from washington, the the mclaughlin group. the american original. for over three decade >> issue one. bleak bernanke. >> we are looking very carefully at the economy. trying to judge whether or not the loss of momentum we have seen recently is enduring. and whether or not the economy is likely to continue to make progress. >> federal reserve chairman ben bernanke in the senate testimony this week sketched a gloomy outlook for the u.s. economy. the chairman offered no hint of further government money. here are the economic items. unemployment 8.2% last month and over 8% for the last 3 1/2

years. item, jobs growth slowed from 226,000 jobs per month, january through march, to 75,000 per month, april through june. item, the euro zone crisis which baron's weekly says should be resolved by this formula. one dollar should equal one euro. chairman bernanke chided congress for failure to act on fiscal policy. he warned that without help from congress, we would face a double dip recession with 1.25 million r jobs created next year. question, how grim is the economic news? and the economic forecast? pat buchanan? >> grim, john. and the american economy looks like it is headed into a stall. as does the european. and look what we've done to try to get it moving. over four years, and the fed has tripled the money supply, refinanced the banks, and zero interest rates, and we've got

the stimulus package, and, what, four straight trillion dollar deficits to pump it up, and it is still not moving. and it is not moving in europe. and john, it is hard to know what is going to get it going. and also, i think we're headed for the fiscal cliff in january. there just is no good news right out there. >> eleanor? >> well, it is a global phenomenon. it is not just barack obama and his policies. and i think this is something that all of the economies are facing. and i think bernanke's prognosis is very grim. i think the best that we can hope for over the next few months, it appears, that it just doesn't continue to get worse. if it just kind of holds its own. and that is not very cheerly news. and i thought bernanke's message to the congress was really please do your job. the fiscal cliff is a man made phenomenon. they don't have to go over the fiscal cliff. they can raise the debt ceiling. his message was, do your job. and i don't know whether that is going to get through. you would think saner heads would prevail. we will have an election.

somebody will win. there will be a lame duck session. and that will be an opportunity to confront some of these issues. but it is not good news for the american people in the months going forward. >> rich? >> i think all of that is absolutely right. you said unemployment is going to be 7% or above by the end of 2014. it is just an astonishing number and it was basically a cry to help to congress. he basically said we've done all that we, can and there might be a little more tricks in his bag, but congress should avoid the fiscal cliff. if we don't, there will be a recession. and about a million fewer jobs would be projected. which is fine with me. congress should get together right now and extend all of the bush tax cuts for another year. and doing the patty murray plan, letting them all expire would be fiscal insanity. >> mort? >> the economy is very weak. all of the major numbers in the economy have really rolled over. they really tilted. and the economy now is much weaker than anybody expected.

given the fact that we had $5 trillion in total fiscal stimulus. the lowest monetary rates we've ever had. the most fiscally stim tive monetary policy and something is not working. something fundamental is wrong in the economy, frankly. a lot of it is we had too much debt. and there is still deleveraging going on. particularly for the american families. they have lost 40% of their equity in their homes. and which is a huge number. and we've never seen that kind of a number. except for the great depression. and the policies that we have followed are simply not properly structured in my judgment to do whatever we could. nevertheless, we are where we are. we have to do something. because we face the problem of a long, long period of a very, very weak economy. it is much weaker than most people think. >> chairman bernanke says there is no more money the government is going to give out. no more stimuli. >> well, he is saying -- what he is saying is the feds are not going to do anything more. but there is very little that they can do. at this point, they've got the lowest interest rates we've ever had.

and not just short term but long term. interest rates are phenomenal. but it is not stimulating the economy. >> is there something wrong in the way he gave the money out, or the amount that he gave out? >> no, i don't think anybody faults the fed with the monetary policy. >> the stimuli. >> the real question is, could we do things at the level of the federal government? i will give you a few of them. we should have put a lot more money into infrastructure which is a a real asset that will help the economy. we should have put a lot more money, into two things -- >> what do you mean by infrastructure? >> you mean highways and sewers and so forth? >> right, bridges. why didn't he do that? >> i don't know. >> we could go to that, but there is political paralysis. there is a jobs act up on the hill that they're not passing. there is an infrastructure that they're not passing. political gridlock. and both sides are looking for advantage. and rich is saying just go ahead and extend all of the bush tax cuts. that's not going to happen,

rich. and what the republicans can't stand is patty murray has actually come up with a clever idea. the bush tax cuts expire at the end of the year. and you are scheduled to do that. and you free the republicans of their -- excuse me, and you come back, in january, and you -- >> let rich in. >> and the clouds part and the sun comes out. >> we got it. after all of the wailing and shouting, the fight over the debt limit, how republicans are supposedly holding the economy hostage, here you have liberals and democrats turning right around and saying what we need to do is hold the economy hostage to a tactic that ben bernanke said would throw us into a recession and that's where you're at. >> the libor system is structurally flawed. i would like to see additional reforms to the libor process. assuming that libor will continue to be a bench mark for

financial contracts. >> libor. an acronym. it stands for london inter-bank offered rates. libor. the libor rate is calculated daily. that rate becomes the standard interest rate. the london inter-bank offered rate. libor. libor adopted by banks worldwide. the u.s. house of representatives financial services committee is now investigating whether banks distorted libor's key rate. the committee is noting that three barclays top executives have already resigned for manipulating the rate. barclays was fined, get this, $450 million, and has agreed to pay to settle the rate manipulation accusation. successful manipulation of libor would reach down into

student loans, mortgages, financial derivatives, all of which rely on libor and operative rate. why is the head of the fed refusing to sign off for what i pronounce as libor, the rest of the world i guess pronounces libor. i'm not moving. i'm not budging. and i would like the rest of the world prove that it is libor. but to get on to this, what about there libor? what about it? this is a place where the banks are supposed to go so they're not -- so they're not at odds against each other on interest rates which can be used to believe it or not rupt each other. >> i don't know anything about libor. but i will talk about libor. you have a real issue. >> please do. >> the banks get together and they agree on what is the rate on the basis of which every other bit of financing is priced. for example my company did a bond issue recently and it was based on say 125 basis points or 1 1/4% above libor for that

period of time and they measure it for 30 days, 60, 9 days, two monthses, a year, three years. and everything gets priced off of that. and the real issue we find out they have been manipulating this for several reasons. one of them is they're actually hedging and in fact gambling on where interest rates are going to be so they want the interest rates to go up and they frankly play around with what the libor is and if they want it to go down, they play around with it a different way. it is a huge scandle. >> are banks playing with each other? >> yes, the banks were playing with each other. i don't know how many banks were involved. you about barclays was one. it wasn't the only one. the question is who was involved with it and who knew about it. >> bernanke is taking the position for the united states with regard to libor. you say libor. with regard to this institution. okay? he says we're not going to sign on. we're not going to be bound by it. because of what? >> because he doesn't want to have the interest rates -- the whole interest rate of the united states fixed by a group of people in london who fix these rates and fix them for

their own personal purposes. >> well, how can he integrate us into the institution of libor/libor, how can he do that, if he wants to, you know, take this hallowed course, this sacred course? >> the market will determine what interest rates are, okay? you have been using that as a reference point. there is just going to be another reference point which is probably going to be where the market is in the united states, where it is actually trading. >> eleanor? >> i don't consider v-a company that has done a recent bond offering so i don't have first- hand knowledge of it. >> i don't have a company that has done a recent bond offering so i don't have firsthand knowledge. it is complicated to understand you about it is actually quite easy. the traders colluded with the bankers and adjusted the interest rates so the traders would make more money, and the bankers would make more money. and the people who lost were the people who had the pension funds. and the investments in there. the regular consumer who didn't have their own fixer. and so it is pretty easy. and they even put the evidence in e-mails and they traded bottles of champagne.

it is pretty shocking. >> i think your point is extremely well taken. but i'm intrigued by the fact that he is holding out and he does not want to get involved in this institution. in any integral way. i'm talking about the head of the fed. >> look, this is the london bank, the london banks, quite frankly, people got the benefit of it because the london banks were reporting lower interest rates for their borrowings to make themselves look good, and that lowered the libor so that helped consumers and it helped mortgage lenders. but larger issue. this is a horrendous scandal of the bankers in london. they're all people looking at people as crooks. and liars. some of the most distinguished men in finance. and you look across europe to southern europe, john, and eastern europe, and democratic capitalism is now under fire. you look at these parties of the right, and of the left, that are rising up, saying throw the whole darn system out, they're all crooks, and they're all liars. and this is what is coming to. if more is predicted, if you do two, or three more years and

you will find some real right wing and hard left wing governments -- >> how do you think joe six- pack -- evaluate his banker in the united states and his bank. don't you think they approach a banker, especially if it was a principal of the bank, dealing with him or her, with a measure of respect and belief? >> perhaps in their community. but this is more evidence that goes to the perception that the entire system is rigged. in this case, it was rigged. let's not forget, mort was asking who knew about it. the regulators knew about it. tim geitner knew about it. and it is somewhat shocking that geitner just wrote a polite memo saying i would like to call your attention to the fact -- >> sent it to -- >> the governor bank of england. because this is actually a price that is fixed in england, in london and there are about 18 banks that participate in this. and the rate that they loan to each other. >> in view of the world

publicity on this, do you think that they have straightened out their act over there? >> no. >> it is going to be like an altar boy picture? >> no. >> i'm not going to comment on altar boy picnics either because that is not my strength. but i will say this. there is definitely going to be a level of supervision, to which these rates are determined, period, by the government, not just by the bankers. >> let her in. >> geitner's reputation is going to get nicked in this, too, because he did know something. and so did bernanke. they're already asking what did bernanke know and when did he know that. in fairness, when he became aware, it was in the middle of the big meltdown in '08 and early '09. and it was basically like being told there is a bomb going off on the edge of the city, while he had 400 missiles raining down on him. he couldn't dole deal with it. so he -- he couldn't deal with it. so he just overlooked it. but he -- he has feet of clay, bernanke does. >> absolutely untrue. >> you mean he currently has

feet of clay? >> yes. >> that is totally untrue. >> he is answerable to the congress. he is answerable to the american people. he is answerable immediately to the president. >> what he did -- what he did -- what he did -- >> wait a minute, wait a minute. >> the phrase banker's trust has become an oxymoron. an inherent contradiction. people, you're right, about the local bank, fine. people look at these people running the show in washington, running it as libor, running their government, they're all failing them, john. all. >> is there something about bernanke though that is totally innocent, almost egrarian about him. >> i agree. i agree. >> he is the perfect man for the job. because he is not that way. >> john, john -- >> an honest guy but a boring guy. >> he was a brilliant central banker, if i may so-so. he saved the banking system. he did things no other banker has done to save our banking system. >> was he reappointed by this

president? >> yes. >> he was basically -- >> a nine-year term over there. >> basically alan greenspan's understudy and he has the same applause and strength that greenspan has. and basically they're an arm of the big bank. >> do you think that a bernanke is under the lens as closely as we are trying to indicate, i think, or suggest by the flow of this conversation? >> you know, is he not being examined this closely by the american people and the editorial price? >> no, no. >> he is under a lot of scrutiny. >> does obama escape there kind of scrutiny? if he has a role to play? >> no. >> we are the dominant nation in the role in economics and in military strength. >> bernanke, i think, is, as of now, looks cleaner than anybody around. >> that's right. >> and obama is under horrendous fire because it is a campaign. >> he seems to be moving along. >> he seems to be moving away from him. he has the magic nontouch. when we come back, romney woos

the buckeye state, ohio.

issue two. buckeye bruiser. in the last six months, he has held 100 fundraisers. and guess how many meetings he has had with his jobs council? none. zero. zero in the last six months. so it makes it very clear where his priorities are. his priority is not creating

jobs for you. his priority is trying to keep his own job. >> mitt romney lashed out at president obama this week, in the crucial state of ohio. also known as the buckeye state. ohio is unpredictable. meaning ohio swings both ways in elections. ohio is populist. it has 18 electoral votes. ohio is a bellwether. meaning ohioans have voted for the winning candidate in every presidential election since 1964. that is 12 presidential elections. on wednesday, before a ginned up crowd in bowling green, ohio, romney also attacked this obama statement, quote, if you've got a business, you didn't build that, someone else made that happen, unquote. the president was referring to costs of infrastructure and the role played by government in business infrastructure development. but romney said the president

intended something else. namely, to attack entrepreneurs. >> he divides us. he tries to divide america. tear america apart. he tries to diminish those who have been successful in one walk of life or another. it is simply wrong. >> the rom mi camp also has a new ad that attacks what mr. romney calls the president's quote-unquote crony capitalism. >> where did all of the obama stimulus money go? friends, donors, campaign supporters, special interest groups. >> question, how successful are romney's lines of attack? eleanor clift? >> i think the crony capitalism is weak. the republicans really tried to get it going and it doesn't get them any votes. >> what is half billion dollars >> horrors, horrors. i think it is more -- >> it is only taxpayers money. >> 500 million here.

500million there. >> it is a good line of attack and i don't think it is. >> what is solyndra for those who have -- >> it is a solar panel company that was made with government money and the solar panel company failed. >> that's right. >> and mitt romney would make that argument as well. >> much more effective is his attack on the president's comments that if you don't buil whole thing, you build it with the support of roads and the creation of the internet, by the government, and all of that. and you are already giggling away. but romney has taken it -- the comment astoundingly out of context but it is -- excuse me. but it is an effective line of attack. because most people are totally unaware of the benefits they get from government. >> it is not out of context. what he said and what he meant to say -- >> i'm glad i've got you all worked out. >> hold on, eleanor.

let me get a word in here. he said if you're a successful entrepreneur, it is not so much your individual initiative, it is part of it, but it is like the roads and bridges. it is like john might be a real successful tv host but who is responsible for the success is the guy who built the chair. and that's ridiculous. it is not what made steve jobs. >> what makes it special is the heart of the campaign, obama identifies himself as a creature of government. and government is the creative force. the great force. and the in dispensable force. >> he is not defining himself as that. >> it is not entrepreneurs. >> he doesn't define him as that. >> small business guys know who created their small businesses. >> i want to get this in. hold on. in the 45 seconds that remain for this particular part of the show. this is a new york times poll which was conducted on tuesday of this week. it says who do you think would do a better -- who would do a better job on economy and unemployment? obama gets a 41.

and romney gets a 49. for doing a better job on the economy. >> now, one little ray of light in that poll -- >> no, i have looked at the poll. >> there are four. there are four. he also scores higher on taxes. handling taxes. the federal budget and the deficit. and national security, he also scores higher. on who would do a better job. believe it or not. >> well, the dominant issue in this campaign is going to be the economy. and on that issue, i see polls that show romney in the high 50s, compared to the president. okay? this is going to be the dom atlanta issue. we're going to see -- the dominant issue. we're going to see how it evolves. >> what is the dominant issue? >> the economy. >> the economy. >> the economy and jobs. >> he had four years to straight continue out and he focuses on health care which has increasingly become arguable. >> if the economy goes south, if the economy goes south, obama is gone. >> quickly, quickly. >> the more important thing is

not whether romney's attacks are working but that obama's attacks are not working because the economic conditions are overwhelming. >> we will be right back with

>> predictions, pat? >> assad of syria will be gone by labor day, john. and by new years eve i think the muslim brotherhood will be the dominant force in syria. >> eleanor? >> it looks like romney will tough it out and not release any more tax returns but the

pressure on him will not relent and flet work interviews, debates, it will be a prominent issue. >> rich? >> mitt romney undertakes a major offensive on the economy. including a lot of substance right after the olympics. >> mort? >> he will have a lot to work with because this economy is going to get weaker for the next two quarters at the very least and we are not out of the difficult times that we have been in. >> i predict that the fast food phenomenon, still popular in the u.s., will give way to a new powerful and enduring demand for natural food. fresh from the farm. and from the ocean. bye-bye. [ male announcer ] where did all the obama stimulus money go?

friends, donors, campaign supporters, special interest groups where did the obama stimulus money go? solyndra: 500 million taxpayer dollars. bankrupt. so where did the obama stimulus money go? windmills from china. electric cars from finland 79% of the 2.1 billion in stimulus grants awarded through it went to overseas companies. [ romney ] i'm mitt romney and i approve this message.