, the new economy. i like to call it the, essentially the swish economy. >>> a power player in restoring liquidity to wall street. larry fink was the government's go-to guy to help put a price tag on troubled assets at fannie mae, freddie mac and aig. his firm was willing to take the risk. backing a $1 trillion fed program to acquire residential mortgage-backed securities. fink also counseled then treasury secretary henry paulson on the original rollout of the t.a.r.p. plan. he was convinced that using t.a.r.p. funds to acquire toxic assets from the banks was the right move. if paulson opted to acquire equity stakes, which fink says was a major mistake. as a stock market has rebounded in 2009, economic recovery has been slow to follow. blackrock chairman ceo larry fink shared his opportunity and what it will take for a broader recovery to truly gain traction. based on the economic backdrop, is the market and money on the sidelines moving into the market expecting too much? >> see, i don't think so. i thi

where is the ent to this phony economy. t's balance our trade deficit. >> i hear what you're saying. >> how about that? let's give our savers and retirees better than 1% for their savings. that's what i'm earning in the banks. >> all gold foreshadows is what specklators think it's going to do tomorrow. >> gold is foreshadowing the fact that the country is depreciating the value of our currency and its purchasing power. it's not only losing its value against gold, it's losing its value against six other -- >> since melissa is insulting all these free market indicators -- >> melissa. you have to sit next to him. >> trish, i got bruises this morning. john harwood, let me ask you. in terms, coming back to president obama, is he going to tout the economic recovery, john? >> think he absolutely is. larry, all i can say is you've forgotten more about the relationship between the economy, the stock market, and economic indicators than i'll ever know. i'm bound to your expertise. >> john, let's talk politically. he's got some real in

i believe the economy is doing well. it has grown .9% in the second semester, which is very important, the second quarter. we're very optimistic for the 2010, i believe that the brazilian economy can grow 5% for the year 2010. we are developing a strong policy for the poor population. we are developing a strong policy because we are lagging behind 100 years in these areas. it's necessary that the economy grow. but at the same time we should make the poor go up the social ladder. so i believe that brazil is prepared for many investments. we have an investment program that involves almost $359 billion in the infrastructure project. airports, railroads, highways, and so we have assumed the commitment at the peak of the crisis that we will build 1 million new houses for low-income brackets of the population, up to minimum wages. things are sound, moving forward. the construction industry is growing. consumption is growing. and so now we have to be very comfortable to make things continue to go well. because we can't waste the

when the economy is barely bottoming out. in my view the markets have been rising too much too soon relative to economic underlining fundamental, and for this reason, there is a slosh of liquidity now chasing assets. equities, commodities, oil, credit, and that's rising essentially these assets prices more than is justified by the economic recovery. i think there is still a risk by q4 or q1 of next year of a contraction in asset prices of stock markets, a correction. >> a number of people have looked at china as sort of the savior for global growth. we are talking about growth in china back to 8% or so, if you lis on the somchai na watchers there. how important is china? you've made the point that, yeah, china is growing, but it's not going to be big enough to really take the world out of the slump. >> absolutely. it's growing for itself, but it cannot be the main locomotive or engine. total gdp is $3 trillion while the total gdp of the u.s. and japan is $40 trillion. $1 billion chinese -- while american consume $10 trillion.

but the question would still be the western economies are still a major part of the world economy. can we move out of a sort of bouncing along the bottom recovery and move to something stronger? >> final question. what would you like to see come out of the g-20? what would you like to see that you walk away and say this is a success? >> i mean, i think what happened at the london summit was very important because it gave us clear direction. i think what people want to see this time is a continued clear direction. a sense of coordination, coming together, the major economies of the world. at least agreeing on a basic framework for global economic policy. >> and my thanks to tony blair for joining us today. coming up next, we'll tell you what might move the markets tomorrow when that opening bell sounds. we'll get you set for tomorrow's trading session. and tomorrow please join us for my one-on-one interview with the president of brazil. lula will join us tomorrow. we will ask him if he thinks his country can sustain its red hot economic growth. another "first on cnbc" and an exclusiv

since the beginning of the recession, the economy has now lost 6.9 million jobs. after its best august since 2000, the dow did not get off to an auspicious start in september. the market fell 180 points on tuesday on concerns about financial stocks, but it did break a four-day losing streak on thursday. on friday the dow rose after the jobs report. meanwhile, new vehicle sales had their best month in nearly two years, but in spite of the cash for clunkers program, it was a mixed picture. for example, gm sales were down 17% in august from the same period a year ago. ford's were up 21%. toyota's gained 10%. chrysler's were lower. >>> spiderman has a new address. the wall disney company is buying marvel entertainment. for $4 bill. >> anne: in cash and stock. characters like ironman and spiderman will join forces with mickey mouse and wall-e and the company says that they hope that the move will attract more boys to the brand. >>> even though it is considered a lagging indicator, the jobs report is still considered a crucial piece of data. the markets watch closely. jo

how the battle over the healthcare reform is saving the economy. now they are leaving american to get the american dream? >> good morning, my neighbor. >> top earners bolting for better pay in other countries. where are they going and who is trying to stop the brain drain? it is an outrage alert. hollywood hypocrisy hits a new level. >> why is obama trying to abort healthcare? >> aren't these the same movie stars making millions working on bobs office disasters? all that and talk about a big pay day. american men willing to work for sex? >> you want to be my pimp? >> it is good work if you can get it and we have it here and only here. your money, your life, your show to stay ahead of the game. "cashin' in" starts right now. >> mr. chairman, i'm not delaying. i'm making an extremely important point. >> it is very important point but you are delaying. terry: tempers flaring as fighting over the healthcare bill hits a boiling point pushing the global warming bill to the back burner and someone here says that is helping save our economy. our crew this w

>> the pare docks is the economy is going to get better. i think it will continue to get better and the number will go up and probably go up like this for the next 12 or 24 months. chris: jobless number. >> jobless number will keep going up and the economy will seem like it's going up. the question, though, how long is that sustainable? and i think you might see the economy get better over the next 12 months. but at some point, something's got to give. i actually don't agree that we can remain in a high jobless rate and the economy will maintain. you look, there are pockets of this country, michigan, for example, number 17 plus percent. and that's -- you have to get manufacturing jobs and we're still not manufacturing. chris: here's the question, kathleen, for years, president faced high unemployment, ok, i'll cut taxes big. ok, i'll spend more money. but with the deficit already $2 trillion this year, and a debt heading up to $13 trillion, this guy can't exactly start shoveling money out the door. >> the truth is we haven't given the stimul

what is happening in the u.s. economy right now, what everybody says is the crisis is not the crisis. falling real-estate prices, companies going bankrupt, credit being restricted, consumers not spending as much, savings going, none of this is the problem. all of this part of consequences of the problem. if people are trying to solve a nonexistent problem, if they're dealing with the symptoms and not the disease, they're not going to solve anything. the problem was years of reckless spending and borrowing. and this didn't happen because of some failure of capitalism, far from it. capitalism would have prevented this from happening. this is the failure of government. the problem is not that the bubble burst, the problem is the federal reserve would sheet money and congress with moral hazards, inflated the bobble in the first place. the fact that it burst is a foregone conclusion. but our politicians, who never understood the problems, who didn't understand the crisis, the people who were laughing at me when i tried to poin

the stimulus program has helped to get the economy growing. we will feel the benefits for the next year or so and that is probably a good thing because the economic recovery it is going to be a lack luster. we have seen significant changes in policy, a very aggressive monetary policy that open up their balance sheet, expanded them to medically to keep the banking system liquid. just this morning, there were more reports on the consumer asset-backed lending program and how successful that has been in re-liquefying those markets. they have addressed other asset- backed market in the consumer and auto area and i think high marks are deserved by those at the fed for those policies. they were precedential. i think we were well served to have the fed to throw out the old playbook and bring in the new one. i think they deserved a lot of credit for what has been a very, very trying time in our financial markets and for getting us through the worst of those. i was happy to see that the president agreed with me and reappointed chairman ben bernanke. i sa

that was the intended design. our economy is so complex and so wounded that reinvigorating one segment alone and using one school alone would never do all that needed to be done. the recovery act is not a single silver bullet. i think of it as silver buckshot. the president cost recovery and reinvestment act isn't just working towards something. -- is not just working, it is working towards a more transformative economy. this act was designed to do three things. most people when you talk about it, they think it was $787 billion for highway projects. they want tax cuts. it is part of it. it is a significant factor and benefit. people think it is a big $787 billion of public works projects. it is made up of three parts. it will bring relief to those hardest hit by the recession. republican critics think maybe we should not do it. i am not being facetious. it is a legitimate disagreement. bring relief to those who were fallen into the abyss. jump-start the economy. there are desperate economic circumstances. reinvest in existing

has that been enough to keep the economy going? we have this report. >> on the banks of the yellow river, china's government is trying to solve an age-old problem. every year, the loss -- to the north of the country faces a drought while the south that's flooded. so they're building the world's largest grain. -- the world's largest drain. the middle section will be called under kilometers long. it's a bigger engineering project in the three gorges dam. they are trying to read engineer mother nature. in five years' time, billions of cubic meters of water will head south. china is careless and single- minded about these grand projects, but the jury is still out on whether this will actually work. there is no question about be released this is bringing to the chinese economy. the project has been on the drawing board since the days of chairman mao, c -- says the chief engineer. >> [inaudible] >> work started before the financial crisis, the government house record-breaking stimulus program helped things along. >> china has been undergo

>>> plus, the economy. a year after the financial meltdown, why mounting job losses may be the biggest challenges of all facing the white house. insights from the roundtable, anchor of "street signs" erin burnett, "thyme" magazine contributor author joshua cooper ramo and nbc political director and white house correspondent chuck todd. >>> but first, the debate on health care. joining us, senators john cornyn and dick durbin and former house speaker newt begin river and former dnc chairman, dr. howard dean. good morning to you. a lot to get to. we'll start with senator durbin. in light of the president's speech this past wednesday, what specifically will be achieved on health care this year? >> i think we can pass health care reform. i really believe the american people are ready for it, we are closer to victory than we have ever been, and i hope we understand that failure to pass this health care reform this year will make things overwhelmingly worse. those who are opposing us, those who are criticizing us,

the u.s. economy, struggling to rebuild. but where are the jobs? bank ceos seem to be doing more than okay. wait until you see their paycheck. didn't we just bail these guys out? why you might not see your favorite football team on tv this year. get ready. time to talk "your money." >>> hello everyone and welcome to a very busy labor day edition of "your money." ali velshi is on the cnn express stop in madison, wisconsin, listening to americans about your stories about how the economy is affecting your honey. for most of us our personal economy starts with our job. the jobless rate jumped to 9.7% in august, the highest unemployment rate in 26 years. but the pace of lay-offs is slowing. down from the dark days last winter, in august 216,000 more jobs shed, the fewest number of job loss ins a year. little relief in the hardest hit sectors, more than 120,000 jobs shed from manufacturing and construction, financial services trimming jobs as well. but look here. 28,000 positions were created in health care. that trend continues. >>> managing director of

the economy is not growing enough to prevent the unemployment rate from rising. the jobless rate is at a 26-year high. >> the president continued to push for his plan to overhaul health care saying that it is linked to the economy. they are expected to reach a compromise bill tomorrow. max baucus has been negotiating with democrats and republicans. >>> we're taking an in-depth look at the efforts to overhaul health care. there is a need for -- it airs tomorrow night at 8:00 here on abc 7. >>> the obama administration was to extend theey provisions of the patriot act. it includes those giving investigators to access business records and conduct wiretaps. justice department officials said they support extending the law, but they're willing to consider additional privacy protection. >>> mortar shells were fired at the grains out during the president -- at a vice-president biden -- at the green zone during a vice presidentbiden's visit today. there are no reports of casualties from the attack. this trip is the vice president's third trip to iraq this year. >>> tonig

as we know, employment tends to lag the economy. the growth of the economy. and i think that's going to happen in this case, too. so we'll see a period where economic growth is expanding. the economy's expanding. but we will not see growth in jobs for some time after that. >> i want to ask you about, really, the flies in the oinltment, or really, the things that you think might make things worse, or sort of the red flags that you look at. and one of them certainly that has been spoken about quite a bit recently is the exit strategy out of the federal reserve. what would you recommend the best path to take for the fed in terms of unwinding and backing out of some the stimulus that's in place right now. >> this is a very difficult challenge for the federal reserve. they have cut interest rates to essentially zero. and they've had a series of targeted programs. this policy has been appropriate. they've done the right thing. now, as the economy starts to grow again, at some point in the future, we don't know exactly when that's going to be, at some point in the f

but he says that lays the groundwork for a bigger surge, when the u.s. economy returns to a full recovery. >> basically, it will reverse itself. the supply/demand issue will be even harder, meaning the demand will go wild in two to three years. so hold on to your horses everybody, real estate is coming back, there's no doubt about it. >> jeff: a sentiment many americans may not yet believe, but desperately hope will happen. jeff yastine, "nightly business report," boynton beach, florida. >> paul: tomorrow marks the end of the third quarter on wall street. s&p's sam stovall joins us for a review and a preview of what's next. >> susie: at&t is working on a big infrastructure investment as it tries to keep up with consumer demand. the telecom giant will invest up to $18 billion this year on its wireless and broadband networks. that investment includes adding as many as 3,000 high-tech workers over the next three months. it's all part of at&t's plan to bring whatever content you like on television or the desktop to your cell phone. >> paul: the first vaccines for th

you know, that's not divorced from the economy. the stronger the economy, the better able we are to afford the health care system we have. >> final question, what would you like to see come out of the g-20s? what wau like to walk away and say this is a success? >> i think what happened to the london summit was very important because it gave a clear direction. i think what people want to see this time is a continued clear direction. a sense of coordination coming together, the major economies of the world at least greeg of a basic framework for global economic policy. >> my thanks to prime minister tony blair. up next on the "wall street journal" report, what's the richest man in the world doing with his money and his time? bill gates on fixing america's schools and how high-tech will have an impact. >> where the computer can see, it can talk, it can listen. it can talk, it can listen. the welcome to progressive. how may i help you? i'm looking for a deal on car insurance. i think i might have a coupon in here. there's an easier way.

still to come the water economy. they're not making any more of it. pollution, demand and our aging water systems. but first...the grave state of social security...what changes the new year will bring.... that's coming up after the break. 20-10 will mark the first time in three decades that social security will pay out more than it takes inand the first time in three decades that those receiving social security checks won't see a cost of living increase, thanks to low inflation. jeffrey brown is a finance professor at the university of illinois and he was nominated as a public trustee for social security and medicare by president bush in 2008. welcome to the program. was your assessment of the state of social security in late 2009? it's really the same assessment that i will have given a year ago that the program is on an unsustainable course. the recent recession and economic downturn has brought some problems closer in time the facts as you mention the we are born a star running deficits now and to the next few years but we've known for decades that

where is one time we lowered tax rates and we haven't had a boost in the economy? even a boost -- george bush cut taxes and we got no improvements in standard for the a average american and a monster bubble that you said was a recovery and it wasn't. david: steve, does that work? >> no, that shows us george bush should have studied ronald reagan. he only did half. david: millionaire celebrities complaining about millionaire c.e.o.'s making big bucks. first, live like a celebrity and a c.e.o. with our gang's stock picks that are ready to rally. david: stocks ready to pop. >> i have wellpoint. they will benefit from increasing roles from healthcare. they have a good records management program add they are cheap. >> i would wait for the debate to play out. david: you like disk drives? >> they recently upped the outlook. david: mike, she got a stock back in march that has popped 130%. >> in this case i think she is wrong. i like western digital. i think they have the technical advantage. host: you like a chemical product. >> i love huntsman. goldman sachs has been buyi

they will spend two days talking about the global economy. what do you think should be number one on the agenda. >> join the global crisis and match it to the planet crisis underway and link them expolice zitly. we think the present system can't answer five questions what's the economy for, how does it work, how big should it be, and how should it be governed and what's it is for is social and planetary stability. how does it work, subject to the laws of science. how big should it be, not so big it overwhelms the earth's natural systems. this economy is overwhelming the systems and the g-20 will try to make it bigger. this is a suicide pact underway there in pittsburgh. what is fair is going to be fair to future generations of people an other species. we have taking half of the effort's life support capacity right now and we are one in 15, 20 million species so we think it is overoverreaching. the united states and many other countries are under the control of their own financial elite went ' need to go beyond each nation going to a conference

we said, ok, maybe it is not the same level of an economy as the american economy or the same as the european economy, but it is bigger than many of the country's which are members of the g-8, like canada, italy -- the russian economy is bigger. if we talk about the figures, it is bigger. and in terms of energy security, the russians can bring a lot to the global development. then we said, ok, it's something wrong with in this format. all they talk about that g-7, talking about the only financial global issues, and then at the same time we invite five more states every year, the outreach format -- china, india, brazil, and mexico, and this year even more. it means that the g-8 cannot cope with all these problems. our canadian colleagues, they repeated it -- 50-20 is the future -- that he g-20 is the future. we need to shifted from the g-8 to the g-20. we believe the debt with them both -- we believe that within both, russia can bring a lot to the global economy, given its resources, well-educated population -- because we have a very well-educated people. if you travel a lot and compar

the fmoc was talking about an economy that was lefing off. but ben bernanke and policymakers gave no clue as to when the fed might raise interest rates. the fmoc still expects weak economic conditions to persist and so it will keep the funds rate at a, quote, exceptionally low for an extended period and it expects inflation to remain subdued. among the biggest drags on the economy -- job losses and tight credit, putting a drag on consumer spending. the fed did reiterate its plan to purchase $1.2k5 trillion in mortgages, but there is an extension from the end of this year to the end of the first quarter in 2010. larry? >> all right, hafr ton, thank you very much for that update. now let's swing over to the stock market. matt nesto has the full drill down. action selloff, reaction, hello, matt. >> stocks ended up down far second straight day here. a dramatic turnaround in the final 90 minutes. the dow giving back 170 points to finish down 81 at 9748. we're still up about 2.5% for the month of september. today, though, financials, energy, materia

economy ghetto that situation? >> well, i think two factors interacted. one is the global economy itself was quite unbalanced. we've talked about that before. the united states for ten years has been a very high consumption economy. it gave up on savings, basically it didn't do much historically in terms of business investment. and to satisfy our consumption habits, which have required a lot of input, we imported a lot, we financed that sending over dollars which came back to us in the form of short-term financing in all markets. now, the ease of that financing helped facilitate a lot of financial shenanigans. >> rose: yes. >> and as they built up over time, you know, one of my favorite complaints is fancy financial engineering we got during this period where some very smart people thought they had manage the complexitys of the market to the point that the risks were not great. they had been redistributed in a way that would not present a challenge. and the market came under pressure, that did not prove to be the case. and i think that combination of the kind of confidence, the facade of confidence which are d

so the fed is accepting a little dollar deappreciation. >> that's a command and control planned economy. steve liesman, we just learned in this past decade, that that kind of sinking dollar will come up and bite us in the keister, to use reagan's phrase, and create bubbles of assets and why don't they go and absorb some reverse a reverse. >> i'm very surprised at you both arguing that the government should keep the dollar artificially high. >> boo. >> let me finish. >> what are the terms of trade? the terms of trade are such that the united states has a dramatic -- >> it's called creating too many dollars, rick santelli. isn't that the real cause? it's not free markets, rick. >> i am not going to argue economics with any of our esteemed panel. i'm going to bring it on a level that my parents understand and that is the more the dollar goes down, the more our standard of living benchmarked against major economies, slips. you can slice and dice it -- >> only because you and your parents, rick, are importing too much french wine. if you would go with the napa valley, you would not have a pr

and the economy was hit badly by the crisis. so three things happening: recovering,decentralisation and democratisation. but now ten years after the reforms started, indonesia started to look at the international world and trying to put itself somewhere in the map, indonesia is peaceful, religious, democracy and friendly to the world. >>sager: we have seen peaceful elections and president yudhoyono re elected. what are the key challenges in the second term? >>baswedan: short term, is infrastructure, because that would guarantee the expansion of the economy. number twois decentralisation of the market, ensuring there are quite a few engines of growth across the country. three is education, ensuring that the young indonesians, many of them, are educated three is education, ensuring that the young indonesians, many of them, are educated properly, quality education, so that they can participate in the market. when we often, indonesians often see ourselves as a very rich nation because of the minerals, oil, gas, that is present here

the weakened financial system weakened the broader economy. the only way to successfully address these challenges was to address them together. this administration, under the outstanding leadership of timothy geithner and christy roemer, larry summers an others, quickly on all fronts a initialized a financial -- quickly on all fronts initialized a response to the crisis to restart lending. by opening and examining the books of large financial firms, we helped to restore the availability of two things that had been in short supply. capital and confidence. by taking aggressive and innovative steps in credit markets week spurned lending not just the banks, but the people looking to purchase homes or cars or finance small businesses. the home ownership plan, responsible only -- responsible homeowners stemming the tide of falling home values. providing relief to the unemployed, all of a while spurring consumer spending, preventing layoffs of tens of thousands of teachers, police officers, as thousands of these projects are under way across america,

the economy, it is really the same picture as well. the unemployment rate is at about 9.5%. we have got a number of states, 16 states, that are above that and most of those are double-digit unemployment. among them, california. the state has just reported numbers for july. so, the july numbers in california, the biggest job losses, lost 37,000 jobs in july. that puts their unemployment rate right up near 12%. that's just behind michigan, which has the worst at 17%. and they also saw 5,000 -- 5% loss of jobs year-over-year. the absolute numbers in california are staggering. depending on which survey for employment you look at, they lost between 760,000 and 800,000 jobs within the last year. a lot of those, real estate-related, construction was one of the biggest industries hit, down nearly 20%. when you look at that absolute number that is just staggering. that is as much as the population of north dakota, which happens to be the only state in the nation that actually saw a year-over-year growth in employment. now, north dakota is a big

that the economy is still likely to feel very weak... and that's exactly the sentiment we found on the streets of chicago... when we asked people whether or not they think the recession is over. no doesn't seem like it's over.. economy still staggaring.. jobs not filled... lot of pent up demand not beign satisfied.. no it's not over not by a long shot i work in air craft industry and things are pretty tough right now.. what would give you indication it is over.. if we started selling airplanes no not to me.. long way.. wall street going up.. average person.. long way to go.. so no i don't think it's over but we did come across a few people who say they are feeling a little more optimistic. things are still slow but i can see they are getting better.. like what? i work with smaller companies.. picking up with them.. so getting there.. still slow i think it's improving see positive signs.. gm re hiring people.. housing sales improving many experts believe the continued job losses are likely to be a drag on consumer sentiment.. and keep spen

really eclipsed the economy as an issue. but the communication coming out talks about greater coordination of economic policies and an agreement to rein in exorbitant bonuses apparently. >> yes. now, the u.s. and europeans have not come to a meeting of the minds on all the particulars on those issues. in particular, executive compensation, the french favor more specific dollar caps. the u.s. is about realigning incentives to reduce the incentive that financial institutions have to take excessive risk. but they are going to agree on rebalancing the economy, encouraging china to become more of a domestic demand driven economy, while the united states wants to become more of an investment and savings economy here at home. those aren't going to be easy to accomplish and there will be a long arc on those changes. that's what we thought was going to be the news of the summit. a lot of work put in ahead of time. as well as the continued progress on the issues of climate change and free trade. which is somewhat embarrassing for the u

we're asking your views of the economy firsthand. anecdotally about the recovery or not? conspeck with us consumption or thriftiness? two e-mails about community that, one, we hear about a lot and the other we don't often hear about. las vegas, byron is a real estate agent in vegas. he's noticed auto traffic on the valley roads and freeways considerably down. vacant office/retail space is dominant in. strip malls and power shopping centers. here's a very interesting one out of fargo, north dakota of all places. jeremy lives in a town near there. he says golf courses are still packed, dairy queens are always full, just like the billboard in fargo says, "fargo is not participating in the recession." >> does that really exist? wow! >> if jeremy says it, it must be so. >> get us photos and e-mail to us. we'd love to see it. but you know, fargo didn't have the big boom either in housing prices so it didn't come down as dramatically at other -- that's one of my all-time favorite movies, by the way. >>> also ahead, what are the three best e

there is fothen the real economy and there is the financial economy. he financial economy was originally designed thelp the real economy do things. somewhere along the line over the last 25 to 30 years those lines have gotten blurred and the financial ecomy think it is an end of itself and i guess to the people at t very top is and they have done exceptionally well. but our country, each of the state's, all of the counties, all of t municipalities, all of the workers, all o the retired people and all of the children have paid a heavy price for that. it's up for us to turn that arou and try to start t produce things again, try to create good paying jobs. look, the question i think we need to ask time and time and time again when somebody says it stimulated the economy ask them to put in the because if all we are going to do is create the same economy as before the same result will flow. less manufacturing, were wages for workers, people at the top doing better. ask them what will be the new driver? what will be the new driver for an economy? in the econo

so how to improve the structure of the japanese economy. and as far as -- there are two main problems we can see in this program. the first one is on labor law and the second one is demographics. those are very important problems for the japanese economy, which suffers from very low potential growth because of very low demand due to the fact that the wages are very, very low nominal wages are very low. and also, demographics, because, of course, population growth impacts your potential growth. on those two problems, i -- what i can see from the government or from the program, electoral program after winning coalition, there is no satisfactory answer yet. >> luca, is there a satisfactory answer, period? i mean, you know, are these problems just too intractable to solve? >> well, you know, i think that when there is such a big change in a government, there is something always going on. and i think that this coalition is going to slowly come to terms with what the real situation is as far as government in japan -- as far as governing japan. and

the housing sector is coming back and the economy is bouncing back. for the recovery. the second thing is regulations. all kinds of things like conflict of interests with agencies and side bets that helped create this just very unhealthy speculation that i think the white house does need to get to but health care is going to come first. >> joe, a year ago this time, obviously, lehman brothers and that, for many, was the big change in the presidential race how it was handled by john mccain and the republicans. a year later, you have this democratic president. how do the republicans make this an effective bargaining chip, if you will, for them when talking about 2010 and the american people? >> well, of course, you don't want to play politics with the financial sector. >> you don't want to play politics with anything but we see happening. >> but no. republicans have some disagreements with democrats on the economy and how to deal with the economy and what republicans are really afraid of and caution americans about is one government takeover after the o

>> it would come from the banks. >> the economy grows. look, you've got this positive curve and zero interest rate, but if the banks grow, then everybody's going to be paid off and we'll live happily ever after. i bet sheila bair's taking a close look at this. >> but steve said they're not. >> it's on the table. >> but it sounds like they're tamping down this story as being the leading option. there are problems with going to the treasury aborrowing. >> what's the problem with this plan? >> i don't know what the problem is this plan is. it looked like a winner for the banks. >> and the taxpayers. and the taxpayers. this is outside the box, unconventional thinking. it's a brilliant, clever, new-thinking idea. this is creative capitalism at its best. >> it's hard to answer why this is not seen as leading to other solutions. but we know sheila bair's talked a lot about replenishing this fund. >> we're going take a quick break. >> outside the box thinking. a man who played second base here some 45 years ago. actually, 47. ladies and gentlemen,

there is more savings, more investment, the economy grows faster. there is real resources created out of thin air byhat measure. there are many other harmful activities we can tax. pollution of all kinds, transactions in the financial markets. just an endless list of activities. getting on a congested highway. there is an endless list of activities that people engage in that cause harm to others. taxing those activities makes economic pie bigger and when you do that it's always possible for everybody to get a larger slice than before. so again, my prediction, 100 years from n, we will think back and identify charles darwin as the father ofodern economics because i think by the time people will realize that there's no general general presumptiothat self interested action in the marketplace lead to generally to the best results for all. sometimes it does. often it doesn't. and when it doesn't there are often simple unobtrusive policy measures we can adopt that will bring us closer in line with what our real possibilities are. animals can do that. we ca

it seems like the economy is definitely on a rebound. we'll see some growth over the next few years and that should feed into itself and actually result in more and more growth. also look at just the funding costs in the corporate market. industrials bonds, bond yields are down about 2.4% this year so far. financial yields are down 2.8%. that's going to help a lot with financing growth for corporate america going forward. we would expect actually that the market should gain some steam and actually we should have some period of growth in a reasonably nice recovery, better than i think the market's expecting. >> steve leisman, when you look across the entire sphere of your contacts, which are very broad and have very different views on inflation/deflation, where do most people feel more concern right now? >> most people are in the disinflationary camp who i talk to. then maybe i'm not talking to the broad enough spectrum. respected people out there who are deeply concerned about inflation and deeply distrust the fed's ability to pivot. i wo

the more brown paper bags there are, the weaker the economy. day when he walked by that shoe repair shops there were as many bags s s s s as he has s years. >> i get my shoes repaired all the time in the best of economic times. >> it could be the people wait and take a bunch in at once. >> what do you think, maureen? >> it could go either way. maybe people are buying shoes and getting them repaired, but as i just said in that shopping bag indicator, people are buying less. shopping bags were down, so you know maybe it's not what people are reinvesting in yet. that's a sign that we have a ways to go with this economic rebound. >> here is an interesting one. this is linda who owns a jewelry store in puerto rico. she says that when she sees customers paying with $100 bills instead of the charge card, she knows they're in their rainy day funds. isn't that interesting? >> that is really interesting. >> when they're paying cash. >> instead of charging it, they are into their rainy day funds. >> starting to use the cookie day funds. >> meaning they don

there's the real economy and there's the financial economy. the financial economy was originally designed to help the real economy do things. somewhere along the line over the last 25 to 30 years those lines have gotten blurred and the financial economy thinks its an end to itself. to the people at the very top it is. and they've done exceptionally well, but our country, each of the states, all the counties, all the municipalities, all the workers, all the retired people and all the children have paid a heavy price for that. it's up to us to turn that around, all of us, collectively and try to start to produce things again, try to create good paying jobs. look, the question we need to ask time and time and time again, when somebody says let's stimulate the economy, ask them, to what end? because if all we're going to do is create the same economy that we had before, the same result will flow from it. less manufacturing, lower wages for workers, people at the top doing better. ask them what would be the new driver? what will be the new driver fo