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GLENN BECK

Will Democratic Race Turn Dirty?

Aired March 5, 2008 - 19:00:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.


(BEGIN VIDEOTAPE)
GLENN BECK, HOST (voice-over): Tonight, Billary Clinton attack machine, full effects, and Obama`s feeling the heat. Look out, John McCain, because if Hillary gets the nomination, you`re next. And what is next?

Plus, Barack is being scrutinized by the mainstream media over his dealings with a Chicago developer. Illegitimate business or dirty politics? We`ll try to get to the bottom of it.

And the latest sign our economy is in a crisis. Now the Federal Reserve chairman is asking banks to take a hit for those mortgage owners whose eyes were bigger than your wallets. My Grandma would say, don`t put more on your plate than you can eat. Bad idea. All that and more tonight.

(END VIDEOTAPE)

BECK: Well, hello, America. And may I make a prediction? I am no longer going to make predictions in this election.

Last night, Hillary Clinton beat Barack Obama. I mean, the odds of winning three out of the four crucial Democratic primaries in Texas, Ohio and Rhode Island were astronomical, but she did it. And here`s "The Point" tonight.

Last night, we were all reminded, in no uncertain terms, don`t ever count a Clinton political machine out. The Clintons are indestructible terminators of American politics. They will destroy anything or anyone that gets in their way. And here is how I got there.

Going into yesterday`s primaries, Hillary Clinton lost 11 contests in a row to Barack Obama. His momentum seemed unstoppable. I believe I made the prediction that he`ll be the next president of the United States. Even though -- even though there were those in her own camp that said if Hillary didn`t win in Texas and Ohio, it was over, now it looks like it`s not over. The red light started flickering in her eye, and she`s back.

(BEGIN VIDEO CLIP)

SEN. HILLARY CLINTON (D-NY), PRESIDENTIAL CANDIDATE: For everyone here in Ohio and across America who`s ever been counted out but refused to be knocked out, and for everyone who has stumbled but stood right back up, and for everyone who works hard and never gives up, this one is for you.

(END VIDEO CLIP)

BECK: I don`t even know what to say. I never in my wildest dreams thought I would be excited that a Clinton won an election and here I am. She is a Clinton and while her husband doesn`t know a lot about morals or, you know, fidelity, he knows something about politics. And if you can afford to fight fair, that`s cool and everything, but that ship has sailed. Now it`s time to claw your way out of a trap like a rat.

First there was the suggestion that Barack Obama had attended a Muslim madrasah. And the Clinton camp denied spreading that rumor. But an accusation, often it doesn`t matter if it`s true or not. It`s just planting the seed of doubt. Then there was that mysteriously circulated photo of Obama in a traditional Somali dress. Big deal.

I mean, this was a ploy that, I guess the presumed goal was to get people to say, "Gee, that Obama guy kind of looks Muslim-ish, right? Looks like he`s scary."

And throughout the campaign, the Clintons have tried to make sure that nobody forgets that Obama`s former patron, Tony Rezko, and his Chicago corruption trial is about to begin. The Clintons seemed to be saying, if Rezko is on trial, shouldn`t Obama be, as well?

Tonight, America, here`s what you need to know. Now things are going to get ugly. There aren`t enough delegates left for Hillary or Obama to legitimately, mathematically win the Democratic nomination without a brokered convention or the super delegates. You can bet your very last dollar that the Clintons will go after the hundreds of delegates that have been disqualified in Michigan and Florida.

You see, when the rules don`t work for the Clintons, they change them, even though they created those rules in the first place. It doesn`t matter. They`ll blame it all on the GOP. That`s just the facts. There`s just too much at stake for Hillary and her game to play nice. And last night`s win just encouraged her.

Now the question is Obama. Will he fight back? I mean, seems like a nice guy, but he may have brought a knife to a gunfight. Last night, Hillary Clinton bought some time, but hell hath no fury like a Clinton fighting to win.

David Mark is a senior editor at the Politico. Let me just do the math here, David. There`s 610 delegates left. How do they do it without super delegates? Can they?

DAVID MARK, SENIOR EDITOR, THE POLITICO: Barack Obama would have to get something like 70 percent -- 77 percent of the delegates. She would -- Hillary Clinton would have to get, like, 94 percent. Basically, it`s not going to happen. They rely on super delegates.

BECK: So they`ve got to go to the cyber delegates. How do you do that without having an ugly, ugly scene, 1968 kind of style stuff at the convention?

MARK: Well, you try to do it quietly outside of TV cameras, not in public. Barack Obama is trying to quietly move these super delegates and saying, "Hey, stick with me. I`ll be good for you."

Hillary Clinton, however, is saying, "Keep your powder dry. Don`t come into him yet. Do you really want him to be the nominee?" And she`s really trying to hold it open -- open to the convention, if she has to.

BECK: Can you really legitimately, basically bribe these people? They`re sending them -- they`re sending them money. You can legitimately just send them money?

MARK: You can do a lot of things. It might not even be money, although that`s one element of it. There`s ambassadorships, patronage jobs, all kind of federal jobs for people`s children, uncles, nephews, whoever it might be. There`s lots of things you can do to get people on your side.

BECK: America, isn`t this exactly what we`re -- what we`re saying is wrong with the government? I mean, I was thinking about it last night. As you`re looking at what happened in Texas where you have to go vote and then you`ve got to go to a caucus, I mean, which party understands small, not complex government that makes your life easy? It`s crazy the way they`re picking this.

MARK: It`s very strange. The hard part for people to understand, particularly with the Clintons, as you say, they`re trying to change the rules in the middle of the game. They`re saying, oh, that Texas caucus part, that doesn`t really count. Only the primary should count. You`re seeing that in Florida and Michigan. So it`s very confusing.

BECK: The "Wall Street Journal" also said that there is something else, that I mean, I`ve asked people. Nobody has ever heard of this. There`s 76 add-on delegates that I don`t even know who selects. They haven`t been selected yet. They`re just saying, you know, we`re going to add some more super delegates. Who do you want?

MARK: Well, yes, they`re, quote, "bonus delegates." And the dirty little secret of all this is the Democratic National Committee can change who the line of the super delegates are at any time right up to the convention.

BECK: David, thank you very much.

America, I mean, it`s like they don`t trust you. I mean, it -- well, let`s put enough people in there, just in case the people make the wrong choice. Let me broaden the discussion a little bit. Let me go to a Republican strategist, Richard Brand, and Democratic strategist Liz Chatterton. Welcome to both of you.

Liz, let me start with you.

LIZ CHATTERTON, DEMOCRATIC STRATEGIST: Hi, Glenn.

BECK: How are you?

CHATTERTON: Good.

BECK: Tired?

CHATTERTON: Yes.

BECK: OK. NAFTA, Farrakhan, Rezko, the Muslim photo, what was it? The 3 a.m. phone call? What was it that was the punch that changed the dynamics in this?

CHATTERTON: Glenn, it`s a really interesting question, and it is a definitely interesting morning. None of us sort of saw this coming. My gut instinct is it was nasty in Ohio, and it was the 3 a.m. phone call in Texas.

You know, the 3 a.m. phone call, it`s interesting to me that this time it wasn`t a phone. It was a child sleeping. It was targeted to women. She had to bring the women back over to her side. She`d been losing them to Obama. And you know what? They came back. And that ad was good.

BECK: The phone rang eight times. Who do you want answering the phone? I don`t know, somebody. Maybe on the second ring.

CHATTERTON: Yes.

BECK: Let me play -- let me play something that we played last night with exclusive audio from one of my radio affiliates down in Texas, KURV. And they talked to Hillary Clinton about 7 p.m. last night about Florida and the delegates. Listen carefully to what she said.

(BEGIN VIDEO CLIP)

CLINTON: I think that the voters deserve to be taken seriously and I hope we can figure out how we`re going to get them to count. The people in Florida didn`t sign up to any rules. The Republicans governor and the Republican legislature pretty much pushed this on them.

(END VIDEO CLIP)

BECK: Liz, I`ve got to ask because you`re a Democrat. It wasn`t the GOP. It was the DNC. It was the national DNC that did these rules. And I mean now they`re trying to change the rules. How can they get away with it?

CHATTERTON: The DNC isn`t trying to change the rules.

BECK: No, no, no. The Clintons are.

CHATTERTON: The Clintons are trying to change the rules.

BECK: Yes.

CHATTERTON: No, I have to tell you, as a Democrat this really kind of makes me angry because the DNC set the calendar. Florida decided to move its primary anyway. The DNC said we`re not going to count your delegates. Florida said we don`t care. And then here we are.

So if you have someone to blame, you`ve got to go look at the Florida Democratic Party who made the ultimate decision that they were going to move forward with this. And you know, with all due respect to Senator Clinton, whom I do have respect for. She needs to play by the party rules. She needs to not have those delegates count, but it`s going to be a war.

BECK: Rich -- Rich, could you please explain to Liz what conservatives have known for a long time. They change the rules whenever it applies. Whenever it helps them, they`ll change the rules.

RICHARD BRAND, REPUBLICAN STRATEGIST: The Clintons take seriously the Dylan Thomas line -- maybe it was Bob Dylan. They don`t go gently -- gentle into that good night. They rage against the darkness. And I`m telling you, this is far from over. This is right. This is going to get really ugly really fast, and that`s only good news for John McCain.

BECK: You know, I have to tell you, I don`t think that Barack Obama, and I think it started with the "SNL" thing. Which I don`t know how much of a role that played, but Barack Obama can`t take a punch. He can`t -- he has not been punched enough to take a punch. I saw him on the news shows this morning. I saw him on -- I don`t know -- five or six different channels, and every time he was stumbling and fumbling. Now granted, he may have been tired or he just maybe learning how to do television for me. But he wasn`t real good.

MARK: Well, I mean, one of the things that "Saturday Night Live" thing did have an effect and so did Wolfson, the press secretary, communications director for the Clinton campaign. They put on a very, very strong case to the press corps that the "Saturday Night Live" thing really was so.

And you remember in that debate last week, she said, "Why do I always get the first question?" Mrs. Clinton is great. She`s best when she`s America`s -- America`s victim.

BECK: Yes.

MARK: And she did it again.

BECK: Liz, do you see 1968 coming again? I don`t know how you decide this with super delegates and add-on delegates and not disenfranchise a lot of people. I mean, how do you solve this one now?

CHATTERTON: Well, I`ve got to tell you, Glenn, if I knew how to solve this today, I`d be making a lot more money. But the God`s honest truth is that I don`t think we know yet. I do think it can be solved before we get to Denver in August. I think every Democrat in the country wants this solved before we get to Denver. Nobody wants to see a brokered convention. We know that weakens us.

BECK: Do you think that they`ll go VP -- president and VP? Do you think they`ll team up?

CHATTERTON: Yes, I don`t think that she would ever be his VP. I think he might be her VP. Right now they`re both pretty mad at each other. I don`t really see them teaming up. No.

BECK: OK, thanks.

Now coming up, Tony Rezko, who is this guy? A long-time Barack Obama friend. He`s a fundraiser. He`s on trial now for slew of corruption charges. Is this the weak link that Hillary has been looking for? Is there anything to it?

And talk about a bad idea. The chairman of the Federal Reserve is hinting now that he wants banks to take a hit for the consumers who took on too much debt. That`s tonight`s "Real Story." It`s the economy, stupid. Coming up.

(COMMERCIAL BREAK)

BECK: All the experts are saying, "Oh, no, our economy is just in a slow down. We`re not in a recession." Really? If we`re not in a recession, if things aren`t bad, how come the Federal Reserve chairman thinks it would be a good idea if the banks just reduce your $200,000 loan and just say, "OK, let`s call it 100 grand." Yes, what does that say about the economy? The "Real Story" in just a few minutes.

But first, I`ve got to be real honest. I hate politics. You may watch this program and think here`s a political geek. I`m not. I`m really not. I didn`t care about politics or really much of anything until 9/11, and then I started paying attention to things.

But there are times that I watched stories and pay attention to stuff so you don`t have to. Because life is hell enough without paying attention to these geeks in Washington. So I haven`t really paid attention to this Rezko story out of Chicago that Hillary Clinton keeps bringing up.

I don`t know who he is. I don`t know if he`s a good guy or a bad guy. Seems to be a pretty bad guy, but we don`t know. It`s in court now.

Tony Rezko and Barack Obama. What`s the connection, if anything?

Here`s a guy who`s paying attention, so I don`t have to. Let`s listen in.

John Kass, he`s a columnist for "The Chicago Tribune."

John, who is he?

JOHN KASS, COLUMNIST, "THE CHICAGO TRIBUNE": Well, Glenn, I call Tony Rezko, I call him Barack Obama`s personal real-estate fairy.

BECK: OK.

KASS: He`s the fellow who helped -- he helped buy Barack a house. Barack didn`t have the money to pay full price. Let`s see, he paid -- Barack paid, asked him for less than asking price, $300,000 less. Rezko`s family paid the asking price for a house -- for a lot next door. They kind of put it together, and Barack still hasn`t been answering questions as to exactly what happened.

BECK: Wait, wait, wait. Wait, wait, wait. So when -- when the housing prices were still really good...

KASS: They were high.

BECK: ... he paid -- he got a $300,000 discount. And Rezko bought the property next door at $300,000 more? Or something like that.

KASS: Yes. Something like that.

BECK: What was that? Was that just a really good friend? Or -- because -- Tony, I could use a new friend.

KASS: If you had a friend like that, you`d want to be -- you know, have a lawyer, too. Because Rezko has been indicted on federal extortion and corruption charges for playing -- for being an influence presently in government and Illinois.

BECK: Barack Obama has built his whole campaign as being, you know, a reformer. He`s different. He`s clean. He`s got -- let`s get rid of all these dirty politics and everything else. You`ve got an article coming out tomorrow called "The Chicago Way." Is Barack Obama part of -- is this a smear campaign or is he part of something that is dirty?

KASS: So I`m going to -- here`s what`s going on, Glenn. Outside of Chicago, reporters, particularly in the -- I guess, the eastern establishment, liberal media establishment.

BECK: Yes. We`re totally clean.

KASS: Because you`re not part -- well, the deal is they look at him like, is it Barack Obama as the boy King Arthur, you know, pulling the sword from the stone and ready to fight dragons and reform our government. But he`s from Chicago. This is Chicago politics.

And the Rezko story is about basically the Chicago way. And I`m trying to illustrate that tomorrow in a column and a video.

BECK: OK. All right. So...

KASS: What is the Chicago way? What is the Chicago way?

BECK: I saw "The Untouchables." I think I know what the Chicago way is.

KASS: That`s one way to look at it.

BECK: What is it?

KASS: I don`t know. Right in the -- right in the city council chambers of Chicago, there`s a portrait of George Washington with all the aldermen, and George Washington has his hand out like this. So I don`t know. We`ll have to figure it out.

BECK: Hang on just a second, John. One last question. There is something to do with this London billionaire that apparently was laundering money for Saddam Hussein, and -- and Rezko has been to Syria, like, eight times or something like that. Is there a sort of Middle East connection?

KASS: It looks like from what I read in the "Wall Street Journal" and John Fund`s column and out of Britain that there is some money that may have trickled through from Iraq to Rezko into, perhaps, into the house, which I think was not $300,000. Maybe it`s a $150,000 discount. Into something involving Illinois, involving Mr. Obama. All he`s got to do, Glenn, is sit with you and talk with you.

BECK: John, thank you very much. See, America, that`s why I stopped paying attention. I mean, jeez, what is that?

All right. You tell me where I`m wrong. I say if the fraud and extortion charges against Tony Rezko stick and Obama is at all tied in, Obama is done overnight because he was, you know, little King Arthur coming here, pulling the sword out of the stone. Agree or disagree? Go to CNN.com/Glenn and cast your vote right now.

Now coming up, why is it that somebody who once declared war on the U.S. government said, "Kill your parents" and blew up the Pentagon is not only a member of polite society, but he`s also teaching at a university. We`ll talk to Jonah Goldberg in just a second.

(COMMERCIAL BREAK)

BECK: Jonah Goldberg, as you know, is one of my favorite new authors. His best-selling book, "Liberal Fascism," is No. 1 on the "New York Times" list. He raises and answers some interesting questions in that book about the foundations of left-wing politics. Now he`s got a new column out that raises even more questions, this time about the, quote, "light baggage" that one travels from violent radicalism to liberalism and terrorists who never have to say they`re sorry. He joins me now.

Jonah, first of all, congratulations on the No. 1 status of your book. You deserve every bit of it. The book is a must-read, America.

The double standard that is -- that is out there, if you make a statement at some 200-year-old senator`s birthday party, you`re immediately connected to the KKK. Yet, the left can actually be a guy who blew up the Pentagon in the `70s, said, "Kill your parents," and he can go and become a professor at the University of Illinois. How does that work exactly?

JONAH GOLDBERG, AUTHOR, "LIBERAL FASCISM": Well, first of all, thanks. I couldn`t have done it without you regarding the book`s success. I`m eternally grateful. Not only are you a handsome but you`re a powerful one.

BECK: Well, I`m married, man, too, so back off, please.

GOLDBERG: I`m sort of astounded by -- that this is a controversial observation, that there`s a double standard in our culture. We look at the 1960s as a culture. Not me, not you, necessarily, as a time of these youthful, exuberant, you know, idealists who tried to take on the system and stick it to the man and all the rest.

What`s often left out of that is that the leaders of these movements were violent, self-proclaimed terrorists, or not terrorists, but they proclaim they were at war against the United States.

BECK: They were revolutionaries.

GOLDBERG: They were revolutionaries. They blew up people. The Black Panthers assassinated policemen, murdered other people. And yet, culturally we look back on those people as, if they did anything wrong it was that they cared too much.

BECK: Well, wait a minute. This doesn`t work. This university professor, what is his name?

GOLDBERG: William Ayers. He was one of the founders of the Weather Underground.

BECK: Right. He -- he blew up the Pentagon. He`s quoted as saying, "Kill your parents, kill all business men."

GOLDBERG: He planted bombs there. He didn`t actually blow it up.

BECK: OK.

GOLDBERG: Still there, right?

BECK: I stand corrected. He was quoted on 9/11 -- on 9/11, coincidentally in the "New York Times" saying, "No, we didn`t do enough."

They asked, "Do you regret it?"

He said, "No, I wish we would have done more" on 9/11. This guy hasn`t changed his stripes. And yet, he`s a professor at the University of Illinois.

GOLDBERG: Yes. The reason this guy came into controversy is because it turns out that he`s sort of a muckety-muck in local Chicago politics. And Barack Obama had to sort of go and pay his respects as he was coming up the system there. And I am not trying to sort of smear or attack Barack Obama.

But what I thought was interesting was how routine this is and how so many former radicals, even unapologetic ones, like Ayers, who said he regrets he didn`t do more, even though he was the leading bomb-maker for a terrorist organization. But these people, there`s no baggage. There`s no sort of price that is exacted from these people about coming into mainstream society.

BECK: Yes.

GOLDBERG: Hollywood makes movies about the black -- the Black Panthers as if they were just sort of heroes.

BECK: Yes, I mean, Che. There`s a movie coming out about Che, and you know, and all the T-shirts, all the fashion T-shirts.

GOLDBERG: Those "Motorcycle Diaries," which is about the young Che.

BECK: I`ll have to tell you, I`m thinking about making T-shirts with Robert Byrd`s face on it.

Jonah, thanks a lot.

GOLDBERG: He just cared too much.

BECK: Yes, I just care too much. Thanks.

Next, Bernanke, banks and bail outs. Oh, my. Lions, tigers and bears. The scary details in tonight`s real story, coming up.

(COMMERCIAL BREAK)

BECK: You saw the show the other day and -- not yesterday. Yesterday -- I think it`s best we all forget last night`s program. It involved Democrats and Republicans and small animals.

And anyway, the other night I talked to the president of the Czech Republic. And this is a guy who is, you know, vehemently anti-global warming, and that`s why he was in New York. But I sat down with him, and I talked to him in part two of my discussion with him about our march to socialism.

Here`s a guy who grew up in a communist country. Listen to what he has to say about America coming up in just a second.

But first, let`s get to the "Real Story."

Cable news ratings were through the roof last night as everybody tuned in to find out, is Barack Obama finally going to put this race to bed? But the "Real Story" is, I`m pretty sure that Americans weren`t the only ones paying close attention.

Last night the Israeli government was watching closely as well. It`s mostly lost because of all the election news, but miracle of miracles, the United Nations Security Council actually passed its third resolution against Iran earlier this week.

The vote was 14-0 with only the weasels in Indonesia abstaining. Why, you might ask, do we need yet another U.N. resolution? Well, one, that`s all they really do at the U.N. But didn`t the NIE report actually say that Iran was basically as friendly as Switzerland? Yes.

It turns out that that is not really true. I mean, despite the early celebration from the media, the U.N. says, no, not so simple. Iran is still refusing to disclose important information, and the IAEA hasn`t been able to actually make any substantial progress in confirming that their program is peaceful.

If you watch this show a lot, I told you about a year ago that I didn`t think George W. Bush would leave office without ensuring that Iran would no longer be a threat. I corrected that later after the NIE report because I thought it changed everything.

I don`t think he can do anything. He doesn`t have the political cloud to act anymore. But Israel does.

I believe they may try to take Iran on before this president takes office -- or leaves office. We`ll keep an eye on the news coming out of Israel over the coming months.

Now, let`s move on to something else.

If Israel does act between now and the election, it would likely benefit John McCain. Obviously his strength is national security. Unfortunately, for him, however, voters are now virtually unanimous that the economy is their number one issue, and that`s really not exactly his sweet spot.

I don`t know if you remember when he said that economics not really his thing, but he did buy the Alan Greenspan book, which if you coupled that with staying at a Holiday Inn Express, I mean, John -- and by the way, if you`re reading books, you might want to check out Tom Tancredo`s book on illegal immigration.

Just saying.

A year ago when I started talking about the economy being in trouble, a lot of people said that I was nuts and, quite honestly, I may be. I mean, craziness runs through my family like a pack of wild elephants, but that`s a different story.

If we are right now going through something that is nothing more than a routine slowdown, like the president and so many others claim, then why is the "Real Story" that our Federal Reserve bank is now pitching ideas that just three months ago would have been crazy talk?

At a meeting of bankers yesterday morning, Ben Bernanke made a historic proposal that should be shocking. Listen to his words carefully.

He said, "In this environment, principal reducks that restore some equity for the homeowner may be relatively more effective means of avoiding delinquency and foreclosures than reducing the interest rate." Let me translate that from bull crap to English for you.

Call up the people who borrowed the money for their house and tell them that instead of owing you $300,000, hey, you now only owe $200,000. Consider it a gift from your friendly neighborhood bank.

It`s like toasters. Just really, really expensive toasters that they give out at banks.

If you have a mortgage right now, it probably sounds sweet, huh? I should have taken out a bigger mortgage. But think about what it really means for a second.

The chairman of the Federal Reserve bank, not some politician or some think tank analyst, has proposed that banks voluntarily write off what could amount to hundreds of billions of dollars. Why would he pitch that? More importantly, why aren`t the bankers rioting in protest today? After all, you have a nonpartisan, high-ranking nongovernment official asking private companies to take a huge hit for a typical slowdown.

The only reasonable answer is the one that nobody wants to hear. It`s because both sides understand what we are really facing. And it`s not a typical slowdown. The only reason to willingly give up hundreds of billions of dollars if you think you might lose more if you don`t do this.

Peter Schiff is the president of Euro Pacific Capital and author of "Crash Proof." He`s our economic bogeyman, and he`s got the book "Crash Proof: How to Profit From the Coming Economic Collapse."

Peter, first of all, I don`t think I took out a big enough loan if this is what we are going to do. Second of all, lower mortgages? I mean, just handing this out, what happens if banks just start to say, we`re going to start lowering people`s mortgages?

PETER SCHIFF, PRESIDENT, EURO PACIFIC: Well, it`s going to happen anyway, because remember, the borrowers can walk away from these mortgages. Many of them have no equity as it is, or they put nothing down. And so it`s the lender`s problems. So, ultimately, this is what`s going to happen.

But, you know, in the short run, the principal is already being reduced. Look at the dollar. It hit a new record low today against the euro. Record high prices for gold and oil. People around the world who have loaned Americans money are already taking a significant reduction in their principle. It`s in the foreign exchange market -- the weak dollar.

BECK: OK. But you say reducing the loans would actually decrease home values even more, faster?

SCHIFF: Well, of course. Well, the problem is Americans overpaid for homes in the first place and borrowed more than their homes are actually worth.

And what this means, think about it. What Bernanke also said is that in foreclosure right now, the average recovery rate is less than 50 cents on the dollar. So imagine a bank trying to loan somebody money to buy a house for five or six percent interest rate, knowing that if the guy can`t make the payments and he has to foreclose, he`s going to get 50 cents on the dollar.

Nobody is going to lend in this environment. So real estate prices have to collapse.

BECK: Am I right by thinking that the reason why they want to give people more -- they want to reduce this is so people have more equity. And let`s be honest, when people have more equity in their house, they spend more.

SCHIFF: Well, sure. That`s how we got into this mess.

People extracted the equity in the first place with refis. Remember, Alan Greenspan encouraged it. And now that all the equity is gone, they are asking for the lenders to fill the piggybank back up again so Americans can extract even more equity that they don`t have.

BECK: Peter, did you see my article? I posted it -- I think it was just a couple of days ago. I called it my DEFCON...

SCHIFF: DEFCON, yes.

BECK: ... for, you know -- where are we?

SCHIFF: I think we are in DEFCON 4, headed for DEFCON 3. And the only thing you really left out of the equation was what happens to the value of our money. That is the real story.

Americans are seeing their wealth evaporate -- the value of their wages, the value of their savings. The Federal Reserve is on a mission.

You know, there`s a cost. There is a cost to all this easy money and low interest rates. That cost is higher food prices, higher gasoline prices.

You know, prices are not rising because somebody in China is eating more food. That`s nonsense. Prices are rising because the government is printing too much money and debasing our currency to try to prop up the market and prop up the economy.

BECK: Thanks, Peter.

That`s the "Real Story" tonight.

Find that article, by the way, at CNN.com/glenn on where we are in the economy.

Coming up, part two of my interview with the president of the Czech Republic. See what he has to say about Putin and our own seeming march towards socialism -- next.

(COMMERCIAL BREAK)

BECK: Earlier this week, I sat down with Czech Republic president Vaclav Klaus, who recently gave the keynote address at the Heartland Institute`s International Conference on Climate Change.

We spent so much time on climate change, that the segment was over before we could get to other topics I wanted to talk about. Fortunately, President Klaus generously agreed to return for another segment.

(BEGIN VIDEOTAPE)

BECK: We were talking about global warming because you are in town for a global warming conference.

PRES. VACLAV KLAUS, CZECH REPUBLIC: Yes.

BECK: And you have said that global warming you believe is a way to kill democracy will.

How do you mean?

KLAUS: Well, I`m afraid that there will be a game of society, organized, mastermind regulated, controlled from above. And by the anointed, by the people who know better than the rest of us what to do. And I`m afraid that this is something what we went through in the past, and that bothers me.

BECK: Are you struck by -- I was talking to somebody earlier today that this is becoming a religion, that it is -- you know, in religion in the dark ages, you couldn`t ask questions because that was the devil that made you ask those questions.

KLAUS: Yes.

BECK: Now if you ask questions, that`s big oil that is making you ask that question.

KLAUS: Well, I would say it`s (INAUDIBLE), or better to say this is an ideology. And it`s an alternative ideology, because now everyone of the people on the left understood that the old-fashioned socialism is over, communism is over. So they have been searching for new "isms."

BECK: Yes.

KLAUS: And in this respect, global alarmism is a very good idea.

BECK: You k now, this sounds crazy and, look, I`m a clown basically. I mean, I`m a self-educated man, and I try to figure things out myself. And help me out on this.

I was thinking this summer, I can`t imagine if America fell overnight like the Soviet Union fell, and they started pulling down the statues of Thomas Jefferson on the Mall in Washington, that there wouldn`t be any resistance to it, that there wouldn`t be a good core of Americans that would resist this.

I don`t think communism really ever went away. They regrouped and renamed and just reformed. Isn`t the old Soviet Union in a way coming back?

KLAUS: Well, I would say that in our countries, in the former communist countries, the past is much more over than in some other countries who didn`t go through the same experiment.

BECK: Right.

KLAUS: So, this is discredited very much in our part of the world. Much more than in western Europe and the United States of America. Therefore, the ideology has shifted to some other field.

BECK: Right. But Russia, with Putin, does he keep you awake at night? Does that -- does the threat that that growing power in Russia with Putin...

KLAUS: That`s a good question, you know, because I will answer in a way that you will be probably surprised, because I have to put it into the right historical perspective. So, what was making me awake during the night was Mr. Brezhnev and the Soviet regime.

BECK: Right.

KLAUS: So, in to compare Brezhnev and Putin is, in this respect, really impossible. And to make such a comparison and to somehow assume that this is not a qualitative difference, but just a quantitative margin or change...

BECK: Sure.

KLAUS: ... as it is sometimes done here is, in my understanding, a tremendous mistake.

BECK: Putin -- I understand. I understand that.

But Putin -- are you saying that Putin isn`t on this same kind of totalitarian road, where it is -- I mean, he`s dropping missiles. Oops, I dropped a missile on Georgia. I mean, that was-- was that a mistake or...

KLAUS: Well, I don`t know about exactly dropping a missile on Georgia.

BECK: Right.

KLAUS: That would be a partial issue. But nevertheless, you know, the political system in Russia, the presidential elections in Russia of course totally different presidential election than in the United States of America or Czech Republic.

BECK: Sure.

KLAUS: Both, I would say. So Russia is in a different place.

Nevertheless, if you look at Russia`s history, if you look at the situation in the countries around -- I mean, in Asia -- I wouldn`t say that Russia is so different.

BECK: Right.

KLAUS: And as compared to the past, it`s really much better.

BECK: Because I have read about you for quite some time, and honestly, in many ways -- I don`t know if you are a fan of our founding fathers -- but in many ways you say the same kinds of things -- in many ways -- I`ve said on the air in the last year or so that if you read your words, you are closer to a founding father of our country sometimes than some of the people who are running for president here.

Why -- why the -- is it the experience of what you guys went through?

KLAUS: I think this is the experience, because I spent, I`d say, the first 48 years of my life in communism. And it influences your thinking, and you are dreaming all the time about different political regimes and political and social systems.

And we tried to follow all the positive things in America, in American history. We tried to read books. I studied American economic science, not Marxist...

BECK: Right.

KLAUS: ... or socialist.

BECK: And it`s weird, because now we are studying Marxism. But...

KLAUS: I was joking in the early `80s in Czechoslovakia when someone asked me about how will the people really do believe in communism and Marxism, and I provoked them 25 years ago. Well, I`m sure that there are more true Marxists in the University of California in Berkeley, and the whole -- Czechoslovakia.

BECK: Oh yes.

KLAUS: So I think we tried to understand it. And so for us, the real revolution was the American revolution more than 200 years ago, not the French revolution.

BECK: The people here will tell you that, well, communism or Marxism works, socialism works. It`s just never been done right. And I can`t for the life of me -- it has been tried and tried and tried and tried, and it always fails and it always ends in bloodshed.

Does -- you`re an economist. Can it ever work?

KLAUS: Absolutely not. And this is quite clear.

But the problem is that the argumentation you use is to the argumentation used in the communist era. The political leaders that are saying, of course it`s not perfect, and the people will be better in the future, and the system is OK, just the people are wrong, this is the same argument -- we went crazy when listening to such terms. And they said no, no, the people are not the problem. The system is totally wrong.

BECK: We as a country right now -- and as a guy who broadcasts on radio and television every day, sometimes I get down because there is just so much stuff. There`s just so much going on that is just -- we are going in the wrong direction.

Give me something great. Give me something that you look across the water or the world and say, you know, the one thing America really has is - - that`s good. What is it?

KLAUS: Well, I am a pragmatist, and I look at -- and I know you can compare either reality with reality or a model with a model, or a model with reality. But compare model and reality is -- the difference is basically wrong. So when I look at the United States of America, it`s -- the country has much more freedom than in any other part of the world.

So, for us, the U.S. is the guarantor of freedom. And in this respect, I am very, very glad that the country exists -- and based on such ideas as it is.

BECK: Wow. We are very glad that you exist and you are the president of the Czech Republic.

KLAUS: Thank you.

BECK: Sir, thank you very much. A pleasure. A pleasure.

KLAUS: Thank you.

BECK: Back in a minute.

(END VIDEOTAPE)

BECK: So Hillary Clinton made it through the campaign last night with a pulse still beating. I guess, I don`t know, maybe it`s time for Bill to start making some of that yummy banana bread for the superdelegates. Oh yes. Oh, they`ll vote for Hillary once they taste my famous blueberry pie.

It`s like Aunt Bea walking around the White House.

But Hillary`s victories yesterday are bizarre, I think, for another reason. And it`s the tactics that she used. This is Hillary`s most recent ad...

(BEGIN VIDEO CLIP)

NARRATOR: Barack Obama says he has the judgment to be president, but as chairman of an oversight committee charged with the force fighting al Qaeda in Afghanistan, he was to busy running for president to hold even one hearing.

SEN. BARACK OBAMA (D-IL), PRESIDENTIAL CANDIDATE: I became chairman of this committee at the beginning of this campaign, at the beginning of 2007. So it is true that we haven`t had oversight hearings on Afghanistan.

NARRATOR: Hillary Clinton will never be too busy to defend our national security, bringing our troops home from Iraq, and pursuing al Qaeda in Afghanistan.

SEN. HILLARY RODHAM CLINTON (D-NY), PRESIDENTIAL CANDIDATE: I`m Hillary Clinton and I approved this message.

(END VIDEO CLIP)

BECK: Wait, I`m sorry. Have I slipped through a wormhole and entered some parallel universe? I mean, on what version of Earth does a Democrat lure primary voters with a pro-defense message?

I mean, maybe I haven`t been watching the news enough, but I could have sworn that the Democrats have spent the last several years trying to out Cindy Sheehan each other. You know, it`s been a race to see who could go so far left that it makes moveon.org feel a little uncomfortable.

Yes, I get it. I understand that Texas and Ohio are two of the more sane states in our union. But it`s still surprising that, I mean, this could work for a woman who spends most of her time saying that she`s going to take away profits from oil companies and promising free health care and, you know, everything else to everyone.

Moving past the primaries, what happens if Hillary Clinton does win? How does she have any credibility and go to the public and say, you know, John McCain is running a campaign based on fear? I don`t know if that message will work on the American people. I mean, it`s essentially elect me, I will take care of that evil and dangerous al Qaeda, but they`re not so dangerous that I`ll try to listen to their phone calls or make them feel uncomfortable at all when we catch them.

I mean -- and I`m Hillary Clinton and I approved this message. I don`t see that ad working, but then again, I didn`t see her winning last night either.

Don`t forget, sign up for my free email newsletter and get the details on the amazing story of the prince of Brunei -- how he has gone from billionaire to dead broke. Oh, it feels good.

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From New York, goodnight, America.

END

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