captioned by the national captioning institute --www.ncicap.org-- >> hello, i am llewellyn king, host of "white house chronicle," which is coming right up. but first, a few thoughts of my own. i am lucky to have a wonderful friend in john adams. we have known each other for 45 years. now i am doubly lucky, because john has written of great book called, "in the trenches." there is on the screen now.

it is a book that tells the great stories of his life, some of which, i am happy to say, are the stories of my life, particularly, working on fleet street. when we were very young man, we went to work on fleet street. it was a place of unbelievable magic and excitement. fleet street is the street in london where all the newspapers were once concentrated. as young men, it was intoxicating. it was not the only thing that was intoxicating, i assure you. john has captured fleet street in this book. he has captured the wars. he is a little older than i am. he served as a conscript of national service in korea, was captured briefly by the chinese, worked in europe for radio free europe, came to america, got into broadcasting, a leader --

later started a publishing company. he is extraordinary and he writes beautifully. among journalists, he is especially different because he is self-effacing. he does not draw attention to his own skill or to what it wonderful friend he is. please, by his book. read it. it is uplifting. it is interesting. it is a thrill for me, and it also reminds you that you do not have to have a great education to go into journalism. both of us started in the trade at the age of 16. and there is no other trade we would have enjoyed so well. we will be right back with a great program for you.

>> and now, your program host, nationally syndicated columnist , llewellyn king, and co-host, linda gasparello. >> hello again, and thank you for coming along. i have a wonderful group of people here to analyze the news for you. linda gasparello, co-host of the program, and today, a guest we're happy to have with us,

laure mandeville, michael fauntroy of george mason university and from "nightly business report," laure mandeville -- darren gersh. what do you think of the consequences of the french election and austerity? >> it is interesting, because we're going to find out if francois hollande is a dangerous man. i think what we're actually going to find out is that he is pragmatic. he is pragmatic in the way he has to deal with the euro. there are obviously problems in france with employment. he is not going to want to sweep

the bond market. he is going to proceed in a very pragmatic way. >> he will have to break with what he promised before the election. >> i think some of the promises he made were just for show anyway. like rolling back the retirement age to 60. that is going to affect very few people. or the 75% tax rate. that is also going to affect very few people. >> anyway, what do you think of the election and what will be the consequence on austerity, and the imf programs in europe? >> there is a huge cloud of uncertainty now in france. i think that linda is right when

she says that france what hollande is a cautious man. he hit -- francois hollande is a cautious man. he is not a revolutionary. the french people are as pragmatic and cautious as he is. are the people who voted for him pragmatists? i am not sure. france is a country that has many difficulties dealing with the real world, if we can say that. austerity is not a word that is accepted, really. in a way, the election of hollande was caked with reform, which sarkozy tried to push through for five years. of course, he did not push so hard because of the crisis. but still, this was the name. i think the rejection of sarkozy is not only a personal rejection

of his personality, which is clear, but is also the sort of fear of change that we have in this country. >> darren, the economic consequences for this country and for europe. >> if europe gets worse, it is not good. >> the economy declines. >> uncertainty is a buzzword. people use it. i think a better word is fear. there is fear that people do not know what is going to happen. the greeks are struggling to form a government. i think he really hit it on the head. is europe confronting reality? austerity does not really exist. what is austerity? we want to make you poorer, that is the platform. maybe that is a fringe platform.

the journalism's strategy. where am i going with this? i think what is happening is austerity is a reaction to the reality, which is that spain has to borrow more money than it has. greece has to borrow more money than it has. italy has to borrow more money than it has. when you have to do that, you have to satisfy the people who have lent you the money. >> argentina defaulted. >> is the contagion effect. we do not know what greek bonds would be worth. we do not know if the greeks will pay them that -- pay them back. with german banks go under if all the greek bonds they held were suddenly no longer good? when you start tearing into the fabric of the financial system, you do not want to see how far the rip those. >> is it the case that europe needs a new paradigm to deal with the euro, this rather

inflexible currency? some third way, rather than, with one currency, how you adjust for that? >> imagine you are in an uncompetitive country and you are paid in euros. you are greece. how do you become competitive? normally, if you have the drop map, you adjust the currency and everybody says, let's go party in greece. you recover that way. now, the way to do it is to allow wages to fall. wage cuts, cuts in pensions, in

a recession in order to deal with the economic reality. >> michael, austerity. we basically have a division in this country where the democrats are saying we can work through this and the republicans are saying we can work through it if we have austerity. how do we address that? >> what is going on there is making its way toward the united states, particularly in this election year, where we see some already trying to tie this president, who they claim to be a socialist, with someone who won in france as a socialist. we see the political unwinding of what happened in france in this election year. that does speak to your point with regard to republicans and democrats. >> austerity is often cutting government programs, government

wages, government retirement. are we waiting for that in this country and how is it going to play? >> we say we are, but i do not believe we really are. the talk about cuts reminds me of a concern, and that is, who is going to be bearing the brunt of these cuts? it is one thing if there is some shared sacrifice and pain that is balanced across divisions within this country, but we already have significant problems with poverty, for example. homelessness is on the rise in some parts of the country. if we go too far with austerity, you could end up cutting off your nose to spite your face. right, but to call what is happening here austerity -- there is a vast gulf between what is going on here and in europe. unemployment increase is 50% -- in greece is 50%.

>> is cutting government programs they're particularly destructive? >> it has harmed the economy in the short run. the question is what happens in the medium to long run. our problem is the medium to long term. it is the aging population, the rising cost of medicare. if we had a rational government -- i know that is a huge f. -- if we had a rational government that could sit down and say, if we been the cost curve on medicare, make adjustments in social security, address in small ways our tax issue -- we're talking a couple percentage points of gdp. they're talking 5 in some of these countries. we're talking one or two. our problems are not anywhere near as dire as what the europeans are going through. >> i think that depends on where we are in this country. there are some parts of the country in which unemployment is above 35%. when you look a foreclosure

rates in this country in the number of people losing their houses, the numbers may not match what is going on in europe, but i do not think we are as far away as we seem to think. i think there are pockets of this country that are in significant danger, and use your work, contagion, it may not take as much to spread as you think. >> i think americans would support many of the programs that francois hollande is talking about in france. he is talking about things like 35% pay cuts for the president and for people who work in the cabinet. they are talking about a cap on gasoline for three months. americans would love that. he is talking about hiring 60,000 new teachers. americans love the idea of doing that. but i think -- when we talk about with austerity in the states is, is austerity deficit reduction? deficit reduction does not seem to be that important to people as much as jobs are.

in order to have job creation, i think you have to do the kind of spending that francois hollande is may be talking about. for instance, getting the european central bank to have project bonds that would stimulate infrastructure growth. that is the kind of thing that i think americans -- >> is still borrowing. >> of course it is borrowing. >> there is a common worry i think both in the u.s. and europe, and that is the problem of what kind of growth can we have? >> right. >> the growth that francois hollande is suggesting so far, and to a certain extent the obama administration as well, is growth by demand. putting money again into the economy on a short-term to try to boost the demand and get business going, but the problem is that structurally, both in

europe and in the u.s., there is this question, the haunting question of can we get some kind of structural reform which would bring about a new growth, new production, new jobs, new taxes? basically, we know that the jobs have gone somewhere else. in china, in asia, so there is this -- why has hollande been elected only by a short margin-i think many people doubt that he will be a magician. they just do not like sarkozy. this guy is coming in and saying, i'm going to calm down things. it is very like some kind of cream on all the wounds of the french, the problems. the problem is we're somehow out of recipes of how to get out of

this structural crisis in europe and in the u.s. >> the british magazine, "the economist," really an american magazine, but nominally british, as they said that if hollande was elected there would be a sudden capital flight the next day. that has not happened, has it? or is it happening? >> i do not think so because the markets are probably watching what is going to happen. there are lots of hints that indeed if hollande does not want to revolutionize, he is going to try to be cautious -- but the problem is that he is going to be caught up in the problems as well. he has on the one hand to appease the business community and to make sure that people do not just leave massively the country, capital flight, but at the same time, you have to forfeit some of the promises.

>> can i just interrupt a moment here for station identification? this is to remind our listeners, primarily on sirius xm radio, that you are listening to "white house chronicle," from washington d.c. with myself llewellyn king, my closest -- co-host linda gasparello, darren gersh, laure mandeville, and michael fauntroy. you were saying? [laughter] >> something about a cream that you put over the welland. -- wound. one thing i hear from people is that there is crisis exhaustion taking hold in europe.

they have been on prices watch for years. >> crisis fatigue. >> crisis fatigue. are you seeing that? they have almost put a structure in place with the firewall and what not. >> you mean if by some miracle the -- >> they are running out of gas, kind of. >> the question is, what happens to the road? r -- to the euro? >> and how do you break up the currency? there are many arguments that getting out of the euro for greece would allow them to reevaluate and attract exports, but how do you do it? do you announce that tomorrow you have to trade your your rose 4 drachma -- euros for drachma?

they would all be in germany tomorrow. in yugoslavia, there were all these problems with currencies disappearing and reappearing. getting the drachma out of the grave is easier to say than do, don't you think? >> there was some talk from the greek government -- >> when there was a greek government. >> well, they're trying to form one. there are some hopeful voices. we will see what happens with that. i do not know how you would do this because the greeks are not modeled on efficiency in terms of the way they run their government. you have to get every bank in the country on the same time on the same day, and say, by the way, a surprise. >> i remember how long it took to denominate things in grocery

stores in the euro. and how about inflation? >> i remember when the british went from pounds, shillings and pence to the decimal system. everything went up. it happened with the euro, particularly in italy. when you start breaking this thing apart, it is a lot harder than one would expect. i think the answer -- but i do not know how it is done, i am not an economist, is to find a way of getting more flexibility into the euro. i am sort of hoping that somebody will come up -- even if it is not a practical idea, at least with an idea of what to do to gain more flexibility. europe, which i always look to for some ideas, i have not heard the idea of how you deal with -- everybody knew this was going to be a problem with this currency, that it would be rigid, that it would be the gold standard writ

large. nobody had any fallback position, what happened when basically the mediterranean countries began to slide, which was sort of anticipated, actually. >> to a degree. the central problem in europe is that the money saving -- the money is there. it is in northern europe. and the northern europeans have to be convinced that there is a solution in the south that is politically viable, that they will not be asked forever and ever to subsidize greece and italy. >> but they are between a rock and a hard place. if they do not -- >> unfortunately, the solutions are long-term solutions that are very slow. things like angela merkel was talking about that would provide some structural reform are going to take a long time, like changing hiring policies and

firing policies. that is going to take a long time. >> michael, you have been very patient. how do you see these two different camps approaching the election, one saying the deficit is too large, that is the largest problem we have, the other saying that the actual payment on the debt is about 1.5%. we are borrowing very cheaply at the moment. as we go into this election, are we willing to convince americans, when we are seeing school teachers, firemen and policemen laid off, huge cuts in the states, that this is what we need across the board and in the federal government? krebs when people talk about getting our fiscal house in order, many of the same voters

will understand that many of the cuts being proposed are more than they can take. hopefully we will continue to list in a positive direction. hopefully there will be an internet boom or some other sector of the economy that can drag the country -- >> the whole energy situation has been changed by the discovery or the technology that enables gas, natural gas -- that has changed a lot. that is a huge subsidy to the economy or a huge sound good for the economy. >> let me pick up on that for a second. it was reported over the last week or so that at the top five energy companies in the united states, there was a net profit in excess of $300 billion. and yet the government is still providing subsidies to that sector of the economy.

one of the ways that the leaders could find some savings, if they really wanted to do it, would be to look at the subsidies of certain industries that are doing quite well and do not need this anymore. >> the better thing to do would be to get all subsidies out, and tax breaks are subsidies, which we never recognized. the way we subsidize municipal- bond, for example. it is an idea of mine. >> it is an idea, i am not sure it is your idea. it can be your idea if you wish. it really guides the policy of tackling the deficit. mitt romney has proposed massive tax cuts that would make it near impossible to balance the budget. that tells me that they're much more interested in ginning up

the economy in satisfying their base than bringing the hard news. >> what about the people in the house of representatives? >> they are calling for massive tax cuts too. that is what it is aimed at. >> somehow they're going to get such a huge amount of new economic activity that the budget will balance on less revenue. it is a dubious proposition. >> i have a low point. within the same week, michelle bachmann, congresswoman from minnesota, became a swiss citizen and decided she did not want to be a swiss citizen. there is probably yodeling relief in switzerland right now. >> when i look at the reelection

of vladimir putin in moscow on tuesday, that is a low point. on the day before he was inaugurated, there was a brutal repression of demonstrations in moscow which show that he is not ready for any kind of compromise. at the same time, it is a high point because it shows that russians are ready for fight. >> domestic politics, just this past week. indiana senator dick lugar lost the republican primary. his politics are not near mine, but he is someone who has been serious and well regarded. >> a friend of mine, i might say, and the kind of republican used to think republicans before the new republicans. >> low point, jpmorgan loses

billions of dollars on a trade that the ceo call stupid and poorly controlled. high point, when said what he should have done -- when asked what he should have done differently, he said he should have read the newspapers that warned of this days ago. [laughter] >> those are our high-low points. we thank our sponsors for making this program possible. we will see you next week.