let's turn to the man behind it, robert shiller, economics professors at yale university, the name behindthe name been the s&p case-shiller pe ratios. this is your new book. i can't believe it. you're telling us that we should innovate more in terms of finance. >> i think that should be our response to occupy wall street. they want to fix something, right? >> right. >> okay. like if a car is broken, you bring in a mechanic. you've got to bring in people who study finance. they're looking kind of bad now, because people think it's just evil. it's not evil. it's something that can be fixed. >> one of the things that you recommend and the great thing about the book is you have very, very specific ideas. some of which seem attainable and some of seem like pie in the sky. one of them, my producer refers to as a prenup for mortgages. tell me what you're talking about. >> right now we have over 11 million americans who are underwater on their mortgage. the home price fell, their mortgage balance didn't fall. so they're ruined, right? and that's a major part of our crisis. they don't spend when t

speaking over books, tomorrow's show i'm going to be joined by robert shiller.e is going to be here for his take on the world's late, great depression and his outlook on the economy. more gloom and doom. >>> up next, diplomatic crisis that sounds like mission impossible. an escaped blind chinese dissident said to be in the american embassy in beijing, just as secretary of state hillary clinton heads there to rescue. the president mum so far. it's a high-stakes game, and will a false move by either side wreck relations? ttd#: 1-800-345-2550 ttd#: 1-800-345-2550 let's talk about market volatility. ttd#: 1-800-345-2550 in times like these, it can be tough to know which ttd#: 1-800-345-2550 way the wind is blowing. ttd#: 1-800-345-2550 at charles schwab, we're ready with objective insights about ttd#: 1-800-345-2550 the present market and economic conditions. ttd#: 1-800-345-2550 and can help turn those insights into ttd#: 1-800-345-2550 a plan of action that's right for you. ttd#: 1-800-345-2550 so don't let the current situation take you off course. ttd#: 1-800-34

you will be getting the robert shiller calls -- the robo calls. you know how hard i work.ou know how strongly i believe in the games that the value of southwestern pennsylvania have instilled in me. i come from a steel town of immigrant parents. my grandfather worked in the mines, someone who lived in government housing on the d a grounds and saw the great sacrifice of our men and women, serving them as they served our country. you know me. they will say all the things that i am someone who does not stand up in what i believe in. you know me. [applause] i ask you over the next three weeks, and this is not have time. no marching bands. we are hitting the fields. the clock starts tonight. we have three weeks to go out there. we will win this state. after winning the state the field looks a little different in may. the one time that we did when in last 120 years, the republican party had the courage to go out and nominate someone who all the experts and contents and republican establishment costs said could not win. it was too conservative. he lost almost every early primary.

. >>> robert shiller stressed that the u.s.conomy is in no way immune to the troubles plaguing the eurozone. >> we're always looking over to europe as a sign of trouble ahead. and i think europe could lead the u.s. into recession. but at this point, it's looking stronger than that. >> joining us now as our guest host for the next hour is senior adviser at asset management. allison, great to have you with us. when we're looking at the economy here .if united states and getting a sense for how the markets trade, eurozone a big piece of that. when we look at the banks, what's your take on where we stand? >> longer term i still like the equity markets. i think near term we're probably in a slowdown process. we had such a strong rebound starting last fall. the market went straight up, almost assuming everything's back to goldie lox environment. we have issues coming out of europe which hopefully people in washington are watching. austerity budgets don't help growth. that could make the market a little move sideways or choppy. >> a l

it is called crowd funding and it could professor robert shiller will plane second ♪ ♪ [ male announcer living breathing intelligence bringing people together to bring new ideas to life. look. it's so simple. [ male announcer ] in here, the right minds from inside and outside the company come together to work on an idea. adding to it from the road, improving it in the cloud all in real time. good idea. ♪ it's the at&t network -- providing new ways to work together, so business works better. ♪ >>> social media has brought crowd funding to the world of investing. we're join by robert shiller, professor of economics at yale university and co-founder of the case index. we have come together, professor. we are soul mates now because we need to. we at least need to point out the benefits of entrepreneurialship and free enterprise. we can talk about some of the details obviously and we've been through a tough period the last four, five years but we both at least agree that free enterprise is a positive thing. now, with that in mind, i look at the reaction to this jobs bill that was passed, the

evidence that have been induced the timing, the housing bubble began in the late '90s according to robert shillernd most intense after interest rates were already rising. secondly, international comparisons controlling for interest rate behavior, countries had a wide variety of experiences in terms of housing. there's not a very good correlation between housing bubbles and interest rate policy in various industrial countries. and thirdly, the magnitude of the movements in short-term interest rates in the early 2000s when you translate them into effects of monthly payments or on mortgage rates, they're trivial. that was demonstrated by the paper that was done by seven federal reserve staff that was circulated and which i have based a speech on a few years ago. i think this relates to alan's question as well. i think that given the heavy cost of the crisis, i think the appropriate mental approach is ago nostism and openness. so i think going forward particularly in situations where interest rates are lower for a period as they are today, we have to be particularly tentative to stmic stability and m

the economics professor robert shiller says a total recovery of the housing market in this country can worries that we might not see a major turnaround in our life times and it's not just home prices that are suffering. a new government report shows new home sales dropped from last march to last november. there's no rush to buy and mortgage rates might be at record lows and if they don't have money to buy, it doesn't matter and with high unemployment, high gas prices and high food prices and uncertainty about the future of the health legislation and the overall economy, and the future including housing looks pretty grim. the question, though, is this. home prices are the lowest in a decade. how can this economy recover? go to cnn.com/caffertyfile. post a comment on my blog or go to our post on the "situation room's" facebook page. a generation before it is back to approaching normal. >> this is the biggest asset almost all american families have, their homes. >> jack, thank you. >>> the united states is bracing for a new act of nuclear defiance by north korea. a provocative test that b

robert shiller is one of them. it is very difficult to change an industry that has been promoting homeownership and bringing up homeownership in this country since world war two from somewhere below 50%, to near-70%. now, people are becoming renters, and what constitutes home ownership is changing. host: jimmy wright's on twitter. guest: that is a good question. it has not been long -- around long enough to answer that question. the short answer is we will see. the main three areas they will police are pay lenders, student lenders, and mortgage servicers. they have a big job ahead of them. they are looking at debt collectors, pre-paid cards, and other types of businesses that were not really regulated by anything, especially the federal government. they have a large job on their plate, but it is not clear whether they will pass muster if and be able to recoup the funds they are spending. host: lauren, a republican in naples, florida. caller: good morning. i was able to get a loan modifications on our home. we have