let's start with ken rogoff, christine romans is the host of "your bottom line." and chrystia freeland is an editor at thompson reuters digital. ken, tell us what this means. s&p said it may downgrade the u.s. and it did it. it took us from aaa to aa-plus. what does that mean? >> well, it's a huge thing. this hasn't happened in the history of the united states. we have defaulted maybe in 1933. but since they started having the rating agencies, this hasn't happened and it's pretty shocking. my concern is not so much the professional investors but what about the man on the street? are they going to panic about this? is there going to be a broader effect that we don't expect? >> what do you think about that? what do you think? it's hard to make that connection. it's hard to tell people who are watching us right now that your credit card rates are definitely going up or your mortgage rates are definitely going up. we're not entirely certain what's going to happen, are we? >> no, absolutely not. right now with what's happening with the stock market, aa-plus looks pretty

ken rogoff is a former chief economist for the international monetary fund. he's a co-author of a book about financial crises called "this time is different." he's a professor of economics at harvard. and terry belton works for jp morgan chase. we thank you all three for being with us. terry belton, i want to start with you since you're closest to the markets. what was behind today's massive sell-off? >> well, judy, the downgrade was a catalyst for it but it's a lot more... it's about a lot more than that. i think what the downgrade is highlighting to investors is that on the fiscal policy side, the u.s. is running out of bullets. what we really need is we need near-term monetary stimulus and longer-term fiscal austerity. i think what the markets, including now, is that near-term stimulus is not coming. we've run out of bullets on the monetary policy side for some time now. we've been at 0 interest rates. it now looks like we're there as well. on the fiscal policy side u.s. economic growth is very weak. it's not clear to the markets how it's going to be reviv

joining me is harvard professor and former imf economist ken rogoff. and ken, it's always wonderful to have you on the program. thank you for joining us. >> pleasure, maria. >> so is this a new crisis or the aftershocks from the last one? >> this is absolutely the aftershocks of the last one. you have slow, grinding, halting growth. that's normal. but especially what is going on in europe had sovereign debt crisis that happens almost invariably a few years after a deep financial crisis like we just experienced. >> isn't that interesting? the debt has moved from an individual and a corporate level to a sovereign government level. so how severe is what is going on in europe, then, in your view, ken? every day this week on wall street i kept hearing it's because of europe, europe is worse off than the u.s. how would you compare what is going on there and here? >> oh definitely europe is the risk in the global economy. maybe the u.s. will go into a slight technical recession unaided by europe. i think it won't. but maybe it will. europe, there is really no

my guest next week, harvard professor and author ken rogoff. join us for ken rogoff. have a great weekend, everybody. i'll see you next week.

ken rogoff is a professor at harvard university. you're watching a special live edition of "your money." thanks for joining us. >>> hello, and thanks for joining us. i'm joe johns in for fredricka whitfield. tim geithner will discuss the credit downgrade during a conference call tonight with representatives of other g-7 nations. in the meantime, the financial world is waiting to see how asian markets will react to the downgrade, announce affidavit the end of trading on friday. it's already monday in eastern asia and financial markets will open there in just a few hours. there is already evidence the downgrade is making some investors very nervous. middle eastern markets were open today, and prices fell 3.7% in dubai. the israeli market had to halt trading for a time and it closed down more than 6%. cnn's kevin flower is in jerusalem. >> what analysts here are telling us, this is not only a market reaction to the credit downgrading of the united states, but also a response to broader losses posted last week and on friday on global ma

. >> ken rogoff -- we can agree to disagree. we got this wrong from the beginning -- >> sorry? >> i said that in february of '09, didn't i? a bit early. we can go back to the tape. >> we certainly can. about 3 million people have. >> what ken rogoff thinks in order to get past this, we're going to need a round of significant inflation. what ken rogoff has argued, we keep saying what is congress going to do and the politicians going to do? in washington, in the media generally, we overlook the roll of the federal reserve. if he thinks and rin heart thinks we'll have to go through a period of recession and it's going to be painful and move money around in ways that are unfair, is that simply the only hope? >> well, money doesn't move around in ways that are unfair. people that have it, control it or invest it, it's theirs and they put it places they deem appropriate. any outsider looking at that process using adjectives like it's unfair -- >> the shift of wealth from one side to the other creditors and dealter --s. >> all of the a

. >> ken rogoff is a former chief economist for the imf, the world's leading expert on economic crises. we have got something going on in the world. is it recession? is it worse? >> i think it is pretty clear we have never escaped from the previous downturn. we're still living in the aftermath of it. it is slow and rocky. and there is some problems on the horizon in europe. i think the short-term probably is things are going to be moderate to slow growth. no question the risks have gone up, that it might turn negative again. >> peter, a cnn orc poll finds two-thirds of americans disapprove of how president obama is handling the economy. 34% approve. is there something that the president or congress for that matter, separately or together, can be doing to reassure americans either that the economy is on solid ground or that they are taking action? there have been all these calls while the markets have been gyrating for the government to do something about it. most people want the government out of their lives until things go wrong. what can the government do or say? >> we need to look a

ken rogoff is a harvard university professor. you're watching a special live edition of "your money." >>> happening now in afghanistan, what may be the deadliest day for coalition forces since the war started. a u.s. military official says more than two dozen american troops were killed in a helicopter crash in eastern afghanistan. most of them were navy s.e.a.l.s. afghan president hamid karzai said the number of u.s. dead is 31. he also says seven afghans were killed. the united states no longer has its perfect credit and that could cause problems all the way from wall street to main street. standard & poors has downgraded u.s. credit rating from aaa to aa plus. >> i think that there is plenty of blame to go around. this is a problem that has been a long time in the making. well over this administration, the prior administration. it is a matter of the medium and long term budget position of the united states that needs to be brought under control. not the immediate fiscal position. one that centers on entitlement and the reform

ken rogoff on your program among others has pointed out we're in something different. it's a great contraction, it's a deleveraging cycle, it's not clear traditional policy tools work as well as they used to. >> rose: i want to close with this which i remember the story of lyndon johnson talking to sam rayburn. jonathan, i know you've heard the story. lyndon johnson talking to sam rayburn and sam rayburn was saying... lyndon was saying he'd been to his first cabinet meeting and he met robert mcnara and he went to sam rayburn and said "the smartest one there is the guy with the comb in his hair. he's smart." and sam rayburn said "i just one time wish he had run for dogcatcher." so politics matter and the capacity to understand where america is and how you can influence america and move it. but that's also what we expect from our best presidents, the pacity to use leadership to bring the people to demand policy reversals and policy change. i'll leave it at that. thank you. >> i was going to say, charlie, that what i've learned from this aside from some really, really art

. >> susie: joining us now, kenneth rogoff, professor of economics at harvard university. hi, ken. nice to have you on the program tonight. >> hi, susie. thanks for having me. >> susie: so let's pick up with darren just left off and talk about the fed. i think it's kind of interesting that here we've got this group of policy-makers looking at the same day dark coming up with different on collusions on what it means and not being able to agree on what to do next. what's your take on what came out of the fed today? >> there's clearly a lot of disagreement at the fed, and ben bernanke has probably purred them as far as he can right now. i think he would like to be more proactive. he would like to cut off the risk of a deeper downturn, something worse happening, but those think we can't do that much. interest rates are almost at zero, and quantitative easing didn't seem to do that much, and we're nervous about inflation. there's a lot of disagreement within the board. so i don't think you can see anything quick happening, nothing big out of the fed. also with all the outside anger abou