mark tuesday. then it moved sideways wednesday and thursday. on friday, the markets were flat. oil prices meanwhile tumbled during the week, falling to a five-week low on monday and dropping even further to below $60 a barrel on concerns about the weakness in the economy and a slowing demand picture. there's a new battle of tech titans. google is taking on microsoft on its own turf. google says it will introduce a new operating system that runs computers in direct competition with microsoft's windows. the software will initially target lower-end portable pcs and will be available in the second half of next year. there's been a lot of discussion this week about the prospects of a second stimulus package. and the current stimulus package, is it working? do we need another one? or should we just give the current stimulus package more time to work out? here to talk more about that is paul macaulay. thank you for joining me on the program. >> good to be here. >> let me ask you about the

prospects of the broad economy and where we are right here. this week we began the second quarter earnings reporting season. it looks like alcoa came in better than people were expecting. what is your sense of second quarter earnings and how corporate america is doing right now? >> i think second qrter earnings versus second quarter of last year will be down very meaningfully. however, earnings expectations actually have been revised up on the consensus in recent weeks. somewhat of a mixed bag. clearly earnings are suffering because the economy versus the second quarter of last year is down. i think the market will stort focusing on forward-looking earnings as opposed to getting obsessed about second quarter earnings. for any individual company, obviously, that will be different. >> are you expecting to see a recovery in the third or fourth quarter of this year, or are you betting on 2010 for the broad economy recovery? >> i think we'll have a recovery here in the second half of the

year, as we shift from the dark side to the sunny side of the inventory cycle. i call it addition by elimination of subtraction. but i don't think we'll have a recovery in the main until we smooth out the unemployment rate and it starts coming back down. that's 2010, we hope. >> how about the stimulus package thing? here we arelooking at 6.9%, guessing a lot of people are saving whatever stimulus they may have gotten. they're not necessarily out spending it or. maybe the money hasn't gone to work fully yet. do we need a second stimulus package? bottom line. >> i think we need a second package. to the first question about the effectiveness of the first one, i think it's been effective but it hasn't generated the types of exuberance that people were hoping for. it was never designed to do that. the downside as far as obama saved the same jobs, as much as to create jobs. obviously we've lost a lot of jobs in the first half of the

year. but without the stimulus package, i think we would have lost even more. so i think a lot of people are being too harsh on the stimulus package. that said, i think we need another one, particularly directed towards helping out people who are long-term unemployed by extending unemployment benefits. also revenue transfers to the states, while really cutting back on their expenditures. i think that's the big area we could have a second stimulus package is do something for the states. >> meanwhile we've got a suddenly high budget deficit. a lot of people worry we've seen so much spending and you can't really p a dent into the deficit by raising taxes. the numbers don't add up. are you concerned about the debt and the deficit in this country and what that may mean to both the dollar and the treasury? >> in the short run, i'm not. the world's in a recession. the united states will do fine, i think, on a relative basis. so i'm not worried about the size of the deficit right now.

in fact, i think it should be actually a little bit bigger as far as the second stimulus package. and the bigger issue is long-term how it projects five to ten years, which is really away from the business cycle. we often make tough choices as a country how we want to treat entitlement spending. i think we need to move in the directioof having more means entitlement spending. that's where the debt is longer term. right now, i think the deficit is big and should be big and should be bigger. >> how are you investing today? >> fine. we've been very public about what we've been doing over the last year. we've been overand at mortgage-backed securities have been leaner. that's a good trade for us. we've been overweight. the senior financials are a bit safe for us. essentially we have been concentrating our investments into sectors that are being

supported directly or indirectly by a governmental safety net. meanwhile, we have been a little bit long in duration and a little bit long in the curve. we're going to be fine. >> you're not worried about real estate at this point? i mean, a lot of people worry about commercial real estate. this week we saw a record in credit card delinquencies. many think that the commercial side of things would be the next shoe to drop. does that concern you? >> it absolutely does. in fact, i think the commercial-backed securities market is the biggest concern on the horizon. i think the fed will do some very good in that area in trying to support this process. but the bottom line in commercial is commercial property prices market to market have come down to t point where a great deal of negative equity exists in that sector and it's very difficult to refinance negative equity. so to me, that's one of the

biggest black holes that we have to worry bout, a black swan risk in the year ahead. >> paul, thanks so much for spending the time. >> my pleasure, thank you, maria. >> we'll see you soon, paul macaulay joining . up next on "the wall street journal report," health care spending is one-sixth of the american economy. is now the time to overhaul and it how much will it cost? nobel laureate paul krugman weighs in. guitar hero and other hot american brands with one tng in common. their founders became the richest men in town. what can we learn from their journeys? as we take a break, look at the stock market at the end of the the week.

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a week when president obama

has made several historic visits abroad, take is turning to two ofis front-burner issues on the domestic front, health care reform and the stability of the broader economy. here to talk about that is paul krugman, nobel prize winning economist and columnist for the "new york times" and joins us right now. i saw your op-ed on friday, talking the stimulus package and whether or not we do need a second stimulus. tell me how you all come out on this. >> i'm very much for a second stimulus. i thought it was always too small. the economic outlook has darkened a lot. not because the stimulus has failed, because most of it hasn't even arrived yet, but because things happen, stuff happens. and what looks even in january like a too small package really is too small now. we're looking at -- a survey is forecasting the unemployment at the end of 2010 will be as high as it is now. that's a pretty bleak outlook.

we need more oomph behind the policy. >> what will be the measure of success of the stimulus package? is it not true that a lot of the money that taxpayers did receive was actually saved? savings, 6en 9%, which is a good thing. but they're not going out and spending. >> this is why as i said it has to be more focused on government spending as far as you can. now a large check arrives, you don't necessarily spend all of it at once. but sure, the big stuff is helping states avoid budget cuts and then spending on the infrastructure projects that we need. >> both the house and senate right now are looking at health care legislation. we're hoping to see a vote wind the next couple of weeks. the budget office testified to two senate committees. one over $1 trillion, the other $600 billion. can we afford health care legislation?

>> sure. those are not big numbers. keep in mind the federal government projects nationally we'll spend $33 trillion on health care over the next 10 years. we're talking about something that would add maybe 3% to our total health care spending over that period. not counting savings that would probably come along with legislation. reform of medicare. comparative effectiveness. it's probably not actually from a national point of view going to cost anying at all. these are small numbers. we do have to pay for it. par foye it with a combination of medicare savings. probably some kind of tax someplace along the line. this is well within the range of what we can do. >> would the option to purchase public or private insurance plans encourage competition or some people say it would actually dilute isn't it. >> no, it would encourage competition. member, most states have very little competition among health insurers. a lot of the states -- i look at iowa, grassley -- 51% of that market is one insurer. very little competition out there.

give people a plan that competes and it's going to actually increase insurance. this is not a competitive free market. this is a collection we have out there. >> some have come up with the idea of taxing employer-provided health benefits. something that would have a huge impact on middle class americans. how do you feel about that? >> you don't want to tax the whole thing, no way. there's actually -- right now we have a system where that employer -- it's actually the only thing that holds most participants together. but some tax on a very high number, probably one way or another we're going to see it shift towards a system where this is more of a benefit for everybody rather than something we're accepting some people get plans, some people get nothing. that's okay. i don't object to the principles. >> we know health care expenses is really a big issue in terms

of the costs for business, for consumers. in this economy as you just said, we're watching this economy stall. what is going to get this economy moving again? you say we need another stimulus. >> right. >> at some point. >> i think we -- we should be moving on this now. bu i mean, the one thing you know we need to do is we need to provide enough support so we don't fall into a because people are still deleveraging. >> people are still deleveraging, increasing their savings rates. wages. we've seen increase 4% a year. most recently wages are growing at about .7% a year. that's pretty close to serious deflatio once you start that it's hard to get out. >> what happened in l'aquila, in your view in the group of eight met this week in italy.

the eight largest industrialized economies. will we see something come out of that? >> well -- look. >> they've met in london, they've met -- >> i thought talking was infinitely more productive. >> i agree. just tell me. the g-8, first, what do you think? >> it's not much. >> going forward, can the rest of the world help the united states or is everyone loong inward at this point? >> you know, we really ought to be having a coordinated stimulus. but we're having enough trouble even getting a unilateral stimulus package. no, i don't -- >> is there any growth in the economy? >> oh, sure. look, industrial production is probably going to turn positive quite soon if it hasn't already. inventories are drawn down, there's going to be an inventory bounce. there's some signs. stuff is turning up. but none of it looks like enough to actually continue.

>> all right, good to have you on the program. we so appreciate it. see you soon. paul krugman joining us. coming up next on "the wall street journal report," what does your neighbor know about making money that maybe you don't? the inside secrets of self-made wealth. once again, a new era for the isolated culture of north korea is (announcer) it is the most advanced automobile

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thanks. for the difference. except for you -- you didn't book with orbitz, so you're not getting a check. well, i think we've all learned a valuable lesson today. good day, gentlemen. thanks a lot. thank you. introducing hotel price assurance, where if another orbitz customer books the same hotel for less, we send you a check for the difference, automatically. many of american's self-made millionaires aren't from wall street or hollywood but may be from your street. joining me is author of "the richest man in town: the 12 commandments of wealth." great to have you on the program. congratulations on the book. this is such a fascinating topic. so you traveled to 100 towns across the united states to talk to the wealthiest residents. all self-made fortunes. what did you learn?

>> i learned that the american dream is alive and well. i learned that success can take place in any town in this country. i think so often we view the world of wealth and success, wealth creation, through the lenses of hollywood or wall street. and we forget the country in between where great things are happening. and i love the fact that these richest men in town were not goal-setters. they were executers. so many times i heard them quote thomas jefferson saying, vision without execution is hallucination. and that fascinated me. because i always thought going into this that they would be the sort of five-year time horizon kind of strategic planners. >> so they didn't have a master plan or structure to it? they got it down step by step? >> step by step. every day they were determined to do better than the day before. like the japanese principle, constant, incremental improvement. many of them still in their 50s,

60s, 70s, 80s today are still doing it. amazing. >> i want to know wha they had in common. let me ask about the book's title. it refers to the richest man. are the richest women different from the richest men? >> not surprisingly. there were four women in the book of the 100 that i interviewed. so it doesn't prove that women have yet shattered the glass ceiling of wealth creation but it does prove that it is happening. and i think you'll continue to see it happen more. but i didn't think of that difference. they were the same entrepreneurs, action addicts, great execution. >> action addicts, interesting term. you said they were resilient before the commercial break. can you tell us about some of the other traits that they all have shared? >> one of the great commonalities is what's failure? failure is an option. i say in the books one of the commandments of the book is, fail to succeed. meaning that they had several

failures in their lives. but they kept bouncing back every time from the failure. it didn't seem to scare them. whether they were male or female, that was the common phrase, resilience. it's probably the thing i most admired about the richest man or woman in town. >> the publicly traded companies that are beating marke averages was interesting. how successful are the richest men and women on wall street? give us some standouts. >> we should all be investg with the richest man in town because the richest man in town index which i calculate is up about 28% year to date, versus what's happening with the nasdaq and s&p and dow jones industrial avage. so some standouts are green mountain coffee roasters, the richest man in burlington, vermont, bob filler, up 123% year to date. >> wow. >> activision. the makers of nintendo's guitar

hero. the brothers bala in albany, new york, the richest men in town. started vicarious vision which they sold to activision. >> these are all just really good ideas. >> ideas brilliantly computed. so many people said to me in the process of this, ideas ar dime a dozen is execution is everything. >> great conversation, so appreciate it. thank you for traveling all around the country for this. this is something that we all could learn something from. thank you. >> thank you. >> randall jones joining us. do you have what it takes to be the richest man or woman in town? go to our website for a link to the aptitude test. up next on "the wall street journal report," we'll take a look at the news this week that will have an impact on your money as well. television watchers in north korea are seeing something we've never seen beforehis week. a commercial interruption.

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check out the website. wsjr.cnbc.com. find a link to my new blog, maria bartiromo's investor agenda. i hope you will check it out. the stories coming up in the week ahead that may move the markets and impact your money this week. a lot of enings coming up. five dow components. bank of america, johnson and johnson, jpmorgan chase, intel and general electric make up the list. ge, parent of the company that produces this program. tuesday, we get a look at consumer behavior when retail sales for the month of june will be released.

we'll get the index that would show inflation at the wholesale level. wednesday the follow-up, the consumer price index which tracks inflation at the retail level. the federal reserve's open market committee releases the minutes of its most recent meeting. a busy week ahead certainly and possible impact on your money. finally, how's this for strange news. north korean state levision report lid aired its first commercial this week -- for beer. the communist nation is usually wary of capitalist influences. a brewery broadcast a 2 1/2 minute pitch after a news program. the beer promises to help ease stress and improve health. that's the program for today. thanks so much for being with us. next week, join us. guest former dnc chairman howard dean on health care reform. keep it right here where wall street meets main street. have a great week, everybody. i'll see you again next weekend.

♪ >> tim: today's guest is the greatest third baseman ever to play in the major leagues. and in his 18th season with the philadelphia phillies he was a the-time most valuable player, eight-time home run champion, a 12-time all star, a ten-time gold glove winner and the list goes on and on and on. his book is clearing the bases, now, stay with me on this one. clearing the bases, and a hall

of famer's search for the soul of baseball. i welcome mike schmidt. >> thank you, timmy. i had problem with those words, sham. >> tim: i have not read the book, but i understand it's very clear. some great lines about george brett, joe morgan, pete rose, all touting the book saying it's a must-read which is more than just blurbs on the book. i'm anxious to read it. >> especially pete, you know? for pete to read a book is tough. >> tim: i was going to wait until the third or fourth segment to talk about pete rose, but what about pete? i mean, pete was -- is one of your best friends that ever played the game. >> surely. >> tim: when he came to the phillies in 1979 i think he filled the role that dick allen did earlier in telling you how good you were and reassuring you on a daily basis that michael, you're the best player in the

game. and i'm serious about that. >> not just me, timmy. i think everybody on the ball club. you know, he treated that way. it's just the way pete was, as you remember. just a wonderful teammate. he made the game fun for me and everybody else on the ball club. i think just something about him. i played against him for so many years and you did that. you couldn't stand him when he was on the other team, right? intimidating player and knew how to play the game. pete right now, it's unfortunate, and us talking about it with somebody the other day and he used the term purgatory. i kind of have him in the state, a lot of commissioner's offices have failed to make any kind of a call on pete rose. the book -- >> tim: you think that's the unjustice -- the commissioner's office failing to make the call, even telling him look, pete, you have no chance of g