it is rising gas prices. the other piece of this which people don't really talk about is about for the average family energy prices in total are down

in large part because of natural gas which a lot of things rely on heating the homes has become incredibly cheap. energy prices a as a percentage of the tip cam family's income. as you can see it is a lot lower than it has been in the past few decades and even than it was a few years ago. let's begin here. no one likes paying more at the pump. as we recover that will be inevitable. tensions in the middle east are part of the story, a lot of the gop candidates most publicly outraged over high gas prices like gingrich and santorum are also towards iran. right now i want to bring in dan dicker, who has been one of the oil traders and been in the oil market. >> still! >> sorry. i want to ask you, what do you think is behind the rise in oil prices? how much of this is part of the recovery and how much part of shocks and nonuseful speculation? >> i will discount your second argument first. that's the one that you are talking about which is the economic one that's most drawn upon now that there is a correlation between what is -- a

growth factor in the economy and in the emerging market economies and the price of oil. that has not been historically the case. we had a very steady oil price from 1908 to 2000. we had plenty of times of double digit growth. so i'm not about to buy that. that's been very much an economic argument about where oil prices have been going. first part of the argument is obvious. and that is about the supply issues there are surrounding the geopolitical situation first and foremost in iran but iran is not the only place. most important. but there's trouble in sudan we know about. syria has trouble. and we are no exactly sure where each is going to work out and how -- safe the production there is. and libya, for example, we have seen production come back online. there are lots of supply shops outhere on the horizon and that is feeding -- only feeding what's the real driver of oil

price which is are investors who come in and looking to buy oil as if it was a stock or a bond and based upon what they believe to be a very strong long tail risk that some of heesz supply shops are going to hit over the course of the next month or would or three. and that's why you see oil prices at -- right now at $107. globally more like $125. that does not seem to want to go down. >> this is where we get into the speculation. on gene sperling. when people say the word speculation like -- everybody is like 50 points. obviously in the natural gas market right now speculators are dropping the price of the natural gas way down. and nobody is all that upset about that. i think that -- is it fwar to say you have been an oil speculator? >> i have this -- no doubt. i guess you can -- i hate that term speculation in the book i tried very hard to get away from that permanent the there isn't a better one. when you say speculation you have a certain nefarious image of snidely whiplashes. sitting in the corner.

figuring out how to gain or to man up late the energy markets in order to drive it higher. if you are, in fact the owner of a pension fund or if you are the -- manager of a college endowment, chances are you have been part of the problem contributing to a higher energy prices. if you have any kind of money manager or private wealth management firm or involved with pimco you have been involved part of the problem in driving energy prices higher. in many ways, the villain that we are looking for is in the mirror. >> i think -- i wish oil prices and gas prices were a lot higher. i think that the time is long overdue when we get off our dependence on foreign oil and on fossil fuels generally. let's get to something that we can really -- distinguish ourselves as this country in the future, electric cars, whatever it is that we immediate to do to get beyond this. what say you? >> what say you? >> what say you, mr. speculator? >> these are important objectives to obtain.

right now the -- renewables as fuels are not red write for prime time. that does not mean that government should invest in them. as far as i'm concerned, when you invest some something like solyndra, it is not a reason not to invest in solyndras. you know governments have to invest in infrastructure and the lion's share of the investments are going to be failures. we should expect them to be failures. >> on solyndra, if the process was corrupt and if the investments solyndra for the wrong reasons, that's -- idea -- that it failed, if all of the -- all of the governments investments are paying off, those are not investments they should be making. they need to be making investments in the things that are moon shots and the things that the private sector won't do because of too risky. that's where there is a big role for government public money. >> here is a practical example. we have the chinese. now remember, that solar was -- an american technology. >> right. >> chinese have basically taken it over and haven't done it for humanitarian reasons. they have poured billions of dollars into this and, in fact, lost billions of dollars pouring money into this industry.

silicon market has gone straight down basically important the last year and had a half. last u.s. company that i can think of, stock down 75% over the last year. this is not a viable profitable market. but the -- chinese continue to pour money into this because they want the exclusive technology when it hits of solar so everyone will have to come to them when the technology works. >> there is another side on the sort -- when you are talking about whether or not renewable are viable, comparison to price of fossil fuels, viable if they are not that expensive. oil, not viable if they are. but -- >> economically viable. >> talking about the investment. >> so one thing over the past couple of years is we could have made the decision when oil prices began got very, very high to ram up our investment in technologies to move towards that but what a lot of companies have done and in some cases what we have done publicly with public money, incentivize going out and just find oil and natural gas deeper in the ground and much more environmentally damaging ways.

that's led to a big natural gas when they are finding new oil reserves but not the easy oil anymore. now i mean we are get to the dirty oil where you have to blow up the earth to get it. in some degree that's a his. we could have made a big effort to move and it we did it. >> one of the complaints i have about the obama administration, one of the things i think the republicans will center on, whether we will have traction or not is that he has not created an integrated energy policy. he will not be alone in this. no american president has created and integrated energy poll spip he had an opportunity and i still think he has a small opportunity to try to do that for example, with the gas act which something that both political sides of the aisle really hate. the -- democrats hate it because it is -- they think it is -- gives more enthusiasm for natural -- natural gas which they have a real hate of and republicans don't like it because any kind of incentive, any kind of subsidies make for -- government look like they are picking winners. number two, because they are economically conservative and don't want to see money -- >> democrats keep trying to vote

down -- >> that's my argument. that's exactly my argument. but this is going to be something that angers both sides of the aisle. therefore, how could it not be politically -- how could it not be right for the country? it would provide jobs and, in fact, drop gas prices almost immediately. and it would be good for the -- economy straight away. there are lots of good reasons to push forward on the natural gas act. it is unlikely to pass. last chance to do it was on tuesday, to include it in the highway funding bill and it lost. >> we are going to -- continue on this discussion when we come back. [ male announcer ] this is lawn ranger -- eden prairie, minnesota. in here, the landscaping business grows with snow. to keep big winter jobs on track, at&t provided a mobile solution that lets everyone from field workers to accounting, initiate, bill, and track work in real time. you can't live under a dome in minnesota, that's why there's guys like me. [ male announcer ] it's a network of possibilities -- helping you do what you do... even better.

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we as a country at this point seem to have no plan at all. we are just completely at the mercy of the markets here. >> i wouldn't agree. i would say that there is a very good plan that's been implemented by the nation's largest oil companies and they are doing a great job for their interests. they expanded drilling just as you said into all sorts of incredibly dangerous places where we are producing more oil in the united states now than we have in eight years. demand for gasoline, however, is also down. so while oil companies are producing more here, they are also exporting more and more out of the united states. so they are exporting oil and exporting finished products. making us actually a net petroleum exporter. they also have concentration of which they -- worked very hard to get. they have pushed out competitors so that you have a small number of major oil companies that control production in the united states and refining, transportation, and selling of

gasoline. so that a very large percentage of that pricing piece is in their control of gasoline. and they also exercise a a large amount of control over the price of oil than we tend to give them credit for. i would say that the plan that is in place in the united states is one that had been and continues to be very, very good for the major oil companies and not particularly good at all for consumers or for the broader economy or for the environment or human rights or other issues that oil touches on quite closely. >> if the public were to create plan, what sort of plan would it be? i want to listen to sound from mitt romney i believe yesterday talking about energy prices and gasoline. >> the gas hike trio ought to resign. they ought to turn in their resignations. they were hired to raise the cost of gasoline and now the president says he wants on lower it. given that is the new direction, their expertise is not in lowering the price of gasoline.

their ex-perfectties was pertis raising it. if i were them i would turn in my resignation. >> what romney is talking about there is the idea of cap and trade. what the obama administration wanted to do when they came in a office was pass a bill that would make sort of intensive energy more expensive. what's odd about that is when obama and -- sarah palin and john mccain had a cap and trade. it seemed like the two parties were converging around plan. is that plan dead? is there another one that would -- work? what do you fall on this question? >> you know, i would say actually the moss important question right now in terms of pricing of gasoline, i would actually shift us to a discussion important where you began which is what should be the price of gasoline and how should we get there? i think that the price of gasoline should be high. but in order for it to be high and to have the entire economy move with us towards high

gasoline, we need to be capturing the benefit of that high gas in taxation and that high taxes on gasoline should be held to be invested in public transportation and invested in things that help people get away from their cars so that as the price of gasoline goes up, it doesn't further endanger households and our economic development because i would disagree with the premise at the beginning that the fact that the price of gasoline is going up again is good and that because that's a reflection of demand and supply. first of all, globally, we are not having a demand and supply problem. we actually have excess capacity the saudis are ready to bring onboard and we haven't had a demand and supply problem important some time. we have seen the price of oil driven up, driven up, driven up, because speculators are driving back into an unregulated market. not fairly operating market and

not a just market. not a good market but those speculators with the twisty mustaches who are manipulating that price up and up and up and up, that's the primary determining if you price trading that's how you can trace increasing price of oil much, much more so at this stage than any shifts in actual demand and supply. that rising price of oil is the primary determination of the rising price of gasoline, not demand, american consumers are demanding less gasoline, and are actually making that shift on their own right now. we just really have to help them by giving them another mode of transportation. right now that rising price of gasoline isn't being supported by changes in public policy that make it possible for the economy to continue to support families when they can't afford gasoline. and that's a public policy choice about how we capture the rising price of gas and how we

capture the rising price of oil. i don't think that money should go to banks and hedge funds and oil companies. i think it should be captured by the government to invest in the changes we need to get off of oil. >> my question is -- you know, obviously when the price of gas rises sufficiently and alternate is -- much more traffic but is that does that happen when it is driven by tensions in the middle east and speculatedors responding to that? or do they just assume that once the tensions subside prices will go back down and no point if allocating capital of sources of energy snap do we get any long-term benefit at all from a run-up like this? >> i don't think so. i mean, if -- if my thesis is correct, you are not going to see the kind of dip in oil prices that you have seen in the last run-ups like the '08 run-up we saw with 147, then 32. in fact, that you saw -- when the libya crisis struck, where we got to 112 and then back down to 78.

the idea is that there is this layer of investment and that continues to grow, that sort of baseline it is price of energy and -- antonia is right. no supply/demand disconnect here. there is clearly enough supply to meet what's ever rising demand for the most part. so that's not really the issue. but in -- in my view, there is a layer of money that continues to grow and, therefore, the bottom, baseline of oil prices continues to get higher. so -- you won't see prices dip back down to where you saw them in '08 or '09 or '11 or the next time. next low you will see is closer to 95. >> part of the issue is how you steady that out. how you get away from the incredible volatility. i-want to ask you about that when we come back here. [ captain ] sorry folks, our landing time got moved back another hour.

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of pain and fever relief recommended by pediatricians or creates another laptop bag or hires another employee, it's not just good for business, it's good for the entire community. at bank of america, we know the impact that local businesses have on communities. that's why we extended $6.4 billion in new credit to small businesses across the country last year. because the more we help them, the more we help make opportunity possible. we are talking about gas price was our panel. i wanted to ask you about what -- in terms of the speculation can actually be done. i should say for our viewers, a

larger debate about whether it drives at all, st. louis federal reserve paid this week saying speculation is the second most important factor behind changes in demand. i'm not qualified to adjudicate that debate. either way everyone agrees speculation has become much, much larger in the last decade or two decades. what would you do about it if you could? >> the primary reason why speculation exploded is because we chose to unregulate the trade in basic there majority futures contracts for oil. and we did that at the behest really of enron. then we saw what enron did with it. it exploded the west coast electricity market and imploded upon itself. we saw what that did to the sector in the globe am economy. well, that deregulation continues to do the same thing to the oil sector fully unregulated futures trading in oil where there's just an orgy of greed and speculation taking place among people making lots and lots of and lots of money.

they fell out of it for a little while because they crashed the global economy with their trading and scattered and there were investigations and in the -- investigations ended and the economy started picking up and moved back in and the prices are going back up. so -- dodd/frank, did, in fact, couldn't place a number of potentially very good regulations that could rein back in oversight, trading sectors. unfortunately we are not implementing dodd/prank and it is being challenged and threatened and capacity of the regulatory agencies, cfts, sec, are not being given the person power and money they need to actually enforce these rules so we have some very good rules on the books. i don't need to articulate them for you because they are there in the legislation. we are not implementing them and we are not making it possible for them to take effect.

>> i will agree with that. we see a lot of attacks on dodd/prank. one of the ways people talk about it is that they will attack the cost benefit and say you didn't do a proper cost benefit analysis and this will harm my business. what about the cost benefit to the consumers? what about the people at the pump? to talk about the volcker rule, they excluded what's called spot commodities, actually trading the physical commodity from the volcklecker rule. it is part of the reason we see this inflation in prices. if we don't include commodities how can this help? the cftc commentary for the volcker rule is still open. if will is something people are concerned about, i would encourage people to get on the comment -- write a comment letter let er . -- letter p. >> it is a revelation to me that -- supply, plenty of supply. demand is decreasing. i'm just -- just telling me as -- >> domestic demand is

decreasing. >> why are prices at the pump continuing to go up? are you saying it is all because of speculators? >> no. >> it is like college tuition. it never seems to go down. it is like the prices that wall street charges for its services. these cartels, whether it is the universities or oil companies or wall street seem to be able on have an incredible pricing power at the moment. i don't know understand it. >> well, were i don't know how beer to explain it. let's say that you are on ebay and you were trying to sell a t-shirt and wouldn't go for much. >> or my books, for instance. >> if it was signed by you or if -- >> even less. >> justin bieber, you might -- people might want it. might want it more than they did before. >> oil is -- barrels signed by the sheik. >> chris hayes it put it very well. he said oil has become the tribeca of risk assets. it is a hot community, hot place to buy a house right now. that's -- that's -- how -- >> it is speculation. >> part of that is -- >> i hate the word.

one reason tribeca is expensive people want to move into tribeca a long time. part of what speculation does is it is not just about the current demand. it is about belief china will keep getting richer and india keeps getting richer and oil supplies at this points are brit and never clear how much saudi arabia can get out. lot about the future. >> it is driven about -- peak oil theories that -- that are widely held and driven by -- are theory of the dollar being demolished, theory about conning money printing mere. it is that -- that's what drives these -- that's what drives investors into the mark. >> also seems to be driven by a theory of the political system which is the political system will never get its act together and pass something like that. or tax carbon. democrats, republicans and other governments and other large -- economies will never be able to do this. you know, the -- demand for oil will continue to be there. because we are not capturing -- you know, we are not forcing. >> needed something different. china and india, so now global

demand is much more robust because even if -- even if you feel there is a danger from the america's side not from others. antonia, do you think there is anything likely that can be done? if we implement a dodd/frank will that be enough? dodd/frank would be a great start. but -- i -- agree with the rest of the conversation which is that what we really have to do is to address head-on the transition into moving off of oil. there's would ways to do that. one is by deflating some of the restriction that's being put in place by the oil sector. and that would be doing things like getting that money back from them and the president's proposal to get back $4 billion a year and in taxes from the oil sector that it just doesn't immediate. let's add in subsidies. add in all of the welfare we give to the most profitable wealthiest industry in the world. let's capture that money and invest it directly on -- i keep repeating this -- public transportation, public transportation. let's get away from cars. let's move it into things that we are actual -- will help us

get away from oil. but we also have to address the political power of the industry and uncover the dramatic amount of wealth that gets poured into restricting the policy choices, democrats make and that republicans make and, you know, the president over a year ago said that he was going to call together a task force that was going to look at criminal investigations into the manipulative behavior of traders in the oil market. he called that. they had one meeting and disbanded and never met again. i think if he -- really -- if we really got a lot of very, very strong political will that wants just about rhetoric that happens at the time of elections, really gets pushed all the way through to policy, we can see dramatic changes and how we use oil and price oil and gasoline and how we shift away from both. >> thank you very much. dan dicker, author of "oil's endless bid. antonia juhasz, author of "the

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nourishment with zero weight. pantene. hair so healthy it shines. i will tell you what we should know important the week ahead. right now it is time for a preview of melissa harris perry. what's coming up? >> good morning. you did a great job this weekend. such great job. i have a really special guest i think you know about on knew show. would know that mitt romney has a huge money advantage in the gop primary. but i think that he might be running with a major message deficit. we are bogey to talk about that. we will take a look at the illinois primary which just two days away. wondering whether or not rick santorum despite his delegate problems can scrape together a win there. we will also look past that primary to the three people who might be the future of the republican party. none of them are running for president. of course, we are bogey to talk about the ncaa because i have got march madness. >> thank you very much, melissa.

so what should you know for the week coming up? you should know that the former governor of illinois, rod blagojevich, reported to federal prison in colorado thursday to serve out his 14-year sentence to try to sell or trade president obama's old u.s. senate seat. you should also know an organization called the state integrity investigation, partner of the senate republican integrity, is raising their report on state level corruption tomorrow. it will include letter grades for all 50 states. you should know the state of illinois received a preliminary score of strong in response to the question can the chief executive be held accountable for his or her actions. you should know on tuesday, i will little hold its republican presidential primary and should also know according to the real clear politician of polls romney is ahead of santorum by six points and barack obama's home state. if you are planning to commute for hot gop action tomorrow, you should know that the debate has been canceled. if you are a big debate fan i'm

sorry to tell you that the poll and debate was the last scheduled debate of the primary season. oh. as the ncaa tournament advances you should also know the 2012 final four gingrich, santorum, paul and romney proved anything, anything else, responsible. you should know that this week marked the four-year anniversary of the collapse of bear stearns. the federal reserve approved and secure ad $30 billion loan so jpmorganchase could buy bear. you should know that the chairman of the federal reserve ben bernanke is on twitter. this twitter handle, closely watched. there was theory alan greenspan was seen leaving his house with a stuffed briefcase. that meant that the federal reserve is going to change rates that day and traders should get red xwrip you should know as long as the fed posts things like charts showing that -- showing their bond yields, i will be a fan of the twitter

feed. finally, you should know when greg smeth said that goldman employees routinely call their clients muppets. goldman sachs actually has represented muppets as in the muppets. >> you are looking a little sheepsih. >> in 2003 the family of jim henson, creator of the muppets, who died in 1990, bought their father's company back from a german based company that acquired it. the financial adviser for that deal one goldman sachs and company. my guests are going to come back ask tell us what they think we should know this week right after this. this one's for all us lawnsmiths. grass gurus. doers. here's to more saturdays in the sun. and budgets better spent. here's to turning rookies - into experts, and shoppers into savers. here's to picking up. trading up. mixing it up. to well-earned muddy boots. and a lot more - spring per dollar.

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back at the table now. welcome back john. what should we know as the newsweek unfolds? i want to thank my guests today.

alexis, let's begin with you. >> i think people should know going into next week, the senate will be voting on a jobs act. it's a business startups act. even though it's couched in the language of jobs, it offers huge investor pro techs, like the chinese wall, where analysts can't recommend the same stocks as others are investing in. things like you can't advertise to nonsophisticated -- you can't get them to invest in a private placement. it's a bad bill couched in the language of jobs. it's going to repeal investor protection. for me personally, i think this is something people should look at and talk to senators about. people need to know as a dukie, i will not spend as much time as i usually would watching march madness. on a serious note, people need to know the infamous greg smith

who people say i should pay a commission to now has touched a succession debate at goldman sachs. there's more to this than meets the eye in my opinion. i think you have to understand he was working in london. he mentioned specifically in his piece the president and blank fine the ceo. he may be helping out one or two candidate to become ceo. >> you will be very busy if that happens. >> you should know that the obama campaign released a very interesting documentary that made its case for reelection on thursday. it's a 17-minute documentary done by a sleek professional documentary filmmaker. the interesting thing that you should about it, at the center of it is a case that healthcare reform was necessary to get the economy back on track. what's interesting about this, it is an argument that i think the romney campaign will have a

lot of fun with and be happy to see. if you recall, romney is the one candidate who can't made a head-on assault on obama care because his plan was the intellectual godfather of obama care. by putting this at the center of the election campaign, romney can make a case, which is this is a diversion from the recovery. it was a curious choice from the obama team. in terms of what alexis said about the vocal rule possibly excluding physical commodities from what we're trying to regulate, i think we ought to realize that the glass siegel act of 1933, which was brought up, which was designed to keep banks from being able to engage in securities training, if you dig into the history of that, even with a plastic shovel as i have, that never really worked until the cocktail party conversation is that the repeal in '99 was the grand beginning of our troubles.

but they began before that. which makes me skeptical about a lot of changes we're pre vibing to kang the culture. >> that can be a -- i want to thank my guests alexis dpoeld stein, william coe han. how obamas team fumbled from the recover and the root.com. thank you for joining us. chris hayes will be back next weekend. his guests will include author of -- check out the website for next weekend's programs. up next, it's melissa harris-perry. have a great week. buying this juicer online was unbelievable. what a bargain!

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