for our entirecrew, i shawn we lock. thanks r watching bellator 17 from t wang theater in boston. hi, everybody. welcome to the "wall street journal report." i'm maria bartiromo. the dow falls nearly 1,000 points during the day, its biggest intraday drop ever. but some of those trades won't count. why riots on the streets of greece led to the tumble and what could happen next. some good news. the economy continues to add jobs. now at its best pace in four years. what does it moon for the economic recovery? we'll talk to labor secretary hilda solis. wall street pays off. he tells us what he's cracking down on. my had conversation with ken feinberg. "wall street journal report" begins right now.

this is what's making news as we head into a new week on wall street. it looks like the jobs market may final i hely be picking up steam. the government released the unloimt report for the month of april and it was encouraging. employers added 290,000 jobs last month wk the fast eggs growth in jobs in four years. the unemployment rate rose to 9d.9%. that was because more people entered the labor market and were looking for a job. a wild and volatile week in the markets. on thursday the dow jones industrial average set a one-day record falling nearly 1,000 points in the afternoon before rebounding. here's cnbc's bob pisani at the new york stock exchange with the details. >> reporter: thanks, maria. it was certainly an unforgettable week in the markets and unforgettable thursday. i was on the trading desk in midtown manhattan. there was more yelling and screaming than the beatles at shea stadium. what happened? the dow dropped 600 points in just a matter of minutes. in fact, almost 1,000 points at

one time before turning around. as to what happened, one or a combination of three things. number one maybe a computer glitch although it seems unlikely. or number two, make a mistaken trade. that's possible but kind of strange no firm has come forward and said they made any kind of mistake. finally, this may be the answer. a flaw in the market structure. for example here at the new york stock exchange traders can slow trading in certain spots for short periods, programs 90 seconds. that happened in procter & gamble. it's allowed to trade away from the new york stock exchange. stock went from 60 to $39. if we have circuit breakers, it ought to apply to all of the players. on friday the markets continue down. a long-awaited marriage in the skies was announced this week. continental and united airlines will merge in a deal valued at about $3 billion. if it passes legal hurdles, the new company will be the world's largest airline and will use the

united brand. no word yet on what impact it will have on fares or routes. a major story the week is the jobs report released on friday. what does it mean and what does it tell us about the economy today? joining me to interpret and explain it is hilda solis, secretary of labor. great to have you on the program. welcome back. >> hi, how are you? >> i'm doing great. what's your take on the employment report? we saw 290,000 new jobs created. the unemployment rate at 9.9%. better than many expected, but the unemployment rate went up. so how would you characterize this month? >> well, let me show you my chart here. i'd like to show you where we were last year in april. we were losing over 500,000 jobs. obviously we've gone up. the last two cycles we've added more than 500,000 jobs in the last four months. and the gdp is up as you know for the last three months. the tickup of the 9.9 unemployment rate is because 800,000 people who were discouraged from looking for

jobs are now back in looking for jobs. so there will be a readjustment there but i think overall this is a god sign that we see broad coverage of the private sector. i have another chart where you can see manufacturing and see in professional and business development and in other industries being impacted by the recovery. and i really do want to give credit to many of the folks that voted for the stimulus plan because evidently it is having an impact. >> so what about the number including more than 60,000 federally hired census workers who are of course temporary workers, right? but in reality, the numbers are not quite as good as they appear. isn't that right? >> actually, it's not that bad, though. the 230,000 jobs created are in the private sector and they're in areas where we're looking at manufacturing. we're looking at construction. we're looking at big infrastructure projects and machinery. whether it's acquiring steel and metal. all of those industries are now

slowly, slowly coming back. but we know we still have more work to do because there are still a stubbornly high number of people who have not found a job. >> what do you think it's going to take to get job growth back in the u.s. in a sustainability trend? where do you think those jobs will be? >> they're going to be in renewable energy. they're going to be in the health care industry especially with the new health care reform legislation. that's going to create a whole slew of jobs. last year we added well over 200,000 jobs ithe health care industry. we continue to see growth, movement there as well. also in the hospitality and tourism area. so i think that it's a slow recovery but, yes, it's steady. and i really want to say that our confidence, i think, with the public has gone up a bit. i think that the market is also changing. there's more confidence. people are willing to spend more. the investments are starting. temporary business -- services are also increasing. so we see signs on a broader level than we did in the past.

>> so we lost about 8 million jobs since the recession began. typically the engine of job growth is small businesses. so what can government do to help those businesses? especially since they are the ones having trouble getting funding from banks. >> right. the president did enact legislation to help provide the biggest tax breaks and credits for small business. in fact, he continues to see that as the engine of growth. it has to be in the private sector. so he is making that available so that people can draw down credit, be able to get their hands on that capital and begin those reinvestments. >> what do you think about the state of america's economy today? most economists call it a fragile recovery. of course this week was a wild week in the stock market. all these worries about debt in greece and the contagion effect in europe and the u.s. that impacted confidence a bit on the part of investors. are we vulnerable to an external shock? >> i would think the stems that

the president has taken and the administration -- certainly he's monitoring what's happening in europe. i know that he's going to also have the secretary look at that as well. i think for the most part the investments we made helped stabilize and stop the major hemorrhaging. >> let me ask you about labor unions for a minute. the majority of union members are now in the public sector rather than the private sector. overwhelming the number of members has been in decline since the 1980s. is that good for american workers and business or not? >> i would tell you that the shift has happened in the way we do business globally. a lot of it had to do with our trade agromts. i know the president is very concerned about keeping those high paying manufacturing jobs here. that's why we're making so much investment in clean energy and renewable energy and health care industries and also in the i.t. area. those jobs will remain here. and i think that is something that the president has really placed a priority on. so i'm actually pleased to see that these investments are

starting to pay off. a lot of it has to do with the recovery ooktd that made and stimulated the investments. >> secretary solis, great to have you on the program. see you soon. labor secretary hilda solis joining us. up next, why what happens in greece matters so much to the united states. it's all part of the new normal. i'll be talking to one of the smartest guys in the room, mohamed el erian. overseeing compensation at the bailed-out banks. the man known as the pay czar, kenneth feinberg, will join me.

it was a wild week for the markets on wall street and around the world. investors and governments have fears about the stability of greece's financial system and whether or not that is going to be contagious for the rest of europe. what is this turmoil telling us about the new normal? mohamed el erian ceo and co-chief investment officer at pimco. wonderful to have you. thursday was stunning on wall street.

intraday decline for the dow jones industrial average down almost 1,000 points before cutting the losses. can you talk to us about the potential of a contagion? tell our viewers what the fear is in this market right now. >> maria, think of a sand mound where grain after grain of sand is being added and nothing happens. and then suddenly, the whole thing starts coming down. that is a little bit what happened this week. a few things were in place. first, people recognized that greece is not a liquidity issue but a solvency issue. which is another way of saying it is very hard to solve. secondly, people realize that it's not just about greece, but it's about europe and potentially it's about the globe. and thirdly, you had a technical hitch, if you like, a glitch in the middle of all this. put all that together and you have massive volatility, people's stepping back from the

markets, liquidity erodes and you get these very big price movementses that of course adds to everybody's concerns. >> is this justified? do you think that the uncertainty -- we should be afraid? >> we've been saying for a while that 2010 is the year the sovereign risk. it's the year where the public finances in many industrial countries start becoming price-setters, start influencing every market. and that's what we're seeing. now, the market is not used to worrying about sovereign risk. you tend to think sovereign risk is over there somewhere and i'm over here. but when sovereign risk becomes a big issue, it contaminates everything else. >> so are there other shoes to drop, then, in europe? what about italy? what about spain? what about portugal? >> we did a debt sustainability study a few months ago. and if you rank countries in terms of vulnerability greece is the most vulnerable followed by portugal followed by spain, ireland, italy.

portugal is pretty close to greece. when you get to spain, things are a little bit better. then when you get one step higher, things are a lot better. but we should recognize that there's serial contamination going on of different balance sheets and people are going to be looking to the eu and asking the question how do they feel about it. >> so what about the u.s.? i mean, should we be worried about the municipal debt in the united states, cities and states facing budget tightening? and does europe have a contagion in the united states? >> on your first question, maria, what's happening in greece tells you first and foremost debt and deficits matter. second, that be careful. it can happen very quickly. and thirdly, make sure that you have flexibility to respond. the u.s. thankfully is not where greece is, but we have to take these things seriously. otherwise, we get to where greece is in a few years.

on how the u.s. is impacted, there is a silver lining. but it's pretty small. the silver lining is that a lot of capital that would have gone to europe or is actually in europe today would look to go elsewhere. and the united states is still the most attractive. it's what my colleague -- former colleague says, it's the cleanest dirty shirt. it's not a clean shirt, but it's the cleanest dirty shirt. so the u.s. will get some inflow. however, let's not forget what's happening in europe is deflationary for the world as a whole. and what's happening to europe is increasing risk aversions so equity markets in particular will come under some pressure. >> you said it's a clear example of what could happen. what do we need to do in the united states to ensure it doesn't happen? >> we need to get our act together. we need to recognize that fiscal adjustment is important and we need to be credible about adjusting over the next few years. the best way to do that is in a

high growth world. so you have to take advantage of whatever growth we have right now to make sure that that is combined with a credible medium-term fiscal adjustment. >> so, in other words, slow down the spending and raise revenue so that we could put a dent in the deficit? >> that's right. hit the balance between growth and fiscal adjustment. if we don't get that balance right today, we're going to be forced into what economists call a corner solution, doing something more extreme in a few years' time. >> great to have you on the program. thanks so much. mohamed el erian. up next on the "wall street journal report" fear and loathing on watts. world trade center. world trade center. become a fan on

o's been say and who doesn't want value for their dollar?