and your port foal row. he has a million customers and more than 80,000 employees. the man who runs the nation's largest school system. what's fixed? what's broken? what's next? >> what's cooking when it comes to school lirchlgz. meet the woman trying to bring a revolution to school cafeterias and how she says she can help make your kids healthier. the "wall street journal" report begins right now. sgeerchlgts here's a look at what's making news as we head into a new week on wall street. unemployment in the united states is now at the highest point since june of 1983. the economy lost 263,000 jobs in the month of september. that was worse than analysts were expecting. the unemployment rate now at 9.8%. payrolls have dropped for 21 consecutive months.

the markets wrapped p the fourth quarter on wednesday when all of the major indexes off the double digital is. the dow having its best quarter since 1998, up 15%. october got off to an ugly start. the dow having its worse day since july on thursday. falling more than 200 points on disappointing economic news. the markets continued to decline on friday. bank of america ceo ken lewis will be stepping down at the end of the year. lewis has been under fire since the bank's takeover of merrill lynch in the midst of the financial crisis last year. no successor has been named yet. auto sales slowed significantly meebl in the month of september after the cash for clunkers program ended. xw m sales down 47%. toyota down 16%. fords were down 8.9ers, and chrysler also fell by more than 44%. there has been a slew of economic data this week, and the markets wrapped up their best quarter in years, but where are we headed next? joining me now jerry webman,

chief economist with oppenheimer funds and stew schweitzer with jp morgan private bank. good to have you on the program. welcome. >> good to be here. sdoo stew, we got the jobs report. we know it was worse than expected. the economy is still shedding jobs. 9.8% of the country unemployed. what is your reaction? what do you make of this data? >> the human toll from this recession has just been so terribly high. i think we've got to look at the other side of all of this. companies have been preparing and are continuing to prepare for tough times, and that means that if there's any turn in growth, and i think we are on the cusp of better growth here, if nothing else because of the inventory rebuilding that companies are having to do, then i think we'll get positive profit surprises. profits are the root of business expansion plans. profits are the root of business hiring. i do think that this job weakness, as painful as it is, is going to turn into job improvements by early next year.

>> early next year. jerry, what about you? what did you think of the numbers, and when might we see growth from your standpoint? >> let's keep in mind that the one thing we can say with almost complete certainty about any extreme number is it's going to get revised. you know, the -- we don't want to overreact to it. there's almost no way to paint this as a good number. i put it in a similar context to stew. remember how good the product it numbers have been right through this recession when it's not supposed to happen. businesses become more productive because they get every worker to produce more, so as we're seeing spending actually get a little bit better, even without the cash for clunkers, i think inventory building, as stew mentioned, it's building. that means we're going to at some point have to add people back, but businesses are going to be cautious about doing it. stoo stew, federal reserve chairman ben bernanke expressed concern about the strentd of the dollar it this week in that testimony on capitol hill. that was on thursday. lisp to what he had to say. >> if we don't get our

macrohouse in order, that will put the are dollar in danger, and that the most critical element there is fiscal -- long-term fiscal p stability. >> do you xwrae? >> absolutely, maria. i think the key, too, are long-term -- the long-term affordability of all of this mess cal stimulus is to have this economy grow. i think the worst thing we can do is raise taxes at the wrong time in the name of reducing the deficit, and end up undercutting growth. >> i think we have to be really careful in this tax issue. i don't want to pay higher taxes. nobody else does either, although i would like to get into a high enough tax brablgt, so i'm at risk. just remember, though, that the last time we got anywhere near these levels of debt was 1992 just after the bush 41 tax increase, just before the clinton tax increase, and guess what, we have nearly a decade of very good growth to the extent we were able to pay down the deficit a little bit.

>> all right, jerry. let me ask you to keep with the federal reserve. we've seen some fed presidents making puff u public speeches and statements about the fed's exit strategy. dow fed president richard fisher says this. my colleagues and i will move well that if needed will be equal in speed and intensity to that with which we pursued monetary accommodation. does this concern you? why do you think they are doing this? >> i think they're doing it to hold off the bond village laboratoriys a little bit. i think what they're trying to do is say, look, we've got to continue to print money. you know, it's been a trillion dollars. that can sit out there as long as it isn't chasing, and when it's necessary, we will be more aggressive in raising rates than we did in the period of the housing bubble. >> yeah, but, i mean, stew, is there an issue that the federal reserve is going to have to unwind some of this stem husband, possibly raise interest rates when unemployment will be still near 10% or above 10%?

>> i think that's exactly right, maria, and what will be the political feasibility of the fed tightening monetary policy at a time when growth is coming back, but it's not coming back rapidly enough to significantly reduce the unemployment rate. >> the market advisory gone up nearly 50% meanwhile since the lows in march, guys. this is an amazing performance. finishing up one of the best quarters. we have the best quarter this last quarter in 11 years. is it too late for the average investor to put money to work here if you have actually missed this rally? >> it's almost never too late to put money to work in an intelligent way. what i would be suggesting to people, although international markets thought we had rallied a little more than the u.s. market. people should be trying to put that money to work where they could get some advantage from growth that may be faster in other parts of the world, and, frankly a dollar and here i have to agree with stew, it's a risk that the dollar continues to deteriorate. investors' response needs to be, well, you know, how can i cushion my own lifestyle by

being invested intelligently in a global way? >> stew, you are even more optimistic, right? >> i am. i think that overwhelmingly people are just too neglect at the about this economy, maria, and now it's true enough that we had a banner quarter in the third quarter, and so naturally some people were late comers to the rally, and they became sellers when the economic news turned a little squishy over the past month or so. i think people are still too negative. i do agree with jerry that international diversification ought to be part of the story. we at the jp morgan private bank have liked asia x japan and i think we would expect that although that market has done astoundingly well, there will be further gains over the next 12 months. >> all right, gentlemen. great xwvrgs. we so appreciate your time today. >> always i pleasure. >> we'll see you stoon soon. up next on the "wall street journal" report -- snoo and they're saying that if you don't hold teachers, schools, school districts accountable for student performance, forget

about it. >> new york city schools chancellor joel cline on applying lessons learned from the business world to the job of running schools. then, first vegetables and fresh foods. getting more of it on the menu of school cafeterias and how that could impact the health care debate. as we take a break, take a look at how the stock market ended the week. ♪ today ♪ must have been one of the strangest days ♪ everyone may face the same uncertainty. ♪ some would say that you won't find ♪ protecting yourself, however, requires good decisions. find strength and stability with mass mutual, a company owned by its policyholders. ask your advisor or visit massmutual.com.

joel klein was a former business executive when michael bloomberg gave him a tough assignment, running the city schools. mr. klein oversees a budget of $21 billion in the country's largest public school system. chancellor klein, great to have ow the program. >> great to be here. sdhoo we're just into a new academic year.

want to talk to you about what's going on. new york's 1,500 schools had to institute an across the board budget cut of about 5%. what kind of an impact have you seen? >> it's having an impact. i mean, schools that lost a teacher, that retired, they haven't replaced them. some of our after school programs have been affected. i think the schools have managed it effect tifl tively, and we let our principals and our school communities decide how to make the cuts. we don't try to make them for them, so you'll see different schools. some schools, for example, that might have had very little class size, they're willing to expand their class size. other schools that have a lot of after school programs or weekend programs make cuts there. it's a serious cut. >> this is something that is very important that you have given the principals this power to make the cuts where they see fit he. this is one issue that we've talked about in the past where principals have not had the leway even to hire the right teachers. you want to put a business together, you want to have your best athletes on the field.

there was some handicapping going on there. >> it's true in education and in education, think about it, most of the people that run our schools have virtually no discretion. the ucla school of management did a study and showed that new york city principals have more discretion than anyplace in the country. the whole notion of putting your team on the field, hiring the teachers that you want, supporting them, all of those ideas are not part of.discussion until the mayor here in new york changes it. >> you really need to be able to put the best foot forward and have the talented people on your team. now, this summer you distributed more than $27 million in bonuses. nearly double the amount in the previous year and fronted totally by the city rather than private donations. a lot of talk about that. how did you do that in such a tough economy? >> because we really made a commitment to pay for excellence, and what we saw was our teachers really performed, our schools performed. we outperformed the rest of new york state dramatically last

year, and so what we're doing, again, something that you see in business all the time, but you don't see it in education is you reward success. >> right. >> that's what we're doing. >> that's what i want to ask you about. the president and the education secretary has said that states that do not focus on performance, accountability of the teachers, will not be eligible for the grants out there and that is obviously from the federal stimulus. new york state banned using student test scores to evaluate teachers. >> well, they did in terms of tenure and that was a mistake. that law will end pretty soon. i think what the secretary and the president are doing is so important. they are really trying to inject true builtability into public education, and they're saying that if you don't hold teachers, schools, school districts accountable for student performance, forget about it, and that's the message, and it's very, very powerful. i give both the president and secretary great credit. these are the things we've been doing in new york, like the bonus program and we've been

looking every one of our schools. we look at how much progress it makes. we give them a grade based on the progress. these ideas are now starting to catch on nationally. >> let me ask you about this state of education today. what worries you most in our urban school districts right now? >> i think what worries me most is that our urban school districts are falling behind the rest of the world, that we've had these racial and ethnic achievement gaps, but if you look at what's going on in the rest of the world in terms of what's going on in other countries, industrialized countries. you know, if you look at the industrialized countries and the united states is, like, 24th in math, 25th in science, i mean, this doesn't work. think about graduation rights. from 1995 to 2005 all the industrialized states, you always see the studies. all the industriesized states went up. we started at two, and we're now at 16. >> wow. >> others went up. we stayed flat. the president is right to focus on it, and i thought he did a big thing by saying education along with health care and the economy, those are going to be the big issues.

they should be the big issues. you know, maria, i was in washington with the mayor on the stimulus package, and he was asked by the new york delegation, will we get through this economic crisis? twhs things looked tough. you know what the mayor said without miss ag beat. i said, sure, we're going to get through this economic crisis. america always does. the question for you is will we get through our education crisis? america never has. >> what do we need to focus on? the last year in business can prove to all of us that we need to adapt to a changing economy. does that mean we need a new skill set, we need new training in schools? how do you adapt to so many changes that are out of your control? >> i think lots of things. the first thing is high expectations. you would be amazed at how many people tell me kids who grow up in poverty, you can't educate them to a particularly high level because of their family or their poverty or whatever. expectations matter. second thing, you mentioned it, accountability. if people aren't accountable, you don't get good performance. you don't reward success. in education we pay people

togs -- think about this -- a math teacher and a physical education teacher get paid exactly the same, and each year they get paid more regardless of their performance. now, no rationale system would pay math and physical education teachers the same. i can get plenty of physical education teachers. i can't get great math teachers. when i'm short math teachers, my kids with the highest needs and the most challenged communities don't get good math teachers. we've bot it focus relentlessly on high quality teaching, rewarding success, using data every business you know -- people come on this show. data is a part of everything they're doing, and in education it has to be a part too. >> are there things we did learn from overseas? some school systems outside of the u.s.? >> sure. two key lessons. one is a lot of these other school systems, they're just much more time in school. you know, if you spend a lot more time at tasks, you're going to get better outcomes, and the seconds thing is those school

systems that work best are school systems that are recruiting people from the top quarter of their college graduates to become teachers. we have got to professionalize teachers. we have got to respect teachers and support teachers, and we've got to make that the profession of choice in america. those are core international lessons. >> so great to have you on the program. >> good to be here. sdoo thank you so much. joel klein. up next on the wall street journal report, school lessons don't end at lunchtime. we'll take a look at closer look at cafeteria meals, and one renegade lurchg lady yes, sir ideas for making them healthier. no, ketchup is nott a vegetable. sdmrimplts it's a list everyone sdmrimplts it's a list everyone wants to be they've served for decades as a golden, tasty sidekick...

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while preserving their famous taste. because no one wants to give up a classic. this is how cargill works with customers. ♪ what role does the tarter to the play in your child's future health? the centers for disease control estimates that one in three americans born after the year 2000 will be affected with type two diabetes, a condition we already spend $116 billion annually to treat. joining me now is chef ann cooper, known as the renegade lunch lady. she's the author of "lunch lessons" and has recently joined with whole dpoodz market to launch an on-line training portal for schools to reform their cafeterias. great to have ow the program. >> happy to be here. >> americans are spending $147 billion a year to treat obesity and the rate of childhood obesity is climbing. what are kids eating in school? >> chicken nuggets, tater to

thes, chocolate milk, canned food cocktails, in some cases pop sickles. that's what they're feeding our kids in schools. >> what is the caloric intake of a lunch like that? explain to us why that's on so bad. >> well, we know that fried foods aren't particularly healthy. can from cocktail, especially in syrup, can be full of high fruk toes corn sugar, and we have to see kids 650, 700 calories busht there's no maximum, and there's no maximum sugar. it's kind of crazy. >> what is the alternative? >> roast chicken, roast potatoes, salad bar, fresh fruit instead of canned food cocktail, organize neck white milk instead of chocolate milk with corn syrup. >> it seems to obvious to me. why aren't we seeing increasing moves towards healthier meals in schools? >> actually, we are, and especially in this area. we're seeing new york schools have made great headway. baltimore has a chef now. new haven has a chef now. i think a lot of schools are starting, but it's taken us a

while to really understand that we do have to feed kids better and that we should really be working on it. >> okay. how much more expensive is it for a school to switch from something like tater tots and fried chicken mcnuggets -- or chicken nuggets to roast chicken? >> i think we really need to add a dollar. the federal reimbursement rate is $2.70, and i think we really need to add a dollar to that. now, in our country we're feeding 5.4 billion lunches a year, so adding a dollar would be $5.4 billion. we're spending $260 billion, a quarter trillion on these diet related illnesses. if we could start to see or kids health as a health initiative and school lunch as part of food that we feed our kids and that is healthy foods that will make a difference, weshd we could see school lunch as proactively taking care of this health care crisis that's impending on us.

>> you have got to have a way to get average families to use the convenience of healthier foods, but also be able to pay for it. >> well, but there's not only that. of those 5.4 billion a lot of kids -- many, many kids get we need to make sure every kid in america gets a healthy meal at lunch, at school. >> a look at the news this upcoming week that will have an impact on your money, and then the annual list of richest americans is out, and a lot of really rich got a little poorer this year. ine air travel for a new generation. to ensure our forces are safer and stronger. to take the world we share to tomorrow and beyond.

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zeemplt for more on our show and our guests check out the website wsjr.cnbc.com. you'll also find a link to my new blog, investor agenda. check it out. here's a look at the stories coming up in the week ahead that may move the markets and impact your money this week on monday the supreme court kicks off its 2009-2010 judicial session. the initial caseload includes questions on corporate political spending, pat ebt standards and second amendment rights. wednesday third quarter earnings season kicks off. we will hear from dow component alcoa after the bell, find out how business is going. on thursday earnings reports are expected from pepsi co, marriott, and chevron among others. on friday the international

balance of trade will be reported. we'll find on the u.s. economy imported or exported more goods last month. the rich may have a little less money than they did last year. most of them are still feeling no pain. forbes making sdmreen released its annual list of the 400 richest americans this week, and they'll -- there are no great surprises. some of the big names suffered big losses. microsoft co-found other bill gates came in first at $50 billion where w a loss of some clars 7 billion from last year. the oracle of omaha warren buffett is now worth $40 billion. that's down $10 billion. oracle founder larry ellison is worth $27 billion followed by wal-mart, airs,isty's, alice, and rounding out the top ten, michael bloomberg and energy titan charles and david coch. that's it for the show today. thanks for being with me. my guest next week edward laziere. join us for that. each week keep it right here where wall street meets main street. have a great week, everybody.

i'll see you again next week.

>> this is "open house." today's celebrity designer, kenneth brown, shows us ageless appeal. >> we combined the gray pallet with brown furniture to give you that warm, rich, sophisticated