investors will have confidence in the economy. so, how -- just because congress says, okay, you can raise the debt ceiling, that averts the crisis? how does that work? >> i guess you're looking at short term and long term crisis here. if you don't raise the debt kreeling that's a short term immediate crisis an all of the affects you would see from a long-term crisis happen right now because if the government can't borrow then -- legally can't borrow then you ur just stuck and then if the government can borrow then but that's a warning to investors that maybe the u.s. can't sort out the political problems in dealing with this just like other countries in europe have dealt with this politically and managed to do it though obviously with a lot of trouble and difficulty in the uk and greece and spain and it lain ireland and all these places, and if there is a signal to investors that maybe the u.s. won't be able to deal with this then the cost of borrowing almost immediately goes up. and so, then you not only have as a result of that d

gwen: david, we heard so much about the bad economy. yet at year's end it felt like the stock market had rebounded, retail sales, christmas sales had really bounced back. have we turned a corner or is it too soon to say? >> i think we've turned a corner. the problem is that it's better but not good. so the good news is the economy is growing again. you're right, the stock markets up 10% this year. employers are beginning to hire, and at this pace in 25 years from now we'll be at full employment again. so the problem of the pace of the improvement is so slow that many americans can be excused for saying hey, i don't think the recessions over yet. so it's not surprising that those people are dissatisfied with the president and the democrats. they would have turned on any incumbent party. gwen: in fact, if you listen to what the republic conditions had to say after the elections, they said they're aware that people are pretty unhappy with them as well. >> i think they behaved in a way that was surprisingly, i think for some, a modest, at le

the russian economy the baltic economies if you want to see where the us is going look at the model it's taking in europe is taking latvia and iceland the problem with the mortgage market and america versus china is here it wasn't fannie mae that did it it was the massive fraud by commercial banks shame on them. on the banking system it was fraud that brought it down and nobody has been sent to jail at all in fact the fraudsters have been rewarded in china the banks or state banks and others are you sure there is no you actually say. you actually saying that are you actually saying that the united states over the last ten years has been moving in the direction of free markets we've had the most incredible explosion of government spending government intervention bell outs handouts subsidies i mean this isn't neo liberalism and a classical liberal sounds this is video shows it is. going to do you want to break real quick gentlemen after a short break we'll continue our discussion on currency war stay with our. repairing a broken. highway construction humanitarian aid. budgets. it's th

government and the economy? >> well, you know, people tend to look at the competing strategies for dealing with a financial crisis and try to characterize them as two extremes. there's sort of a-- you might call it the liquidation strategy to say let the market solve it. and there are some people who say, you know, to use the pejorative i think unfairly is to say you should choose the broader-- you might call it the nationalization strategy. have the government massively socialize, take on those risks. we tried an approach in the united states that was very different from that and it was enormously successful. we said we would try to recapitalize the financial system as quickly as possible with a framework that maximized the chance that private capital will come and do that work for us. and the things we put in motion in the stress test were designed to make that much more likely. and alongside that, we try to take the catastrophic risk out of the broader financial marks by making a lot of commitments to make thu

as the economy has gone up. there is some fear that if you don't do anything about the deficit and the debt and leave this problem festering that investors will eventually start questioning the ability of the u.s. government to pay it back and you look at 4.5%, 5% borrowing costs, 6%. the reason this is just not for the government borrowing because it obviously affects how much the government is going to be able to do in other programs if it's spending so much money servicing debt but also beyond that in the idea of how these interest rates flow through to the rest of the economy and the market place the ten-year treasury yield is known as the benchmark rate and that flows through if you're ever looking for a mortgage it's often tied very closely to the ten-year yield and with some premium that borrowing costs in every other way e tied to the ten-year yield ether for corporations or for consumers. investors can turn quickly and fiercely so they can decide and we never really know when investors are going to decid

-- the pace of the economy. looking at the number of changes on the tax side and the spending side, we did not look at defense spending separately. we looked at infrastructure spending and changes in grants for state and local governments. >> my time has expired. the defense is a huge part of our budget. fairlyts recommended are barel significant. but because they have a big impact on jobs, we will talk with you may be through the armed services committee. >> yes, sir, we will have to talk with you. >> thank you. >> it is good to be here. i appreciated working with the congressional budget office when i was in the house budget committee and at omb. i appreciate your testimony today. we find ourselves at a veritable time, doing that? it is a day after you told us that we're facing the base deficit of our country, in fact, in the history of the world this year. by the way, these projections are notoriously wrong. the unfortunate, this looks more accurate than some -- unfortunately, this looks more accurate than som

so the world economy can rebalance. the world economy can create jobs. the world economy can create growth in the future. the world economy can consume the financial crisis that have been deep indeed it is a structural change happening between europe and africa, asia and the rest of the world, but to do that you cannot pursue orthodox policies because you're at a point of transition in the world economy. you cannot invest in education and training and skills and technology and science. if you do not to have the goods and services will be the most sophisticated and the ones people want to buy. and america with its great in invented genius and ability to create companies of the world can be one of the great beneficiaries as new era. because you're creating a supermarket in asia that's twice the size of a consumer market in america and the second thing that's going to happen is that if we trade freely with other countries and don't become protectionist speaking to the shares of the market but there's a danger of protectionist sentiment at the moment because

the economy is not a fixed pie. when you expand the labor curve, a simple economist will say the price of labor goes down and we're all hurt. the more people that work here, the more people that are chasing jobs and we're all doomed. wrong. the expansion of the available labor force creates opportunities that did not exist before. you have innovation and entrepreneurialism that increases the actual size of small and medium-sized businesses. they consume and that expands the demand curve. you have a dynamic economy for 90% of u.s. born workers that enhances their wages. the other 9% got whacked up side the head with globalization and immigration and everything you can list and they need help. getting rid of immigrants doesn't really help them. the final point is if you look at the last 15 years, 25% of publicly traded companies in the united states are essentially from the bay area region and one out of four was started by an immigrant. we have great data on this because it's all transparent. you can look it up. you c

the economy stabilized. you can go back before that and say that bernanke and the federal reserve did not anticipate this crisis and might have and this up -- prevented if they had anticipated that. they may have avoided it. you can say the same thing of henry paulson who was the treasury secretary. although his reputation is not as high as bernanke's. he acted decisively on a number of occasionss to help stabilize financial markets. i think that the credit for stabilizing the economy belongs not just to one person, but to an array of people in both parties. but they all made mistakes at different times. nobody was perfect. under other circumstances, things might have gotten much worse. >> who do you think has been wrong? >> everybody has been wrong. if somebody committed a single sen more that -- a single sin -- >> talk shows are pointing their finger at the other side. if you were just listening to figure out who is wrong. they say that president obama is a socialist and if you look at the left, they will s

he is not going to do anything to bring about growth in the economy. his is how out of touch he is. what people up and down the country are saying is that he is going too far and too fast with deficit reduction, and that that is what is inhibiting growth in this country. the evidence shows that while cuts are being made in the public sector and while jobs are being lost in the public sector, jobs are not being created in the private sector. why does not the prime minister, just for once, put his arrogance aside, and admit that he knows how to cut jobs but has absolutely no idea how he is going to create them? >> the right honorable gentleman has got to stop writing his questions before he comes to the chamber and actually listens to the answer. he asks about changing course, and i have to say to him that he seems to have replaced a shadow chancellor who did not understand labour's program with one who does not agree with it. he asks specifically about cuts next year. let me just remind him that it is labour's own plan for significant cuts in spending to

tomorrow, the launching of startup, america, an initiative to spur the economy. you will hear about the obama administration costs plan to create jobs. that is live of 11:00 a.m., eastern. >> this week and miliband challenged the prime minister over the state of the british economy after recently released gdp figures for the final quarter in 2011 showed the economy fell by 5.5%. the prime minister said the numbers were disappointing but the spending -- defended his current deficit reduction plan. >> i am sure the whole house will want to join me in sending our deepest condolences to all those affected by the appalling terrorist attack in moscow on monday. our thoughts should be with the families of all those killed and injured, but especially with the family of gordon cousland of the united kingdom. i spoke to president medvedev on monday evening and offered him our complete support in ensuring that the terrorists should never be allowed to win. this morning, i had meetings with ministerial colleagues and others, and in addition to my duties in the house, i shall

government is the engine of the economy, basically. he had this airplane metaphor backwards. the engine of our economy is the private sector, not the public sector. when the public -- and the private sector grows, it creates new jobs, new industries, new ideas and more tax revenue. but when the public sector grows, it simply consumes more of what the private sector produces. big government waste is funded on the back of small business thrift. the american people deserve candor and directness from the elected officials. the money to sustain the president's big government vision, the more investments he called for is simply not there. we don't have the money. meaningful spending reductions are not a choice. they are an obligation. there is no serious alternative. we need to take a tougher road, the road that leads to prosperity. reducing the size and cost of government and not be easy, but is the only responsible course, the only one that will lead us to a better future. so i look forward to discussing the issues with you now and as we go

in terms of the national economy? ell, it would -- it's difficult to know frankly because it hasn't happened for a long time. it would certainly be -- it would certainly create a lot of stress and volatility in the markets. there's no question about that. it also would mean that the state, when it came back into the market, would probably have to pay a much higher interest rate for a considerable period and, therefore, it would be, i think, a very much last resort for any state to do that. >> i thank you very much. thank you, mr. chairman. >> i thank the senator. i thank the senator for asking the question because i think this is something we need to be paying close attention to. senators raised the question of a series of municipalities that may be under significant stress. we've also been told that there are a number of states -- i've been told as many as 20. governor manchin, maybe you have more recent information. >> i just cycled being out of the chair of the nga and we were concerned watching the fiscal viability

in terms of the national economy? >> well, it would -- it's difficult to know frankly because it hasn't happened for a long time. it would certainly be -- it would certainly create a lot of stress and volatility in the markets. there's no question about that. it also would mean that the state, when it came back into the market, would probably have to pay a much higher interest rate for a considerable period and, therefore, it would be, i think, a very much last resort for any state to do that. >> i thank you very much. thank you, mr. chairman. >> i thank the senator. i thank the senator for asking the question because i think this is something we need to be paying close attention to. senators raised the question of a series of municipalities that may be under significant stress. we've also been told that there are a number of states -- i've been told as many as 20. governor manchin, maybe you have more recent information. >> i just cycled being out of the chair of the nga and we were concerned watching the fiscal viabi

immigrants are a net contributor to the economy. it is easy to be distracted by the fiscal analysis which is about tax revenues and expenditures. entire categories of people at a certain phase in their life and a certain period in their economy are net users of tax resources. as it happens since we're running a big federal deficit right now, we're all net users of resources. if you add us you will up together, we're not producing enough revenue to cover the expenses of the government. people that are older, children, those are categories of people who are net drains on the economy. that's a fiscal analysis, not an economic analysis. so point number one for your friends who are not persuaded that immigration is a good thing, get them off the fiscal analysis and ask them to focus on the economic analysis. that's a bigger picture analysis. yes, a child of 7 costs money because they attend school and no, they don't work. the last time i checked, that was a good thing. later when they go on to do wonderful and innovative things, whether i

those four sectors, they're more sensitive to the global economy than they are to the u.s. economy. >> reporter: while they may disagree in their forecasts, these strategists warn markets will be volatile. some are worried about what will happen when the federal reserve stops buying bonds, withdrawing support for the economy. there's also the possibility of the return of european debt concerns. >> obviously, they haven't gone away. and i think really, in 2011, we are going to continue to see more volatility caused by foreign issues, like sovereign debt in europe. >> reporter: but for tonight, there's reason to celebrate. the end of 2010 marks the largest three-year advance for stocks in over a decade with a more than 50% increase in that time. erika miller, "nightly business report," new york. >> tom: here are the stories in tonight's "n.b.r. newswheel." stocks were mixed on this last day of trading. the dow rose seven points, the nasdaq fell ten, and the s&p 500 was off a fraction. holiday trading volume continued. big board volume was under 600 million shares. nasdaq volum

the u.s. economy picked up steam in the fourth quarter of last year, although not as much as analysts had expected. the gross domestic product, the broadest view of the strength and size of the american economy, rose 3.2% on an annualized basis. consumer spending was the strongest it has been in more than four years. for all of 2010, the economy grew at 2.9%, the biggest gain since 2005. the markets hit some big numbers this week. on wednesday, the dow touching the 12,000 mark for the first time since june of 2008. then on thursday, the s&p 500 hit 1300 for the first time since august of 2008. but on friday the markets came down. the federal reserve's open market committee met this week and left interest rates unchanged. it also said that the economic recovery was strengthening, and that it would continue its $600 billion bond buying program. it's been a busy earning season among dow components. mcdonald's fell short of expectations, hurt by higher commodities prices. verizon was in line as was boeing

to get the u.s. economyk on track the federal reserve created another quantitative easing policy last autumn. in this "global economy" series we focus on the united states. nhk world's david savina reports from new york. >> reporter: the new york stock exchange opened the year on an upbeat note while the dow jones industrial average posted three-year highs two times in its opening week. >> well, it's supposed to be the year of the rabbit, and this is a pretty good -- pretty good start. you're seeing money coming into the marketplace that had been at rest somewhere else. >> reporter: one driving force behind the rise is retail sales. americans have been buying more. according to the international council of shopping centers, 2010's holiday sales were up, with the season posting the strongest sales since 2006. the strong sales have carried over into 2011. this ski resort has 10% more customers compared to the same time last year. some say it indicates americans have more money available for recreation. >> for

what is the republican congress going to do about the economy and jobs? is there anything you guys have for these next few months to try to address these problems directly? >> we believe the mass of the expense of the federal government has hurt the economy -- massive expense of the federal government has hurt the economy and hurt job growth. we could do more quantities in easing. what we want is a long-term sustainable growth. we believe that happens by constraining government and cutting spending in washington, which over the long term will keep interest rates lower and give folks better access to credit. and over the long term, it will reduce our tax burden as well. with the extension of the 2001 space and 2003 tax cuts was beneficial -- to does a 1 -- 2001 and 2003 tax cuts was beneficial. you also see the regulatory burden of this administration. over the last two years, we have had hundreds and hundreds of new regulations written that have had billions of dollars of impact on the economy. is before you talk about the implementation of dodd- frank and

. >> try to turn the economy from the brink, now our job is putting our economy into overdrive. gwen: on capitol hill. >> i don't want rationed care. gwen: a vigorous effort to roll back one of the administration signature accomplishments. >> our goal is to stop the job destroying health care bill. >> what does it do when you look at it? it blows a hole through the deficit. gwen: washington's political chess game turns three dimensional as senators retire. >> i have decided that it is time for turn the page to a few chapter. gwen: who is likely to go next? covering the week, david wessel of the "wall street journal," peter baker of the "new york times." doyle mcmanus of the "los angeles times." and carol tumulty of the "washington post." gwen: good evening. it couldn't have gotten any fancier in washington this week. ruffles and red carpets and famous faces and lots and lots of hand shakes. the obama administration pulled out all of the stops for jintao's visit. also went out of the way to stress the importance of the relationship. >> at a time when some doubt the benefits of the

it hasn't moved the economy. e of confidence, that he's willing to do that. i think that's what he's done. >> the economy has shown some improvements. i think the president can take us beyond the crisis he inherited. we have heard for two years the economy was going off the cliff. now we have an opportunity, the president has an opportunity to talk about the road to revival. to rebuild on america's infrastructure. it will take private investment, as well as more public investments, i believe. this is a great opportunity to show that he can bring diverging opinions together, people that might have different beliefs and different backgrounds. he has a single goal to create jobs for the american people. >> the economy is improving. and that's what's depressing. the recovery began in june 2009, 20 months ago. unemployment seems resistant to this. >> aren't they trying to kick start from the emergency rescue to putting it back -- >> i think that's all symbolism. the reality is. the strategy is to hope that the natural

more money will be circulating in the economy. think that we tried to be sensitive with president obama's leadership to really look at the long-term. let's get strong and moving forward. and we can and we must deal with this deficit. >> chris: would you -- obviously, you wouldn't decide this by yourself. but your personal opinion, would you be willing to shut down the government rather than to accept a steep and what you felt were overly draconian republican spending cuts? >> absolutely not. let me tell you something. we remember speaker gingrich 16 years ago shutting down the government. a confrontation with president clinton, which backfired on speaker gingrich and really caused some problems across america. speaker john boehner is much more responsible. he said let's look at the debt ceiling like adults. that's a quote. he's right. we don't want to mix foreclosure on the full credit of the united states of america. it would be disastrous. china, our major creditor are in a position if tomorrow they announced they lost confidenc

we need to stimulate the economy. what you can do and what are would say is urgent right now is to repeal unproductive holes in the budget called tax preferences that don't stimulate the economy. tax preferences above 200,000. all these things that are great giveaways, the deficit really does count but one last thing i will say is it is not just a matter of is the deficit high or not? why is the deficit high? the highest deficit came out of world war ii and yet the following 30 years were the strongest period of sustained prosperity for america. we invested in infrastructure and that is what we need to do right now and we need to not waste time getting around that. >> at what point can we not put the deficit off any more? >> a little grid on what the various commissions were aiming for. the president's commission was trying to get to a deficit of 2% of gdp to 2015. all thoughtful efforts are trying to echo what jim has said which is don't prune everything now in an emergency but where are we in 2015? we are in 2011 now

for the global economy, given that two-thirds of the world's major economies are in the early stage of coming out of this recession, i would not put in place and on the global level at the high list of concerns. just to start where you began, the most important thing n apart fm the united states is doing what needs to do to repair the damage caused by this crisis -- i am the always the first to admit, the u.s. made some substantial mistakes in how we ran our financial system. ey caused enormous damage to our credibility and to the american economy. will be living with that for a long time. >> when you say that, you are talking about the failure of enforcement of regulatory authority? >> we just ran an indefensible the antiquateda th antiquated financial system. it is an obligation that we acknowledge that mistake and make sure we do everything we can to fix our challges here. apart from what we do, which is important to world affairs, i think it is vy important to see europe -- and they will do this. i have no doubt they will do this. we have to make sure they put in place a framework

the rhetoric on regulation is harming the economy. it's making businessmen hesitant about investing. i think the president's new tone where he is basically writing an op ed in the "the wall street journal" of all places about how we need to move toward more job reation and competitiveness. how we need to examine our regulatory policies is basically the right thing to do. >> and mr. reich's point that the interest of big business and everybody else aren't necessarily in sync? >> look f the pie gets bigger than it is a lot easier to discuss how you cut it up. and if the pie gets bigger, and by that i mean we create more jobs, then labor is going to be better off. we can argue about how we are goinging to divide it up later on. but right now we have an unemployment rate well over 9%. we have virtually zero job growth. we've created a few jobs, job growth is about less than a percent over the past year. we've got a problem. and if the president wants to cooperate with the business community and create more jobs, i'm all for it. >> robert r

growth is contingent on oil oil drives the global economy every single part of the global economy is tied to oil but you've also he also mentions the fact that you've got peak oil so there's probably not even enough oil in the ground to finance the recovery so this just a huge intersection of competing die off not only are the birds dying and the fish dying and the crabs dying but the bond markets dying in the credit markets dying and the oil's dying that's peak oil well there's not enough oil in the ground at less than one hundred dollars per barrel and you need that less than one hundred dollars per barrel without to continue to grow the economy didn't the mayans say that two thousand and twelve was the big end of time i believe what we should ask the romanian which is they would know already well thanks day's over for being on the kaiser report thank you max already when i come back we're going to be talking with gonzalo lira in chile about the economy what's happening down there so don't go away. renewed elitists in science and technology from around the world. we go to the future

in terms of the national economy? >> well, it would -- it's difficult to know frankly because it hasn't happened for a long time. it would certainly be -- it would certainly create a lot of stress and volatility in the markets. there's no question about that. it also would mean that the state, when it came back into the market, would probably have to pay a much higher interest rate for a considerable period and, therefore, it would be, i think, a very much last resort for any state to do that. >> i thank you very much. thank you, mr. chairman. >> i thank the senator. i thank the senator for asking the question because i think this is something we need to be paying close attention to. senators raised the question of a series of municipalities that may be under significant stress. we've also been told that there are a number of states -- i've been told as many as 20. governor manchin, maybe you have more recent information. >> i just cycled being out of the chair of the nga and we were concerned watching the fiscal viabi

and joel, being very smart, having covered the economy at the "l.a. times, and at "the national journal," where we both worked as well, he has a substantive background and is a good writer. he is an expert at grammar. when things are not clear, he tells me. and when he thinks i'm saying something -- his political views are different than mine, and when he thinks i'm saying something that is really off the range, he tries to rein me in. then i go either to the "newsweek" editor's or the editors at "the washington post" writers group that syndicates the column, and they are very good, too. particularly editors at the writers' group, when i say stupid things are things that are unclear, they say let's clarify this. they do what editors are supposed to do. i have always regarded editors as my friends. what every rider wants to hear is "this is the most brilliant thing that has ever been written, it is completely clear, you do not have a word out of place," but unfortunately that is not the reality. i regard editors as protecting against myself, so i liste

the economy has struggled to recover from the recent recession. the pace of growth and output has been anemic compared with that in past recoveries. the unemployment rate has remained high. federal budget deficits and debts have surged in the past few years. going to accommodation of a severe drop in economic activity, policies enacted in response to the financial crisis and recession, and an imbalance between revenues and spending that predated the recession. unfortunately, it is likely that a return to normal economic conditions will take years. even after the economy is fully recovered, the return to sustainable budget conditions will require significant changes in tax and spending policies. let me discuss the economic outlook first and turned to the budget outlook. the economy will be below its potential for some time. we project that tbt will increase, reflecting continued strong growth and business investment. improvements in residential and investment and exports and increases in consumer spending. we have a long way to go on the of -- the

for the global economy, given that two-thirds of the world's major economies are in the early stage ofoming out of this recession, i would not put in place and on the global level at the high list of concerns. just to start where you began, the most important thing now apart from the united states is doing what needs to do to repair the damage caused by this crisis -- i am the always the first to admit, the u.s. made some substantial mistakes in how we ran our financial system. they caused enormous damage to our credibility and to the american economy. will be living with that for a long time. >> when you say that, you are talking about the failure of enforcement of regulatory authority? >> we just ran an indefensible the antiquateda th antiquated financial system. it is an obligation that we acknowledge that mistake and make sure we do everything we can to fix our challenges here. apart from what we do, which is important to world affairs, i think it is very important to see europe -- and they will do this. i have no doubt they will do this. we have to make sure they put in place a fr

emerging markets have been a hot trade as the global economy recovers. tonight, the fund is at its lowest price since november. even before egypt heated up, the tech sector was a drag thanks to earnings and guidance last night. microsoft led the dow losers, falling almost 4%. amazon.com shed 7%. job recruitment website monster led the tech sector down, losing a quarter of its value. disappointing earnings and outlook, management changes and the possible i.p.o. of professional networking website linked-in get the blame. speaking of initial public offerings, this week saw the first ones of the year. earlier susie spoke with the chief at bank united on its first day of trading. it wasn't alone this week. adeco-agro is a south american agricultural conglomerate. it cut its initial asking price and saw a nice pop today. interxion operates computer data centers. it also saw some continued interest up 6%. earlier in the week, t.v. ratings company nielsen can public. it remains above its i.p.o. price tonight. and internet content firm demand media also remains ab

as the economy has gone up. here is some fear that if you don't do anything about the deficit and the debt and leave this problem festering that investors will eventually start questioning the ability of the u.s. government to pay it back and you look at 4.5%, 5% borrowing costs, 6%. the reason this is just not for the government borrowing because it obviously affects how much the government is going to be able to do in other programs if it's spending so much money servicing debt but also beyond that in the idea of how these interest rates flow through to the rest of the economy and the market place the ten-year treasury yield is known as the benchmark rate and that flows through if you're ever looking for a mortgage it's often tied very closely to the ten-year yield and with some premium that borrowing costs in every other way are tied to the ten-year yield whether for corporations or for consumers. investors can turn quickly and fiercely so they can decide and we never really know when investors are going to de