we'll talk to nobel prize winning columnist and economist paul krugman. how he thinks we should fix america's health care system and whether we need another stimulus package now. plus the inside secrets of america's millionaires. their road to wealth and how it can help you navigate your own financials. meet the richest men in town. "the wall street journal report" begins right now. >> this is america's number one financial news program. "the wall street journal report." now, maria bartiromo. >> making news as they head into a new week on wall street. after just 40 days, general motors has emerged from bankruptcy. the dramatically slimmed down corporation will shed four brands, tens of thousands of employees, and more than $100 million in debt. the speed at which this bankruptcy occurred is regarded as a major achievement for the obama administration which committed $50 billion to gm as part of its bailout of the u.s. auto industry. one of the most glossally watched and important earnings seasons in years kicked off. alcoa, dow component, was the first co

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. hi, may i help you? yeah, i'm looking for car insurance that isn't going to break the bank. you're in the right place. only progressive gives you the option to name your price. here. a price gun? mm-hmm. so, i tell you what i want to pay. and we build a policy to fit your budget. that's cool. uh... [ gun beeps ] [ laughs ] i feel so empowered. power to the people! ha ha! yeah! the option to name your price -- new and only from progressive. call or click today. >>> 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 frid

that's what pessimista paul krugman wrote today. i can't believe he said that.and after this huge rally, do we buy or sell? here now is josh siegel. we have former labor secretary robert reich, he's not only the author of "super capitalism," he was on the front page of "the new york times" this morning being quoted about backnks.s. and, of course, the great charlie gasparino, featured in a huge "financial times" story today, is still with us. josh, let me go to you. you heard charlie rip into citi. you want to defend citi after their performance? they lost money after selling the smith barney thing. they're being taken to the cleaners and on top of that with a zero interest rate, they couldn't even make money trading stocks and bonds? huh? >> i don't know if i buy that last part? >> the huh? >> the key is, at the core right now, they're still making money. net interest margin is still positive. it's still well north of 3.5%. but the fact is, we're not out of the credit crisis yet. we're going to have nonperforming assets and charge-offs to continue to increase.

paul krugman, who you had on your show, i arguing th. 's mnstream economics in terms of what yowould normally do. >> rose: spen money in a time of crisis. >> yes. and the queion will be whether more stimulus--hich by definiti makes the deficit evenbigger-- would be acceptable tmaintreet. i noticed the republicans are already saying you cld never do tt and a lot of others, david ooks, for example, argug that the first priority has to be to get our fiscal house in order and n to do that a so forth. whether the public would accept that and whether the financial markets wod accept that, i don't know the answer to that but it seems it's up in the air. >> ros a stimulus program, that's the only option they have to try to. >> that's the only option the adnistration has. w the biggest pler when it comes to stimulus is not the executive branch, it's t fed. >> rose: right. >> on monetary policy, which is a much me powerfulool. so, of course, one thing that washington as a whole could do-- st that the administratio wouldn't be ing it-- woulbe psue

paul krugman and donna brazile, welcome back. you see lyndon johnson signing medicare, president clinton giving his mea culpas on health care in 1995. which fate does obama have in his future right now? >> bill clinton's fate it seems to me. because of bill clinton's experience, which they sometimes ascribe, this bhout white house, because of the fact it took so long to get to it. the white house, obama white house has been saying speed is essential and they're right, for the reason that emerson said that when skating on thin ice speed is safety. >> the streejs istrategic decision they made to go for everything is the right decision? >> but not with cap and trade and new energy supplies, country has a sense of overload. the president has 60 senators, he has a 70-vote majority in the house of representatives and he blames republicans. that's not the problem. his difficulties from the mayo clinic to the congressional budget office which just yesterday said of the president's latest proposal, a panel, magic silver bullet to constrai

paul krugman gues that pnt about needing a new stimulus. n this program last week. wh happens if they do that? >> the question in the context our discussion here would be whether the financial markets... but even more so main street would accept en bigger deficits whi such a secon stimulus by definition would cause. because a second stimulus would mean comnation of mor spending and more tax cuts a erefore bigger deficits. >> rose: give me a short primer on deficits. >> well, firstf all, we've never seen deficits of this magnitude either in absote terms-- just the dollaramount ofhe dicit-- or in relative term the size of the deficit to our econy and the growing relationsh of the deb as it grows virtue of thes deficits. never seen theseefore in your lifetime omy lifetime. so for example the deficit for e year we're now in is going to be about a trillion nine. a trillion nine. >> rose:over 2009 the deficit will be $1.9 illion? >> that'right. and keep in mind, only a few years o, four orive years ago, the ente budget wasn't $1.9 tllion. it would he been,ay, five yearago

bush administration have put in their given his background given a good timing, go ahead iraq paul krugman says there haven't been enough money pumped into the economy and our other economists are starting to warn that the deficit has grown so much that it is getting very dangerous so how are you feeling? it sounds like you think enough has gone into the economy. >> yes i think the big issue for me is what will the federal reserve start doing one of the financial processes, the credit creation through the bank's start coming back to normal because basically what the fed did was that ben, the financial sector was a gross for months to. we came to a point where there would have been a lot of credit destruction quote for banks would have been obliged to call back loans from private people, companies and that would have been the turkish all over so what the fed did was a buy from the banks is outstanding credits, put them on their balance sheets to us to present that there would be recalled. of course, of the counterpart of that buying by the fed of the credit given by the banks is, of course,

going to play you a sound byte from george stephanopoulos, talking to paul krugman. >> paul, you're the laureate in economics. is the recession over? >> probably in a very limited sense. the numbers right now look a lot like november 2001, which is the date that retrospectively was considered to be the end of the 2001 recession. it looks like we're probably going to be seeing positive economic growth this current quarter. >> so, technically, the recession might, maybe be over. but the pain doesn't subside. >> reporter: that's right. i mean, the economy has stabilized. that's the good news. but you have to look at where it stabilized. and it stabilized in a pretty poor place. we're not falling off a cliff anymore. but the best guess still is that unemployment is going to continue to rise, as the recovery slowly takes hold. and it's going to be a slow recovery. unfortunately, the best guess is now a jobless recovery. >> no miracle cure here. betsy stark, thank you very much. we appreciate it. >>> one note from the world of sports. in cooperstown, baseball inducted its newest hall of famer

paul krugman, the nobel prize winner says you're bribing people to get into the market. is warren buffett right? >> i don't share those concerns, but we have to think about the relative alternatives. and the classic model that many people advocated would have resulted in a much greater subsidy of banks into wall street. the classic model is that the government itself goes to banks and says, we'll combine these assets from you at a price that the government picks up. and the risk in that context is the government takes much more risk, giving much greater subsidy to banks and the much greater cost to the taxpayer that is the strategy we considered and did not adopt. that carries the risk of a much greater subsidy to banks and investors, and we considered but rejected that basic strategy. >> your growth statistics for 2010 is 0.8%. the imf came out with the forecast which is 0.8%. >> i haven't looked at the imf forecast. >> economists, i think it would be fair to say, a lot of economists believe it is likely to be more than 3.2% f that happens, my question to you, is the de

. >> paul krugman says there hasn't been enough money pumped into the economy and now other economists are starting to warn that the deficit has grown so much that it's getting very dangerous. so how are you feeling? it sounds like you think enough has gone into the economy? >> yeah. i think the big issue for me is what will the federal reserve start doing when the financial process these, the credit creation through the banks start coming back to normal because basically what the fed did is a step in. the financial sector was frozen for months. we came to a point where there would have been a lot of credit destruction where banks would have been obliged to call back loans from private companies and that would have been fought for these all over so what the fed did was buy from the banks these outstanding credits, put them on their balance sheet just to prevent that there would be recalls. now of course the counterpart of that, the credit given by the banks is of course the reserves of the banks have been increasing american banks close to $1 trillion in reserves they are sitting in wh

. >>> we'll t tal to nobel priziz winner paul krugman. ho heththks we shouldld f fix health care syemem and whether we need aanew s smumulu ckage. >>>>> d ththe secret toamerica' millioionaeses. how it canhehelp you navigate your own finances. me t t richestt m in town. the "w"walststre journal report" begins right now. >>> this is america's noum r onfinancial news rorogr. thth"wall street jojourll report." now marariaarartimo. here's's a look athat'smamaki news as s we headntnto a new w on wall ststre.. afafr r ju 40 daysys,general motors ererge from nknkptcy. thee dramatically slilimm down cocorpatatn will shed four branan.. tens of thouousassofmployees anmore than $100 llllio in debt.. the speed at w whi this bankruptcy occccrered regarded as a majajor a aieievent for th obama administrarati w wch committed $50 billion togm a pa o o its bailout of the u.s. auautoindustry. one of the most osely watchehed and importantararngsseseass in yeaea kicked off tss past week. alcoa, t alumumin producer and dow compmpont t wa the fst to report sen

. >> heris aewyork times comnist paul krugman on friday -- what mr. obama needso do is level with the amecan ople. he needs to admit he may not have donenough for the fir try. whateeds to do wi economic pocy is what he is already do with re relations and foign policy - talk to america like adults. >> he y do mething like that. he did in thbeginning. he said in the beginng it will only ow down what will inevitay be a shrinking of the economy. but memories are short and peop had high expectatio for the stimulusplan and it didn't move fast enough. the idea of a second stimulus plant is simply a red heing. iis not going to happen. he willot ask for because he can't g it, it is a los. he got as much as a good the fit time. in additn, what they are goi to do ofhat they say theare focused is trying to get the infrastructure money out faster because rit now the mey that out there is savin jo, not creating new os. the infraructure jobs arehe ones tt could become new jobs. >> there is a lotf revisiism about what the administration had promid. it had said tha it

. >> here is the new york times, this paul krugman on friday -- what mr. obama needs to do is level with the people. he needs to admit -- he nds to do on economic policy what he has already done with race relations and foreign policy, talk to americans like adults. >> he may do that. he said in the beginning it is only going to slowdown what will inevitably be a shrinking of the economy. but, you know, memories are short and people had high expectations for the stimulus plan and it didn't move fast enough. the idea of a second stimulus plan is a red herring. it is not going to happen. he is not going to ask for it because it is a loser. he got as much as he could for the first time but in addition what they say they are focused on, and that is trying to get the infrastructure money out faster because right now the money that is out there is saving jobs and not creating new ones. the infrastructure jobs of the ones that could become new jobs. >> there is a lot of printed -- revisionism about what they promise. they said the stimulus would prevent unemployme

you'll recall that on this program, distinguished experts like paul krugman and martin wolf made the claim that the stimulus is too small and too slow to have much impact on a $40 billion economy? is that true? second, should the big banks have been forced to dispose of their bad assets? the obama administration has taken a middle course as regards the nation's biggest banks. it rescued them, but it didn't nationalize them or force them to sell their so-called toxic assets. was this the right strategy, or should they have been taken off their books so they could start lending? will the banks be seen to have failed? and finally, is this recession different from all others, or at least all others since the 1930s? the gloomy case rests on the fact that this time consumers entered the recession with massive debt burdens and are going to spend years working off their personal balance sheets. if that's the case, alas, there is very little washington can do except wait. i will talk about this with timothy geithner and foreign deputy prime minister turned critic. >> this is a system. >> let'

paul krugman wanted him to spend more money. he was critical when it happened.he leading liberal economist by far. he did not do that. he did not do what was suggested. sean: the people he is listening to, lawrence summers, timothy geithner and the rest of them, they said we would feel the effects. >> he was doing with the liberal economist told him to do. that is not true. >> he was following a pump priming example of the new deal, which was not effective at the beginning of the new deal. the president is trying to say, we made a mistake. we miscalculated. >> he was more moderate and liberal economists. sean: warren buffett says unemployment might be as high as 11%. the gao says the states are misappropriating stimulus bonds. -- stimulus funds. it seems like they are taking our money and paying back the people who voted them into office. >> several states are already bankrupt. they are sending out iou's instead of paychecks. it will get worse each month. i think the green shoots you're seeing are not the ones they're talking about. sean: their printing money. i

argument for thebama administration believ if thetimulus would work, then should have followed the paul krugman coent, to deal with a siton that was worsthan they thought iwas? i don't believe that. we are 130ays into the stimulus packa. president obams clear from the beginni that this is not a quick fix. if hcould snap his fingers and the economyas fixed, i'm sre he woulddo that. as hard ast is to do, the ameran people are going to have to exercise some patience while the stimulus kicks in. the adnistration can't just give out this money blindly to the states that would create even mor prlems. >> sounds lik that's what they'redoing. >> you've got some ofhe top ecomists say no one thought th would be a quick fix, that it would take tim these pe didn't lose their jobs overnight and wouldn't be put back i them over night. >> i thi the market at the stimulus aone would fix the econy -- >> you said only the stimulus. >> actually, theobama administrati said that, tha if we didn't pass a stimulus, we would be facing much worse circumstans. they're ying this is the panacea. >> keep the economy fr turn

is rove suggesting that the stimulus should have been much bigger as paul krugman was arguing?most of us would say that the stimulus is actually wouldn't work no matter what because it's a kenzian theory. it's deficit spending and that's never worked. what worked is what john f. kennedy and reagan did, which was cutting the rate. if you buy into the kenzian theory that stimulus spending works, president obama hasn't done that. there's been little money spent on things to improve infrastructure and create jobs. we've spent millions on things that have no correlation on creating jobs. >> your response? >> there are some serious arguments you can make about stimulus spending, like it might lead to inflation down the road, but it's not serious to say that stimulus spending doesn't work. that's not a serious critique. you inject money into the economy. it's going to create jobs. the question is, how much money and how fast. the irony is that it wasn't big enough. krugman and the huffington post were arguing that it needed to be bigger, but it was the gop who forced cuts from the sti

host: paul krugman writes in peace iece. "ok, thursday's jobs report settles that, we are going to need a bigger stimulus. but as the president know that? it is continuing to lose jobs at a rapid pace. once you take into account the 100,000-plus new jobs we need each month to keep up with a growing population, we are about 8.5 million jobs in the hole. the deeper the hole gets, the harder it will be to dig ourselves out. pat, republican line, what will it take to jump-start the economy? caller: good morning, i am a first-time caller. i think the people of america need to wake up. we are being taken over little by little, and gradually we will have all of our freedom gone. this cap and trade -- we do not see anything happen within the next few years, but gradually we will be paying and we will be losing our freedom. they are talking about so much gas that we will be able to use, so much electricity we will be able to use, so much water we will be able to use, and who is going to be paying for all this? the people of america.

there were some exceptions paul krugman argued that the stimulus was way too small. by and large, most economists did not really understand that when the united states started going down, the rest of the world would go down quickly, too. they came up with economic projections that were way too optimistic in the administration and paying a price for it now. >> david gergen, appreciate it. president obama travels next to ghana where he will be touring a dungeon, one of the many where slaves were held before their journey to the new world. the interview airing monday and tuesday night on "360." just ahead, sarah palin says she's quitting to save alaskans from the frivolous complaints against her. we found one of the complainers, a fellow republican. we'll look exactly what the complaints are. >>> later, the arrest of steve mcnair's girlfriend just days before she shot the former nfl star dead and turned the gun on herself. we have new details about her unraveling personal life and the untold side of the story and taking your questions with criminologist james fox. the m

. >> first up, paul krugman offers an ant dote from president obama's recent meeting where a man stoodp and said, keep your government hands out of my medicare. he writes -- >> i talked yesterday to jim cooper of tennessee, one of the moderate democrats trying to affect this debate. he said there's so much misinformation out there, like that man at the meeting and democrats have to push back against that. things that aren't in the billing, but characterized that way. >> the president got a question from a woman who said that i hear people are going to come and ask me how i want to die. so yes, there's plenty of that information out there. >>> next up, maureen dowd. she described the former alaska governor as quote, a nixon with hair extensions. she once called hillary clinton a whiny contender, saying she should stop complaining. she writes -- what do you think? >> in alaska, it was pretty interesting, of course, to see sarah palin in action. now, there's a new poll out that shows her approval ratings have plumeted. >> those comments by maureen track the focus group i saw, very critica

comes in, everyone's turned pessimistic and laura tyson talked about a second stimulus package and paul krugman is on their case because he wants them to spend more money. is there a shift going on? is there panic inside the west wing. >> there's no question we vastly expanded from the original use of the sandwi$700 billion bailo from banks and insurance companies, automakers. if we now start spending it on small business, the distance we would have traveled between the original concept and where we would then be, it would be pretty significant. no question you've seen a real evolution in the administration's thinking about what is possible and what is appropriate and what would be helpful to the economy. >> benjamin applebaum, weight po -- "washington post," we appreciate this, short notice. thanks so much. >> my pleasure. >>> to the stock market, the stocks dropped, sending the s&p 500 to its fourth straight weekly loss. my particular worry is the fed has deflated the money supply and that in turn is deflating the reinflation play in e stock market. it's been energy and commodities, industria

paul krugman wrote an interesting piece couple o months ago sing whynot make chlted banking -- it wasn't the highest paid or that broadly set up highalaries and wy not go bac to a worl where the salaries are still attractive but maybe not as attracte. i look at it and say not only andrew cuomo.ut wheres sn't he supposed to get the bonuses back and shame them into it? how co we don'tear about that wraen ner? >> that is the pitic solution a pctical matter that is a litical maneuver. >> you tal a maybe a fear of gettin into the litigation and that the aig cowboyees would say, i'll take you to court but i say, let's go tocourt and ha an open conversation abt what you did to earn this. >> you better be ready to spend the money isll i'm sang that is millions ofollars spent on legal fees. >> and probably this is just the first example. somebody goes down that road, it willontio happen and it will bac fight. >> as a practica and political matter is outrage. the bottom li they've got contractand entitled them t this amount money and why the political hing was more effective to give ba the bonuses

if you agree wh paul krugman and theredent that fiscal stimulus is the way to ease that dama and createuld make the case for dog something more later i the perhaps. >> hopes of recovery mpened thursdayhen the latest jobless numbers were leased and the numbers, 467,000 jobs lost in june, goes uto9.5%he unemployment rate e right w. that is new 2626ear gh. soso weighing in on all of that and whe thihi goes from here. >> the reason thee numbe ththursdayas so disapinting is everince janua, where job loss peaked, numbers have b bn declining evevery single m mont you had a a good patter mamaybe th continues a and mayb we gofrom losg jobs to gaing jobs later inheyear, but this in ju t t number went back the otherer dirtion andthe numberf job l losses incased, to 467,000. at's enorus. we have aahad the number of initial claimsmsor jobobss nefits, number of p people fili has been aove 600,000 since middanuary that n number hasn'tt come down substantially. thiss a terrible lor mart. >> we hahave seen somome provements, economic tnds ke nufacturing, consumer spenenng to degree, thehe consumers seem

paul krugman said the 50's are part of what he calls the great depression when you have a strong middle class and one salary could feed a family, you had a lot more free time, and i'm wondering if there is a link between that and the creativity also flourishing. i don't think allen ginsburg could afford to live in manhattan and certainly not brooklyn. >> that's new. i lived in manhattan in 1974 for $125 a month on west eighth street between fifth and sixth avenue. but it's a good point. all of these artists, it was a thriving artistic community most of them are not east av, ninth street around fourth avenue what is now called astor place. they all hung out there. it cost very little money. i mean there are good things and bad things. nobody was producing much wealth either but nothing cost anything. you could live on a nothing salary back then. one thing that it happened that made people urgent all through the fifties there was this post for prosperity toward the end of the decade there was a recession. a pretty deep recession. 1958, 59 eisenhower was the president. eisenhower was the o

paul krugman, who won a nobel prize, a "new york times" economist. i want to read to you something he said how the issues are playing out politically -- so, he's saying that it's not necessarily -- he would like to see maybe even a bigger stimulus. >> that's right. i've heard his argument. i just don't agree with that. more borrowing -- look, we're already borrowing 50% of the federal government's this year alone. we're borrowing $2 trillion just this year. all this borrowing is going to push up interest rates. it's going to give us an inflation problem. and we believe that the stimulus -- and we proposed an alternative -- ought to go to businesses, small and large, to encourage them to keep people working. to encourage businesses to invest and expand and hire more people. more spending through washington. look, if more spending from washington was the answer to our economy, then we wouldn't have a problem in our economy, because we're spending more than we ever have in the history of this country. >> let's talk about that, representative. let's talk

george will, david brooks, arianna huffington, paul krugman and donna brazile.resident said he wanted this to be a type ofable moment. what did we learn? >> president should learn that some things are not their business, such as local police disputes in cambridge, massachusetts. george, look, when you are a highly paid, much-honored ten urd professor at the richest university in the world, in a city with a black mayor, a state with a black governor and i country with a black president, it's hard to get the coveted status of victim. mr. gates got the kov elted status of victim with the president from the president because when the president said the police behaved stupidly could you not escape the belief there is a name for what the president was doing called racially profiling, distinguished black men, white policeman, white policeman must be in some infrengs way a racist. >> i think the president was very measured in his initial comments and perhaps the word "stupidly" caused some to believe he was attack the character of the police department. but george, ther

paul krugman writes goldman is very good at what it does. but rescuing the financial system without reforming it washington has made another crisis more likely. joining us live is matt taibbi. matt writes about how goldman sachs has manipulated the u.s. economy since the great depression. good to see you, matt. how is that possible? >> well, in the case of these profits that they made they're announcing this week, that's almost purely the result of a massive state subsidy. everybody knows that goldman has already paid back the $10 billion in t.a.r.p. money, but over and above that goldman was massively subsidized by the government in the last year. it received about $13 billion through the aig bailout and it also had access to about $28 billion in federally backed loans. so basically the banks had access to mountains of cheap money, virtually free money, and they used that to go out and lend it out at market rates. all of us have reduced income from interest and the banks are making an enormous amount of money. >> i talk about the great amer

paul krugman wrote had this on july 9 -- >> we've got an old saying down home that there's no education with the second kick of a mule. we've seen what happened with the first stimulus. the president said rush and spend it, pass it, we'll hold unemployment to 8%, which now pretty clear we're going to 10% n my state it's almost 11%. by any measurable index, the stimulus package has been a failure. and we are adding, as i indicated earlier, dramatic amounts of money to the deficit. we're spending, david, $100 million a day in interest on the stimulus that we passed back in january -- february, the rush and spend was what they told us, pass it, and we'll hold unemployment to 8%. by any objective standard, this has been a failure. >> you have announced that you will oppose judge sonia sotomayor for the supreme court. why? >> i think her personal story is remarkable. i, myself, am married to an immigrant who came to this country not speaking a word of english and who ended up in the president's cabinet. i'm a big fan of her career, the way she rose from humble beginnings and went to fine sch

people were saying that you needed to do something bigger and bolder, including the economist paul krugman. right now, he's saying the same thing again. don't wait. you need a second stimulus. you need it now. >> look, what we have to do now is we have to properly, adequately, transparentally, and effectively, spend out this $780 billion. >> that's your job. you're in charge of it. >> that is my job. and i think we're doing it well. if you notice, george, there's other predictions. this is going to be wasteful. all these terrible projects will be out there. well, that dog hasn't barked there. >> senator colbern has identified some. >> the rest i dispute. the bottom line, though, i think anybody would say, this has been pretty well-managed so far. the question is, how do you now -- what we have to do, george, as this rolls out, put more pace on the ball. the second 100 days, you're going to see a lot more jobs created. and the reason you are, is now all these contracts for the over several how highway contracts have been approved. >> but you're also seeing states across the country cutting

you know, paul krugman has said that the fifties are part of what he calls of the great compression when you have a strong middle-class with one sao rating of family and have a lot more free time, and i am wondering if there is a link between the bad end of the creativity that was also flourishing. i don't think alan ginsburg could afford to live in manhattan is really not even brooklyn today. >> that is really new. i lived in manhattan in 1974 for $125 a month on west eighth street between fifth and sixth avenue. but it is a good point. all of the artists, there are these thriving artistic communities most of which were around east eighth street and east ninth street and fourth avenue, around what is now called esther place. they all hung out there. in the cost very little money one. there are good things and bad things, nobody was producing much well either been nothing cost anything. the you could live a on a nothing salary back then. one thing that did happen it that makes people a bit urgent, all to the fifties there was this postwar prosperity and toward the end of the decade there

paul krugman says we need to get working on this now. why? because stimulus is not working, the jobless rate is headed right to 10%. those shovel ready projects that we heard about four months ago are simply not there, not ready. the stimulus is not working. there is another stimulus plan being talked about, but there is a huge deficit. people do not like it. gregg: help me out. we have not even spend 90% of the first stimulus, and a scant $500 million is going to infrastructure. just a fraction of the original stimulus. is it not premature to talk about 2nd stimulus when we only spend 10% of the first one? >> look at the next few years, when the full stimulus will be spent. $1 out of four goes to stimulus plans. towards what you might call job creation. of that $1 in four, only $29 billion goes towards highway projects. that is it. stretching the stimulus out over its lifetime, you will not have all of the jobs created that were promised just four months ago. that is why there is all that talk of another stimulus. gregg: there are two ways o

typical of the prevailing sentiment was the warning from paul krugman in january of 2009 -- let's not mince words, this looks an awful lot like the beginning of a second great depression. the economy was in free fall at the start of the year with no apparent limit on how much worse things could get. over the three months ending in february, the economy lost 2.1 million jobs, the largest three months declined by a factor of two since the second world war. gdp was declining at a six-month period of close to 6% treed even before any policy changes, the budget deficit was projected in 2009 to be well in excess of one trillion dollars. the financial markets suggested significant risks of implosion. we looked at rather fat tale probabilities as calculated from options and they suggested a better than one in six chance the dow jones would fall below 5000 during 2009. markets were expecting 30% of investment-grade corporate bonds to default within 10 years. municipalities face tremendous difficulties issuing new bonds to the point where muni bond rates, which are supposed to be below treasury

paul krugman has suggested that. some members of congress have.you think a second stimulus is necessary? >> any stimulus, there's a delay, including the first one. it is not a panacea. a stimulus is the right thing. you hope it doesn't get watered down in many ways. you know, our first stimulus bill, seems to me, sort of like taking half a tablet of viagra. you know? and then, having a bunch of candy mixed in. everyone was putting in thicks for their own constituencies. it doesn't have the wallop that it anticipated. >> reporter: during the campaign, he threw your name out as a lot as a mentor, and someone he turned to advice. how often do you speak to him now? >> not often. i speak when spoken to. >> reporter: does he call you? >> no. >> reporter: looking back, to you think t.a.r.p. was worth it? t.a.r.p. was needed? >> i think anything that restored confidence was useful, even with a fair amount of window dressing to it. >> reporter: what are your thghts on how the public/private plan has gone so far? >> so far, it's kind of gotten pushed down t

paul krugman is probably saying the recession is over in a limited sense. an asterisk and i suppose that has to do with a few trillion dollars on the other side of all the ledger. if wall street is your barometer and stock market is your barometer the dow is 39% higher from 12-year low set back in march and housing market showing some signs of stability. i'll let the author of the article continue with what we're looking at here. dan gross, author of a cover piece on "newsweek." nice to see you. how are you? gavin and toure and maria are also with us. what is the thesis of your piece? >> the people i trust the most say it's over. that is a technical thing that economists talk about. it means output is no longer contracting. when imports plummet that is positive for gdp. you remember how this stuff goes down. >> it hasn't been that long. >> you have these technical factors alone saying, okay we will have positive growth in perhaps this quarter. >> which is the intention of the bailout by the way. ben bernanke and the people that were the architects of that b

typical of the prevailing sentiment was paul krugman's sentiment in 2009, let's not mince words. this looks an awful lot like the beginning of the second great depression. the economy was in free fall as we started the year with no apparent limit on how much worse things could get. over the three months, the economy lost 3.1 million jobs, the largest three-month decline by a factor ofçó two since the second world war. gdp was declining over a six- month period at an annual rate close to 6%. even before any policy changes, the budget deficit was rejected in 2009 to be well in excess of $1 trillion. financial markets suggested it significant risks of implosion. if5p0Ñ at probabilities, as calculated from options, it suggested a better than one in six chance that the dow would fall below 5000 at some point during 2009. the market's were expecting a 30% of innocent -- of investment-grade value to default within 10 years -- the markets were. muni bond rates, which are supposed to be below other rates, soared to nearly double treasury yields when they were supposed to be below. fear wa

even paul krugman, the most recent nobel prize winner, has acknowledged spending in the great depressionot what got us out of the depression. so i had actually read a lot of articles. i think i am pretty well informed. as for recovery.gov, the data that you see is not actually tracking the money. there is a competing website called recovery.org, and they are a private business who tracks the money. they have been doing this for 10 years. they had even offered their help to the obama administration. it seems, like every other administration before, wants to reinvent the way they do it. on recovery.gov, it is not the actual data. also, and they do not track the money until it is actually spent. i agree with you, it is important to be very well informed. i would recommend that you read christina romer, who is an expert of the great depression. host: some of the items that you have written regarding the stimulus is "why the stimulus will not work" and "do stimulus packages work?" our last call is gone. we are done for this particular segment. thank you for being on the program. we are going

paul krugman on the left says the stimulus was never big enough.it to get more money to bail out california, somehow this guy is going to do it. brian: write the check to california and the other 30 states who also can't pay their bills, kirsten, do you think that could destroy him? >> if the economy, i agree about what he said. if the economy does not turn around by the time is he running for election, i think he is in serious trouble. i think that everybody -- basically everyone is saying ok, you are in charge. we're trusting you. you are doing these things. you are telling us that they are going to work. >> show us the money. >> we need to see them working. we are talking a lot about unemployment. unemployment is a lagging indicator. so, you know, the administration would argue that things are starting to move. the money is starting to move out. we will start to see things change, that's what has to happen. >> they better be right. brian: we just have three and a half years. promise you will come back. we will see how it goes. great job pundit p