Return to Transcripts main page


The Buck Stops Here

Aired February 4, 2009 - 21:00   ET


LARRY KING, HOST: Tonight, President Barack Obama takes on corporate fat cats. They spent your money on their bonuses. Now, the bucks stop here.


BARACK OBAMA, PRESIDENT OF THE UNITED STATES: And I will not tolerate it as president.


KING: He ups the ante for a nation teetering on economic collapse.


OBAMA: Failure to act and act now will turn crisis into a catastrophe.


KING: Is it time to push the panic button?

Donald Trump on excess -- is this the end of an era or is greed good?


The Donald in a little while.

And we've an outstanding panel that will be with us through a great deal of the program.

They are, in New Orleans, James Carville, the CNN political and Democratic strategist.

In Los Angeles, Larry Elder, the best-selling author. His books include "The Ten Things You Can't Say in America." He's been described, by the way, by "Daily Variety," as "a firebrand libertarian."

Paul Begala is in Washington, the CNN contributor, Democratic strategist. He was a counselor to President Clinton in that administration.

And Amy Holmes, also in Washington, the CNN contributor, independent conservative. Obama went after company executives today. He wants to cap executive pay.



OBAMA: This is America. We don't disparage wealth. We don't begrudge anybody for achieving success. And we certainly believe that success should be rewarded.

But what gets people upset -- and rightfully so -- are executives being rewarded for failure. Especially when those rewards are subsidized by U.S. taxpayers, many of whom are having a tough time themselves.


KING: James Carville, good move?

JAMES CARVILLE, CNN CONTRIBUTOR, CLINTON SUPPORTER: Well, I think that -- as I understand it, it's among these financial institutions that received government aid. And I think people are justifyfully outraged that some of these things are, you know, practically -- are bankrupt, I mean, by any standard accounting. And the government is having to come in and prop it up. And this would be something -- something tied to that.

So I suspect that this is a pretty smart move on the part of the president.

KING: Larry?


of course, it's a good move. But the real question is whether we ought to be bailing out these companies in the first place. These guys made bad decisions and now we're bailing them out with taxpayer money.

If we weren't bailing them out, the free market would take care of them, either by firing them or their board would demand that they take lower compensation.

We ought not be bailing out institutions that made bad mistake mistakes.

KING: Paul?

PAUL BEGALA, CNN CONTRIBUTOR: Well, we certainly ought not be using taxpayers' money to subsidize pay. I think what the president did today is wonderful. It's an example of moral leadership.

You know, back in the '20s, Babe Ruth made more money than President Hoover. And they asked about them. They said, Babe, how come you're making more money than the president? He said, I had a better year. Well, these folks on Wall Street did not have a better year. They don't deserve taxpayers to subsidize their enormous compensation packages. And I think the president's dead on with that.

Why should taxpayers be subsidizing multibillion dollar bonuses to guys and gals who have failed in their jobs?

KING: Amy?

AMY HOLMES, CNN POLITICAL CONTRIBUTOR: Well, I think it's a move to be expected. You know, if you get into bed with government, you're not going to have a very good night's sleep.

And conservatives warned that if you take the taxpayers' money, you're not just answering to the shareholders. You're answering to 300 million Americans.

But what we're seeing here is by taking that tax money, this distorts the incentives.

Who is the person who's going to be punishing these CEOs, Barack Obama?

Is he going to be now a wage setter?


HOLMES: A price setter?

So, unfortunately, this is a slippery slope. And now we're on it.

KING: James, how do we enforce it?

CARVILLE: Well, I suspect that the bank is going to have to open its books. I don't think there's much doubt that they're going to be a completely transparent thing, to the extent the government now has part ownership in it and it's a public corporation.

And, by the way, the reason, as I understand it, is that they have to bail them out and they can't fail. It's all interlocking.

Look what happened when the government let Lehman Brothers fail. I think most people that know anything about this say it was the biggest mistake that we ever made. It caused a financial panic on 7/15, from which we never recovered.

The president has said we're facing something catastrophic. The prime minister of Great Britain says that it's a depression.

Now, the conservatives believe everything is kind of OK in this economy and if you just let it flush out a little bit, it will be fine. Remember, they were telling us that the fundamentals were strong. You had Karl Rove and Bill O'Reilly saying in December that this thing was made up by "The New York Times" to make Bush look bad.

So, I mean, if you don't think things are bad, then you say, well, if a couple of banks go by -- go down, there's nothing to worry about. And I think there's a...

KING: All right...

CARVILLE: There's a difference. I think Democrats say that there's real danger out here...

KING: All right...

CARVILLE: ...that this unemployment is something terrible...

ELDER: James...

CARVILLE: ...and we've got to do something.

ELDER: James, conservatives are well aware that we are in a recession. They're well aware that people are being thrown out of work.

What we disagree with is the notion that government, which caused this problem in the first place -- or at least helped to make it worse...

KING: They didn't cause it (INAUDIBLE).

ELDER: the savior. No. But all these government programs, from the Fed to Freddie to Fannie to FHA to the Community Reinvestment Act -- all of this created an incentive for people to engage in behavior that's far more reckless than they otherwise would have engaged in.

There was a full-page ad taken out by the Cato Institute -- 200 economists, by name, including at least one Nobel laureate -- said the thing to do now is to cut taxes and reduce the size of government, not expand the size of government, which is what Obama and the Democrats want to do.

KING: Paul?

BEGALA: Well, look, what President Obama is trying to do is save jobs. That's the bottom line for him. We have lost a half a million jobs per month for the last two months. We lost 2.5 million jobs last year. We're losing 15,000 jobs a day.

Given that, doing nothing -- Larry makes the case for doing nothing, I'm on President Obama's side on...

ELDER: I didn't say do nothing.

BEGALA: ...I'm on...

ELDER: I didn't say do nothing.

BEGALA: I'm on President Obama's side on this. I want to take action. I want solutions now. I want bold steps. The president is trying to put that into play. But a lot of these Republicans, they helped create this problem. Well, you can blame government all you want. This was Republican governmental policies that created this. Now they're trying to stop a Democratic president from solving it. It's like an arsonist standing in the way of the fire trucks.

KING: Yes, Amy?

HOLMES: But here's the problem...

KING: Amy -- Amy, Obama didn't cause this.

HOLMES: Obama didn't cause this. He wasn't in the Senate voting to subsidize, for example -- or, sorry -- to insure these subprime loans that Larry is talking about that incentivized this risky behavior.

But I think what conservatives are saying is that it's not -- government spending isn't the only answer. There are other options on the table. For example, creating a bank that would sop up these bad loans that have been bogging these banks down and keeping them from offering credit to, you know, perfectly reasonable, responsible small businesses, which are the creators of jobs in this economy.

So I think that it's not that we don't see that there's a problem, it's that we're just saying that maybe the solution is a little bit different.

KING: Is he selling it well, James, do you think?

CARVILLE: I think that -- I think they can do better. Look, Larry and Amy, they did not want to extend unemployment benefits. We think that's important. They want to...

HOLMES: That's not true.

CARVILLE: ...cut the capital gains. We say there's no capital gains to cut. I mean I think that some of the things that they're proposing -- look at today. You had a man testifying for eight years he was beating the door down of the Republican Securities and Exchange Commission and he got lectures about they're not going to regulate people like Bernie Madoff.

I mean, don't they see the world that they've created and that it's fallen down around them?

And what the president and the Democrats are trying to do -- they started this fire and they're try to come with the fire truck.

KING: Hold it...

CARVILLE: Now they want to block the streets and not let the fire truck in. That's what's going on here.

KING: Hold on one second, James.

Hold it one second.

Our panel will be coming back.

Donald Trump has got a lot to say about big money and big spenders.

How would he like it if the president limited his income?


Find out and send us your money questions, as well --

Our panel will come back.

Trump is next.

Stay with us.


KING: We'll be back with the panel in a little while.

We want to spend a couple of segments on the phone with Donald Trump, one of our good friends, the businessman and CEO of The Trump Organization.

Donald, let's get right into it.

Is Obama right or wrong to go after these executives with salary caps?

DONALD TRUMP: Well, I think he's absolutely right. Billions of dollars is being given to banks and others. And, you know, once you start using taxpayer money, it's a whole new game. So I absolutely think he's right.

KING: All right.

What about the whole concept of bailouts?

TRUMP: Well, it's a little bit different. A lot of people are not in favor of bailouts. You know, we talked about all the different things going on in this country.

And let's face it, Larry, we are in a depression.

And if they didn't do the bailout, you would be in depression number two and maybe just as big as depression number one.

So they really had to do something. The problem is they're giving millions and billions of dollars to banks and the banks aren't loaning it. If you are a prime customer of a bank and if you need 10 cents, you can't get it. The banks are out of business. They're not loaning.

Now, billions of dollars has been given. They're supposed to be loaning out that money and they're using it for other purposes.

So it is a real mess. But it's an artificial -- what we're really in, we have an artificial propping up. We would be in a depression if they didn't do that.

KING: If you were in the Senate, would you vote for the stimulus plan?

TRUMP: Well, I'd vote for a stimulus plan.

I'm not sure that all of the things in there are appropriate. Some of the little toys that they have are not really appropriate and they're a little surprising that they seem to want it, because the publicity on it's been terrible.

But I would certainly vote for a stimulus. But I would really vote for banks having to loan out the money, because they're not doing that, Larry.

KING: In your adult career, have you ever seen it worse?

TRUMP: No, this is the worst ever. This is the worst I've ever seen. 1990 was a bad period of time, but this is far worse. And this is worse on a -- you know, on a -- on a really global basis. You look -- I was watching a little while ago some of the shows. And I'm looking at different countries. Every country is bad. Now they're blaming us because of what happened.

You know, why not blame the United States?

But every country is in trouble.

KING: Can you put the blame anywhere?

TRUMP: Well, look, it's something that, to a certain extent, happens. You go up, you go down. You have recessions. And if you look -- if you just look at the charts over the period of 150 years, you've had good times, you've had bad times.

Certainly, there's been a lot of greed. There's been a lot of stupidity. You know, like I say, today the banks don't have money, they don't loan money. But if you went to a bank two years ago and you wanted a $300 million loan, they'd say no we don't want to do that, but we'll give you $400 million.


TRUMP: So I guess, to a certain extent, that's part of the problem.

KING: If you -- if you had the power, if you could wield, what would you do?

TRUMP: Well, the biggest problem we have is it's trial and error, Larry. I mean it's never been -- we've never had anything like this before. And it is -- it is absolute trial and error. They're trying. The new president is trying. Bush left him with a mess -- a total mess in many different ways. And, you know, I really think he's doing the best he can. But it is trial and error. They try something, if it works, great. If it doesn't work -- and the problem is you don't really know if it's going to work for quite some time. And if it's really wrong -- and it could be wrong -- we're going to really have a mess in two years.

KING: What about people like you, someone in your position, the entrepreneur building buildings, what has this done to you?

TRUMP: Well, I guess from a lot of standpoints, I would like to see the world just sort of be entrepreneurial. You know, this takes the entrepreneurship out, when the government comes in with artificial fixes.

And that's really what it is.

I'm not saying they shouldn't be doing it. But as an entrepreneur and as somebody that is in very good shape right now -- I mean I'm in very strong shape -- I guess I'd like to see a lot of things fall and I'd like to go out and buy them.

Well, they're not going to fall as much as they would fall because of this artificial propping up. So it's a very interesting period of time. You know, the question is, do they nationalize the banks?

Do they create good bank/bad bank?

I mean, essentially, the government owns most of the banks -- the big banks. It's a very, very interesting period of time.

KING: Haven't you had a -- didn't you have a problem in Chicago with a bank that wouldn't extend money it was supposed to extend?

TRUMP: Well, I was having the problem, but we're working it out. And that's what you have to be able to do.

I'm building a beautiful building in Chicago. But the Chicago market, like every other market, is in terrible shape. We sold over $500 million worth of units. But the market itself is in very bad shape. And we're trying to work it out with that particular group of banks.


so you're confident?

TRUMP: I'm very confident.

KING: Could all this collapse, really collapse?

TRUMP: Well, it really could. I mean, we don't know what's going to happen. You know, they talk about a trillion dollars as being so much money. But when you look, Larry, over the course of the world -- because that's really what we're talking about, the world -- a trillion dollars is not very much money.

But if you -- if you think in term of this country as being a huge or a giant company, it only has -- you know, we are limited as to what we can do. Already, you have the Chinese buying up our debt. You have the Chinese with unfair trade practices and lots of other things that they're doing.

I mean here they are, they sell to us. You try and open a business in China. You try and open a business in Japan. You can't do it. And yet they come over here, they sell their cars, they do all of the crap that they do. And this country is really a whipping post. We don't seem to use our best business minds to protect our country. Everybody is taking advantage of the United States. And it's a shame.

KING: Donald, I've got a couple more questions for you, OK?


KING: We'll be back in 60 seconds with a few more minutes with Donald Trump.

Can Wall Street be shamed?

It's next.


KING: We're back with a few more moments with Donald Trump.

A blog question from Mike in Florida: "Mr. Trump, 90 million baby boomers are retiring now, receiving Social Security and Medicare benefits. They won't be buying homes, fewer cars, less everything. This is the largest spending bloc of consumers in America. Any reduction in their spending will affect the country and the recovery. Do you agree?"

TRUMP: Well, I do agree. And it's a big problem. And it's a problem that we've all been reading about. You have a lot of people that are going to be spending a lot less.

And especially now, with the psychology of what's going on -- and when you see a Madoff get away with what he's getting away with. I mean why this guy isn't in jail is hard to believe. He's sitting in an apartment on Park Avenue.

But Madoff -- and you see what's happened. And the big problem is it's a lack of trust. They have so many people, they're afraid to take their money and put it anywhere. They don't know who are the crooks, who are the thieves. It's a really big problem.

As far as the economy is concerned, though, Larry, I'm afraid that if and when the economy does get going, you'll have OPEC raise its ugly head and come out and just raise oil prices again and kill it, because I think that OPEC had a lot to do with the failing of the world economy.

KING: Have you lost a lot?

TRUMP: Well, I guess everybody's worth somewhat less. And, you know, I'm in a good position because I finished a lot of developments two years ago. I made a lot of leases two years ago. So I'm in, really, one of best positions I've ever been in.

And I'm a buyer. I'm buying things now for much less than what I would have paid two years ago. I mean, I recently bought something for a fraction of what I paid. And I'm signing on something next week for a fraction of what I would have paid two years ago -- even a year ago.

KING: Haven't you had people, though, in your buildings unable to pay rent?

TRUMP: Well, it's harder. And it's harder to sell things when I build apartments. And if I have an empty unit or whether it's a rental or whether it's a -- something that was selling, it's certainly harder to rent and it's certainly harder to sell. There's no question about it.

And part of it is -- and especially when it comes to the sell end, the people that want to buy, they can't get money from banks.

If they want to go for a mortgage -- no matter how good their rating, if they want to go for a mortgage, they can't get money from banks.

KING: Yes.

Donald, thanks for sharing your time with us.

See you soon.

TRUMP: Thank you very much, Larry.

KING: Donald Trump.

We want to hear from you at Give us your thoughts and financial questions. We'll get to them ahead.

Back with the panel on LARRY KING LIVE.


KING: We're back with James Carville, Larry Elder, Paul Begala, Amy Holmes.

Obama is painting a very gloomy picture if the stimulus isn't approved.



OBAMA: Failure to act and act now will turn crisis into a catastrophe and guarantee a longer recession, a less robust recovery and a more uncertain future. Millions more jobs will be lost. More businesses will be shuttered. More dreams will be deferred.


KING: Let's start with Paul Begala this time.

What if it doesn't work?

BEGALA: Well, if it doesn't -- it will work. I mean economists on both sides of the aisle, including some who advised John McCain, agree that the president's plan will create -- somewhat create or save somewhere in the neighborhood of three million, maybe four million jobs.

Now this is as we're losing them, though. As I said earlier, 15,000 jobs a day are going out the door. So even if it works, the best we can hope for is maybe just to -- you know, to kind of break even. And we're still going to be in a terrible recession, maybe even a depression -- even if this works.

The question is, will we do the things we need to do, to modernize our electrical grid and modernize our health care information technology and our infrastructure and the things that can set the stage for long-term growth?

This is what the president is fighting for. And this is what a lot of Republicans don't want to do.

KING: Amy, is the honeymoon over?

Is genuine bipartisanship fading?

HOLMES: Well, I think that President Obama found out about that Potomac kryptonite...


HOLMES: ...and that some of his superpowers over the last 18 months have been waning. He is obviously giving it his best effort.

But, you know, at the end of the day, it's politics. And politicians have different ideas about what are the solutions that we should be pursuing.

So you look at this bill -- I mean, look, Larry, in the Senate, the stimulus bill is still growing.

You thought that the House's bill was big?

Well, they're already up to $900 billion. And we -- you know Donald Trump, in the earlier segment, he was absolutely right.

Why are Democrats larding this up with, you know, pork that is so easily pointed out as ridiculous and it could doom this bill?

KING: James Carville, must this stimulus -- what's the alternative if it doesn't pass? CARVILLE: Well, I mean we've seen the alternative. I mean the president has spoken out and he said it would be catastrophic. I don't -- everyone but the deniers in the Republican Party that seem to think that we ought to do less as opposed to more.

My question is, is, you know -- and I think -- I think Donald Trump's would be the same thing, is why a trillion?

I mean we'd better get to work here because we don't have any demand in this economy right now. Businesses are not buying anything. People are not buying anything.

And, you know, we have to -- we have to create some demand. And if we can come in and get these projects going, get them moving, then we can start this thing moving back again.

I mean we've got some things that are going for us. We've got some low prices out there. And you get this thing going and you can create some demand, maybe we can -- this thing can do a little bit better than we hoped for.

KING: Larry, do you favor less?

ELDER: Well, it's interesting that James and Paul consider taking action to lower taxes -- ideally, eliminate corporate taxes, lower dividend taxes, lower capital gain taxes, lower income taxes, doing nothing. You also ought to repeal the Community Reinvestment Act. We also ought to have open free trade with Colombia.

One of the things in this House bill that is so bad is it's got a "buy American" provision in there that the European Union is upset about. And they may retaliate with protectionism -- one of the things that caused the Great Depression to become a Great Depression.

We had this spending thing before. FDR did it. It did not work.


ELDER: It prolonged the recession and it deepened the recession. And many economists, contrary to what Paul Begala says and Obama says, believe that this...

KING: All right...

ELDER: ...spending stuff will make things worse.

KING: You're saying FDR failed?

ELDER: I'm saying FDR failed. He absolutely did fail. That stuff -- that spending stuff...

KING: The New Deal failed?

ELDER: Larry, let me say it real simply. I'm not speaking Ebonics. The New Deal failed. It prolonged the Depression. It deepened the Depression. What got us out of it was the war and the economies of all of our competitors were destroyed, creating a huge demand for American products.

KING: Paul, will you...

ELDER: It didn't work.

KING: Will you defend...

HOLMES: But could I add to...


KING: ...FDR, Paul?

BEGALA: Yes. I mean, look, Larry...


BEGALA: ...Larry is clearly entitled to his views. He belongs to the flat earth society of economic thinking. That's OK.


BEGALA: It just isn't going to solve our problems.

If you want to go back to the failed policies of the past -- the Bush policies, the Republican policies that got us into this, god bless you. But we know what that brings us. We know what happens when you design government policies to favor a tiny wealthy elite -- the sort of Bernie Madoff/Ken Lays of the world -- and you ignore working folks and ordinary people. We know what that brings us.


BEGALA: We know what the past failed policies do.

I think President Obama, just like Donald Trump says, we're going to try some things. Those things that work, we'll do more of. Those things that don't, we'll do less of. That's what FDR did. And it's why FDR was such a successful president.

Larry may not want to admit that...

ELDER: But, Paul, but you know...


HOLMES: But we -- but we also know...

KING: All right, quickly...

HOLMES: We also know

KING: ...let him... (CROSSTALK)

KING: Hold it. Hold it.


HOLMES: down a rat hole when it doesn't work. We had $300 billion that went to the banking system that even Donald Trump says we don't know how to account for. And, yes, the CBO, a nonpartisan organization, said that this stimulus bill will create jobs.

But at what cost?

A hundred thousand to $300,000 per job?

Couldn't that money be better spent in creating jobs in this economy by incentivizing small businesses...

KING: All right, I've got to...

HOLMES: ...all the things that Larry ticked off to grow this economy?

KING: I've got to get a break.

We'll be right back.

Dick Cheney was in the news today -- back in the news with something to say about the security of the United States. He's worried. It's next, when we come back.



OBAMA: For top executives to award themselves these kinds of compensation packages in the midst of this economic crisis isn't just bad taste, it's bad strategy. and I will not tolerate it as president.


KING: We're back.

Gone, but not forgotten -- guess who's back in the news?

Former Vice President Dick Cheney took a hit at the Obama administration in a recent interview with Politico. Watch.


DICK CHENEY, FMR. VICE PRESIDENT OF THE UNITED STATES: The United States needs to be not so much loved as it needs to be respected. We need, from time to time, to use military force or all of the resources at our command, in order to defend the nation and defend our friends. Sometimes that requires us to take actions that generate controversy.

I'm not at all sure that's what the Obama administration believes. I think there probably are some who actually believe if we just go talk nicely to these folks, everything's going to be OK.


KING: James, does the administration believe if they just talk nice, everything is OK?

CARVILLE: Earth to former Vice President Cheney, things are not OK out there right now. I don't know how to say this, but you left a few unfinished things. I think what happened is the vice president was getting his feelings hurt because Rush Limbaugh and Joe the Plumber had taken over the intellectual and moral leadership of the Republican party. They probably wanted to -- probably wanted to get himself back in the mix.

We Democrats are always glad to see the vice president on television, reminding the country of those Bush/Cheney years. So welcome back into the fray, Mr. vice president.

KING: Larry Elder, what do you make of Cheney's warnings?

ELDER: I think that the vice president, former Vice President Dick Cheney was the most articulate spokesperson in the Bush administration. He's absolutely right. Obama, I believe, is a man of very good faith. He believes you can look somebody in the eye, and let them know you are a person of good intentions, and talk them out of bad actions. Ahmadinejad and the Iranians recently reiterated that the holocaust was a fiction and that Israel should be wiped off the face of the Earth. After Obama did his outreach on Arab cable network, Ahmadinejad said, OK, now apologize for 60 years of anti- Iranian actions.

KING: He didn't apologize. So?

ELDER: So what good did it do?

KING: They haven't met yet.

ELDER: Meanwhile, Iran is still pursuing a nuclear bomb.

KING: Paul.

BEGALA: By any objective measure, Dick Cheney weakened America. First off, he was charged with convening a task force on terrorism. He never even met with them until the week of 9/11. He preferred to meet with Ken Lay and Enron and Exxon and the energy task force. He did nothing, nothing to prevent the attacks of 9/11.

Look at our adversaries around the world. The Iranians are stronger, not weaker, because of the Bush/Cheney policies. Putin in Russia is stronger, not weaker, because of the Bush/Cheney policies. All around the world, our enemies were emboldened by Dick Cheney. Now, I kind of feel sorry, sort of a pathetic figure. He sounds weak and unhealthy. I wish him well as a man. We'll pray for his health. But he's just kind of pathetic right now. I think his friends should have an intervention here with him.

HOLMES: Obviously, I think it's a lot more complicated picture in terms of our foreign policy and what different administrations are responsible for. But I do think that Dick Cheney, he's talking about the Obama on the campaign trail, but the Obama in the White House, as commander in chief, is a more complicated mixed bag here. Let's remember, he's keeping our rendition policy. And this is angering the far left of the Democratic party. He's finding, just like George Bush, that it's difficult to figure out what to do with these people at Guantanamo. Countries don't want them. The countries that do might potentially torture them.

Are they better off here at Guantanamo or are they better off in some deep dark dungeon somewhere else? I think that Barack Obama, he is -- my impression is that he's trying to be thoughtful. He's trying to be measured. He kept the defense secretary. That was something that, you know, I was very pleased by. We'll see as these policies unfold.

Let's also remember that the same Senator Obama who said he would filibuster the FISA bill if it exempted telephone companies, went ahead and voted for it. We still have to see who Obama's going to be as commander in chief.

KING: Thank you all very much. We'll be calling on all of you frequently, James Carville, Larry Elder, Paul Begala, and Amy Holmes.

Think it's too late to save your house, your nest egg or your job? Sit back, take a deep breath, stay right there, because our money experts are here to help you hopefully right after the break.


KING: Now we talk about what everyone's talking about, the economy and where we're all going and our homes going and coming. Here in Los Angeles, Robert Kiyosaki, the author of "Rich Brother, Rich Sister, Two Paths to God Money and Happiness." There you see its cover. In New York is Barbara Corcoran, the real estate contributor to NBC's "Today Show." She also hosts the "Millionaire Broker With Barbara Corcoran" on cNBC and is author of "Next-Ville, Amazing Places to Live the Rest of Your Life." And in Miami is Done Peebles, CEO of the Peebles Corporation. It's a real estate investment firm. He's author of "The Peeble's Path to Real Estate Wealth; How to Make Money in the Market."

Robert, thousands of people out there tonight losing, about to lose their homes. Any thoughts, any advice?

ROBERT KIYOSAKI, FINANCIAL EXPERT: It's a tragedy. And my whole schtick has always been why don't we have financial education in our schools? Why did we wait for this to happen? On the other side of it, if you have good credit and you have money, it's a great time to buy. It's good and bad for the whole thing.

KING: This is a good time to buy?

KIYOSAKI: If you have a lot of credit.

KING: A lot of people don't have that.

KIYOSAKI: That's the problem.

KING: Barbara, what are your thoughts?

BARBARA CORCORAN, CNBC ANCHOR: Hey, listen, I think people have options they're often not even aware that they have if they're thinking they might be losing their house. I think it's a darn shame that the government hasn't done a thing to help the American homeowner, frankly. All these plans that have come out haven't amounted to a thing.

But getting that to the side, there are many options homeowners have today that they're not aware of. Most people hit the panic button and think they're going to face foreclosure within months. It just doesn't come down that way. People have a lot of options.

KING: Do you agree with that, Don?

DON PEEBLES, REAL ESTATE DEVELOPER, ENTREPRENEUR: I agree. In fact, I think now is one of best times to buy real estate. Warren Buffett says, and always says this, that the time to be cautious is when everybody's greedy. And when everybody's cautious, that's the time to be greedy. And so in real estate, the time to buy is when fewer people are buying and the time to sell is when fewer people are selling. Right now, we're in a buyers market.

Also, President Obama has made a commitment to help restore the American dream to the American people. And you're going to see more programs through HUD, through FHA, and through Fannie Mae and Freddie Mac that will make house purchases more of an opportunity. And because of the affordability today -- you know, we have an historic level of affordability. The affordability index is better than it's ever been since 1970. And in fact, the median income earning American family can now spend 80,000 dollars more than the median price of a home today.

So the affordability index is a big, big increase.

CORCORAN: I wish it was that rosy. I mean, the truth of the matter is that foreclosures are up 80 percent over last year. The truth of the matter is that every single homeowner program that's come out of our government hasn't done a thing to help the American homeowner, except perhaps the high financing afforded by FHA, if you've got good credit.

KING: Robert, hold on. What options do people have, Robert?

KIYOSAKI: Well, I think we're all saying the same thing, basically, is that 46 percent of all the purchases today are from people buying foreclosures. So it's really a great time if you know -- you have the money and good credit.

KING: What if you've been foreclosed? Not a great time.

KIYOSAKI: No. I think that's why I'm saying, again -- I would cut my losses right now. I wouldn't try and hang on. It's one of those things you learn as an investor. You cut your losses when times are bad.

KING: Meaning?

CORCORAN: But you know --

KING: Barbara, you don't agree?

CORCORAN: Well, yes, of course, if you've got the bucks and you're sitting pretty and you've got investments where you've cut your losses, sure. Those people know what to do. They're operating way ahead of the pack. But how about everybody else? How about the guy out there that didn't mean to lose his job, didn't quit his job, just lost his job. His family got run over by a truck, whatever. And he's facing foreclosure and has no options. He goes to his local bank. Even the bank that loaned him the money to get a loan modification supported by the federal government, and the bank wouldn't even return the call?

I mean, it's a joke. I find it embarrassing, frankly, now to be out here at this time, when the number one problem in America is housing. People can't hold on to their houses. The American dream is now the American nightmare. Yet, what happens? The government's giving all these big juicy things to the big fat cats. What about the little guy? I don't know. I'm ashamed to be an American right now. It's a joke.

PEEBLES: I didn't think there was a little guy left in Manhattan, actually, with the housing prices the way they were there. In the real world, out here in America, there are a lot of people facing foreclosures.

CORCORAN: Everywhere.

PEEBLES: All the more reason, for example, to get behind President Obama's financial package. The stimulus package --

CORCORAN: When we see it.

PEEBLES: -- has to be approved because we need to create jobs in America. But those who have jobs, and the many millions of Americans who do have jobs, now's a good time to buy a home, millions of Americans.

KING: All right, let me get a break. We'll come back and have a couple blog questions. Don't go away.


KING: President Barack Obama pulled out all the stops on the economy today, made no bones about how bad it could get.


OBAMA: The economic crisis we face is unlike any we've seen in our lifetime. It's a crisis of falling confidence and rising debt, of widely distributed risk and narrowly concentrated reward, a crisis written in the fine print of subprime mortgages, on the ledger lines of once mighty financial institutions, and on the pink slips that have up-ended the lives of so many people across this country, and cost the economy 2.6 million jobs last year alone.


KING: Robert, you were homeless once. You certainly can understand.

KIYOSAKI: I can understand.

KING: What do you do if you're down and out? What do you do if they take your home away?

KIYOSAKI: It was the worst five years of my life. And -- but it was also the best, because I actually had to fight back. My wife and I just really fought back hard. Donald Trump is my friend. He's never been homeless, but he's lost a billion dollars. And what Donald and I say really is the time to self-assess, to learn, to come forward, you know, to get stronger, get smarter. I don't want Obama to save me. I don't want hope.

I think it's time for us to get smarter and wiser and not expect the government to take care of us.

KING: These people who know about money answer your questions next. So start dialing in.



KING: From our blog at, Lynn from New York City asks, "I'm retiring in two years and will receive a lump sum in retirement pay out. I do not trust the markets. Where can I stash my cash and continue to get the tax write off benefits?" Barbara?

CORCORAN: OK, well, I would suggest you do what I did when I sold my business for 66 million dollars and had every fancy guy in town hitting on me, telling me what I should do with my money. I did nothing for two whole years. I sat on it. You know what I did? I slept like a baby at night. Don't be in a rush. It's hard to trust people. I have found them. I trust a lot of people. But not with a lump sum -- whatever the heck you just called it. It's hard to trust.

KING: Let's take a call from Dallas. Hello.

CALLER: Hi, Larry, my name is Rhonda.

KING: Hi, Rhonda.

CALLER: My question is for Robert. Robert, do you thing that it's a good idea for companies to take a role in educating their employees regarding the financial situation that they're in? Not that the company is taking on the responsibility, but play a role in educating their employees on mortgage, stocks, mutual funds, everything.

KING: You think that's an employers responsibility?

KIYOSAKI: Well, my company, we do. We have financial education. But also, you know who's doing it? The churches are starting to step into that role of -- since our schools aren't doing it. If I could give some -- a little quick advice right now. If you can't afford to buy real estate, I would prepare for the worse of times right now. And I would look at buying either silver, if you have no money -- it's less than 20 dollars a coin. And I would look at buying gold if you have a lot of money.

It's really silly to hope that the worst of times don't come. You have to prepare for good times as well as bad times.

KING: Don, if the interest rates have dropped, is this a good time to refinance?

PEEBLES: It sure is a good time to refinance. Rates are at historic lows right now, both in the residential side and the commercial side. So it's a great time to refinance right now. Your money will go a lot longer

KING: Gardnerville, Nevada, hello. Nevada, hello. Nevada, good-bye. Was this crisis inevitable, do you think, Robert? Did you see it coming?

KIYOSAKI: It happened when we created the Federal Reserve bank in 1913. And that allowed the government to print money indiscriminately. In 1971, President Nixon took us off the gold standard. And now we have the banks are allowed to just create money out of thin air. That's a serious problem

KING: Do you see a way out, Barbara?

CORCORAN: You know what I see is going to take us out of all of our problems? The same thing that makes the change in anything, leadership. If you've got a great leader who can inspire people, with a practical mind that sees problems as things to be solved -- and we're all putting a lot of hope on this new president. I'm as hopeful as the next guy. You can work your way out of anything, if you've got a leader that creates a focus and inspires people to believe.

What we're lacking right now more than anything is people don't believe that we can be a lot better. And yet now we have a president who's making people fired up and believing it. So, yes, I feel like I, personally, have a lot of hope right now.

KING: Don, can leadership change things? PEEBLES: Absolutely. I think Barbara's right. But also I think Robert's right. Americans, we need to accept responsibility ourselves, not expect the government to do anything more than create an environment of opportunity, and then rely upon ourselves to get ourselves out of this. What will get us out of this is a great American spirit of entrepreneurship.

I think that we've got to look at ways to create opportunities for ourselves. And those who are laid off with jobs ought to think about going into business for themselves. I think that is going to get us out of this. There is definitely a way out and President Obama's leadership will restore confidence in the accessibility of opportunities. If he can do that, I think we can get out of this.

KING: More of your questions after this.


KING: We're back. From our blog, Lydia asks, how do tax cuts help business when there is no demand for their products? And how do they help the growing number of unemployed? Robert?

KIYOSAKI: It's a good point. To stimulate the real estate market, instead of passing out a stimulation plan, why don't they give people a 20 percent tax break for buying a house? So if you buy a million dollar house, you get a 200,000 dollar tax break. That increases demand. What tax breaks do is increase demand as well as increase the supply of money

KING: Barbara?

CORCORAN: How about this one? How about the government come out and offers four percent money to anyone who wants to buy a house or refinance their current house to a mortgage that they can afford? Anybody, no questions asked. We would kick this housing market in its butt, where it needs to be kicked and prices would start to go up. What's wrong with something as simple as that?

KING: Don?

PEEBLES: Too much government interference. Frankly, what the government -- one thing the tax policies could do is eliminate the cap on home mortgage deductibility. Right now, there's a cap on home mortgage deductibility. That's one tax incentive that would help.

But the government needs to help people transition from renters to homeowners, but it doesn't need to create homeowners for people who aren't in a position to be homeowners.

CORCORAN: But these little provisions amount to nothing more than a detail that nobody even notices. It makes no difference whatsoever.

PEEBLES: Actually --

KING: Go ahead. PEEBLES: Actually, the housing market has done pretty well over the years. And FHA has played a very important role historically. Fannie Mae up until recently played a very important role and will again. Freddie Mac has as well. These policies do help. The president will be able to get a stimulus package passed, which I believe will get passed. We will be on the road to recovery after a rocky 2009. And the government will have a profound impact on housing.

In fact, one of the things that needs to be done in a stimulus package, which is being discussed now, is giving some incentive for the banks to lend our taxpayer money out to credit worthy people.

CORCORAN: Well, of course. My gosh. It's why we gave them the money, except nobody's gotten it.

KING: Let me get another call. Camp Verde, Arizona, hello.

CALLER: Hello. What about the people living from paycheck to paycheck? Twenty dollars is a lot of money to us to buy a coin. Please.

KING: Robert?

KIYOSAKI: If you can't afford 20 dollars, you can go out and get a job or do something quick to get something. To sit there --

KING: She says she works. She just lives paycheck to paycheck.

KIYOSAKI: Right. But she might have to go and do something extra. See, this whole thing about what I'm getting sick of with America is people want somebody to save them. They feel sorry for themselves. This is not going to save this country. You know, to expect -- the more the government bails us out, the more we become socialists. That's what I fought in Vietnam against. I don't want the government to take care of me. Take care of ourselves.

KING: Newport beach, California, hello.

CALLER: I have a question. I have an option ARM loan and I'm trying to refinance or modify my loan. My LCD is good. It's at 55. My FICO is at 810. The problem I'm having is that my income has been reduced dramatically and my lender will not even work with me to refinance or modify. Basically, what Barbara said is if they would just give me a fixed at four percent, there would be no need for me to lose my home.

KING: Barbara, do you have an answer?

CORCORAN: I think you have your answer and it's the wrong answer, which is you're not going to get a refinancing on your house. You know what, even if you didn't have the income problem, most people in America's homes are worth 10 to 20 percent less than they paid for them. So if your home is worth less, you're not going to get refinancing either. So yes, you are a perfect example of the hundreds of thousands of people out there who are calling their bank, and when they get an answer from their bank, aren't getting what they really need.

KING: The home is worth less than what the mortgage is -- you're paying?


KING: That's crazy.

CORCORAN: It's normal now.

KIYOSAKI: That's why the banks aren't lending. They don't know what a house is worth anymore. Everything is falling down so fast.

KING: So where does one turn?

CORCORAN: Where does one turn? To a foreclosure, to bankruptcy. They declare bankruptcy. To a short sale, which is never what it's cracked up to be, because it ruins your credit anyway. And banks don't allow many of them. So where do people turn? They move out of their house and they give up their dream and they move on to something less in life.

KING: Sad.

CORCORAN: That's the truth.

PEEBLES: Not necessarily.

KING: Thank you all. Robert Kiyosaki, Barbara Corcoran, and Don Peebles. Suze Orman is here tomorrow night. She will take your calls. If you want to send her a question, go to right now and click on the blog. While you're there, check out our other great features, including upcoming guests. We're working on an Oscar extravaganza with the cast of "Slumdog Millionaire," Penelope Cruz, Ron Howard, Josh Brolin, and other Academy Award nominees.

That's coming up. Coming up now is Anderson Cooper and "AC 360."