Return to Transcripts main page


Time to Reset the Clocks; European Influence; Unemployment in America

Aired November 6, 2011 - 15:00   ET


ALI VELSHI, CNN ANCHOR: Welcome to a special edition of YOUR MONEY. I'm Ali Velshi in Cannes, France. Here covering the G-20, which turned out to be something entirely other than what I and the rest of the world thought it was going to be this week with the injection of a crisis in Greece and more pressure on the euro zone.

Here to discuss this and the impact on the world economically, politically and financially, John King, our chief national correspondent and the host of "JK USA", and Sheila Behr, who's the former chairman of the FDIC.

But before we talk them about this, I want to bring in my co-host and good friend, Christine Romans to explain why this has been such an important deal back in the United States.

While I've been out here in Cannes, the U.S. has been watching very closely what's going on here and what's been going on in Athens -- Christine.

CHRISTINE ROMANS, CNN BUSINESS CORRESPONDENT: Because there's a growing understanding, Ali, that quite frankly the U.S. and Europe are in it together. So anything that is negative for Greece and the E.U. is not good for America.

Europe is America's number one trading partner and there's this feeling that we don't quite understand how the domino effect could be if Greece goes down. Greece would be that first domino in an interconnected trade, banking, and financial system.

You know, $400 billion of U.S. exports go to Europe every single year. That makes it a huge destination for our goods. If there were a severe recession in Europe because of a financial crisis, it would definitely hurt the U.S.

There's also over a trillion dollars of direct investment in the E.U. from the U.S. and another $2.7 trillion in loans and other commitments. Everything from banks, companies, municipal governments, retirement funds that are all wrapped up and tied up in business with Europe.

So it's two very close allies, two regions that depend on each other financially. It just shows that we're in it together. What's good for Europe is good for the U.S. Not good for anyone if this thing doesn't get solved quickly -- Ali. VELSHI: Which is why all eyes have been here all weekend in Athens. Christine, I'll check with you a little later in the show. John, let me bring you into this thing.

You have covered things like this, international summits and typically, when you're here with the president of the United States, most eyes are on the president of the United States.

Interesting things are happening at this G-20. First of all, the president of the United States is here, the treasury secretary, the premier of China, Hu Jintao is here.

But all eyes are not on these people. Is this a sign of shifting global sands that the U.S. is not the primary player in a week like this?

JOHN KING, CNN CHIEF NATIONAL CORRESPONDENT: Well, I think that is certainly a sense. You see it there when you're in the summit and hear it back in the states when you watch whether it's people in Washington. I'm in Des Moines, Iowa today covering the presidential election.

When you talk politically about the future, there is a question, is the United States still the preeminent economic leader in the world? Can President Obama go there and make a case about European debt when Washington is so dysfunctional right now about U.S. debt?

When you travel the country, Ali, this is not a business school term I don't think, but you sense there's still what I call a constipation in the economy. Corporations won't spend the millions and millions and millions they have because they have anxieties and uncertainty about Europe.

Also uncertainty about the U.S. tax structure and debt structure. Last night, I met a woman here who just got laid off from her job in a hotel because she said the owner can't get financing to do a big renovation.

So there is this sense of uncertainty. You see the president on the world stage. You feel it on the local level here and it's impacting the world. Guess what, it's going to impact the next presidential election in a big way.

VELSHI: Sheila Bair, let me ask you this. You spent years trying to keep the banking system in the United States safe. Ultimately, at the heart of this issue in Europe is the banking system. It's the issue that banks are at risk. Explain to us what's going on and what they are doing right or wrong to keep the banking system afloat and why that's so important.

SHEILA BAIR, FORMER CHAIRWOMAN, FDIC: Well, European banks are very thinly capitalized. There are differences among institutions, but as a group, they are much more thinly capitalized than U.S. banks.

One of the reasons is because the rules that European regulators follow are much more permissive in terms of letting bank management decide their minimum capital levels.

So I think what we need to do now is have a more rigorous stress test thing by the European banking thought with realistic loss rates, true distressed economic scenarios and also capital level that are based on hard and fast minimums.

It's what we call leverage ratios in the U.S. other than the much softer risk weighted ratios that the EBA has been using in European banking, and other European regulators have used.

I think, you know, confidence in the European banking system is important. They need to be building fortress balance sheets right now. This is not the time to be fudging numbers or be less than completely forthright about the levels of capital and what additional capital needs to go in to stabilize that system.

VELSHI: What's your sense of their understanding of that? We've heard from the French President Nicolas Sarkozy, from Angela Merkel. These are countries obviously whose banks are most concerned.

They're the stronger countries. Is there a sense that all the players at the table understand what you just said and are generally prepared to move in the right direction?

BAIR: No, I don't think so. There's been a lot of focus obviously on these problems of the sovereigns. Ultimately, the impact it's going to have, the banking system is what's going to cause a potentially severe credit contraction. That could cause a broader problem for the European and global economies.

So I don't think enough focus has been put on this. They need to get those levels up with real capital. It may require dilution of shareholders. It may require temporary nationalization. I think much more aggressive action needs to be taken on this issue.

VELSHI: That shared pain or that aggressive action is exactly what is causing countries like Greece to be concerned. It's disallowing people from doing what might be necessary because they are fearful of the impact on this.

John, I have to tell you. You're on that campaign trail. This is not the kind of discussion, this fear of contagion of this debt, the idea what Christine described a slowdown in Europe affecting the United States. This is not really making it into the campaign trail at this point?

KING: They are not talking as much in the fine detail as you were just talking about with Sheila. But they are talking about the idea that in the view of the Republicans who are campaigning.

I sat down with Texas Governor Rick Perry while he was here in Iowa. He says president of the United States can't go to these meetings with big leverage right now because he doesn't have anything positive to say.

VELSHI: Right. KING: Because the United States has not dealt with very similar problems. So that's an issue you will hear. You will hear criticism of the president's leadership. More importantly though, Ali, 9 percent unemployment still.

The U.S. economy creating jobs, 80,000 last month, well, that's nowhere near enough. You know that to start bringing the rate down. Not only that to start putting confidence into people.

So are people here discussing the European debt crisis in the fine detail that the leaders in Europe are, the conversation you just had with Sheila? No.

But are they aware that there's huge drag on the economy and it's not just the factory up the street or the factory in the state next door? They are about that.

When you travel the country and you talk to people about their economic anxiety, they do talk about global pressures. They talk more about China than about Europe, but they are aware this is a big global problem.

VELSHI: That's a very good point. China tends to be the focus, but Europe is, in fact, as a group the largest trading partner. What the implications of this may be is the realization that while everybody is mad at Washington for what they did or didn't do right legitimately.

The fact is the rest of the world may have a bigger impact on jobs back at home than Congress can even. Let's continue this conversation in just a minute. John King, Sheila Bair, stay right where you are.

We'll be right back after this break. You're watching a special edition of "YOUR MONEY" from Cannes, France.


VELSHI: Welcome back to YOUR MONEY. I'm Ali Valhi. I'm in Cannes, France covering the G-20. We've got a blue ribbon panel assembled here to discuss global politics and economics and the affects that it has on you.

I've got John King. He's our chief national correspondent at CNN and the host of "JK USA" and Sheila Bair. She's the former chair of the FDIC, the Federal Deposit Insurance Corporation, a body that was very important to Americans throughout the worst of the financial crisis.

John, Sheila Bair really has been a broad role she and the FDIC played during the financial crisis. I want to ask you, Sheila, people who are watching the show. The show is called YOUR MONEY.

If you're not interested in your money, you're probably not watching the show unless the batteries are gone on your remote. But we don't all know the details about banking.

I think most people polled on the street would be surprised that banks keep less money in core capital or safe capital than we think they do. So when you look at this crisis in Europe, with the hindsight of what we went through in the United States.

Is this problem in Europe imminently solvable or should we in the United States or the rest of the world be very fearful that this is not solvable and could send us into another financial crisis?

BAIR: I think it's solvable if people face up to reality. One of the harder pieces of reality is that the low capital levels in European banks. They really need to get the capital levels up.

If you get into a period of economic distress and banks have too low capital levels that will threaten their solvency. That will threaten whether they remain viable, whether they can keep lending.

So building what we call fortress balance sheets, getting capital up, it matters. It's a job of regulators. It's a good example of why regulation matters to our broader economic health.

VELSHI: All right, Christine Romans is going to take it from here. I'll go back to covering the G-20 -- Christine.

ROMANS: All right, thanks, Ali. I want to bring in Ian Bremmer right now, president of Euro Asia Group. Ian, nice to see you. The focus right now is on the crisis in Greece.

In time, we could face similar scenarios with other European countries like Italy, Spain, Portugal, when will this constant threat of financial crisis, recession in Europe and what it could mean for America. When will that subside?

IAN BREMMER, PRESIDENT, EUROASIA GROUP: Well, it can't subside for quite a while and in part that's part of the plan. If you're Germany right now or if you're France, the core European states or you're the European institutions, you know that the only way you end up fixing European institutions is by continuing to use market pressure to ensure that austerity continues.

So you can't write a check. We're talking to Angela Merkel last year at Davos. She was basically saying that, you know, the only day that she really has leverage is right before she actually cuts the check.

Everyone understands that. So it's not going to be a German marshal plan. This isn't the post-war environment. You have to change European institutions. This is not just a matter of weeks or months. We're going to be talking about this European crisis frankly for more than another year.

ROMANS: You know, John King, what does that mean for the president and his hopes for re-election? Because every minute we're talking about Greece is a minute we're not talking about the fact that jobs market in this country is still pretty blah. Does it have any bearing on a president who is going to be soon if not already in campaign mode?

KING: It has dramatic bearing. He is in campaign mode. He is trying to do two jobs at once, be president and be a candidate for re- election. Just look what has happened in recent days. Greece announces it has a plan, the markets in the United States rally. Then the prime minister says wait, I'm going to have a referendum, the markets in the United States go down.

Europe appears to get a deal, up, down, up, down. What you just went through Ian, you know, Italy, Spain, Portugal, and so on. So if we're going to have this roller coaster heading into a presidential election year, you'll have volatility in the markets.

You'll have uncertainty in the economy. We know Ben Bernanke just said this week persistently high perhaps 8.5 percent to 8.7 percent unemployment by the time the president seeks re-election.

This is the number one issue in the country. It is for him as a leader and it is for the voters. The voters after being promised things would get better after being promised the stimulus plan would help, you can't blame it all on the president.

But guess what, when you're president of the United States running for re-election in a tough economy, you take a hit and this is a very, very steep hill for him right now.

ROMANS: You know, there are any steps that the administration or the president should be taking right now to best position our economy for possible fallout from Europe?

I mean, on the one hand, the U.S. can't also go there and say you should do this, because we're still blamed for the financial crisis in 2008. We don't have the moral authority we once had on these issues.

BREMMER: Well, the U.S. also doesn't have moral authority on social dissolution. I mean, you know, I thought that Sarkozy's speech at the Cannes G-20 meeting talking about the fact that any plan that comes from the IMF is going to take into account the fact that people are hurting on the ground is absolutely a reflection of "Occupy Wall Street" in the United States.

So the U.S. does have this issue. There's not much Obama can do frankly. I mean, he's very much frustrated because he lost -- his party lost the midterm elections. He doesn't have the ability to actually get anything through, through 2013.

That's Romney's best opportunity to beat him. So Obama can talk about the fact that unemployment numbers are starting to go down very, very slowly. He could talk about the fact that American growth looks a lot more resilient right now than European growth.

Those are all true facts, but this election is going to be about the economy. The economy is going to be fundamentally weak. So really 2012 is about the power of the American incumbency, which is very strong against an economy that looks weaker than at any point since the great depression. Even President Obama is going to be very vulnerable in that --

ROMANS: Sheila, you were such an expert on banks and banking and the risk for U.S. banks -- what is the risk there? Because it's such a global interconnected financial system and I'm still trying to get my head around.

I don't know if any of us ever really will know what the exposure is for credit default swaps, some of the complicated derivatives that banks and investors put on just in the very case something happening in some of these countries. What is the risk?

BAIR: Well, there is a lot of relationships. There's not much direct exposure to the peripheral sovereign debt either through direct ownership or CBS coverage.

But certainly there's a lot of exposure to the European system generally in European banks generally, which is why I hate to sound like a Johnny one note, but I really think there needs to be a laser like focus on building the balance sheets and the resilience of the European banking system to absorb what's going to be a prolong tumultuous time period as Ian indicated.

As you indicated earlier, Europe is a huge export market so there's certainly it's going to be an economic drag if their economy falters and exports to Europe reduce. But it also could have a knock on impact on our banking system, which could lead to further credit contractions here, which would not be good.

ROMANS: Yes, it won't good. The uncertainty is just not something that anybody needs right now. Exactly. Sheila Bair, Ian Bremmer, John King, thanks to all of you for some fascinating analysis of the situation.

All right, does the latest jobs report offer evidence that we may have averted a double dip recession here at home. We'll take a look next.


ROMANS: It's 80,000 jobs added in October. It's better than nothing, but it's not enough because you need at least 150,000 just to keep up with population growth. But this is what it looks like over the past year, 80,000 jobs created in October.

The unemployment rate actually slipped a little bit to 9 percent. The private sector created about 104,000, but there are some revisions, folks. If you looked at August and September, you can see that those months were better than we thought.

So there was more job creation in the end of the summer, early fall that we had thought. I guess you could take that as good news. You've got a full year now of job creation.

But Diane Swonk, chief economist with Mesirow Financial, Diane, it's been this sideways, slow and disappointing for a recovery that does not feel like a recovery.

Is it that so many CEOs in companies are just so afraid that things are going to turn south again? They don't want to fire. They don't want to have hire people just to turn around next year and fire them. DIANE SWONK, CHIEF ECONOMIST, MESIROW FINANCIAL: That's actually right. I think most people forget that these people are people too. They don't like firing people after they hired them up and the issue is uncertainty.

Look at all the icebergs still we have floating around out there. Europe is on the front page every day and it's going to be for some time to come as the earlier segment pointed out. We've got our own impotence in Washington.

And what's going to happen to "Super Committee"? Are they going to get the $1.2 trillion? Are we ever going to deal with our fiscal situation in the U.S.? There are so many uncertainties out there. That it's really hard to get vision.

We don't have vision even though we got cash on the balance sheet. It's hard to make that commitment to hire because you just don't know what the economy is looking like going forward. We're also looking at -- it looks like they might not extend the payroll tax cut that's (inaudible) tax increase for everyone at the start of the year.

So even if we make it through the fourth quarter looking OK, worry about the beginning of 2012. That's just not a good environment to be hiring up in.

ROMANS: All right. Economist, Peter Morici, is a professor at the University of Maryland, School of Business, a friend of the show just like Diane is.

You know, Peter, long-term unemployment, this is a trend. These people have been out of work six months or longer, a real problem, a real problem when you start to talk about structural unemployment. Is that reversible at this point? Do you see any signs we can reverse that?

PETER MORICI, PROFESSOR, UNIVERSITY OF MARYLAND SCHOOL OF BUSINESS: Well, not until we get demand growing a lot quicker. You know, with the debt overhang, the heavy level of imports we have and so forth, demand is growing, you know, not adequately.

It isn't that people aren't buying, but demand for domestic products is not strong enough. In that environment, the people that are unemployed for more than six months are the last ones to be hired back. At least, they're further down the ladder because people who have recently worked are just more attractive.

ROMANS: That's why you're seeing the job -- there's a big controversy about job ads, you guys where there are all these job ads that say you must be currently employed to be considered for this job. That means it's impossible.

SWONK: That adds insult to injury.

MORICI: Absolutely.

ROMANS: I think employers will lose good people that way, too because there are some people who are just victims of all this, who are perfectly good employees. This is the whole problem of this labor market.

Tig Gilliam, is the CEO of Adecco. They place people in jobs throughout the world. So he first hand knows what it's like to hire, who is hiring and what it takes to get hired right now.

You point out, Tig, that temporary workers are not being let go in large numbers right now. A sign that corporations, they've gone to the temporary worker and they need those workers?

TIG GILLIAM, CEO, ADECCO: Yes, absolutely. Where companies absolutely need capacity, they are going first to a flexible solution. That means they are coming to temporary and contract workers as a first step. We saw that in a jobs report here with 15,000 more temporary jobs.

That's more than what we even expect with a seasonal increase that comes in the fourth quarter. So that's a good sign. More and more people are getting their permanent job opportunities having completed a successful temporary contract assignment with clients.

ROMANS: That goes to underscore what we've been talking about, companies are just too -- they are too timid right now. They don't have the clarity of next year, too much uncertainty, too many icebergs.

GILLIAM: Too much uncertainty. And for sure, consumer confidence is at a level that you just can't look at this and say 70 percent of our economy driven by consumers, it's going to take off here. We're in good shape. So they're keep being very cautious as they move forward and look for flexibility in the workforce.

ROMANS: You know, Diane, I want to bring you back and talk a little bit about young people right now because if we look at the employment rate. There's a good report this week from Demos about how we have this whole generation that may be unemployable.

I mean, all of these people who don't have their first foothold into the economy. So you have people who have been out of work for six months or longer then you got these people who have never even had a chance to work. What kind of a challenge is that for a modern economy?

SWONK: It's a huge challenge because they are not learning the simple things like what it's like to go to work every day and what is like to be responsible, and what it's like to do a menial work even.

I mean, I was a maid at one point in time. I worked at a burger place that's now defunct. But you know, these are things that are important to learn those skills. They also teach you, you don't want to stay there, believe me, if you have an ability to get out.

I think we're losing that. In fact, I actually this summer I made my 16-year-old take an unpaid internship because I was afraid that if she took a job, she would take it from an older worker, but I wanted her to get those skills, show up for work every day.

She took an unpaid internship to at least get the experience. I think that's really important because without experience, you start getting this compounding effect of people not having experience and not wanting to hire them either because they don't have experience and practical skills in the labor force.

ROMANS: You know, Peter, look at some big issues in front of the labor market right now, would the president's jobs plan? Is there anything congress can do? Are these temporary measures? I mean, what can be done, if anything, in the very near term about this?

MORICI: Well, I think more debt relief for the people with underwater mortgages would help a lot. The infrastructure jobs bank would help a lot and frankly, freeing up domestic oil and gas production because a lot of that stuff.

It creates the same kinds of jobs as infrastructure construction, roads, dams, you know, when you do oil rigs, it's things like cement, pipelines, so forth. That would help a lot and that wouldn't cost a lot of money.

ROMANS: Diane, you want to jump in there?

SWONK: I just don't think they are going to do anything. I'm really concerned they won't even extend the payroll tax cut, which is de facto tax hike. So I'm just concerned that we just have a real impotence in doing anything right now.

The fed certainly is trying to do everything they can, but it's a big burden for them to carry on their shoulders. I think that's unfortunately central banks of the world are the ones who are carry the burden now of growth globally.

As we've seen in Europe that's a very precarious situation. So there's just a lot out there that's very difficult still. The only piece of good news I will put in here is that small businesses do like they are being created again.

We did see small business employment pick up in the ADP report. Other surveys to small businesses are a little more optimistic. That means new business births actually look like they are picking up.

The household survey catches that a little better than the unemployment report we saw come out today. So that's one piece of hope, but it's still not enough.

ROMANS: Tig, it's been a year of sideways jobs growth, is it another year of sideways jobs growth or does it pick up next year?

GILLIAM: I think it's very likely that we could see this sort of pace of job growth for the next 12 months, you know, 100,000 to 150,000 a month as you pointed out earlier that's not going to have a significant impact on the overall unemployment rate.

We need to get in the 200,000 to 300,000 jobs a month range to really start moving in that direction. So I agree with Diane. We need something from Washington. We need that payroll tax put back in place for 2012.

Because remember, health care cost rise every year, and for many employees with no other change, they're going to have less take-home pay because of the increased cost of health care.

ROMANS: And that hits the economy because that's money that's not going to something else. All right, Tig Gilliam, thanks so much. Nice to see you.

The rest of you stick around because we've got another thing to talk about here. It's another jobs report that leaves us with many more questions and answers.

Forget the temporary solutions. We're going to ask our economists for permanent fixes to this unemployment crisis next on YOUR MONEY.


ROMANS: The jobless rate stands at 9 percent. That number has nearly doubled when you look at underemployment rate, which includes those who want to work full time but can only find part time work. That's 16.2. Each month brings slight progress at best, but what are the real long-time solutions.

I want to turn back to our economists, Diane Swonk and Peter Morici.

Diane, let's start with you. You know we have gone over the problems. What needs to happen to return to the days of 200,000 jobs added each month and 5 percent unemployment?

DIANE SWONK, ECONOMIST: It's going to be difficult. There is no easy fix. We have always talked about, if there was a silver bullet to be shot, it would have already been shot.

That said, there are things that could be done in the margins. Changes in regulations, easing up on regulation, and if we did have some more fiscal stimulus, as Peter noted, I think that would help. We're not going to get it, unfortunately, to go on with the ongoing monetary stimulus in the U.S. economy.

I also think it's important, the issue we talked about discrimination against long-term unemployed. We have to eliminate that. That just can't happen. Because then you close those workers out for good, out of the labor force.

We are seeing many states now pass anti-discrimination laws, where you can't say, I'm not going to look at you unless you're employed already, or have been unemployed for more than six months, or more than a year. That is a very important issue, as well.

You have to do things like I did, the unpaid internships, to make sure we keep our young engaged in the labor force, at some level. Even if they are not earning money they are getting skills that are going to be very important for them going forward. There are things that can be done on the margin to keep them employable. The key issue is to not have a whole lost generation at the both older and the younger end of the spectrum.

ROMANS: That long-term unemployment issue, it really-it was part of the president's jobs bill, you guys, that it would have made it illegal on a federal level to discriminate against somebody because they have been out of work. You can see recruiters do it, you can see it on job posting boards.

SWONK: Absolutely.

ROMANS: There is a bi-partisan group of senators, who have said, please stop doing this, because you're leaving people out. It's just not fair.

Peter Morici, I guess, my advice to people is, to fill the gap on your resume, if it says the jobless do not apply, apply anyway. Because-

PETER MORICI, UNIVERSITY OF MARYLAND: You better be careful with that.

ROMANS: You think so?

MORICI: Absolutely. Lying on your resume is a serious issue.

ROMANS: Oh, no, I don't mean lying on your resume, I mean filling it with work and professional organizations.

MORICI: Oh, yes.

ROMANS: With life and volunteer work, unpaid internship, offering your services, fill that, so there isn't a big one-year gap since your last job, make sure you've done something.

MORICI: One thing older workers can do, that have been laid off, is get out and do that volunteer work. After about the first two or three months of looking for a job, your day simply isn't filled up by it, because you can only send out so many resumes. You should do something every day. But if you budget your time properly, you can then do some of the things young people do, and that can lead to other work.

I don't mean internships but volunteer works where you continue to apply your skill and keep your cutting edge. Working at a nonprofit, for example, even on a volunteer basis if you're a financial person can help you get another job.

ROMANS: Yes, it's a date and place, and a reference, and a boss, on the resume and that fills that gap.

We're talking about we, on a micro can do about something that is a macro-problem. Some people do everything we tell them and it is still completely out of their control.

Peter, at the end of the day America has to increase demand for its goods. MORICI: Absolutely. Several things we can do. One of them is to deal with a huge trade deficit, half of which is oil. Certainly electric cars are helpful but they are a decade away having a meaningful effect. What oil we need, we could start producing here again. We're not doing anything from the environment like shifting production to places like Nigeria, we are just putting it someplace else where it is less manageable. That does put to work a lot of the people that have been unemployed by this recession, namely construction workers.

Also there are real things we can do with regard to underwater mortgages, far beyond what the president has suggested in terms of restructuring that debt. For example, having the banks and the creditors accept a carry interest in these mortgages.


MORICI: Because they are going to lose the money. Or the Fannie Mae or Freddie Mac is going to loose the money, anyway when the houses are sold. So it is to get those balances down, and not just refinance at lower rates. That would help a lot.

ROMANS: All right.

SWONK: It would help to clear the market as well and I think that's very important.

MORICI: Exactly.

ROMANS: All right. Peter Morici and Diane Swonk, as always, have a great weekend you guys, thank you.

MORICI: Take care.

ROMANS: Next the blame game on the economy. The president blames Congress, Congress blames the president. Shouldn't both sides be focused on who can fix the economy and how, or at least not doing things that make it worse? Pete Dominick and Will Cain are here to duke it out, next on YOUR MONEY.


ROMANS: Welcome back to YOUR MONEY, and with us, CNN contributors, Will Cain and Pete Dominick, host of Sirius XM Standup.

Guys, first up, President Obama saying he can't save the economy all by himself. Listen.


BARACK OBAMA, PRESIDENT OF THE UNITED STATES: The truth is the only way we can attack our economic challenges on the scale that's needed is with bold action by Congress. They hold the purse strings. It's the only way we're going to put hundreds of thousands back to work, now, not five years from now, 10 years from now, but right now.


ROMANS: He's blaming Congress for failing to jump-start the economy going to buy him four more years? Because the other side they just blame him for the policies he's already had.

PETE DOMINICK, CNN CONTRIBUTOR: You can look at it many different ways. Politics is perception. Most people don't pay attention to day to stay politics, but they pay attention to what's happening in their house. He's the president at the time; he will take a lot of blame for it.

The truth is it is becoming more of a provocative question, but people saying out loud, David Axelrod last week, here on CNN, that Republicans may be trying to hurt the economy for political purposes, so they can get re-elected. It's hard to disagree with that in certain examples.


ROMANS: It's hard to disagree with the steam coming out of Will Cain's ears.

CAIN: The height of absurdity.

Let me say this. The president's statement right there, encapsulates all the problems with jobs bill, with fiscal stimulus, with Keynesian economics. All the assumptions built into it are wrong. It requires bold action by Congress. That is asking Pete to be seven feet tall. He's not built that way. It's not going to happen.

Congress cannot-you assume they want it efficient and intelligent, as well. Congress isn't built that way. What more? You want to make jobs right now? One thing about infrastructure, we know, it might be somewhat stimulative but it doesn't do it right now. President Obama, himself, has admitted we learned what shovel ready was.

ROMANS: Will, look, we have more than just the jobs bill to talk about. I mean, quite frankly, there's the super committee. There are like really big structural things that Congress is going to have to agree on.

DOMINICK: There's things that you could do. Congress isn't built that way. You could spend money on infrastructure. It is not going to happen. The jobs aren't going to be created right away. You agree, that there will be jobs created. There's a lot you can do and that Congress can do and has done in the past, to get together.

ROMANS: All right. Let's advance here. Because I want to talk about GOP presidential candidate Newt Gingrich. He wants to attach a mandatory training requirement to all unemployment compensation.


NEWT GINGRICH, (R) PRESIDENTIAL CANDIDATE: You say if you need unemployment compensation, fine, but you have to sign up for a business offered job training program. If you have 99 weeks of unemployment, that's a associate degree. In 99 weeks you can train virtually anybody. If you establish the principle we do not give people money for nothing.


ROMANS: Will, does Newt Gingrich have it right? I'll point out, the president's own jobs bill pitch also included - they showed the Georgia Works program. They said, we'd like to do reforms to unemployment insurance.

CAIN: Right. I mean, the president and Newt Gingrich have an interesting idea. At the point which you have unemployment lasting 99 weeks, you have a question to ask about incentive. Are people holding out for jobs they want versus what is available? Germany and Georgia-

ROMANS: Will, there aren't any jobs!

CAIN: That's right.

DOMINICK: There's three people for every one job, or five for one.

CAIN: Right. We are not disagreeing, so the point is are people holding out for jobs that might not exist. The point is, in Georgia and Germany they have done some of these jobs training programs. They help in a lot of ways. They help psychology. They help make people happier. It helps make them more productive, but it doesn't fix the economy.

ROMANS: Right.

CAIN: The only true fix for unemployment is a growing economy.

ROMANS: I'm not really impressed with it. I'm going to be honest with you, after having covered these for years, I'm not really impressed with retraining programs we have. You have to really start from scratch, finds one that work in this country and then do it.

But there are people from all political stripes, who start to say 99 weeks of unemployment benefits is a very, very long time. At what point do we say that's enough.

DOMINICK: Well, you mentioned Germany and they also do work sharing, which is for another segment, another show, I'd love to talk about.

Listen, there's this idea that people are sitting around and not wanting to work. That idea is pervasive because we all know someone who is that person. It's anecdotal, but it is not necessarily true. As we just mentioned, people are looking for jobs. There aren't any.

The fact is, how are we going to find money to pay for these retraining? Last thing I would say is, unemployment, it's insurance. It's not a benefit. You pay into it, you get it back. It's one of the most stimulative things you can do, unemployment, food stamps, it goes back into the economy. They are spending that money.

ROMANS: True. The last chunk of that, though, the Federal Emergency Benefits, they are paid for by the federal government. The first part, the state stuff runs out, and then somebody has got to-

DOMINICK: And the money goes right back into the economy.

ROMANS: Food stamps, you are right, are very stimulative.

OK, 100 members of the House, both Republicans and Democrats, signing a letter urging super committee to consider all options to trim the nearly $15 trillion national debt. One organizer even says he will make the ultimate political sacrifice if that's what it takes.


REP. HEATH SHULER, (D) NORTH CAROLINA: I'm willing to give up anything, including my next election, if what we are doing today gives us that opportunity for success for tomorrow for the next generation.


ROMANS: If a Democrat is going to sign off on serious entitlement cuts or a Republican is willing to endorse tax cuts, do they need to be prepared to give up their job?

DOMINICK: Shuler is a Democrat. He's also a former quarterback, a very successful businessman. I looked up his net worth. He is worth like $33 million, or maybe much more. Whaa! I'll give up my job here as a legislator and go back to my pile-he-it's like when President Obama said I'd rather be a good one-term president than a poor - I mean, this is just politics.

CAIN: No, no, no.

DOMINICK: It is good they want to get together and that 100 House members said we're up for both spending cuts and tax increases. That's good. I applaud that.

CAIN: That cynicism is completely out of place. Look, we a know any rational person knows in order to get the debt under control you are going to have new tax revenues and you are going to have to address entitlements. That means Republicans giving up their jobs by addressing taxes, and Democrats giving up their jobs by talking about entitlement cuts.

Good for Heath Schuler.

DOMINICK: I'm just saying-Will, I'm just saying, him saying, I'm willing to give up my job, who cares? That's not a big deal, it is not some brave thing to do.

ROMANS: I'm saying-

CAIN: It makes him one of 300.


ROMANS: I'm saying that looking at the polls, the public wants them all to lose their jobs quite frankly, not just whoever is giving up a little bit of something.

Will and Pete stick with us. Because you are staying with us. I need you two to help answer the following questions: Why are more and more Americans, like Pete Dominick, living at home with their parents. We are going to get into that next, on YOUR MONEY.


ROMANS: Welcome back to YOUR MONEY. Still with us, Will Cain and Pete Dominick.

All right. Occupy Wall Street heading into week number six. It shouldn't be a surprise that young Americans are leading the charge. Here might be some statistics that show you why. Look someone aged 25 to 34, 19 percent of men are still living with their parents today. That's a 5 percent increase from 2005. And 10 percent of women in that same age group living at home, up 2 percent from six years ago.

You've got the lowest number of people in a generation who are employed in the 18 to 34 age range. All these people are living at home. Pete, can we call this a generation officially occupy your parents house?

DOMINICK: Maybe. There's a lot of things to look at here. It would take an hour or longer. I would love to see the Freakonomics guys take a look at what this means. Because it is much harder to bring a lady back or a man back. It is just harder to have a relationship, start a family. But there is probably a lot of positive things, too. These young people are saving money. Not having to pay your biggest expense, which is rent. And the new health care reform allows a lot of them up to age 26 be under their parents health insurance policy. There's a lot of good and there is a lot of bad. But there is a lot of "Freakonomics" in here, there is a lot of family, cultural problems. My parents come down for four days there's always problems between them-


ROMANS: Will, I love the very first economic impact you point out, is the impact on your love life.

CAIN: I noticed that, as well. I want to take it back to politics. There's no doubt that young people have entered an economy, or a workforce, where it's incredibly difficult to find a job. And on top of that, I'd offer, they have historical, record levels of college debt on top of that.

ROMANS: Oh, yeah.

CAIN: I would have to say, do you notice we don't have massive inflationary numbers on computers? Highly complex products, no lack of demand. We don't have it for cars. We have massive inflationary pressures on health care and education. Two industries where the government is most involved and is subsidizing. We have to learn, you subsidize something, prices go up.

ROMANS: Those are also two industries that are in great demand. There are huge demand for both of those things.

CAIN: That is true.

ROMANS: That is another reason why prices go up, when demand goes up.

All right. So much for that, Bank of America $5 a month debit card fee. B of A released a statement this week. "We have listened to our customers very closely over the last few weeks and recognize their concern with our proposed debit usage and with that the fee went away. Is this an example that the customer wins, that a company, a corporation is caving to public pressure. It wasn't good business to make everybody so made?.

CAIN: Is this an example of the free market at work?

DOMINICK: Yes. Yes. Both. Both. Yes. The people -- we're screaming. We're protesting.

ROMANS: They were walking. People were walking. Hundreds of thousands of people have gone and joined credit unions.

DOMINICK: This is the weekend, the Move Your Money weekend.

ROMANS: I know, you've been Tweeting about it.

DOMINICK: I'm loving it, that whole big campaign. But listen, Bank of America, this is just one of their problems, the $5 fee. They foreclosed on military families. They paid huge fines. They have done lots of illegal things. They are tons of reasons not to be a Bank of America customer.

CAIN: The theme was, we have got to do something about this. Can you believe they are putting these fees onto these consumers? You know what? The free market just solved it. Don't lament the need for government intervention. The free market just solved your problem.

ROMANS: There you go, you guys agree that it is a good thing that Bank of America dropped it's fee. I don't know anybody who was saying that it wasn't a good thing that they were-I mean, people were outraged and they were losing. They were going to loose customers. There is no question.

DOMINICK: There's more to this and Will made the point last week about Dick Durbin and Dodd-Frank, and why they had to do this. Why they decided they had to do this. The truth is, I said last week, and I stand by this, do you side with retailers or with banks? I side with Mike's Hardware over Bank of America. I want the retailer to get more money in a transaction than the bank.

CAIN: I place myself on the side of voluntary interaction. Not the one where the government intervene forces an agreement. If retailers and banks can't come to a mutual compromise --

ROMANS: All right. You guys both stay, and we'll see. Because there are already more fees that are popping up and I have no doubt-no doubt that there-if you are going to- DOMINICK: Oh, they'll find a way to raise the money.


DOMINICK: They'll find a way to make up for their losses.

ROMANS: We'll be talking about that soon. Don't go away guys.

Next up, how to speak money around the world, when YOUR MONEY comes back.


ROMANS: Welcome back to YOUR MONEY. I'm Christine Romans. Ali Velshi is in Cannes, France at the G20. I'm taking over the show. We have Will Cain and Pete Dominick for your viewing pleasure.

DOMINICK: We actually want to take over the show, from you taking over the show from Ali. And Will and I are forced to read and buy this book, which is by you and your work husband, it's called "The Bald and the Beautiful".


DOMINICK: No, it's called "How To Speak Money: The Language and Knowledge You Need To Know". We have a couple of questions for you. I throw it to my co-host, handsome Will Cain.

CAIN: Thank you, sweetheart.

Christine you write in here everybody speaks money differently, they have different dialects and different accents. In fact your subtitle is: "The Language and Knowledge You Need To Know". Here is what I want to know. How financially illiterate is most of the population out there?

ROMANS: My big worry is that since the crash in 2008, we are as financially literate as we were before. That is my big worry. Think that we still-we run up credit card as soon as we get a chance to do it again. I worry that even though we're trying to make mortgages simpler and we are trying to make student loan debt simpler to understand. I worry about these kids coming out of college, who still don't quite-I'll tell you something really interesting.

I'm about ready to profile a university that they are giving college credit for kids in financial management and financial literacy, because they know they are going to graduate with $25,000 in debt. They will never be able to grow up and be good contributors back to the college, if they don't know how to manage their money. So I'm passionate about financial literacy.

DOMINICK: How much of it is about financial literacy and how much of it is about, actually something Will talks about a lot, as a conservative, individual responsibility? People using their credit cards, I mean, how much is it just responsibility versus understanding what's going happen if they run up these? ROMANS: It is all that, but it is also for so long the whole game was rigged toward, you know, borrow more money, borrow more money. And that was a good thing when house prices were going up. It really was beaten into us.

DOMINICK: We can't do that any more.

ROMANS: No, old habits die hard.

CAIN: It is how to speak money, is this more of a personal finance book, or a macro-economic book?

ROMANS: It's both. But there is a lot of personal finance. The point was that Ali and I are very different. We speak and understand money. I'll give you and example. Velshi can negotiate for things I didn't even know you could negotiate for. That's typical, that a lot of women negotiate differently, or don't know how to be bolder about it. You have to negotiate a different way. Women and men have to negotiate in different ways for the same things. I learned so much about that. I wish I had known it when I was 20 because I would have negotiated a long time ago.

CAIN: Right.

ROMANS: And maybe things-who knows?

DOMINICK: Well, women are catching up in terms of equality in terms of wages and salaries, slowly but surely, but not in terms of the tricks of the trade. Like you said, the negotiations for more, just certain politics at work. And stuff like that. Is that what you mean? That they are-they just haven't been in certain industries or jobs as long?

ROMANS: You know, I think it is because we-

DOMINICK: Or are we men keeping these secrets from you women?

ROMANS: No, no, women are motivated by different things. And that is--

DOMINICK: Such as?

ROMANS: No. Women are motivated by different things. And another thing is that women hit their peak in their career at the same time they are hitting their peak in their family. And their ability to have family. That's a whole different dynamic.

The cool thing, though, is that men are too, now. So, you guys are working dads. It's really cool how the generations are different about it, too. I think the workplace is changing and some of the old rules are, I don't know, I think they are going out the window.

DOMINICK: We have to wrap up. I'm sorry, Christine. The book is "How To Speak Money"

ROMANS: We really are out of time. DOMINICK: And there are a lot of great pictures. Too many of Ali, but lots of Christine, "How To Speak Money".

It's a great book, Will, right?

CAIN: Yes, it is. Thanks for joining YOUR MONEY. Ali is here every Saturday at 1:00 p.m. Eastern, and Sunday at 3:00 p.m.

You can catch Christine at on YOUR BOTTOM LINE, every Saturday at 0930 Eastern.

DOMINICK: Plus, you can get connected with them on Twitter. Christine is @ChristineRomans, Ali is @AliVelshi. And the show handle is, @CNNYourMoney. Have a great weekend, everybody. Thanks for watching.