the fed is looking at reinflating the economy. they're more willing to wrestle the demons of inflammation than deflation. it is not a united fed by any means. there are clear risks out there. if the economy doesn't pick up enough to support the asset prices, you could fall off another cliff down the road. something to worry about. >> susie: mike, you mentioned how well the markets did in august. but what about today? there wasn't much enthusiasm whether you're talking about the stock market or the bond market. >> very interesting reaction to the elections and the quantitative comments. you would comect buy on the rumor and sell. and it certainly wasn't. the market actually priced in these moves in the elections, and most importantly with bernanke did. and to that extent, my guess is diane may be right. as we move forward, if this thing starts to work, we get some employment numbers later this week, and people think maybe employment will be looking a little better because we have uncertainty out of the way with both of these. if tha

over the last thirty years compare that to the economy in the u.s. with that major difference being a larger socialist spending agenda in europe do you realize that the us. g.d.p. and annual basis has been thirty percent greater for thirty years than that of europe so to segregate policy in the economy is really a very large mistake they go hand in hand in the way that you can only where you get good morning where you calculate product and the way you calculate productivity is this the united states is more productive than europe. because americans walketh longer if you control for the most productive economy in the world is simply the swedes you actually hear about one being said much but it's true as the whole notion of a europe and the running in debt and having terrible all growth most of that was a self-inflicted wound from the seattle monetarist treaties of maastricht after all of this you then have a situation whereby we're going to take even more growth of the economy i don't deny that is there and it's there that's a problem what

why has the economy slowed? in the first year, at this recovery benefited from firms replenishing their inventories. during the recession, inventories were drawn down sharply. but unfortunately, this effect has run its course. the benefits of that are now petering out. the u.s. and off that we have seen from inventory -- inventory growth to private demand growth has not been fully established. we have ongoing sluggishness in two key sectors that typically have led to recoveries. consumer spending and housing. the slow recovery of consumer spending and housing reflect the painful unwinding of the dynamics at work that happened during the expansion that preceded the great recession. beginning around 2003, underwriting standards were significantly relaxed. that led to a sharp rise in household borrowing. the rise in home prices helped support more borrowing as household used second mortgages and lines of credit. this also fuelled a response in home construction. it increased demand for housing, robust hiatt -- home

the better global economy, the better opportunities we have to trade and invest. there are a lot of issues. a well functioning chinese economy is good for the united states. if it strengthens, we take that into account. our focus is under development in the united states. this factors and to our analysis this is how we make -- analysis. this is how we make our policy decisions. >> i was wondering how the new legislation will in fact how the fed deals with acid bubble's going forward? >> there is a very important philosophical change in our regulatory system. prior to the legislation, individual agencies focused on just those market for which they were responsible. the banking industry's but at the banks. the trading commission looked at the changes. insurance regulators look to the insurance companies. there are a couple problems with that approach that became evident. the consistency of regulation as very and even. while some -- uneven. some were falling between the cracks. this is a much broader and bent been a single institution prevent it requires great complex

but the real economy. i think you can trace back a lot of our problems -- the hollowing out of the middle class -- to the way which wall street in its very short time horizons and the compulsion to speculate led it to a lack of concern about any other aspect of the economy. we got to the point over this three decade or so period where the help of the economy even today -- where is the dow? it is not really true. it the health of the economy has a lot more to do with social equity and other concerns that were simply thrown overboard. host: what we take for granted when you talk about financial -- a gradual change about the way we think about money market and regulation, we just take for granted. guest: that is one of the things i tried to explain is how regulation, and oversight, not only was outpaced by where the markets were going but became kind of a fool's by occupation, and lost art. a very character driven there and tell a story of all of these individuals and one of these is a guy named jerry corrigan

for every dollar in toks cuts the economy increases by $3. imple economics, forget about whether we can or can't afford or or the politics aside. it's just good for the economy to extend the tax cuts for everyone jemmu. >> christina roamer used to work for-- >> it's good for millionaires and billionaires. >> that's an old line, you need a new line. >> the 700 billion dollars that our economy would lose by extending to the wealthiest americans we can't afford it. >> you don't-- >> hold on, hold on, wait a minute. >> what you don't understand is that investment capital is what creates jobs. and this somehow does not permeate. those millionaires, people who make incomes in that area, are the ones who take capital and they don't spend it. gosh, they invest is. that investment creates jobs. if the obama administration doesn't understand that then, well, maybe we'd have a 10% unemployment rate. >> we need to invest in small businesses and small businesses are not going to receive the tax cuts and the small businesses needed investment. >> and let me

have an impact longer term hurting the u.s. economy and corporate profits. erika miller, "nightly business report," new york. >> susie: here are the stories in tonight's n.b.r. newswheel: as we reported, stock prices were down and so were treasury prices as the federal reserve kicked off a program to buy $600 billion in government securities. that's supposed to drive down long-term interest rates. but prices fell pushing yields sharply higher. the yield on the 10-year treasury jumped to top banking official has been nominated to oversee fannie mae and freddie joseph smith is president obama's choice to serve as director of the federal housing finance agency. he would have to be confirmed by the senate. whoever gets the job will oversee the agencies as they are about to be restructured by congress. still ahead, how do chicken fingers, ballerinas and piano teachers play a role in the economy? illustrator david gillette explains in tonight's inkonomics. it's no secret tuition costs at public and private universities are rising. on average

it was designed to grow the economy. and there is some legitimate concern that we have had very low inflation, that a huge danger in the united states is deflation, and that we have to be mindful of those dangers going forward because that would not be good for the united states or for the rest of th world. beyond that, that is just an observation about what i think the intent was. last question, scott? >> one of your top advisers said this morning that the challenges facing the g-20 now are much more manageable than they were at the height of the crisis. how does that affect the dynamic? is there some taking the bite off the ball among your fellow leaders? >> what it means is in the absence of crisis, people probably are willing to hunker down a little bit more on some of the negotiations. speed seems less of the essence, people think if it does not get solved now, maybe we can put this off for another day. what is remarkable to me is despite some of those impulses we are still getting stuff done. as i emphasized before,

how is this going to help the economy? >> the best example of that is that that has been the policy since about 2001, 2002. we have had seven or eight years of this policy. it has not done a lot to stimulate growth. most economists, we use them as a referee for these debates, they say if you give just the top and folks this additional tax relief, a lot of people will put it in their stock account or put it in the bank. they will not spend. if we're going to give $65 billion of targeted tax relief, let's see if we could use it as an investment tax credit, research and development tax credit, getting some of the money on the sidelines back in. there is not a lot of evidence that extending this tax break will do much to extend the economy. tavis: how is this going to end the year president obama to his progress of base, who he is already in trouble with? >> i want to get out of a left, right battle. and say, how do we get people back to work? 9.6% unemployment. if we are going to be honest, we have to a knowledge that the gove

stocks hit a three-week low on fresh criticism of the federal reserve's plan to pump up the economy by buying billions of dollars worth of treasury bonds. >> susie: tom, the latest opposition comes from two dozen leading economists, investment strategists and academics. they took out a full page ad in today's "wall street journal" under the banner "economic policies for the 21st century." they're urging ben bernanke to re-think the fed's $600 billion bond buying plan. >> tom: in an open letter to the fed chairman, they write, "the planned asset purchases risk currency debasement and inflation, and we do not think they will achieve the fed's objective of promoting employment." instead of further action by the fed, the authors want improvements in tax, spending and regulatory policies. >> susie: so is the fed's plan flawed? we get two points of view. signers of that letter to bernanke. also joining us, alan blinder, professor of economics at princeton university and former vice chair of the federal reserve. welcome to the program. >> thank you, good to be here. >> susie: you believe with

nothing is worse than hitting the economy right now with big tax increases. the second worse is simply delaying these tax increases because what it does is it still adds more uncertain toy the economy. so it's better than hitting the economy for a tax increase right now. but we want to work to reduce the urn certainty out there for investors, entrepreneurs, planners and the economy. >> rose: will there be 14 votes around? >> i don't see 14 votes in anything i've seen come up yet. >> rose: what does that mean? >> that means this is a commission that moves the debate forward. i'm hoping that we'll bring some more ideas to the table in the commission and see if we can get 14 votes for some things but this current plan was not designed to get 14 votes and pass it into law. it was designed to get the conversation going and flowing. alice and i-- democrat and republican-- are going to try to bring a contribution to that debate. hopefully others will be bringing some ideas to the table and we start moving this debate forward. >> rose: when you look at that social sec

the u.s. economy expanded at a faster clip than originally thought in the third quarter, helped by consumer spending and strong exports. >> susie: but the federal reserve thinks that growth will be short-lived, and high unemployment will stick around we'll have analysis on what it all means for you."p you're watching "nightly business report" for tuesday, november 23. this is "nightly business report" with susie gharib and tom hudson.2; "nightly business report" is made possible by: this program is made possible by contributions to your &eeu station from viewers like you. thank you. captioning sponsored by wpbt< >> susie: good evening, everyone. a sharp stock sell-off today after a surprise confrontation between north and south korea tom, the selling began at the opening bell on word that north korea fired artillery shells at a south korean island. >> tom: susie, that overshadowed some encouraging economic news.t the government says the economy grew by 2.5% in the third quarter. that made g.d.p. gro

well the this talk of the economy as they gather for a two day summit in south korea. shared growth beyond the crisis that's the main theme here in seoul where the g twenty has kicked off join me and he said now wait for the latest. and ready for change which is students pour into the streets of london protesting against a hike in tuition fees and on the government stop taking advantage of them and breaking its promises. a new twist in the spy scandal was gripped the world a russian double agent is reported to responsible for blowing the cover on his colleagues in the united states. are you watching r t well news and much more live from moscow on kerry johnston said the economic solutions on currency wars are on the agenda for the g twenty leaders gathered in south korea ruling the world's major economies are confronted with preventing a recurrence of the financial nightmare of two thousand and eight. and the tsunami is following the summit for us in seoul shared recovery beyond the crisis is the main theme that of course.

the american economy is a fifth of the world economy. 're a small droplet. >> but all of this at the end of the day rests on the possibility of peace. isn't that true? because economic vibrancy comes as a result of peace. so how do you get there? >> well, i think peace is crucial, but it's crucial for -- it's crucial for our own lives. it's crucial for our security. it's not necessarily been the driving force -- it could be the driving force of great economic progress. the driving factor of the economic success is the ability of your citizens, of your entrepreneurs to openly experiment with their ideas and to profit by them. or fail. i think this is the driving element of success in our part of the world. peace could enhance it. >> were you surprised at the midterm elections and how the people voted? >> oh, listen, have i enough of my own politics. >> my thanks to prime minister benjamin netanyahu. >>> up next on "the wall street journal report," a look at the news this week that will have an impact on your money. >>> and then the billion

>> obama: i think, first and foremost, it was a referendum on the economy, and the party in power wasponsible for an economy that is still underperforming and where a lot of folks are still hurting. >> kroft: at your news conference, you seemed unwilling to accept the idea that this was a rejection in any way of your agenda and your policies. is this a defeat, a reflection on your leadership? >> obama: i think that what happened over the course of two years was that we had to take a series of big emergency steps quickly, and most of them in the first six months of my administration. each of them had a big price tag. and people looked at that and they said, "boy, this feels as if there's a huge expansion of government." >> kroft: well, it was a huge expansion of government. >> obama: what i didn't effectively, i think, drive home is that we were taking these steps not because of some theory that we wanted to expand government. it was because we had an emergency situation, and we wanted to make sure the economy didn't go off a cliff. i think the republicans were able to paint my governi

it was very much about the economy. i had the privilege to travel to aumber of congressional districts around the country to try to help people to get the vote turned out. i can tell you what i saw. traveling to places whe the real unemployment in certain pockets and certain areas was hovering around, you know, the high teens to the low 20's in terms of unemployment. traveling to districts where the real unemployment is really solidly throughout a state at about 15% out in nevada. traveling to con gregsal districts where one out of every 20, 25, 50 homes is in foreclosure. that's what this election was about. people are trying to see the light at the end of the tunnel. and so i think is this election cycle, i see several things. one, i see that we had volatility in the 2006 cycle. we had volunteertyty in the 2008 cycle. democrats happened to hold more seats in 2010 than we did previously, and so the republicans did and so we lost a lot of those seats. some of these districts are where this the scheme of things, i look at

where are we in your estimation in the economy? >> yeah, the real challenge that people have is as emotional beings we're sort of binary. either we're trapped in airration 58 exuberance or trapped in an irrational despondency. and your role in the media is just to reflect that. so how are things going? they're getting better. there are some bumpy roads in the near term. medium term things are looking well. longer term there may be some pipers to pay. >> people actually have to start feeling better. i mean, that's the -- >> put it to work. >> put it to work. >> you're exactly right. and all this talk about housing, obviously, and that's been traumatic. it's been the worst economic development we've seen in our lifetime. but really the key is jobs because when that turns around that's what's going to bring back the optimism. >> for someone who didn't major in economy or have his master's degree in economy, that's the chicken and egg. well, if we had housing people felt confident about, we'd probably have job growth, and if we had job

>> well, trying to boost the u.s. economy. the fed looks at the u.s. economy and sees unemployment at almost 10%, much much higher than it would like. sees inflation uncomfortably low worries about deflation, as your report announced. and it wants to boost the u.s. economy. traditionally what the fed would do is cut short-term interest rates. but short-term interest rates are already at zero, so you can't do that any more. so it's now going another route and that route is designed to bring down long-term rates, and the idea is we have -- and that boosts the economy in several channels. it encouragesnvestment, it boosts asset prices and the third is it might mush down the dollar and that's the one the rest of the world is very unhappy about. >> woodruff: so it's only within a few days since this started. has it had an effect so far? >> in the u.s. probably not. but it is having a big effect on the rest of the word. even the prospect of the u.s. federal reserve purposing -- pumping money into the economy has already led to fluctuating markets around the w

we're trying to make the u.s. economy stronger. >> makes americans goods cheaper to purchase and harder to buy goods from other places. it had the affect of why wouldn't that help the u.s. economy? >> that's the goal creating jobs. i want to zero in on doug here, the idea this will not create jobs. this is what ben bernanke used so sell the idea to people or if this is about employment. do you think the jobs are going to come? >> look, this is at best going to drive down medium to long-term interest rates 30 to 40 basis points when they are at historic lows. we've got low interest rates. that's not our problem. our problems are deeper and involve the need for policies, cessation to heavy regulatory hand, rollback on health care reform. not raising taxes. all of those things are controlled by people other than the federal reserve. they are well intentioned. but all they are going to do is create inflation. they are not going to change unemployment. that's going the wrong direction from the mandate. >> richard is groaning o

very impacted by the economy. they draw more than any other group in this election as part of the democratic base. -- and they dropped more than any other group in this election as part of the democratic base. the challenge for republicans in this data are two big problems going forward. the first has to do with the problem of deficits and austerity. to say that democrats spent too much and ran up the debt is not the same thing as saying the first priority of this country ought to be austerity and that this reduction. the reason they are angry at democrats is not the same thing -- did not be liberal in terms of what they want to have an hour. -- do not be liberaltteral in ts of what they want to have happen. in this environment i would have thought we would get slaughtered on the question here yet it came out about even. if you look of the voters coming into the electorate in 2012, they are voters that one more demey want more democrat. governments. we ask a question on whether you want -- i will get the exact word

they think that would be the right medicine to help the u.s. economy now, and shore up confidence, investor confidence in the u.s. economy in the long run. they don't think that's going to happen. so sitting there at the finish, looking at the -- the federal reserve, looking at the sta tut a says they have to do whatever they can to have maximum employment, employment too high and inflation too low, they are stepping into the vacuum, just as they did at the beginning of the crisis when the congress was reluctant to act and president bush was happy to let the fed do the heavy lifti lifting. >> i was just going to agree with david and say, you know so, what's really interesting is ben bernanke is a republican and he was appointed by a republican, but in a way he is sort of picking up the ball which the now republican controlled legislature, the smart money is betting will not be able to carry on. it is a really interesting moment where you have, in a way, the country's chief nonpartisan economic decision maker, but appointed by a republican, effectively

is to find ways of strengthening the global economy and preventing future financial crisis. and. the world as a russian. colleagues in the united states. and. for the two countries since the cold war. to the streets of london protesting against. the government stops taking advantage of and breaking its promises a demonstration resulted in dozens of arrests. politicians. it's. time now for the sports. great to have you with us this hour this is sports today i'm you know neal and these are headlines all to play for c.s.m. law school leaders in meet to ensure from take the last fortnight in the russian premier league. off the mark one of your league's pre-season favorites knowledge to win that last single union olympia and. the one step at a time by year since bob stay started. almost lost her life in a training accident the russian speaks to see what her future holds. the game back could yet to find the russian premier league season took place in some petersburg last night but it wasn't a happy i think for home sides and meet with the table toppers stunned three one by fellow title

the economy is changing shape. margins gettinging a little more from things like energy,çç from agriculture, a little bit more from manufacturing, from exports than we were a couple of years ago and a little bit less from consumer spending but it's not a dramatic change. in other words, maybe instead of 70% it's only 69 or 68 percent. it would take many years of this type of activity, of consumers kind of holding back and of other sectors rising to the foreto get a substantial change in the shape of our economy. >> brown: daniel gross, thanks for joining us. enjoy the rest of the holiday. >> thank you. >> we turn from on-line >> woodruff: coming up, we turn from online shopping to online security, and the case of a cyber hijacking. plus haiti's upcoming elections; shields and brooks; and the winner of the world food prize. but first, the other news of the day. here's hari sreenivasan in our newsroom. >> sreenivasan: new rounds of artillery fire rang out inside north korea today, but none reached the south. at the

policy might flood money into the korean economy? >> that kind of question should be asked to me when president obama is not standing right next to me. >> america's main adversary in this is not germany or south korea. it is china. the chinese say that of course they need to become less dependent on their exports, spend more on their domestic economy, and but it is not going to happen overnight, and not by tweaking the exchange rate. in the meantime, the u.s. should not be punishing the rest of the world for the weak state of its own economy. small economies like brazil said they are being punished for the stomach at the top, because the dollar cannot fall against the chinese currency. cheap money from the u.s. central bank is putting pressure on their currencies instead. >> there are two issues. the value of the exchange rate, and the other question is you are exporting to me, brazil, to me, china, to me, mexico. this is not in my best interest and you're creating bubbles in the stock market. york written bubbles in the property mark

people aren't happy about the economy. they aren't happy about the jobless situation, there is little prospect the economy is going to turn around at least in any big way any time soon. and that's always the main issue that people vote on. they ask how are things in their lives. and for tens of millions of people, they are out of work. some of their family is out of work. they are worried about losing their job. no one is seeing pay increases. i think the debt is overwhelming. a lot of people did answer the deficit, i should point out almost no one answered that as your first answer so if you pressed them they would say the deficit. but the reality is very few people, those of us sitting in washington have our nose in books but frankly for the vast majority of the people if the deficit were twice as high or half as high they would still say they are worried about the deficit. it is a really big number. almost no one has a sense of how big that is. so when things are going bad, the idea that the government is running too big

saving jobs and main street and the wages and main street look the things in this country right now the economy is very unstable people are worried about losing their jobs their health care their pensions their retirement security why wouldn't there be a revolt but if we if we look at the results again and you can't help but think that this is a reflection of the health care bill that president obama pushed through you know i was covering some of the local debates and folks who voted in members who voted for the health care bill were demonized you know even if they considered voting for it and they didn't in the end they were looked down upon you almost didn't vote for the health care bill because it didn't include the public option i mean isn't this an indication you know america's youth are not interested not ready or just doesn't care that americans don't think that a we needed a public option and b. it was the right thing to even even push the health care bill to writing this was the major piece of legislation that obama was able to to push through fifty million americans without any health

more will be done to promote the u.s. economy, and that could mean that german exporters find it harder to grow their american business, at least in the short term. if he has things tougher at home, the president will concentrate more on foreign issues, some say, and when it really matters, he will find consensus with the republicans. >> britain has traditionally been the staunchest of u.s. allies. nonetheless, the reaction has been somewhat muted. it is not long since the conservatives regained power year, and the british are worried about the biggest american concern, the economy. >> britain and america are deeply connected politically but also economically. many commentators focus on economic issues, and there are clear divisions when it comes to dealing with the financial crisis. in britain, the state is being shrunk. president obama has criticized that in the past. now, he will be under increased pressure from republicans to do the same. the british government might welcome such exchange, but most importantly, they want to t

we have stabilized the economy. we have job growth in the private-sector but people all across america are not appealing that progress. they don't see it. they understand that i am the president of the united states and that my core responsibility is to make sure we have an economy that is growing and that jobs are being created. i think i have to take direct responsibility for the fact that we have not made as much progress as we need to make. moving forward, the question will be, can democrats and republicans sit down together and come up with a set of ideas that addressed those core concerns? i am confident that we can. i think there are some areas where it will be difficult for us to a great. i think there will be a whole bunch of areas where we can agree. i don't think there's anybody in america that things we have an energy policy that works the way it needs to. that things we should not be working on energy independence and that gives opportunities for democrats and republicans to come together and think about