@openhousetv. thanks for stopping in. i'm sara gore. see you next week on "open house nyc." welcome to the "wall street journal" report. i'm maria bartiromo . how safe is your money? the woman charged with watching the stock exchange tells us if she has enough laws or personnel to make sure. my conversation with mary schapiro . plus, it's a dirty business but somebody has to do it. why urban farming is looking up. the "wall street journal" report begins right now.

sheerz here's a look at what is making news. more encouraging news about a turn arounden in the housing sector. existing home sales jumped nearly 8% last month to a seasonally adjusted rate of 4.82 million homes well above expectations. housing starts up as well, increasing 2.3% in august. slightly below expectations but single-family home starts reached the highest level since april of 2010. the dow industrials continued the streak of monday blues this week and it was flat midweek taking a breath after reaching highs last week. the markets were mixed on friday. the fedex and oracle reported earnings this week. fedex beat lowered expectation and forecast a gloomy remainder of the year. oracle met earnings expectations even though the revenue fell short. apple devotees lined up to pick up the apple 5 delivered to stores on friday. they exceeded expectations. apple stock continues momentum

closing above $700 a share during the week. david stockman has big ideas, many of them controversial. all are interesting. heed the former director of the office of management and budget under president reagan and the author of how crony capitalism corrupts free markets and democracy. so you are in favor of letting the bush tax cuts expire. let's talk about the fiscal cliff. this is the issue on front and center. you want those tax cuts to expire. why is that? doesn't that make the recovery weaker. >> we are in monl 38 of the recovery. we don't have the right to keep borrowing and borrowing massively until someone says we have reached a point where we can pay our bills. i think we have no choice and if it means the economy is weaker because we have to cut spending or raise taxes or both, which i

think we need to do then that's the agenda before the country. we finally are reaching the point where we can't borrow our way to prosperity. >> what are the implications of this. this so-called fiscal cliff, when the tax cuts expire year end, when the spending programs expire you know you will have defense companies, health care, transportation companies laying off. they have to tell employees they are going to get cut because these federal programs are going away. what's the implication of the economy in 2013? >> i think it will hurt the economy pretty badly but it is evidence we are living beyond our means. we don't need $5750 billionle defense pugt in the world we are living in today. we have to cut it an when we cut it there is layoffs and reduction in activity but it is not an excuse to spend on the industrial military come mex when we are almost broke as a country. like wise we can't keep giving the middle class tax cuts like

the president says he wants to do and a romney says he wants to do when we have a trillion dollar deficit. somebody has to pay the taxes and we have to pay them now or cut the spending. >> what's the other low-hanging fruit? you talk about the defense budget, entitlements comes up all the times in terms of social security, medicare, medicaid. what do you think will move the needle in terms of cutting spending. >> the heart of the matter, social security and medicare. the first is $800 billion a year. the second is 600 billion a year. that's a trillion and a half. that's the heart of entitlements and romney doesn't cut social security ever. ryan gets around to addressing medicare in 2023, but for the next ten years does nothing. >> what about the president? >> the president does nothing. he's the great defender. so if you have both parties essentially giving 1.4 trillion of spending a pass how in the world can we begin to close the deficit without major tax

increases? so when romney says no taxes for anybody, he's not telling the truth. when the president says 98% of the public will not have a tax increase, i'm for the 98%, let the 2% pay. he's not telling the truth either. >> let's get your take on where we are in this campaign. of course we have been watching the missteps that have happened around mitt romney and the 47% comment. do you think he can recover from that? >> i think he's lost. i think it is almost over. the problem is romney is not a real conservative. he's trying to lip sync their talking points and he doesn't understand that he is not carrying the tune. so therefore this point about 47% is kind of silly. 150 million people in this country paid payroll taxes. most people paid more payroll tax than income. that's a tax. 220 million people in this country pay consumption and other taxes, that's a tax.

110 million households pay property tax. that's a tax. the issue is not that people aren't paying taxes, the issue is our tax system needs fundamental reform and he's not addressing it. we need a tax consumption and reduce the taxes on labor, the payroll tax. >> has the president addressed these issues? >> no. >> it feels like the president isn't answering questions either about the issues important to the american people, like job creation. >> i agree. the two parties are now simply engaged in a war of talking points in an artificial debait about hot buttons they can press in ordered to mobilize this or that constituency. sgluf an intriguing idea. you are in favor of a national consumption tax. like a value added tax to replace taxes on corporations. what are you saying? that corporate taxes go away entirely and then you come up with this vat tax? >> i think we need a vat.

>> isn't it shifting from corporations to individuals? >> the biggest problem in our society is we save too little and we consume and borrow and spend too much. we need to fundamentally shift taxes away from income and jobs and payrolls to consumption. in my proposal would be to have a national vat and replace a large share of the payroll tax. we have the highest cost labor in the world and we tax it heavily, 15% between employer to employee, a trillion dollars a year. let's lower the burden, make it easier to create jobs and for people to earn a living and shift the taxes that we need to pay our bills to con zumpgs. while we are at it, get rid of the corporate tax. it is a total failure. in a global market that a we live in today, there's no way that you can tax income, you know effectively without encouraging people to move things around. >> david, important issues and great insights.

we appreciate your time today. david stockman joining us. who's watching wall street? we will talk to the woman whose job it is to keep them on the straight and narrow. an interview with mary schapiro later, everything is all right up on the roof. the rise of urban farming. local produce grown high in the sky. look at how the stock market ended the week. pa back in a moment. [ engine revving ] ♪ [ male announcer ] every car we build must make adrenaline pump and pulses quicken. ♪ to help you not just to stay alive... but feel alive. the new c class is no exception. it's a mercedes-benz through and through. see your authorized mercedes-benz dealer for exceptional offers through mercedes-benz financial services.

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is your money safe? a question top of mind for almost every investor out there today. can the agency charged with watching the market keep up with faster newer technology and do they have enough weapons to fight fraud? mary schapiro is with us and she is chairman of the s.e.c. securities and exchange commission. thank you for joining us. >> it is a pleasure to be here. >> i want to start with a piece

you contribute ed to for the "wall street journal" this week after lehman brothers collapsed in 2008, the $62 billion money market fund, the reserve fund collapsed along with it. you recently fought for new rules to regulate that $2.5 trillion money market industry but didn't have enough support from other sec commissioners. tell us about this. in your editorial you said all that care about financial stability must act to prevent another run on money market funds. how critical is this fear? >> very critical. in the reserve primary fund broke four years ago this week. the american taxpayer had to step in and backstop the multitrillion dollar money market fund industry. what we saw four years ago was that froze the short-term credit markets. the run spread to other money market funds and as i said the united states taxpayer had to step in and backstop those funds with a guarantee. we should never want to see that

happen again. >> how do you avoid that at this point? people have money in money market accounts and they think it is money in the bank. when you say break the buck. explain what that means and what steps have you taken to ensure that won't happen again? >> sure. well, people do assume what you are saying is they put a dollar in a money market fund they will get a dollar back out but it is in fact a portfolio of investment securities and they fluctuate in value. so the $1 stable net asset value as we call it is a bit of a fiction. the money market fund may be worth more or less than that at any given moment as the portfolio securities fluctuate. >> mary, there have been so many events to ruin investor confidence. you can look at the flash crash of 2010, the software glitch in august. are toward safe? do you have the regulations and personnel to keep them safe? >> i think towainvestos tors are

in our market. you think of the flash crash wesh immediately called all of the exchange heads to washington and hammered out a set of reforms that dealt with the issues prevalent in the flash crash, banning stock quotes, banning naked access to the markets, requiring exchanges to have clear rules of when they would break trades which was useful when there was the technology issue so it could be contained to the knight's problem and less of a problem for many investors in the market although not perfectly so. i think toward are well protected, but that's not to say there's not more work to do. >> let me ask you about dodd frank. the sec is charged with writing the regulation. 2300 pages. it's taken so long to get these rules actually implemented. do you have the staff needed to

actually do this and handle much more than before? >> we are working hard on dodd frank. as you know, the s.e.c. handed an enormous amount of new responsibility under dodd frank with more than 90, sometimes more than 100 new rules to promulgate and we have made tremendous progress. we have laid the ground work with the regulatory regime and the derivatives market. $600 trillion market at the core of the financial crisis. we have instituted a new whistle-blower program enabling us to do a better job of bringing you security cases faster, broader and more effectively. we have registered hedge funds for the first time and received systemic risk information. we have put in place new corporate governance provisions say on pay that gives shareholders more of a voice in the governments of the companies whose stock they own. an enormous amount of progress has been made. is there more to do? absolutely. we are working hard to do that.

we can always use more resources to do the job more quickly. >> some of the issues is the fact it is so fast, the trading them technology as been implemented to an extent that people are trading in milliseconds. some folks are wondering if the high-frequency traders the so-called dark pools have an unfair advantage over everyone else. how do you get the law of the land even so everyone is following the same rules and fast traders aren't able to put in their bids faster than others so they get a better price and beat the individual out there. >> it is important that toward understand that they, that the markets provide a fair opportunity for everyone to participate. senator reid held a hearing this was that was interesting about high-frequency trading and technology. everyone seemed to be able to agree. there was a consensus around there are issues in this market and issues with complexity from high-frequency trading and

interest of fairness and no consensus on what is the right way forward. that's wa we need to find, the right way forward so at the end of the day the markets provide companies a safe, sound place to raise capital, build factories and create jobs and where toward have an opportunity to invest in those companies and earn a reasonable return on their investment. >> do you think the retail investor is gone? that have they left? who's participating today. >> i think retail toward are still in our markets. certainly they are in the markets through mutual funds and pension funds indirectly but they are in our markets directly. it is our job at the s.e.c. to continue to try to improve the market structure so they have a level of confidence about continuing to be there. >> mary schapiro good to have you on the program. thank you so much. >> thank you, maria. >> we appreciate it. wonderful to stee you again.

mary schapiro joining us. next, we are bigging up dirt on a business trend in major cities, rooftop farming. the growth

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you don't believe hard enough. a smarter way to shop around. now that's progressive. call or click today. [ grunting ] it isn't often a crowded city like new york has any available real estate, let alone property overlooked. by looking up, way up, entrepreneurs are digging in to

a trend that offers a taste of place, rooftop farming is growing up high above, a farm grows in brooklyn. >> brooklyn greens is covering rooftops. two full acres of farmland. >> we sell our vegetables to three channels. one is restaurant deliveries. another is farmer's markets and the third through csa where customers prepay in the spring for a weekly box of what is in season. >> we grow everything from leafy greens, our salad mixes are most popular crop with chefs, tomatoes and peppers grow well. the night shades, eggplants. >> farming on roof has a number of parallels with traditional farming and some differences. we have to be creative to deal with wind challenges. >> the farm is more subject to the winds of mother nature than the market we wanted to create a fiscally sustainable market for al agriculture.

one that was marketable and focus on how to succeed as an industry. >> locally, growing produce is an attractive thing. it is quick to market from the farm which tastes better and can be less expensive. >> it is owned by a and p and will be selling vegetables grown in brooklyn. they linked hydroponic gardens to grocery chains. >> we will have the ability to sell high quality, high nutrient food for a lower price. >> reporter: joining me now is paul lightfoot, ceo of brightfarms and ceo ben flanner. two business trends on urban agriculture. good to see you. paul, you are linking grocery stores to roof farms. tell me how that works. you are building the world's largest roof green house in brooklyn. >> we sign long-term contracts with supermarket chains and we

use the contracts to attract capital to build green house farms that we operate on behalf and for our supermarket clients bringing produce that is better, frerner,ing tastier, healthier, better for their profits and the planet as well in rooftop farming how does it work? how do the numbers work in terms of efficiency. >> we are bypassing supply chain and growing vegetables right where they are consumed, across new york city. we sell mostly to the consumers throughout farmers' markets and csa's and wholesale to restaurants. >> is there any difference in terms of how vegetables are grown in an urban place, versus somewhere else, a large farm where you have a lot of land? >> we have a lot of similarities. organic farming approach. we have grown a fertile compost

that has delicious fresh vegetables. we have certain challenges to deal. the were at times, and some unique complications with farming on a roof but in general it is similar to organic farming. >> is that right? fascinating. what more is going on in terms of projects, paul. you have projects in several states. is there demand? >> there is. local food is the strongest dmmd restaurants and supermarkets right now. the large suppliers of produce that currently supply supermarkets are great at supermarket but not great at local. we are meepting supermarkets needs to decentralized local farms that we are building in pennsylvania, oklahoma, st. louis and other markets, as well. >> how do you determine what is a viable space? a similar question for ben, the difference in terms of urban farming versus where you have a lot of sfwland we are looking

for tland is not economically outized we don't want to compete for the cost of the space and for waste heat. green houses need energy to heat them. if we can pull heat from a bakery or data center it reduces our consumption of fuels. >> you were an engineer and consultant before getting in to this. what is the job skill set? what does it take and how do you translate being a farmer and running a small business, offering the community the education that you do? it's a lot of hats to wear, right? >> exactly. my background in qualitative analysis in engineering helps a lot. you would be surprised how much overlap there is with farming. analyzing the value, the yields and productivity of certain crops. and also as a small business owner, entrepreneur also in new york city inventing the wheel. we wear a lot of hats and

skillsets at the same time. >> ben, good to have you on the program. ben flanner joining us. up next we will look at the news that will have an impact on your money and find us on facebook. check out wsyrwithmaria. cell which can withstand over three and a half tons. small in size. big on safety. up. a short word that's a tall order.

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earnings are up from nike and blackberry maker research in motion. she schiller inbest of my recollection dex gives us a window in to home prices in 20 cities in the nation and the reading of consumer confidence will be out on wednesday. on tuesday new home sales from the last month and the gdp the broadest measure of the health of the economy and a typically a market mover. that's the show for today. thank you for being with me. my guest next week, sheila behr. keep it here where wall street meets main street. i will see you next weekend.