a staggering eleven billion dollars on your watch you probably shouldn't be the secretary of the treasury right why is mitt romney considering a wall street crony to be is treasury secretary and what does this say about romney's you for america also voters in pennsylvania got their voice back as a judge blocked that state's voter suppression id law from going into effect what about the millions of other americans whose votes are under attack by conservatives how do they get their say back and if you look at now i should nationwide polling it appears that president obama's pulling away from mitt romney even in the all important swing states are conservatives are saying that's hogwash and that the polls are being skewed because this outlandish conspiracy theory actually prove valuable for conservatives come november. you need to know that the banks there's blatant fraud in the run up to the financial crisis as in gone unnoticed by one top lawyer in the nation new york attorney general eric schneiderman who also chairs the president's mortgage fraud task force filed a civil suit against j.p.

that we are having a tremendous bubble and safe havens such as treasuries and the dollar for example but the rate of return on treasuries is negative in real terms and so this trick if you will can only go on so for so long is the holders of treasuries are willing to continue cooperating and as you see in the case of japan there comes a time when the market comes to the government and says we're getting uncomfortable what are you going to do about this and this is what's happening there and this is after many many years of course and there are reasons why european could drag it out for so long i don't think these reasons exist in the rest of the world the economy is slowing down the economy a slowdown japan has was having its troubles during the period of global growth it's a major exporting nations nation so they've been able to subsidize their misery if you will we don't have that luxury things like that cannot go on forever for mathematical reasons emotional reasons and practical reasons and i don't think they will but it feels like they could in the middle of every bubble it alwa

increase in nominal debt has been offset by a decline in rates hears the rate for the five year treasury ok well the fed shown a willingness to keep rates suppressed and japan shows that this can keep going and going so why should citizens or businesses in the u.s. be worried why should investors be worried well some of the television co-managing member of ideas is capital is here to tell us those charts you saw that argument you heard me start to lay out those are part of a recent speech he gave and he's going to lay it all out for us so they first of all thank you so much mr mccalla bitch for being on the show thank you lauren pleasure to be back and nice to see you twice in one week we ran into each other grants conference what a pleasure that was and we got to talking about this whole concept that we're going to gust now so you've made the argument that exponential growth in u.s. debt has been able to continue unabated because of the low rates that we've seen at the same time this is allowed the government's interest expense to actually decline we can bring up a chart to show our vie

to increase the treasury corporate spread or increase the treasury m.b.s. spread. similar logic would say in this case that an lsap might have only a more modest effect on stock prices. ok. so this is a backdrop, let me start with the efficacy side of the question. take our $500 billion lsap and as mentioned earlier, let's just stipulate based on the evidence in the literature it's going to reduce the 10-year treasury yield by 20 basis points. now, simple way to proceed would be to essentially plug this 20 basis point change into one of our macroecono met rick models and what are the consequences that emerge for g.d.p. growth and unemployment? if you did this exercise with the feds' workhorse frbus model, it would tell you that a $500 billion lsap which moves the 10-year treasury rate by 20 basis points should be expected to bring down unemployment by approximately .2% at a two-year horizon. this is an economically meaningful effect. so naturally all models rely on a host of assumptions so the true effect could be larger or smaller than what comes out of th

we saw a huge sell-off in the 10-year treasury on thursday.ve come back a little bit today but for the week the yield down 1% here on the 10-year. didn't go into oil. oil down for the week here, 4.3%. second or third week in a row that oil has been coming lower here and we were below the $86 level, $86.14 right now. gold? didn't go into gold either. down a fraction for the week here. i think that is the third week in a row we've seen gold down, first time in over a year we've seen that action there. for a time gold was below $1700 an ounce. we've come back a little bit here. the fear indicator did rear up for first time in quite a while. a gain of 4% on the volatility index. down a fraction but we are in the 17, 18 range, maybe heading back to 20, which would be the flag territory. where did the money go this week? >> i wish i knew. i guess people were bracing for the storm morning we thought. maybe it's in sand bags. we're not seeing it, small cap, large cap. people are rotating. we saw that earlier on the week, rotating out of stocks that ma

increase the treasury corporate spread or to increase the treasury spread. in a similar logic would say in this case that an lsap might have on a more modest effect on stock prices. so this is a backdrop. let me start with the efficacy side of the question. take our $500 billion else out, and as mentioned earlier let's just stipulate based on evidence of the literature that is going to reduce the ten-year treasury yield by 20 basis points. assembly to proceed would be to essentially plug his 20 basis point change into one of our macroeconomic models and ask one of the consequences that emerge for gdp growth and for unemployment. to be concrete if you did this exercise with the feds were course frb u.s. market would tell you that a $500 billion lsap which moves the 10 year treasury rate by 20 basis points should be expected to bring down unemployment by approximately two-tenths of one percentage point at a two-year horizon. this is economically meaningful effect. so natural to all models relying a host of assumptions of the true effect could be larger or smal

>> some kind o a -- an economic collapse based on treasuries, the treasury bubble bursting, i think -i agree with dagen -- >> neil: wait, wait, wait. i hear a long ways off. a long ways off, could be when i'm hungry, can be like, tonight. >> look at japanese interest rates for the last 20 years, you know? people -- >> 20 years? >> yes, sir. >> neil: 20 years. >> 200 years. >> neil: that sounds as reassuring as joe biden saying the iranian threat is a good four years off. >> the iranian economic collapse is only 6 months off according to -- >> neil: unemployment, 25%, among young people. all right, we'll take a quick break here, when we come back this is it. the final presidential debate coming up monday night and, all on foreign poly d we are all over . as we always have been, and, like we were for the first three debates. e most important names in business and politics and the most importa consequential election of our time, and we keep plugging that and if we were doing it during the depression we'd say the same thing, they didn't have cablen the depression and, if they get angry at

that is, a net neutral impact on the treasury. the reason we have been able to get to that level of profitability is all the mortgages put on in the last four years have been very high quality in terms of down pavement and fico score, much higher than the case prior to conservatorship. and the new book, the subsequent conservatorship, accounts for over 60% of the total book of freddie mac. that was all past. we talked about the real old time period, 1938. we looked at the pre-crisis period and post-conservatorship. look forward and think of what to do with freddie mac going forward. it has been a great frustration to me that the treasury department and administration has come up with no program policy or recommendation as to what to do. it is now 50 months we have been in conservatorship and 6,000 people working at freddie mac don't know if the company will exist, have no job security at all. the treasury was to put out a position participate in january of 2010 with a suggested solution. they didn't do that. it didn't come until j

one is treasury secretary, arguably the most important in an economic team.he fed chairman, which someone might have a chance to replace ben bernanke with next year, the national economic council director, which is basically the white house chief economic adviser and wildcard, wildcard would cob office of management and budget exchief of staff or favorite idea is budget czar, mr. mayor, michael bloomberg, who scored high on that. so you can -- >> all three of ours, former bosses, by the way, michael bloomberg was at once all three of our bosses. >> exactly. maybe we are bias. >> clearly hires good people and intensely qualified. >> he knows exactly how to gem gate. the basic idea, you get to delegate, choose the economic team and you can mix and match. you can say, okay, romney wins, put erskine boles in, scores very high on our model, as treasury secretary or budget czar, something like that or if you're president in a 2.0, say i want meg whitman to be in a tie. >> how did you pick the names? i played your little game aged lost. no winner. >> you choose one.

>>t is funneled back to the treasury and a lot of people buy the scam theres no -- >> it is a scam. the dollar means nothing. >> it's the fed, social security. >> investors, but -- that is what i jus said. it is bad... >> neil: at that point, it is a scam and it is ours. what do you make of that? in theend, that is what it comes down to, the world is onto our scheme and we are onto the ponzi scheme and it seems to be working and has been going smoothly. and, waiting for godot, do we put it off and don't worry about it? >> it is a long wa off and what is not -- >> neil: what is a long ways off? >> some kind of a -- an economic llapse based on treasuries, e treasuryubble bursting, i think i agree with dagen -- >> neil: wait, wait, wait. i hear a long ways off. a long ways off, could be when i'm hungry, can be like, tonight. >> look at japanese interes rates for the last 20 years, you know? people -- >> 20 years? >> yes, sir. >> neil: 20 years. >> 200 years. >> neil: that sounds as reassuring as joe biden saying the iranian threat is good four years off. >> the iranian economic collaps

now look at the treasury market. look at where yields are trading in the treasury market. what does that tell you about the potential both in terms of further price appreciation in the equities market and for those holding treasuries? if you're correct we should have this massive reallocation out of treasuries, should we not? >> a narrowing in the equity risk premium which is the earnings divided by price, the upside down pe ratio or the earnings yield minus the ten-year treasury yield is my forecast. so a rising yield initially would be viewed as positive news and as positive news it would probably lift the financials and cause them to be the number one performing sector this year. >> um-hum. >> the bond proxy, which is the utilities will be the last performing sector this year. things are operating pretty much as expected. >> barry, it's aggressive, provocative, i'm sure many people think it's rather controversial as well. we'll see what happens. s&p 1600, we'll see if we get there. barry bannister. >> thanks. >> give me a floor shot, raise your hand if you think we're g

treasury securities. it means that, when the social security trustees go to the treasury to redeem one of their treasury bonds, they hand it to the treasury and say, we would like our money. the treasury gives them their money and goes out into the world to borrow it because otherwise, they do not have it. it is just more government borrowing. >> what would you do about it? >> i would do what we proposed. i have angered any number of people by writing what we said. i would do what we propose in there. have the balance of the social security trust fund for the social security recipients. in 25 years, you would have a system that, it is a pay-as- you-go system. you have a trust fund that is a weird economic thing having to do with social security rolls. but it has no economic value and has led people astray. >> right. let's get rid of it as a distraction. let's just call it what it is. >> let's see if we can get advice from both of you for people who are watching this election. what is absolutely going to h

sworn in he can have the treasury adjust the withholding tables, for example.'ll offset some of the pain. but that's also a big risk because if they don't end up finding a way to come to an agreement in 2013 and now everybody's under withheld, then we talk about that being the mother of all fiscal cliffs, if you will. so there are some risks here, even in the near term under a romney victory, just beginning with what the president does. >> it was very interesting, larry, to hear dick gephardt in the previous segment. it's important what the senior democrats try to counsel the president, the sitting democrats counsel the president. >> right. we've got to let it go. we'll come back and visit this another time. two weeks until the election, and then comes the lame duck congress. michelle girard, thank you. david malpass, as always, i appreciate it. coming up on "kudlow," the politics of benghazi. e-mails. still, how did this massive security screw-up happen? even when the white house got e-mails and watched it on real-time video. why didn't we fight back? i'm stil

agree line shows the yield above the basket of treasuries. you can see it is about the average level it has been since the late 1990's, but look at the red line -- the default level is near the lowest levels. on a risk/reward basis, owning high-yield funds are an attractive place to be. equities is something we're very excited out. we have been excited for two or three months. january has been off to a good start, but the profits many people have made in bonds are starting to move to stocks. let me show you the charts. in terms of metrics used to determine whether stocks are cheap or expensive, this is probably the most popular one in terms of the forward p/e ratio, and you can see it is below the long-term average. many stocks are relatively cheap. this looks at the earnings yield and compares it to treasuries. it is at record highs going back 50 years. some people like to compare it against corporates -- record high for the last 30 years. this is my favorite one of all -- the yield you would receive on a stock relative to a 10-year note on

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you don't the treasury market do your fiscal work for you.ou don't want the fiscal discipline done for you. >> it is said only adult in town and doing something childish in the process. lizzie, it is ridiculous. thank you very much. star of fox business network. you don't get you should demand because your fiscal future depends on it. she mentioned jamie diamond. he is considered one of the brains was wall street and putting couple million dollars aside in just a case sceniar just in case it hits the fan. not if that will come in handy if there is a melt down. he's telling you he's girding for the storm. you should remember that. he said oh, this is the six billion bad trade? i want to remind you, same people in congress. that quarter just out. up almost 40 percent. that is with that bad trade. congress should do so well after this. [ male announcer ] at scottrade, we believe the more you know, the better you trade. so we have ongoing webinars and interactive learning, plus, in-branch seminars at over 500 locations, where our dedicated suppor

treasury securities. it means that, when the social security trust these go to the treasury to redeem one of their treasury bonds, -- department knows that. >> the word sequester. i have had people say what does that mean? it will be a disaster for our national security. >> i do not pretend to know. " cutbacks in social security and medicare, those were things i threw into the pot. geoff, he threw in the defense budget. i would not have thought of it because it is so untouchable. what will happen? i do not know. but, i think we have to be spending too much money given what the rest of the world spends. >> what you think of the elected officials in this country, from your position? >> i think some of them are wonderful. a lot of them are trying to do the right thing and which they could. i think a lot of them feel trapped by the forces that worked in the society that force them to distain compromise, to treat politics as warfare, which it did not use today. -- use to be. i think most of them, not all, but

could this man be our next treasury secretary? stanford professor john taylor on how to balance our nation's books. the economy in the third quarter growing just slightly better than expected, arriving at a 2% annual rate. that was up from second-quarter growth from 1.3%. how are investors reacting to that? stocks now and every 15 minutes. nicole petallides at the new york stock exchange. nicole: good morning, everybody. when you look more closely into the number and then maybe people have been doing exactly that and that is why we have a negative number here on wall street for the dow jones industrials. this gain came from americans using their own income, buying products and services. that is not the case. the formula is comprised of several factors, one of which is pending by the federal government. it turns out they did more spending and that is why gdp got a pop. back to you. dagen: thank you so much. breaking news right now. the national hurricane center releasing its latest advisory on hurricane sandy and the storms track.

it's the biggest bubble and it's not just treasuries, it's a bubble in government.overnment is enormous because it can borrow all of this money so cheap. so you have a government bubble and it's reflected in the bond market and in the dollar. so, it's the dollar that's a bubble along with treasuries and it's all going to burst, and this whole economy built on consumption financed spending both in the private sector and through the government is going to be crashing down. it's a bigger house of cards than the financial. stuart: it's i don't know what bursts, not smart enough to know that you're basie saying there's no way out. >> there's no easy way out. yeah, there's the correct way out and then there's what we're doing. we're trying to inflate our way out of it and we're going to inflate ourselves into something worse. what we need to do is admit as a nation that we're insolvent. we need to restructure power debt and dramatically shrink government spending and reform the tax code and repair what the government has inflicted on the economy. we have allocation, and t

i've met him a number of times to be the treasury secretary.ld to be a brilliant guy. national economic council. we went to high school. jared bernstein for fed reserve chair, he, like you, friend of the show. and cheryl sandberg because she seems like a super woman and facebook is awesome. >> did you pick one for the other guy that you won't name? >> i did pick a team but i didn't write it down. >> no, for the wild card. >> sandberg was a wild card. >> you have four positions. you have some of the right ones, the ones i would pick. mike bloomberg, he scores very high. we scored all the candidates. 70 different people. mike bloomberg scores high in all of those counts, right? you want to put him in. i don't know if he'd want to be treasury secretary. that would be working for other people. i thought you could propose him as budget czar in the wild card. the other guy, not just obama, could choose him to do that. that would be an interesting way to reach across the aisle and get something done. >> what do you want people to get out of playing th

we will change the treasuries to gilts because of the holiday today. currency markets, and you are row dollar, 1.2971. we were at 1.30 on friday. so not big changes since then. dollar-yen still 78 ham. aussie dollar, 1.0164. and sterling-dollar, 1.6084. good news for kelly, she'll be back tomorrow as she brings fresh greenbacks into the country, she'll want to see 2tht exchange rate coming down. let's go to asia. >> thank you, ross. asian bourses retreated as investors hunkered down ahead of europe's meetings. september china services pmi surprised to the up side, but that didn't help the stock market. shanghai composite finished in the red after a week long holiday. some investors fear the revival of ipo approofts could further dilute liquidity. following the mainland's weakness, shares in hong kong ended five sessions of fwans. hsbc hong kong pmi dipped to a four month low. t fox con shares lost despite saying iphone 5 production is on track. japanese markets are closed for the holiday, but the kospi lost 0.7%. steel makers losses after pk telecom so

will he as first lord of the treasury ensure that the treasury stand behind the minister of justice as they deliver [inaudible] radical globally new cash consequences of [inaudible] for the next spending review period? we should be bringing payment by results to all of the criminal justice system. i want to see payment by results being the norm rather than the exception. i think if you look to be fair to the treasury when they designed payment by results in the welfare system. they allowed them to spend the future receipts of lower benefit claims. and i'll sure they'll make sure we get better value for money and better results in our criminal justice system. >> last week from the dispatch box the prime minister said that services are catching hospital [inaudible] this week we've learned that the official review so called deduction is to get rid of many vital services in our hospital and reduce by 80%. the truth is [inaudible] >> what is true is you can always guarantee members will get up in parliament [inaudible] what i said last week is right. >> 170,000 fewer people on benefits and

what would that do to the treasury market, anthony?> yeah, i think there's a definite possibility. i think romney wants to stop this whole qe bond buying program and everything else. the question is how long does bernanke stay? tuz he realize the writing's on the wall and he wants to fwet out now or later. i definitely think that could affect the market and that could put pressure on the downside also. >> we're buying the dip in the 10-year futures. we're looking to go long the market now. now you know how our guys are making money in the futures market. what about you? which do you think is a better buy? stocks or bonds? logon to futuresnow.cnbc.cole. vote in our poll. we'll give you results in our live streaming show 1:00 p.m. eastern. tune in today. one and only peter schiff is going to join us and tell you how to play gold right now. >> that'll be great. he's always a great guest. thank you, jackie. >>> coming up on "the halftime report," this luxury casino and resort raising its dividend after earnings beat the street. should inve

go back to the treasury debt ceiling deal last summer. remember all the brinksmanship that nearly drove our economy right into a ditch. they actually came out of that with something. exclude the sequestration. we got $1 trillion in spending cuts over a 10-year period. that's not inconsequential. that's one-fourth of the way we need to go-- >> wait a minute. it's all pushed off to beginning in 2013. they cut nothing real time in the administration's period. they just did not. so, you know, but this becomes important. facts do matter, and we get this idea, oh, they cut spending. they did not cut spending. they postponed it. everything in the law-- i'll bring in the law-- says beginning in 2013. >> schieffer: can they still make a deal? >> sure. i think one of the encouraging things is to look at the states. i mean if you look at what's happening in florida, what's happening in ohio, part of what's making romney's job more conflicted is they're doing a pretty good job. scott walker has things moving. if you look at mitch daniels, maybe the m

all right it may be history now but does someone on a reported treasury secretary short list or more than one person make a bank bailout two point zero is sound all too plausible we'll discuss let's get to today's capital account. capital account is an economic show rarely ever or do we delve into the space of politics or foreign policy despite being situated in the nerve center of pax americana we find the independence granted to us through such detachment to be worth more than the benefits of opining on matters of state will leave that to the fox news is of the world but tonight as you know two candidates are vying for the presidency in two thousand and twelve and they take this stage and what has become an annual circus of sorts for political pundits and a source perhaps of indigestion for some of the rest of us and today we also have a guest whose job it is to forecast trends not just economic but political geo political social and cultural so it's a good opportunity therefore to break our silence on matters of state and to offer an opinion or two for whatever they're worth now i

twenty million dollars a year but the bank has got together and said tim you know we need you in treasury we need a very sophisticated sloan crook like you to bail us out and to give us true billions and billions of dollars trillions of dollars you're the only guy who can do it stay in when the secretary of the treasury when you step down but the japanese told the senate we'll take harry and then you'll get the big pay off you'll be up big millionaire player just do the looting for us it's our inside mail and we'll do it and geithner said there's one thing that i want i thought you would have to make sure that it wasn't warren is out i don't want to run i want complete control so there's no law enforcement there's no in take private foresman there's no one thing if we're going to steal we have to do it right i'm paraphrasing the discussion. it's almost like the old hollywood movies of the 1930's you know and the mafia would come to that but no one of their guys is district attorney so that he wouldn't prosecute them ever since alan greenspan was put at it over it's over which they put it

charlie: treasury secretary is not quite politics. liz: markets.:speaking this is a polished -- the guys name is kevin warsh. he is 42 years old. this guy, and a lot of people say he is a hands on guide. he worked very close during the crisis with bernanke. basically against the printing of money. he is now basically, you know, a stanford professor. he makes, from what i understand, $100,000 a pop for speaking fees. not bad. liz: i have to truckload. a good chunk of coin there. speaking that is a lot. i guess he will give up his $100,000 a pop speaking fees. it is kind of funny. the last hit i did on this was wall street laying odds on obama reelection in two will be the next treasury secretary under the obama administration. one good debate performance out of mitt romney and now you have wall street talking about his treasury secretary. still very tight race. they are talking about kevin warsh. he is taking the initiative to trying to push his name to the top of that short list. liz: that is what your sources are telling you? charlie: one name tha

congress band the treasury department from lending the post office more than that at one time. the post office is only allowed to borrow from the treasury and can't take money from private banks. >>> more trouble for american airlines. the holding company said the company posted a net loss of $23 million in the third quarter. the company said it would have been profitable if it weren't for charges related to the bankruptcy filings. the charges include more than $200 million in severance payments. american airlines is still encouraging people to retire to cut back on some of the costs. >>> when you're battling breast cancer, that is one time to be selfish. we'll meet one woman who's giving back. >>> these lifeguards were unemployed after they went gangnam style. why they may be back felt pool. >>> beautiful day. the sky has been clear. we're looking at a noise stretch. there's one,ception to that. 64. winds have turned southerly. last night we were flirting with the 30s. mid-40s. tomorrow night down in the mid-50s as the clouds begin to roll. no clouds today. clear over baltimor

but it will turn down the secretary of treasury is highly unlikely. these institutions will be turned over immediately. what happens then? the fdic has this already two bail-out the creditors. there is a lot of language that suggest they might not do it but if you borrow a substantial amount in the tertiary come up 100% of the value of the assets you can use the funds immediately to bail out the short-term creditors to keep them from running. of the event is to make sure the short-term creditors are not afraid their institution might also be seized by the treasury secretary. so you will be taken care of. you don't have to run. there reduces the panic. i expect if we have another financial crisis which is unlikely, that is the way to make it less likely and create a panic of the financial markets we had before. looked the way the act has developed it is widely off the track to becoming a train wreck. look at it this way. counting up all of the regulations made by various agencies and in the act act, about 250. 1/3 and have been finalized since the act

as rick outlined, the secretary of the treasury can seize any company.these are not necessarily sifis. the secretary of the treasury can seize any company, that is a financial company, and following the process that he talked about one day for a court to review the likelihood that a court will actually turn down the secretary of the treasury after having consulted with the president and so forth is highly unlikely. so these institutions will be turned over immediately to the fdic. what happens then? the fdic, as rick i think suggested, the fdic has all kinds of authority to bail out the creditors of these institutions. there's a lot of language that suggests that they might not do it but, in fact, when you create a bridge bank and can borrow a substantial amount from the treasury -- actually up to 100% of the value of the assets that you transfer to that bridge bank -- you can then use those funds immediately to bail out the short-term creditors. and the reason you would want to do that is to keep them from running. the way that you would prevent the kin

so this must have had some kind of implicit treasury or. eval which means geithner is on board so i think it's very significant in the fact that bernanke is sort of coming out of the closet and say yes he has a currency war and is out to trash the dollar all right so the fed prints but these other countries particularly in asia if they want to maintain their export business they in turn must print so the inflation shows up on their shores and bypasses the us right well that's what's been happening so far what bernanke he wants he wants to in effect reimport the inflation he send the inflation around the world through the exchange rate mechanism he wants it to come back to the united states to the fed it was or once inflation in the united states they want negative real rates that one flesh and they want to lower the value of the debt by inflating it away they want to force people into spending money if you think inflation is going to take off you're going to go out buy a car or buy a house or a refrigerator would ever it is that's what the