take a closer look at the treasury securities market in the week, the government is auctioning more than $120 billion roof of t- bills bonds and notes interest rates on the 10 year notes inching up just a little bit. scenes that around 3 1/2% so it does indicate that investors are looking for a little bit high return for the investment in treasury securities but certainly not by much. perhaps% is reasonable. is not as bad as it could be for those bastards in the meantime the federal reserve basically saying that perhaps the economic growth beginning to take hold be very lightly. a new government report says taxpayers will probably not recover all of the bailout money poured into the auto industry... that's according to the congressional oversight panel... which did not give a specific reason why. since last december, a total of 85 billion dollars was given to gm, chrsyler and auto suppliers... in the form of emergency loans... and to get them through the bankruptcy restructuring process. "although taxpayers may recover some portion of their investment in chrysler and gm, it is unlikely t

the tbt for 20-plus year treasuries or the pst for 7 to 10-year treasuries.hese are not a good way to play long-term trends. they don't do what most people think they do. i hate these. they're in travesty. i've been crusading against these etfs for many reasons but makes them so terrible is they only effectively attract daily prices. rebounding means their longer term performance means more to do with the volatility price than the actual direction because we're trying to short them. basically there's no good etf that let's you lever. here's the bottom line, this isn't -- i know it's a stock show but i'm making this point. it's really important. it's very heartfelt and you've got listen to me. the run in treasuries, which i have believed in for very long time, is over. i am calling the top in treasuries right here right now at this moment. that's right, it's time to sell, sell, sell your 10-year and 30-year treasuries. you need to shorten up. you need to start buying cds, fdic protected cds. that's our preferred place for cash until rates go so high that we'll

you seem to be say what can the treasury -- let the treasury have the principal role and you are injecting yourself in a very controversial discussion, going on in washington. may i ask why? >> well, i'm just sharing the perspective of something who's been involved in this for 25 or 30 years. and from my perspective, you know, whether it be secretary paulson or secretary geithner, you read the newspapers. you can see them trying to strug it will deal with the regulators. you have a financial banking regulatory system that's a legacy of history of a financial system. so if people overhaul that, there's a need to try to make sure you've got somebody responsible and accountable. the second observation is i believe very much in a democratic sense of responsibility. congress is going to be sensitive to make sure that it can exercise oversight over financial regulation, as it should. and it's much more natural to have that in an executive branch which has to get elected every four years and plays -- has a balance of power relationship, a shared powers with the congress, than it is in an independ

run down, boom, boom, boom. >> treasuries. done. >>> up next -- one year after our historic government intervention, the signs are flashing that an economic recovery is upon us. i agree so. did washington get it right? >>> and it may have taken a year, but lawmakers are ready to set up an exit strategy. we have spencer baucus on his legislation to unwind. ♪ look at this man ♪ so blessed with inspiration ♪ ♪ i don't know much ♪ but i know i love you ♪ and that may be ♪ all i need ♪ to know (announcer) customers love ge aircraft engines almost as much as we love making them. innovation today for america's tomorrow. [ telephone rings ] [ ring ] [ "catch the wind" plays ] what is the sign of a good decision? in the world of personal finance, it's massmutual. find strength and stability in a company that's owned by its policyholders. ask your advisor or visit massmutual.com. you know why i sell tools? tools are uncomplicated? nothing complicated about a pair of 10 inch hose clamp pliers. you know what's complicated? shipping. shipp

treasury who would agree with you. can you elaborate? >> i would suggest the dollar weakness is a product of a couple things. export policies by trade partners such as europe and asia. the u.s. lives in a world where a lot of countries, they link their currency to the dollar. so the terms of trade do not change, even though the balances change. so, for example, the huge deficit we've been running with china that currency cannot adjust to that because the chinese government won't let it. the big geopolitical question in this world today from an economic standpoint is who will eat the u.s. trade deficit. it's a $700 billion figure and the question is, will europe allow it to be eaten? will asia take a piece of it? we are going down to a point of much more balanced trade, and part of that adjustment -- >> only because of the recession, steve. >> wait, mike, wait. nobody is saying that. you're missing the point entirely. this out of the whack business of 6% of our gdp cannot stand and will not stand. we must adjust. part is going to be throu

treasury bonds. american investors until this past year, they were interested in taking on more risk. to some degree it reflects the fact that american investors on average in general are willing to make more risk than the chinese investors. >> jim, is it a good investment to buy long term american debt at yields as low as they are? >> it hasn't been. the first six months of this year, the 30-year bond lost 24%. that's its worst six-month period in its history and i have data back to the 19th century. these low rates with this type of volatile environment we have, that's what's going to be happening to investors in long-term debt. they will make like they did very well in the last part of 2008. they're going to lose badly like they did in the first part of 2009. and that's why you're seeing as mark was talking about a risk reference. not only a risk reference for treasuries, but also moving toward the front end of the yield curve. >> mark, do you have any concern that there is going to be any change

people hiding in treasuries and we still have ben bernanke still buying in treasuries with both hands. low rates due to the big gorilla in the room. >> would you buy anything in -- >> no, of course not. i think they have a big target and i wouldn't go near them. >> declared war on the insurance companies. >> thank you. >>> up next, the president did speak for congress last night. again this morning making his case for health care reform. did he win over any of his capitol hill critics? >>> and still ahead, one of wall street's most inflew shl banking analysts says prices will drop another 20%. >>> plus, the "fast money halftime report." waiting in the wings at the top of the hour, tim geithner testifying on t.a.r.p. >>> that plus the 30-year bond auction. the dow's up 22, back in two minutes. >>> aig, citigroup, bank of america and fannie mae. some of the most clicked stocks today. >>> disney's ceo was on earlier today giving us a look at the future of his business. upcoming projects. he showed a behind the scenes look at new technology. julia boorstin has more. >> i'm here at the ina

treasury debt. many are call tg top in treasuries. >> the run in treasuries, which i have believed in for a long time, is over. i am calling the top in treasuries. right here, right now at this moment. that's right. it's time to sell, sell, sell your ten-year and 30-year treasuries. >> i happen to totally agree with jimmy cramer. they are the most overvalued assets. but let's talk. let's ask michael pond. he is director and u.s. treasury at barclay's capital. we also have kevin giddis. kevin, treasuries are overpriced to overprotection. what's your take? >> i don't know if we're quite there yet. i think there is still such strong demand in the treasury market when you look around for available investments. we've seen the contraction of a lot of spreads, but treasuries continue to be the game in town. there's still great demand for treasuries. may go a while longer. >> michael, tell me about that. that was my next question. we did see good appetite for those two-year bonds yesterday. why are people b

treasury unchanged. steve leisman, what else did you see? >> not much. i think the question becomes whether or not yesterday was the day for me to refinance my mortgage. looking at it from a totally parochial point of view. this thing is ending and they did exactly what they talked about doing. the term of art in the fed is this concept of "capering" which is keep the amount the same but extend the ending of it and reduce purchases. it is, as we suspected, that's the most optimistic fed statement in many years going back for a very long time except for the one quarter i think it was the second quarter of '08 when the economy was growing. inflation remains subdued and i don't see any particular imminent change to policy other than those that are pre-programmed as the end of the treasury prchdz aurchases and e the mortgage purchases. think we're talking about low interest rates for a "extended period." >> rick and matt, rick, you first. futures apparently still targeting april 2010 for the first potential fed rate hike. you saw a little bit of a move in tr

and we are getting news from the treasury department this week on thursday in fact treasury secretary test right and from the congress said that $70 billion of the part money has already been paid back by banks and he says open next year and a half banks will pay back an additional 50 billion remember the public-private partnership in which the investments for private investors are supposed to buy toxic assets are still stitching on balance sheets the treasury secretary says the program will still continue and going to be launched up in the next several weeks. what of the watchdog for treasurys that the toxic levels still remains on the books. debate over how to reform health care heats up.. as president obama goes on the offensive.... leaving the door open to the idea of a government run insurance option... talking with a group of nurses on thursday... president obama again took the opportunity to clear up any misunderstanding about his reform plan... he also repeated what he told congress earlier this week... saying the government run public option.. is only part of a larger plan. b

treasuries. go on the shorter end of the yield curve and all of a sudden long-term rates could go up without china even selling a dime. >> i didn't catch all the interview, but what i heard, that depressed me. i'm usually a guy who depresses me, but he actually depressed me. that's a scenario, but a very, very unlikely one. we've got our problems. we've been through a very wrenching period and interest rates are going to move higher 3.5% ten-year treasury yield is not something that's going to be around for a long time. 15%, 20%, you know, i just don't see t i think we're making progress on our problems. the saving rate is up. corporate savings is higher, and i think we'll make progress with our fiscal problems at least to the degree we won't get to that kind of situation. >> david, what stood out to you. may not necessarily have been the forecast on interest rates, but what stood out to you from his world view? >> you know, the idea that really nobody aside from china and japan will be there to

does treasury plan to do that? >> i think there's an important thing to start with in looking at whether this was a conservative enough stress test and the measure of that is not actually meaningfully in the forecast for growth and employment that was framed as part of that scenario. the most important thing to look at was the loss rates that were assumed in the worst case scenario. if you look carefully, as you have done, at what the fed designed and produced, the loss rates that were assumed in the stress scenario were worse than peak losses experienced by this country in the great depression. so they assumed roughly ross ralts -- loss rates could rise to 9%. we're in the 2% to 3% range. losses are running well below that level, and earnings are running substantially above the assumptions. >> let me stop there because you're the one who put out what the appropriate details were in the stress test -- >> actually the fed designed it, as you'd expect. >> that's right, the fed designed, but you advanced it and said w

they're all spread off of treasuries.mponent of the bond market is at risk. >> rick santelli, you want it jump in here? >> direct bids for the five-year were just shy of 11%. last auction they were under 3%. this is that money fund dynamic from friday's expiration of guarantees. many traders' opinion. showing up in that category, another turnstyle to pay attention to, just wanted to bring you that number. >> we're bringing up the intraday right now. to the nofs viewer it is going to look like geeldz really shot up here. >> it will tomorrow, of course, because there is a forward roll of four basis points on the five. seven or eight or the two-year yesterday. >> we were talking about interest rates rising maybe because of an improving economy. the latest upbeat view from an american automaker, ford ceo saying he expects u.s. auto sales to rise in the next two years. phil lebeau joins us from chicago with details. >> these comments aren't a huge surprise. what's getting a lot of attention is the forecast for 2011 from allen

does treasury plan to do that? >> i think there's iortant thing to start with and looking at whether this was a conservative in a stress test it in a measure of that is not actually meaningful in. the forecast for growth and employment that was framed as part of that scenario. the most important thing to look at was the loss rate that were assumed the worst-case scenario. and if you look carefully, as you have done, at what the fed designed and produced, the loss rate that were assumed in the stress scenario were worse than the losses experienced by this country in the great dression. so they assumed roughly loss rate in the stress test could se as much as 9%. we are now more in the two to 3% range. and if you look at what's happened over the last quarter, bosses are running well below that level. and in earnings are running substantially above the assumptions. >> mr. secretary, i'm sorry. let me stop there because you are the one who put out what the appropriate details weren the stress tt. >> the fed designed as

treasury when it needs cash. and third, the banking industry is responsible for paying fully the losses that the fdic incurs as a result of bank failures and the fdic board has the authority to ensure that that happens. more recently in recent years congress has taken some steps to make the system, the deposit insurance system less pro-cyclical. and last october when our insurance funds, the reserve ratio, the ratio of our fund balance to insured deposits fell below the lower end of the range we came to the board in october and proposed a restoration plan that would have the reserve ratio getting back within required period. we amended that proposal in february by adding proposed special assessments to prevent the fund from going negative if necessary. and then in may, the board finalized the current restoration plan, and as part of that it imposed a special assessment in the second quarter of five basis points on assets and gave the authority to do two more special assessments in the third and fourth quarter. an

and i think the treasury market in the end is getting this wrong. i think treasury rates will move higher. >> susan, would you jump on this rally at this point? would you put fresh money to work? >> we put it to work. we have a number of mutual funds when the money comes in, we know the people expect us to put it to work. i do think there is a divergence between the v-shaped recovery we're seeing in the financial markets and the kind of recovery we're seeing in the gdp markets. i think that's going to be a little bit slower than what we've seen in the credit markets. and there could be some bumps along the way, as we move out. i think the economy's going to take a little bit longer than, let's say, the spread we saw collapse in high yields. >> david, that's a story that people have been saying for a while, that they said stocks don't match what we're seeing in the economy. so far, it hasn't really mattered, stocks have continued to go up. what do you do? >> of course. because the stock market is a leading economic indicator. it moves before the econ

is treasury willing to do it? >> we have said publicly we are not going to conduct a similar exercise bank by bank. >> how about the next 100? >> let me explain what the supervisors have done. what they have done is to apply pretty careful and exacting from work through the supervisory process to the rest of those institutions so that we can have a better sense of making judgments. it is not realistic or feasible for us to conduct, for the fed, to conduct the level of detailed assessment for this to be credible for a banking system that has 9000 additional banks. >> thank you, mr. secretary. . . i can find no demonstrable metrics for success by the administration. so can you enlighten me? going through again with the testimony and the substantial reports, the fed and financial stability oversight board providing -- i would be happy to do it. but i do not think we are saying is very -- what you're saying is fair. we can see how much money we're spending, but what is happening to boring conditions? one of the most i

wouldn't that do the opposite to treasuries? >> the weakness in the dollar should put a bid into gold and i think gold at $1,000 -- >> who's right? gold or treasuries? >> i think they're both right. i think you buy the gold now as inflation hedge. i think you're supposed to buy both because if your purchase of treasuries is incorrect, then perhaps the inflation protection from gold will off set it. >> j.j., what do you think about gold? >> gold and oil is the international currency and right now, the dollar continues to be in a really downward, seriously bearish trend. in our investors we manage, we look for unhedged, overseas funds. everything that we can get our hands out of dollars. we can't do it perfectly, but we don't want to be in too many dollars. the country we're in right now doesn't support an atmosphere for the high network investor. >> would you, because of the rally in gold and oil, by the minors and oil companies? >> i wouldn't be buying so much in the oil. we tend to keep our assets very short term. as you know,

is treasury willing to do it? >> we have said publicly we are not going to conduct a similar exercise bank by bank. >> how about the next 100? >> let me explain what the supervisors have done. what they have done is to apply pretty careful and exacting from work through the supervisory process to the rest of those institutions so that we can have a better sense of making judgments. it is not realistic or feasible for us to conduct, for the fed, to conduct the level of detailed assessment for this to be credible for a banking system that has 9000 additional banks. >> thank you, mr. secretary. . . i can find no demonstrable metrics for success by the administration. so can you enlighten me? going through again with the testimony and the substantial reports, the fed and financial stability oversight board providing -- i would be happy to do it. but i do not think we are saying is very -- what you're saying is fair. we can see how much money we're spending, but what is happening to boring conditions? one of the most i

just look at where treasuries are at, how many people own treasuries, how much money is in money market funds. you cited the claims numbers earlier. those are critical if you're waiting for the consumer to get back in the ball game, it's going to happen as the later markets get better. and they're getting better. >> sarah, what about that. we've got money on the sidelines. where is that money coming from? i saw a report earlier that they point out they've had outflows out of mutual funds as well as exchange traded funds recently. who is at the ready with money to go into the sidelines -- into the market, rather, and where is this money on the sidelines coming from, in your view? >> maria, my colleagues and i would say it's coming from everywhere. in particular, institutional investors who have significant liability problems ahead of them. they need to put that money to work. they can't afford to be in cash. >> and where are you putting your money right now? where do you see the biggest opportunities? >> well, our fund, because we're a national fund, has picked up 78% from the market low

effectively to pay money to have their assets in the safety of treasury. there aren't any imminent reasons to think that we're going to see a huge back-up in yields which, of course, would bring prices down and start, i think, to bring more people out saying, you know what, we may have had a little bit of a bubble, but it's certainly the asset class lately that has attracted the most attention by far, and i think it's because of this truly unprecedented risk aversion that kicked in last fall and the realization and i think that the frugality that david talked about is a good thing. it's not that 70% of the gdp is driven by consumption for the economy in the short-term, but in terms of financial fitness of the household sector, the private sector, i think it's actually a very healthy path that we're on, even if it's longer lasting than some that would see the economic growth in terms of that. >> clean up your own balance sheet. yeah. we'll leave it there. great to have you all on the program. thank you so much. joseph stiglitz, david wessel, liz ann sonders

mortgage-backed securities and commercial mortgage-backed securities using treasury equity and treasury debt along with their own equity in order to do this. here's how it works. you bring $500 million of your own equity to the table. treasury does $500 million of equity to match. then they'll take a billion dollars of loans op top of that to leverage it up, give you 2 billion out there, and go out there and purchase really the toxic assets, the stuff issued before 2009, the rmbf and the cmbs out there weighing down the banks. the treasury hopes they'll have $40 billion of this out there purchase using really 3-1 government money to private equity money. they should have all nine funded by the end of october. treasury officials telling me. but they're announcing right now the first two, what have they done? they've raised their 500 million. what did the treasury do? match the 500 million of equity and then gave them a billion dollars. so now there's essentially $4.50 billion out there that is funded that can be out and buy cmbs and rmbs. this is an issue that came up about six months ag

after toda the treasury is ne protecting those funds. we'll explain what ts means for your investmts. >> susie: but the treasury m step up its lendinto the d.i.c. the agency in chargef banks may ask r a big loan after 94 bank failures soar this year. >> paul: the bulk of tse failur have been small, community banks. many are suggling with unemployme and bad loans, just like t communities they serve. susie: tonight's "market monitor" believes thmarket has a lot rther to go to the upside. he's robermorrow, editor of the institutional advisory service. >> paul: i'm paul kang. >> susie: and m susie gharib. this i"nightly business report" for friday, ptember 18. "nightly business repo" is made poible by: this program was made ssible by contributionso your pbs station om viewers like you. thank you. ptioning sponsored by wpbt >> susie: good evening, everyone. an important devopment tonight for millions of ericans who invest imoney market mutual funds. after today, t funds will not havehe backing of the government. the u.s. treasury created th g

treasury department. in monday's speech, he went on to say, quote, the treasury department needed greater authority to pull together a bevy of different regulators. treasury is a department and congress can more directly oversee how to uses any added authority. >> even with confessed multi billion dollar ponzi schemer bernie madoff, the search continues for missing millions and co-conspirators in the scam of the century. his brother and niece for their role in the fraud. madoff's wife ruth already mace as $44.8 million suit for money she transferred over a six-year period. >> what is so confusing i think about the madoff fraud is that bernie madoff and his brother peter and his two sons ran a very legitimate, very profitable brokerage firm in new york called madoff securities, and it accounted for at one point i think at its height 10% of all the trading done on wall street. >> erin arvedlund wrote "too good to be true: the rise and fall of bernie madoff", she started investigating madoff in a 2001 baron'

the treasury secretary also called for large financial companies... outside the banking system... to be brought under the same rules as banks. "if you allow institutions that are essentially doing what banks do, to compete with banks with no adult supervision, no constraints are free to engage in unfair deceptive practices, then you will recreate again what this country went through" treasury secretary geithner told lawmakers that the obama administration's goal is to protect consumers from being forced to bear the burden of any more failures. $900 billion is the line in the sand for healthcare reform on capitol hill. that's the maximum price tag reform supporters are aiming for in order to get congressional okay. the latest version in the senate, in addition to requiring most americans to get health insurance, also pushes doctors and hospitals to make their systems more efficient. harvard economist david culter figures 10 percent of health care spending is wasted on unnecessary administrative costs by providers. he estimates another five percent is wasted on what he calls unneces

if you look at the treasury estimates, waxman is only underestimating the cost by 1200%. now, let's fast forward a little further. listen to president obama. remember, march 9, 2009, department of the treasury. here is their confidential analysis. "dear, mr. president, it's going to cost a lot of money." let's listen to what president owe obama estimated on june 25. >> in a decade, the price to the average american will be about the same as a postage stamp per day. >> wow. i think he just did it, too, 1200%, but he was a little more careful. he did actually say in a decade from now. he didn't mention that today that stamp would cost $1,6761! i'm just saying. he's very accurate, because that's the new stamp. i have a question. did the p president of the united states tell the people in congress about this? facts are stubborn. don't they suck? it is always the coverup that gets you. march 9. june 25. mr. president, did you tell congress about prior estimates? that, you know, that you knew about? or did you just kind of keep it secret and hide it away from them and those pes

the thing i'm watching, long-term treasury yields. if they started to back up meaningfully, that could short sur kit. >> you make a really good point. do we have the chart? this is something that i've been focused on. the baltic dry index is basically telling us what's being shipped, which is really what's happening in the economy. it is down to the lowest level, scott, since mid-may. down for the sixth day at $2,056. lower than the december lows. but it is now down 45% off the late may '09 highs. >> you look at something like the ism, that's up quite a bit. there's a series of other data that suggests the housing and autos may have bothered them temporarily. that tends to be very good news. the ism is a very strong correlation with corporate profits. the corporate profit news, i think, in the next couple weeks is likely to be better than expected. unfortunately we're getting a lot of this through government stimulus. i don't know how sustainable it is. for the time being, it's hard to stand in front of it. >> give me a year-end targe

after today,he treasury is do protecting those funds. we'll explain what thimeans for your investmen. susie: but the treasury may step up its leing to the f.d.i.c. the agency in charge obanks may ask foa big loan after 94 bank failures so f this year. >> paul: the bulk those faures have been small, community banks. many a struggling with unemplment and bad loans, just li the communities they serve. >>usie: tonight's "market monitor" believes the rket has a lot fuher to go to the upside. he's robert rrow, editor of e institutional advisory service. >> paul: i'm paul kangas >> susie: and i'susie gharib. this is ightly business report" for friday, seember 18. "nightly business report is made possle by: this program was me possible by contributns to your pbs statn from viewers like you. thank you. captioning sponsored by wp >> susie: good evening, everyone. an importantevelopment tonight for millionsf americans who inve in money market mutual funds. after toda the funds will not ve the backing of the government. the u.s. treasury createthat

me, treasuries here, when you see a ten-year note, 3.3%, that is not a recovery kind of treasury yield. i don't want to be buying treasuries at that yield or two-year notes at 1%. i don't think risks-free assets are paying. equities are the place to be. credit spreads are further but with the risk of higher trades you want to hedge toward equi equities than credit. >> paul, tell me what you are looking at and what your asset class is looking like? >> on the treasury side we have moved quite a distance in a quite short period of time down from 4% to 3.25% on the ten-year. we have wrung a great deal of value out there. we have run a great deal of value out of the cooperate market. it is not terribly appetizing when i look at what is going on right now. i would point out in rejoinder to larry, he thinks we are in a strong recovery and the fed will be tightened sooner rather than later, that will be the death nail for equities. you don't want a strong recovery because you want the fed tightening long in the future if you are long in equities. >> i agree. >> thank you very much. >>> up next

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, mr. larry mccarthy. amidst today's financial turmoil, our sophisticated wealth transfer strategies... and philanthropic expertise ensure your legacy... is passed on to family or your favorite pastime. ♪ northern trust. wealth management. asset management. asset servicing. >>> welcome back. want to get you caught up on things here. we are up now 31. we've almost regained what we had lost just moments ago. you can see in that chart th

we've seen treasuries.uying and index buying, people are afraid of what might happen in october. they are getting their ducks in a row. they want to be prepared in case something unfortunate happens. we had a little taste of that last week. >> scott, didn't the market climb just that wall of worry over a very long period of time here? every day you'd come in and people were saying this the day this market is going to get back a piece of that 50% gain. i know sometime it's going to come. but seemed like the more buying there was, the higher the market went? >> well, you know, we didn't have a whole lot of foot buying. relatively flat level for a while. but in the last earnings cycle, people can say, hey, ignore the top line, look at the bottom line. ignore the fact the only way to do that is by firing a bunch of people. mr. ross was right when he said a few minutes ago, we had to see top line growth. if rim is going to be the poster child for the upcoming earnings season it's really going to be ugly because

the treasury would be the chairman. and the treasury would have a staff. that that's one way you can do it. the treasury would put the... put the treasure in that position but the treasury has no tradition, no staff, no expertise, professional background, no traditions in the area of banking supervision. and then i think, you know, you ask... the federal reserve is a natural place... i mean, i assumed when i was chairman of the federal reserve that i had some responsibility for overseeing the whole system. whether i had any explicit authority or not. because the federal reserve has a special role. it's the only institution that, first of all, is independent and has continuity, it's professional, it's involved in regulation and it's got money, which nobody else has, you know, to go running to congress when there's an emergency. >> rose: that's why it can do the things it did. >> that's why it can do the things it did. >> rose: how did it come to want to put it somewhere rather than the federal reserve? what argument, what reasoning led them to come to a dif

treasury yield curve. weekly jobless claims. there's consumer goods' orders. investment production of goods orders and equipment for high-tech and almost everything else under the sun, transportation and manufacturing. i don't know why people just didn't want to talk much about this today and it's interesting because our great friend, jim grant, had a wonderful story in the "wall street journal" over the weekend. the deeper the slump, the zippier the recovery. mr. grant has been rather optimistic. i believe this spring and summer and so have i. he appeared on the show not long ago. frankly, the combination of easy money from the fed, which may come to bite us in the butt later on, but that, plus the internal correctives, profits are doing better. consumers are starting to spend a little more. housing is bottomed. there's an inventory siek in front of us. the point is, we may be under estimating the possibility of economic growth. that's what this leading indicator's index shows us and it's very important. there's more. there's another show called "the leading

treasury market took it very well and rallied since then.stion is whether the first time credit for home buyers set to expire, remember, talking about redoing that. it is set to expire. the fed will get such positive results from the mortgage market. the problem for the fed, remember, joined with the treasury to coordinate the rescue programs. it's going to have to coordinate exit strategies as well. time geithner and ben bernanke have to do this together to make sure there's no huge shock to the economy. with you on mortgages over here, what you do over there with agencies and things like that, a lot of work to do. >> all right. two questions. how do they tiptoe out of the room without getting everybody to run for the exits how do they work together when there's this bubbling between the fed and treasury, reports about fed denying treasury's ability to look into some of their numbers? >> i think the relationship between geithner and bernanke is pretty solid, despite operational differences. i think will smooth that over. on the first questi

the chinese purchases treasuries. treasuries are considered one of your safe haven options. it may not be quite as much of a safe haven as it used to be given the level of debt that's outstanding at this point in time, but it's still considered to be win of those spots. and those purchases are likely going to continue as long as rates kind of hang in there and don't fall to, you know, the absurd level that we saw earlier in the year. >> jason, as for questions that was e-mailed in and andy answered about the mutual funds and the feds that are teaming up with them to be careful about how quantitative easing happens and to avoid inflation, what do you think about that strategy? do you think that's going to work? >> you know, they need to take a strategy that does, you know, try to contain inflation and moves in a gradual manner in order to get the market back to a reasonable point, allow the economy room to move back to a reasonable point. this is just one piece of many pieces of the overall strategy. i think as we look back at it 6, 12 months from now, it will be hard to disc

another week we have treasury bills.the supply of treasuries is almost overwhelming matching that is the fed buying mortgages. so it's sort of been a back and forth balance, but instead disappears and they will at the end of the year. we may have problems going forward. >> you made bullish comments about the long end recently even. knowing what our future funding is for everything we're doing from stimulus to all the fed initiatives to all these programs. and yet you still make positive -- it doesn't -- none of it seems to make sense long-term. >> you know, that's a consideration on an intermediate basis, a flattener. it would work, long bonds would do better if we got the trade that basically -- the anti-green shoots trade to the extent that the economy moved back closer to zero as opposed to up 2 or 3 or 4%. the markets would begin to anticipate deflation, would begin to anticipate low economic growth or recession in 2010. in terms of recession. >> you're all in on that trade, you and el-erian, view of the stock market

it can borrow a lot from the treasury. the problem with that is the banks are so beleaguered right now, there's just been a political firestorm over this t.a.r.p. bill and people are saying you're bailing out the banks and the banks don't want anything to do with the treasury. >> an analyst from wall street says the banks -- the risk here is tax. not only assessment tax, but a second tax for raising capital requirements not too far down the road, iter from the treasury or the fed or the g-20 or some other higher power. now the government is going to take it away from them. is that an issue? >> it's what they would be doing if they put special assessments on them. >> the big four paying the bulk of it. >> they have the bulk of the assets and deposits. >> are you worried about the liquidity issue? that this is a drain on their basic money? >> no, i don't think so. the banks haven't expressed overt concerns about it right now. they're happy it's not a special assessment which would hurt their regulatory, you know, capital. th

that means prices of treasuries are going up. even the most abused and battered asset of all, real estate, showing science of life. look at the reit index. it has doubled since its low. which asset class is due for a tumble? >> i say stocks. i think the broad based stock move is overly optimistic. we need to be a little more picky as to where we go from here. i like real estate. it's showing itself. >> tell us why he's wrong. >> i believe he's wrong because the overall trend that we're seeing show s shows very, very support for stocks. you look at the at of cash relative to mark evaluations, and it's still extremely high. so people are buy into that rally. >> what about the survey, dennis, from the august survey which, you know, i e-mailed to you. i was shocked because what they found was that mutual funds have the lowest level of cash, the highest level of stock since july 2007. i remember talking about these high cash levels but yet according to all the surveys, all the cash is in the system? >> who else? >> look at the money t

treasury secretary fields your questions. tim geithner host ag cnbc town hall last night promising americans that clinics will change. >> people should be angry. people should be deeply angry and frustrated. that's why it's so important we find the will as a country to fix it. >>> country on the role. stocks higher. we will look to the rally. "squawk box" begins right now. >>> welcome back to "squawk box" on cnbc, first in business worldwide. i'm joe kernen with becky quick. carl is off, he really is 39. everybody wants to be 39 again and again and again. he really is. you're not, are you "no, i'm not. >> you can say that. you've got that to look forward to. five straight days of higher -- we're now, with all the angst, people waiting for corrections, 9687, what's next, 11,000 or 8,000? >> our top story is changing of the guard at morgan stanley. john mack staying on as chairman but stepping down as the wall street giant's ceo. mary thompson joins us with the latest on this story. she is standing outside the firm's headquarte

and the treasury department is subject to congressional oversight.t is subject to the votes of taxpayers. and that really is where this kind of responsibility, i think, should be bested. >> lynn stout, where do you think that should be invested, in washington or even in the mix between washington and self-regulation by the industry. >> well w i think the, it's a little overoptimistic to expect that regulators can foresee and respond to problems. if the federal reserve could have foreseen where we were going, i would like to think we wouldn't be here in the first place. we actually had a pretty good regulatory system before the wave of deregulation in the end of the 1990s and early 2000. and although there was a certain amount of fighting over turf between the securities exchange commission, the sec, the commodities futures trading commission which has a long and very successful track record of preventing speculative bubbles in excess in the futures markets that they have jurisdiction over, and the federal reserve and the treasury. so i think the prob

treasury says the banks can handle what's coming. i think they can, too. let's let the t.a.r.p. end and get this money back to the taxpayers. this is the single most unpopular program ever passed by congress. treasury wants to go out there and extend it longer is just crazy politically. >> i admire tony's optimism, but the problem is we've never been in a world like this and i think there's a lot of uncertainty associated with different problems out there. >> i have to merge our panel again. dan fitzpatrick, given all the uncertainties on the international realm, given the selloff in the market this week, some sloppy numbers, where would you put your money right now? opening day on monday. september has been a hell of a great month. where would you put your money right now, dan? >> well, happily i have a lot of it to put because i've been lightening up for the past week or so. i'm short the dollar right now. and i would continue to be short the dollar. wait for the financials to pull back a little bit to get better entry points. it's not what you own. it's where you own it. >> i

. >> reporter: treasury officials on 15th street had been asking that a little stretch of f street just up the block from here be made one way to discourage truck bombs. congresswoman norton is asking how much security is too much? a heavy police presence is common in d.c. these days, and tons of ugly security barriers fill walkways and streets all around town. >> is this good for deterring terrorists and keeping the street open? what i have found, tom, is no option gets explored except closing it down, shutting it off. the public paid for all of this. >> reporter: eleanor holmes norton, a senior member of committees on federal buildings and homeland security has had enough. >> we've got to stop telling people that we can't prevent everything and anything and it's not worth closing down our society for all of the unknown we've got to balance the unknown against what we do know. we do know this is an open society. >> reporter: she is asking congress to create a presidential commission on making federal buildings safe and security, but more open to the american public. >> it will be a pre

he's the treasury man. in 1985 to 1993, i wonder to what degree as a treasury man that he's frustrated that you can no longer have this fig leaf, the mantra that we have a strong dollar policy in the environment where the fed is having to cope with all that lays before it. >> i think it's annisting point that he chose now for the world diversifying away from the dollar. i think he's really putting pressure on the treasury and fed. we think it's an important tool for geithner and the obama administration that it's necessary. given the huge deficit the u.s. is going to run up over the next several years, and this schism we're seeing at the fed with some officials very worried about inflation pressures next year, we think a strong dollar will be a good tool to anchor a lot of these concerns. >> greg, you say u.s. policy over the last five years has been to have a quietly weak dollar. will that change? they say things a lot, we believe in a strong dollar. but do they actually take action to make the market beli

for the 23 banks, treasury has earned a return of roughly 17%. all of these steps underscroe our commitment to unwind these programs as soon as conditions permit. at the same time, though, we have to continue to reinforce this process of repair and recovery until it is truly self sustaining led by private demand. the problems of government acting too late and putting on the brake too early -- we are not going to repeat those mistakes. it would increase the cost of this crisis in terms of the damage it causes to the fabric of the american economy. millions of americans are still suffering deeply from this crisis, still facing the most challenging financial market we have seen in generations. unemployment is still high. the mortgage market outside what supported directly by fannie mae and freddie mac, fha, is still significantly paried. small businesses and part because they are more dependent on banks have less options to access credit in this difficult environment. >> you are at 5 minutes. >> i am winding it up. foreclosures are rising significan