here to help us sort it out is diane swonk who is from mesereau financial. and diane, consumers don't know what to expect out of this, so are we on the verge of another financial crisis to what we saw in '08. >> we are getting closer and closer than i would like to admit to being on the brink of another financial crisis and too high for the double-dip recession, but it is a unlikely scenario, but more closer today than before. and before we hit the debt ceiling being so messy, and then the downward rescission revisi and the italians buying the wrong bonds, and this is all reminiscent of 2008. we are not there yet, but we had the fed and the other regulatory agencies snub their nose and say, it does not matter about the capital ratios and you don't have to downgrade it and devalue it, and this is important because you don't want the banks to raise more capital and lend less than they are lending and that is extremely important to european banks who have sovereign debt and treasuries on the balance sheet that have been already marked down, so that the reality i

for more on what the fed said and how the markets reacted, we're joined by diane swonk, chief economist for mesirow financial, a chicago-based firm. and neil irwin, who covers the fed for the "washington post." it's great to have you both with us. thank you. diane, let's start with what the fed said today. they had a gloomy forecast for some time to come. they said they're going to keep interest rates low for some time. interpret. >> well, i think actually the statement was even more breakthrough than that. they also said that they would continue to monitor and review and make any actions and adjustments necessary to the size and composition of their balance sheet. that's fed-speak for the opening the door to additional quantitative... we had seen the big bond-buying purchases of treasury bonds that ended in june of 2011. so they're opening the door to that. they're going to clarify that over the next several weeks and months. my guess is the jackson hole wyoming meetings will be quite interesting again with lots of news coming from there. once traders get down to interpreting the full

. >> reporter: economist diane swonk was happily surprised by the stronger-than-expected jobs number. >> 117,000 jobs is nothing to pop champagne corks over. >> reporter: because of the nearly 14 million unemployed americans, more than six million have been out of work for more than half a year. >> the job market is a nightmare. >> reporter: lorraine chavez lost her job as a program director at chicago's depaul university two years ago. so you applied to macy's and to target for jobs. >> yes. >> reporter: and what did they say? >> nothing, i just didn't get hired. >> reporter: what about the house? chavez has managed to hold on to her house by taking part-time teaching and consulting jobs ask tapping into her savings. what you have done to survive? >> that's what i've done. >> reporter: you've depleted your savings. >> everything, it's all gone. >> reporter: chavez is one of the workers characterized as underemployed. >> underemployment is not survival. >> unemployment has held above 8% for more than 30 straight months. do you think we're at risk of another recession? >> the risk of a

diane swonk joins us. ane, let's talk about what has to happen to spur meaningful economic growth in the united states. can you create economic growth with policies, for instance? >> well, if there was any silver bullet to shoot on that front, it would have been shot already. we've stemmed the hemorrhaging the economy went through during the recession but we've been unable to get momentum going. that's very characteristic of a post-recovery. living it has been miserable. >> no kidding. this last week, we started to feel things we had felt three years ago. i don't think any of us needed to relive this. steven moore is the editorial writer for "the wall street journal." we saw the bush tax cuts extended in december of 2010. generally speaking, taxes remain low. but this recovery is not taking hold. why do some argue that lowering taxes, thereby reducing government revenue, would actually boost the economy? >> first of all, ali, the reason that tax revenues are so low right now -- you're right, we're only gett

it's all about sort of day two, parsing the fed and what the fed's statement, as you heard from diane swonkt least 2013. for those of us covering the markets for a long time, it's unheard of for the fed to give a clear assessment of how long it's going to do something, also saying it has an array of policy tools that it can use. we'll see how that plays out today. still, carol, volatile, volatile, volatile. any piece of news can move this fragile market one way or the other. so buckle up. >> we've been buckled for a few days now. it's no big thing for us. a big day for news corp. the company had its first board meeting in los angeles. according to bloomberg magazine, news corp.'s james murdoch is defending the accuracy of his testimony. >> a lot of news in the uk hacking scandal. we'll see whether news corp. says anything about it in the earnings. there was a board meeting yesterday. they may very well have discussed it there. we can be hearing about it in the earnings and earnings call today. james murdoch has a deadline this week to appear or at least respond to questions from parliament

prices coming down, there is some argument that the democratic economists are making and we heard diane swonk make this argument with andrea mitchell in the last hour that there is room for the federal reserve action and if they take it, it could provide a lift to the markets and the economy. >> but would that be a new bond buying program na we sa that we end of in june? >> yes, ben bernanke has been creative in the tenure as federal reserve chairman and you could buy more and hold the ones that you have longer and other steps to take as well requirements for bank could be adjusted in ways that put more money into the economy. it is all a different way of pumping money into the economy and their willingness to do that depends in large measure on the risk of inflation, because of course, the fed has a dual mandate, one, to keep the economy growing and secondly to prevent inflation which does not seem to be a problem. >> thank you, john harwood, and we will keep an eye on the fed statement. >>> and now the domino effects of the downgrade of the aaa credit rating on state and local government. s

and on last night's "piers morgan tonight" economist diane swonk explained why the fed's decision sparked a big rally. >> ben bernanke said we could do things with our balance sheet. we're still not done. we're not out of bullets yet. when all was said and done and financial markets digested this massive amount of news and unprecedented statement by the fed, they said you know what, maybe that means we won't have a double dip recession now. we might not stall out. we'll sputter along. the bad news is we'll sputter along. it's also the good news, we're not going to stall out. >> and here's how the markets closed yesterday as we mentioned. the dow was up 430 points or 4%. the nasdaq up 125 points and the s&p 500 was up 53 points. >>> whiplash, that's why you're not supposed to be messing with your portfolio. >> i didn't touch it. i took your advice. >> never know what's going to happen next. >>> the congressional super committee starting to take shape. senate majority leader harry reid appointing the first three democrats who will serve on it. by next week there should be 12 lawmakers appoi