this means the united states of europe need to be thought as the united states of america you know just as america has a center of fiscal fiscal agent that's called the united states treasury that does not exist in europe what exists in europe is that every country cannot have a budget deficit above the three percent and to also furthermore that from now on every continent in the euro zone should not even have three percent reduction have a constitutional amendment that should be even much lower than that even a one percent except in some difficult times this is not what i would call the fiscal union this is it is not possible for every member of the eurozone group to create surpluses so that it is possible to then the euro the euro zone to be in a an even keel based on the definition of a wad. of america believes and president sarkozy made a major fan stay with you when you were i mean if i can say with you in new york of any but when countries joined the european union i'm sorry the eurozone they didn't sign up to this kind of economic policy at all did they i mean this is turning into a straight jacket i mean people didn't vote for this they voted to have a common curre

this means the united states of europe need to be thought is the united states of america he understands america has a central fiscal fiscal agent that's called the united states treasury that does not exist in europe what exists in europe is that every country can have a budget deficit above the three percent and to that and also for a good mile or so from now on every continent in the euro zone should not give in have three percent reduction have a constitutional amendment but it should be even much lower than badly.

this means the united states of europe need to be thought there's a guy that states of america you know this is america has a central fiscal fiscal agent that's called the united states treasury that does not exist in europe what exists the euro is that every country cannot have a budget deficit above the three percent and to paint all.

the best place to put your money last your, some people would say hide your money, was in united states treasuries, yes. long-term treasury bonds. just take a look at the i-shares bar clay's treasuries etf, also known as the tlt, it's the stock that appreciates when treasury bonds rally in price and interest rates go down and drops when treasuries decline this price and interest rates go higher. prices and rates trade inversely, sorry i had to give you that. the tlt was up 30% last year and gave you closer to a 34% return when you think of coupon payments. it's normally a safe place for your money, bonds, but we do not think of them delivering the massive capital appreciation that so many pundits came on these shows and said it was a bad bet. 30% return is not what you expect from a u.s. government backed piece of paper. now it's looking to me, and others, like bonds may have topped. like this terrific move at last is over, and at least according to tim collins my colleague at "street.com" which is why we are going off the charts to understand why last year's raleirally in treasuries may turn out

autoworkers in washington general motors posted profit of over $7,000,000,000.20 years ago united states treasurywns a quarter of the general motors inspecting $1.5 billion profit this year's. germany chancellor probably angela merkel but not forget the meeting she had this morning during the meeting in germany angela merkel a waiter on suspected shower of beer 21 year-old server says he was pushed from behind all of the glasses fell off of the trette add-on to angela merkel staff hurried smiled at the waiter took the stage and delivered a speech while drenched in beer. and tonight we're mitt romney. warning labels for widely used cholesterol lowering drugs federal government says the drugs can cause memory loss. and comedian bernie mac and an honor reserved for just a few in our city. tonight's medical watch teenage prints at risk biggest threat for adolescents short-term memory reading and mental compilations impaired after a head blow or profoundly and teenagers fortunate skills developed rapidly making them more fragile to stress and trauma. research and new revelations for doctors who believ

. >> coming up on world business, the united states treasury has sent a message to the god father of japan's most powerful mob family yamagu ch hi. we'll tell you what they said on "world business today." [ gnome ] oh, poor darrell! if they'd booked with travelocity, they could be paying less for the same room. noooooooooo. [ female announcer ] the travelocity guarantee. from the price to the room to the trip. you'll never roam alone. . >>> "world business today" live on cnn. welcome back to the show. now there hasn't been much good news coming out of europe these days. one bright spot is in the corporate sector. it's released its latest earnings. basf. its net earnings here up almost 36% year on year. this company also managed to squeeze about $8.2 billion out of its sales and those sales were up about 15% from 2010. this result comes in that dip in german gdp. it's also encouraging news for europe's biggest company nonetheless because basf is a huge player. for more on these figures let's go to the chief executive of basf, kurt bach. thanks for coming on "world business today," mr.

in 2011, the federal reserve bought something like 70% of the debt issued by united states treasury. suddenly ron paul is looking a lot less like a nut on that and there's a lot more people who share his views on the federal reserve. where i part company with ron paul is the idea of an america that can live aloof from the rest of the world. as a 19th century isolationist republic. there is no fortress america. this country can't even maintain its fortress against to relatively benign neighbors. basically half the population of mexico has moved to north, and 100% of every single disasters canadian idea from multiculturalism to government health care has moved south of the board. so there is no fortress america. and even as a 19th century isolationist republic, america was only able to enjoy that role because the water may be maintained global order. the royal navy expunged slavery from pretty much most of the planet in the 19th century. royal navy cap the britannica on the seas. the idea that america can't retreat from the world and to be no consequences to that i think is a diluted.

treasuries. and finally, the federal reserve is buying so many of them themselves. you have very few private investors in the united states buying treasuries. i think going back, what is lacking in this country from a government policy standpoint is a simple program that answers five questions. those questions are, what are you trying to do, how are you going to do it, why is it going to work, how much is it going to cost, and where are you going to get the money? no, congress hasn't answered that question. the administration has not answered that question. the markets are waiting for an answer to that question. it's been the role of expectations in how people in the economy financial markets work. if there was an answer to that question, the markets would immediately take that expectation of future stability and give us stability today. and until we answer those questions, any stability will be short lived. >> thank you. senator johnson is recognized for an equivalent amount of time as i just consumed. >> i will be quick because your line of questioning covered an awful lot of what i wanted to talk about. >> we're obviou

. >> and united states. treasury we have people who have been there also giving our two cents for how we think europe should go. it's difficult. >> i don't know if this matters but i have friends who live in greece. they say so for people actually pay taxes. >> our best, right? >> yes. >> interesting, a mortgage settlement appears to be -- i've been ming you about this for several weeks now but it looks as though the attorneys general are going to sign on with the government to end in five or six big mortgage servicers and lenders, a million people could have a write-down of their principal but up to $20,000. that what t. housing and urban development. it would be the biggest, broadest relief yet. $20,000 on average for underwater m underwater mortgages written down in principle. a million qualified homeowners, zoraida was asking me, what does it mean to be qualified? we don't know quite yet what the qualifications will be. we do know all the housing rescues to date have been not satisfactory for all the people who t

united states. elsewhere, treasury secretary tim geithner sat down with steve liesman this morning.e pressed the need for congress to lighten the load of the middle class. listen. >> even when gas prices are caused by stronger growth, just part of what's happening, people really do feel it. so it's important for congress to continue to do things to make the economy stronger overall and help lighten the burden on middle class families. >> elsewhere, new home sales snapped four straight months of gains, dipping .9 of 1% in january. but keep in mind, the department also revised sales figures from october through december, with december showing the fastest sales pace in a year. all those were revised higher. so that was a little more encouraging. so how should you be investing right now that the dow has failed at least for the moment to reach that 13,000 level on the closing basis here? >> joining us here is david at morgan stanley smith barney, and patrick. great to have you with us. >> great to be here with you. want to give a shout out to the family of marie katherine colvin who lost

united states. at the same time, though, the concerns of investors about the situation in europe has so far led them to invest more in the united states and in u.s. treasury securities. so one of the factors that has pushed down the interest rates the u.s. treasury is now paying is actually fear of what is happening in europe. and investors' desire to come to a place that they think is in better shape. so if the situation in europe were to worsen, there could be some important factors that would be very bad for our economy there are also some channels through which our -- in a perverse sort of way, we would be better off because we would be viewed as being a relatively better investment than europe would be. risks to the u.s. economy of worse outcome in europe. i think that is a topic we've discussed a number of times in our panel of economic we built into this projection shallow recession in europe, which is consistent i think with the latest consensus forecasts. we didn't find a way to quantify a particular alternative european scenario. and part of that is it's very -- we're very unsure what the financial connections are. and just how a particular sort

as you well know when a dollar goes out the door from this united states capitol and a dollar goes out the door from the united states treasury, it is a loan program. there is no guarantee that dollar comes back. our most folks faithful payers? yes, they are. does every dollar come back? no, it doesn't. we need to look further than fannie and freddie to see that model. for the first time we begin to account for that risk so the american taxpayer understands when their american government guarantees a loan what potential impact that has on their pocketbook at home. and finally, mr. speaker, it requires all federal agencies to post their budget justifications on line in a timely manner. now, you saw last week, mr. speaker, we were able to pass the baseline reform act, which said no longer will we just assume every agency is going to spend more. for the first time we'll say every agency needs to justify any increases they receive in their budget. what this provision does is go one step further to say, when you are producing that budget, post your justifications online, what the american people -- let the american people in. mr.

it's going to continue we call china is the most important relationship the united states has insofar as. buyers of treasury bonds and and suppliers of consumer goods and products but the problem is that there's a famous saying in in banking circles when you can't pay a million dollar debt to your bank that's your problem but if you can't pay a billion dollar debt to the bank that's their problem so even the chinese recognize that the united states has gone so far into debt that it is very difficult it is to be able to pay his debts back and so the chinese want their money but they don't want to stabilize the whole situation in the process of getting their money they don't want an american default and so both sides are very careful in their relationship because they both recognize how fragile both their respect.

to it's going to continue we call china is the most important relationship the united states has insofar as buyers of treasury bonds and and suppliers of consumer goods and products but the problem is that there's a famous saying in in banking circles when you can't pay a million dollar debt to your bank that's your problem but if you can't pay a billion dollar debt to the bank that's they're all sitting in the chinese recognize that the united states has done so far into debt that is very difficult it is to be able to pay stubs back and so the chinese want their money but they don't want to stabilize the whole situation in the process of getting their money they don't want an american default and so both sides are very careful in their relationship because they both recognize how fragile both of their respective positions are the chinese party has to make sure that it's keeping its its people happy the american government has to make sure that it's keeping its people and so they have to work in tandem and that's what they're doing why i think i wonder if you agree with me here that we saw some of the balance

conversation well ben bernanke of course is one of the bailout architects for the united states banks and he along with treasury secretary tim geithner and the administration here have made it very clear that they want bailouts to continue because bailouts mean that banks get paid the bondholders get paid that money markets in the united states serve are kept whole that there is no crazy losses going on in the financial community and that's what they know that's where they come from and that's what they support the idea of forgiving debt the idea of even allowing a population to heal itself rather than have from it extracted its future its economic future in order to pay bailouts isn't on the table because that's not in their philosophy because they don't feel the pain they're probably not watching the people in the streets and if they are they're thinking hey you know these people ran up their own death they were like people wanted pensions and they had to be paid in greece was all out of bounds and so now we need to rein it in and that's basically what ben bernanke he was saying in different words in a speech

we have very few private investors in the united states buying u.s. treasuries. i think, going back, what is lacking in this country from a government policy standpoint is a simple program that answers five questions. what are you trying to do? how're you going to do it? why is it going to work? how much is it going to cost? where are you going to get the money? no, congress has not answered that question. the administration has not answered that question. the market is waiting for an answer to that question. the innovation in economic science over the last 50 years has been the role of expectations in how people in the economy, financial markets, work. if the u.s. government were able to announce a program that answer those five questions, the markets would immediately, and it was credible, the markets would immediately take that expectation of future stability and give us stability today. until we answer those questions, any stability issue will be short-lived. it could vanish at any moment, as mr. johnson said. >> thank you. senator johnson is recognized for t

that's a credit to the united states government's treasury. it does not account for it as a debit because now folks have promised to have social security and medicare there for me when i turn 67. it counts as a credit, mr. speaker. when we hire a new federal employee, every new federal employee we hire, mr. speaker, when they pay out of their monthly check to the federal employee retirement system, that pension that's available to every federal government employee, that payment that they make into the pension program is counted as a credit. it's as if the more federal employees we hire, the more money we'll make for america. no. because with every year of payment into that system they get something very large out. this is not news to any business owner in america, mr. speaker. this is not news to any business owner in america. they have to do this accounting every day. you want to talk about the crooks on wall street? if wall street accounted the way the federal government does its accounting, they would in fact be crooks and they would in fac

euro zone or a european union supposed to be united states of in the united states of america new york sends a lot more tax dollars to the federal treasury good being the receives in terms of government expenditures on life. delaware and i've had these in the in the opposite direction he's receives a lot more than it says to the federal treasury so you cannot have a euro zone with with only one power to dictate the terms of the game so clearly one's one's governments begin to understand the answer that you say there is and in the election and the ideological shift if you look at the last polls in greece you will see that the left has been gaining as well as the altar right now this is not a healthy situation and i am sure that you will see the same thing in portugal and you will see ultimately the same thing in as you are seen in france for the socialist action the present there and headed to gain support against mr sarkozy who did it has no idea what a european leader was spectacular leadership is supposed to be ok so clearly you will see that on some transformations i would be taking place interesting frank is close and in london i can

united states. let's go to ai chida for that. >> wants to lower the tax rate for corporations in the united states. also a way to appeal in the countdown to the presidential election this autumn. the treasury department proposed on wednesday a reduction in the tax rate to 28%. the current rate of 35% is one of the highest among industrialized countries. the effective rate for manufacturers would be capped at 25% so they can compete better in the global markets. the plan also includes measures to offset an expected decline in tax revenue. it aims to close loopholes for oil and gas companies and raise the rate for american firms that operate overseas. treasury secretary timothy geithner said that the last time the business tax code was reformed was over 25 years ago. that was before the internet and the cell phone. also prior to the rise of china and other emerging markets. >>> greece continues to be in the spotlight. major credit rating agency has downgraded. on the second bailout agreement for the country including private sector involvement. fitch announced it lowered its rating to single c. that's down from aaa. single c shows that default is highly likely in the near term. came as secto

united states and our economy. can we work with you to ensure that our tax laws are not opposing unnecessary barriers to much needed investment during these challenging times and does treasury have any thoughts on whether the law may cause foreign capital to go to similar investments in other countries instead of the united states? >> thank you, senator. let me just respond briefly. i will be happy to respond in more detail separately. we have two objectives we bear in mind as we look at these kinds of proposals and reforms. one, we want to make sure investors are really on an even playing field, are really treated equally. we don't want the system to favor foreign investors at the expense of u.s. investors for obvious reasons. we have to be careful as you know when we look at any reform of how we will pay for it. if it will cost money, we have to figure out how we're going to pay for it. so with those two constraints, of course, we will look at any proposal and happy to talk about it with you in more detail. >> thank you. >> thank you, senator. senator kyl? >> thank you, mr. chairman. because time is short here, let me do what some of the media people call a lightning roun