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Foxbusiness.com live everybody I'm -- along with Jenna and that's the first time in three weeks that she let you start the show by speaking first that's alive with an olive tree I was actually a weekly segments and ignoring life.
As this morning you know did you open your mind your -- is really -- today it was just the way -- you could pick it.
We'll -- that -- technical problems that we keep to ourselves at certain things on the Internet you know we feel like we're family we are families thanks everybody for tuning in again so we look forward your comments as we have outnumbered.
You know big topics that we can talk about today Peter Barnes come on on these fuel standards that -- -- be getting a lot of attention.
A little bit later on there's some controversy over the emissions.
And whether non us Americans are going to be it to drive in the small cars.
So get into that little bit later part later in the show yet -- what we have never had Charles Payne on and that was this point it's like well.
Or or -- talked about an issue whether full size Americans would be able to fit inside some of the European card so.
Any it will get into that a little bit later on -- this is adjusting bill that's going -- congress that congressman Ron Paul is put forward where he wants actually audit the Federal Reserve so.
Congressman Paul is an interest in a fellow but we're gonna have another congressman Walter Jones on the talk about that later so that's this idea of holding the Fed which -- talked all about transparency.
Holding them somewhat accountable to via.
To be more transparent so lot of that and then the TARP money which Anderson come on little long talk about these banks that now applied to and wanna give back the -- Why I was it would Robert -- -- on his mind.
Robert Wood and an accident when I tell this kind of we'll watch a serial a lot of the big stories and Davis -- the market really had to -- -- -- even despite that.
That big basket of news.
Yeah it's been a lot of news in -- you know you guys were told senator more about the repayment of TARP.
By some of the big financial institutions people are talking about that they're also looking at -- the huge rally we had yesterday so many stocks up now a lot of -- and -- there was -- Was behind stocks buying stocks basically so people expecting that the fate as we head into the weekend because it's a long holiday weekend markets closed Monday.
But we have not seen that so far today the big economic numbers out of course surrounding housing this housing starts coming in.
The record low by the way we -- I economists were looking for -- to increase sending for the building permits is of course just permits to build also at record low levels -- -- still seeing.
-- the continuation.
Problems in housing as -- -- -- of trading Everett elect securities tell me just moments ago that.
Some of the market look at what they're good guy.
Saying oh well -- you know you're out of work the existing inventories you're not building now more it.
Houses because we don't even -- -- -- sold off -- out there his says the bad guy of course says well that inventory can sit there for awhile longer until the economy turns around right now.
The good guys winning out -- -- -- got to really keep it.
People watch with both sides of an interesting take that mean that the a couple of months ago with eating kind of hint of negative news was taken very badly in some good -- taken -- now it's the opposite my dad used to -- of them joked about baseball -- -- Susan -- with 19 KFC with the other yes that would be kind of the the same -- -- -- and abolish -- -- out there are are doing that right now on you know that's that's when they get down there watching right now what -- Home -- -- this morning which -- you know for our purposes was -- the stock had run up -- a that a little -- -- You know compared to -- pretty much along the lines what we saw with lows yesterday but the stock now sells off yeah I was up six point 6% yesterday as the down about five and a half recently came into still slightly higher for the two days -- but what they didn't it was raised the forecast that's what Lowe's did -- Also we talk a little bit about gross margins without getting too technical means -- keeping more of -- sales for profit.
They shrank at Home Depot they expanded at Lowe's which means Lowe's wasn't discounting as much they're selling more high priced items and home Depot's Home Depot.
That that's when they know a lot of analysts and investors like to watch to see how profitable company as well as doing a better job right now.
Of managing that and Home Depot as -- again Home Depot running out yesterday.
You know buy on the rumor sell on the news to keep that in mind also and -- housing starts views well in sort of double edged sword right because yet a lot of cutting construction guys use Home Depot and lows for -- their equipment.
That's true and finally Robert before we let you go.
We've talked about the fix the volatility and a fear index and the highs last during the crisis of being close to ninety or 89 and a half and now we're.
Below there were below thirty were below thirty yesterday the first time since the weakest.
September -- sexual David is the week that followed Lehman Brothers collapsed AIG's collapse Fannie Freddie that.
Fateful -- in the thirteenth and 14 September last year we haven't had a close.
Below thirty since.
That Friday the twelfth.
We had some intraday drops below that thirty level at thirty seems to be big a big number out there's a lot of traders are closely watching this investors.
Again we haven't closed below that since before that time and and so many people tell you that that we can -- -- inevitable that it will.
And -- economy spiraling downward in in -- so much business coming to a halt the short term loan market does -- Commercial paper really drying up banks unwilling to lend to each other no one really trusting counterparty would remember what went through all of that September October.
And really -- -- the nadir in November bounced up a little bit when we're back down.
But that was a crucial weekend so we get back below those levels on the -- and perhaps above those levels sustainably you know in stocks -- -- a lot of people are watching.
Interesting to watch when it you -- anything about anxiety and this is of course we talk by the market and and fear.
Even though it is the market is highly technically it's the way that we can talk about your two -- anxiety do you have Ray -- feeling today.
How do you measure -- -- that's what the vick's essentially measures and there's been sent murmurs that even though we use it as if you're gay aids.
And we've used it over the last several months that maybe it doesn't apply anymore not that I could apply and that well it it just it it hasn't evolved with the market as the market has evolved.
And the way.
What you know we're measuring -- and now might be different.
I mean the end and then here's they'll get -- that I won last time here because the guys that well -- back lower we're not as afraid as we were.
You're going back I preached that weekend but the other guys maybe were too complacent -- this rally we're seeing going up.
And that and often times when that happens you'll see a sell off in the market so something to keep an eye on certainly and.
He -- this thing -- mountain -- and that guys coming out.
As your vision.
That got contacts and -- a candidate.
All right well this thank you doctor.
Robert -- there you know I think that kind of created a monster with some of the user names I feel like in him.
Team in Virginia is fine and Jonathan but if some people -- that handles that upon god was okay but.
It would give you a little too far I think it's if it fits the but we don't know -- all the people that we haven't haven't -- -- definitely we definitely are so.
Our good friend DJ jazzy chest.
So little bit of everything we talk we're gonna talk about the housing numbers adjusting in a lot of ways we'll talk about this later about -- Roberts started to get into this Jeff Smith an economist gonna join us later in the show.
About you know whether this is good news we did the number -- across it was mostly up a little bit for the first time and housing starts and in almost a year instead it went down and the argument from a lot of economists say hey we need that to happen.
It needs to go down so that we can work our way through the inventory because in the long term that's a good thing even though in the short term -- that's a problem that we haven't yet.
Every of this housing market -- -- it because it's all -- and we look at refinancing mortgage applications but it's tough to really know what kind of fresh and new activity.
Is actually how.
Yet another case that have been made -- this turnaround in housing is now.
Are being made a little bit less -- wheel gets all that and the banks and everything else and just moment we start on the markets.
With didn't apple is a former hedge fund manager to -- had fun here in new York and I brought down on the talks who -- the markets as good -- just about anybody I know and he agreed to come on.
Because I think I'm married to -- Of the essence but -- -- that the introduction of full disclosure would welcome you happy to be here on the have been we have a little -- Happens like that on Thanksgiving is this kind of that the -- family time -- -- -- -- you.
Actually yeah but I did he does most of the talking and I do a lot less public less likely that that was accidentally hits just keep my eyes as he minds myself from -- -- McConnell.
-- -- -- -- -- -- -- -- -- -- -- -- -- -- What does I think what does things by the way.
And it's a sappy you became a little left and I have this conversation you carry out attack.
You -- from the heads for the world exists it's always interesting to people about the hedge fund because you guys are not public.
Showed you since you have been able to kind of size stepping in -- that was a little bit.
Not actual specifics about it but just tell us -- what is your outlook for the rest the year -- to start really general.
And what you're seeing for the economy and is -- the same thing as racy for the stock market.
Yeah and it's really good question and I I think that the the thing that you have to be mindful of is is the I think what's dominating.
The world now is is a big kind of asset allocation trade.
We had a you know kind of panic period into the early part of the year that was predicated on number of different.
Things that are all sort of well known and well reported kind of news items and -- you into the early part of the year.
I think that what's happened is is that the world now is sort of in this for the investor worlds in this position where people are under invested.
There's heavy under exposure to the financial sector because it was sort of its own pandora's box for -- -- it was a great way I think that you assets were assets for allocated towards you know -- quote simpler easier to understand.
Sectors when this whole pandora's box and all the government involvement made -- difficult sector to invest and and either -- you're seeing now is a you know a reallocation of resources back into.
That were you know arguably.
More difficult to kind of figure out earlier in the year.
Right and this is that what as that happens is it.
You know it's a limited amount of money that's going back into it right I mean in other words how active is the investment community and throwing their money because people -- the market run up by 30%.
At the same time we hear a lot of money on the -- -- we'll give it this way I was reading something today that something like 37%.
US market cap.
In dollar amount is still sitting in money market funds at the at the lows it was something like 40% to the big number by historic standards -- you know if you look at the ground.
And I think that the important thing that they consider is that everything is linked in the sense that.
Some in the sense that consumer spending you know consumers pulled back dramatically in the early part of the year.
Investors pulled back dramatically in the early part of the year companies fired you know workers aggressively in the early part of the year companies.
-- suspended cap -- capital expenditure programs aggressively in the early part of the year so everybody was ordered in austerity mode.
Again in -- in the in the sort of -- Q4 last year Q1 this year I think that what you're seeing is sort of the circular nature of the kind of everybody pulling back at once and -- and some new equilibrium at least in the short term being formed now.
And you know I was like this you know just an interview just thinking about you you're -- -- you mentioned on the previous segment which is.
What are you doing and you know how does that correlate you know volatility in the markets and -- you're you're spending patterns and have people just reached the point where there's some new.
Anticipated at least in the short term how to market equilibrium where you know.
Saturated registered and that it just it kicked right you were saturated with just how we feel about the economy the mark we've we have a -- we've adjusted.
I just it is -- waving -- me to speaking personally when we -- locking in for news in September October November even this December a little bit.
There with an edge in anticipation.
There's been still a lot of big -- since then but it just feels different because you've been there before so.
Consumers might be feeling the same way that you're talking about -- -- you know -- what kind of going -- -- mark and then coming back to where you think they're gonna come back in first.
So here's the thing so I think I think that the I think that you're sort of you know you you you're you're sort of seeing that the way things are playing all right so.
They're number of themes.
You know one could be the you know natural resource.
Investment opportunity where it's you know in -- -- scarce asset -- in theory there's less.
I thank my goal still -- -- -- it could be commodities.
It could be.
-- assets where there's some degree of of scarcity value -- replacement demand.
-- we could be.
Companies that you know that make replacement parts for cars that I manufacturing and telling me I think it's I think it's -- -- be -- more company and industry specific.
And -- industry and company specific.
You know theme going forward in that I think you have to get granular and look at you know companies.
Look at what companies have pricing power this is a little.
That means the market right because if you're the average investor out there in your life you know.
Based on the fact that -- do some -- of this research.
I still got to keep the money on the sideline and maybe -- -- and when things become more obvious maybe I'll invest in Johnson and Johnson and Procter and.
But at some point that money's gonna come flooding back into something it's what the question of -- and what it goes into right well I think that I think that ending to a large degree it kind of it kind of has been.
Right and and you and you've seen it flood into those those sectors where.
There are under -- that exist.
Across the investor community right.
-- think about there's been fifty billion in equity new issuance I think over the last week or so there's been alone you know incremental amount of investment grade corporate and high yield debt issuance over the next week or so right so I think what what ends up happening is all of these things happening at once.
It's tend to have their own sort of soothing effect on the market which is the notion of for why volatility in general is sort of you know waning is that.
Companies have access to capital companies are tapping the market yet in a way that they couldn't have done you know two months ago.
I think attack that happened in Iraq I mean companies were doing capital raises Citigroup -- -- capital raises that.
Two years ago and they've been able to do you manage your time and Andrew the government was the only sort -- classic capitalist capital raising so the fact that like I can go out and get a loan or company can go out and raise money.
Should that be a fundamental reason for people to step back into the market.
Well I think that what what -- the notion of stepping back into the market in the short term is again predicated on.
Well I think that that that that of that question really predicated on an answer the questions predicated on you know what your definition of sort of the new normal is.
-- and you know if you kind of go back to an environment where people are spending more conservatively companies are are spending more conservatively.
You focus on business models that are predicated on leverage our assets that are operating -- leverage was housing obviously is.
And you and you and you start to focus on areas that are predicated kind of on the old way of doing thing.
-- and just interact Ukraine Georgia says that he thinks that 8000 -- the new -- equilibrium recovery won't happen because it was a correction from -- absurdly absurdly overpriced 141000.
Right the -- -- not going to be what we knew in 2001 that's happened.
Point is that you you have to come and if you think about it rightly leading up to the you know -- the last time you had.
You had kind of an emerging markets bubble in the late ninety's followed by the tech -- In sort of the you know 2002001.
Followed by a you know there was there was a period in 20022003.
Where went through the fraud period went through Enron went right -- -- that.
And then you had.
The -- levering of the system.
That brought us from 2003 back up through you know where we were at the highs in the end of 2007.
-- and you shafted.
You know what that new normal lives and I think that -- one of the ways that I helps me to think about it is if you think about what kind of return you need to -- in the market to get you back to those levels from 900 today as an example on the S&P.
Is to get back from 900 to 1560.
Or you know whatever the specific -- was.
10% per year for seven years is an effective doubling of of the level that we're at today so right if you -- -- 10% compounded by buying sort of the market defined as the S&P at 900.
In seven years you'd -- you'd be back effectively at 18100 how to get there quicker.
Well what salary you take more risk if you wanna get their all of this again aggregate citizens who get to getting -- quicker could be I mean you've seen plenty of stocks that off the lows are up.
-- hundred you know percent 50% they'll be just from -- performance I think across.
The spectrum but I think that the bigger picture question answer -- to ask and answer about the market as a whole is.
You -- on that spectrum will we be is that achievable sort of overall aggregate market return.
Kinda doubt that that -- by the plane.
I -- that more of that more fun interesting money making environment where we were or is is now more challenging for -- Now I think now now creates you know now creates tremendous opportunities I just think that we're not what -- place.
I'm waiting for the opportunity for anyone out there that this is maybe think it's been overlooked -- place that you really like this because have a sweet spot.
-- I think that if you can figure out.
If you can figure out the financial space amidst all the amidst all -- -- I think there's a lot of money to be made.
There -- think there's a lot of money incremental money to be made in the disposition of assets off banks' balance sheets which I think inevitably you know will happen over -- those guys -- gonna make a ton of on the -- program affects thanks for the government looked perfect in the -- right but that -- that is the banks have to be worth a lot more.
Provided they don't go out of business than their trading for now even though they've had a run of 30% or more well again but it's sort of it's sort of like if you look at Citigroup right -- -- Citigroup's.
300% off the lows but it's still down you know 90% off the high so what is the function of you -- valuing what you think.
That business model is supposed to look like on -- go forward basis and you will get to a point where -- will the banks will eventually be able earn.
Enough dollars to incrementally mark those that sits down and they'll be some point in the future whereby it makes sense for them to actually.
Sell assets in and -- in what might be a better environment because right now you know we're sort of still this at this DC this equilibrium where.
Banks just raise the bunch of capital right -- no desire to part with -- assets and take incremental losses because the bids are still relatively well.
But he with the governments hoping for is that if enough time passes.
And the banks you know have some degree to -- you have some ability to earn their way.
Not all the way back a part of the way back that it creates some incremental flexibility for banks to transact think that that's going to be actually a big.
Influence I think on kind of where investment grade credit trades right going to be a big influence on where high yield credit trades because just gonna become.
You -- it could very well become the kind of price setter for.
You know the corporate credit universe and it gives us transition to talk to center about the TARP program among which are -- -- -- -- -- it was all right -- -- can take the -- and acted like an average of some stuff but -- No way the first time on journalism and was confident she was -- but nothing official that yes thank again and here.
Back attacked again back yeah I think so definitely yeah actually front near your Thanksgiving table.
That's fine but I think this kind of invented humid today exploited and we're gonna have that are committed talked a little bit about the the TARP money and Anthony's financial -- right now.
If we talk about that they're gonna love the jungle you know and it can the market actually -- -- itself might -- some ways this is it to kinda.
And present an analogy -- -- was talking about.
And seven the old value as -- were some of the old -- can grow back.
And so they can -- -- -- -- it -- -- think about it that everything's been cleared and definitely it's a different things are gonna -- back up again return.
And you make this method they're not going away that that certain institutions in the eastern I don't know it's not going anywhere just plug in.
Somebody's listening and haven't actually standards kind of -- that -- -- -- think -- the fall of the -- And I told -- -- know something about -- I don't know.
Please defender let's talk to her let's talk Turkey girls go ahead so the idea is that they're Goldman and Morgan wanna pay it back gonna guess JPMorgan does -- media -- morning.
Jamie -- -- just hot -- conference call it is still going on for the annual shareholder meeting here in New York for JPMorgan that was probably interest and it is actually very interesting little joke about why we never see Jamie -- on fox while by the way but let.
Other -- -- one of the shareholders that they all have their opportunity to step up and said you know so I did you see this on fox in an awesome everybody's -- And it and because she got -- pretty well well not like the -- I'm not a terrible yes I'm not taking part in the meeting and the coverage -- actually pretty amusing.
Nonetheless the most important details coming out -- that.
-- that shareholder meeting is Jamie Dimon saying that we expect to have the ability to date pay -- these tar ponds within the next few weeks.
In some pretty serious points he made.
About parkinson's -- morphed into something different he's -- he didn't know what to expect when they accepted these TARP funds.
And that JPMorgan didn't need -- bailout funds in the first place actually really really interesting comments coming from him but he's making it very clear we want these TARP funds back.
And the big question is you know for everybody out there -- -- wanna get that they want the government off their back they don't want the government.
Putting pay restrictions and their executives their senior level executives.
They don't want the restrictions that are now being seen tied to these TARP funds.
So they want to get rid of -- and as possible and we're also look Fox Business is also confirming.
Of the big banks the report today Goldman Sachs Morgan Stanley JPMorgan on pay -- these funds several of the nineteen banks that -- these bailout funds.
Want to give them back as soon as possible.
And right now we're hearing about a date possibly -- any.
We could hear about the approvals with some these banks and -- -- college.
They're really keeping your wife is such a sensitive decision for Tim Geithner our Treasury Secretary.
If because those stronger banks case in point JPMorgan they're -- to pay back their funds.
What happens all these weaker banks who are raising capital to make up for what you know and -- shortage.
What happens -- -- I -- there at third and not be able to track the U.
Brightest in fast out there.
High school right now thanks to our guys get together through the door -- he and other guys that are just just right invasive Bennett let me -- like -- like eighteen gonna beat me right.
That's it's and it's a great analogy to Tim Geithner.
Part of it I -- that's part of separating the winners that was part of this next phase of this of whatever this is that we're in crisis where everyone -- college is separation.
A space and these are winners in the -- That's the argument that's out -- saying.
They are the best bank nation have the best opportunities and it would attract the best talent.
Why should the government be able to say now we have to get these -- the change.
But that's obviously why they -- don't have a government that -- -- working with JPMorgan to buy -- stir is that you have the government forcing some the other -- are -- forcing with air quotes.
You -- the mid line thanks to accept her finds that everyone looks more equal to the big bad banks out they are not paid to be too big and that it because it you know this is still -- the person that's out there like the -- report that's right.
This -- -- on this person's not.
It's true let me just before you answer that remind everybody that the -- speaking about auto emissions live on Fox Business Network -- I can see that the bottom your screen or watch on TV we're gonna talk about this topic a lot.
By the way later on in the in the show but that's obviously another hot topic today he's live right now speaking about -- the Boston.
America what I mean here's the thing is JPMorgan today he's sounding very passionate Jamie Dimon as he speaks he's saying.
Well we took these bailout funds not because we needed -- to survive.
But the government was telling them how good they would be for us and for the economy so now we happen but your time all the restrictions -- funds that we had.
What I'm anymore but now they're not even letting them pay back so that's how series of the situation this is.
-- JPMorgan saying we need to get these back so we can continue on business as usual.
Nothing made comments about Washington Mutual saying that that was a very good fitness turned out to be a very very good decision and it's.
You know and giving back east -- I was gonna allow some of these stronger banks to move -- But then you know in the case of some of these regulators and supervisors of the banks.
-- hold it got to look at the banks little bit more not only for the good of the bank patents they think any kind.
Chelsea we shall see perhaps in -- -- our attention thanks so it's interesting that I mean we're just start cool kids were just started gushing out the applications and we'll see.
Which ones are -- And -- -- yeah definitely -- since swap.
It says Alexander -- But senator -- another CEO -- -- governor.
I'll -- back we -- that's from.
We're developing her her filter so that I just kind of remind.
Eccentric -- -- Always good to see you what are we talking about now what we're gonna talk about this bill -- the president you -- still speaking at the auto emissions.
This bill that's working its way through congress this is kind of interesting that there is a kind of a growing movement you might called it was started or spearheaded by congressman Ron Paul.
To audit the Fed you -- the Federal Reserve talk all about transparency but now.
How about a transparent fair language -- -- made as a columnist at MarketWatch joins us now.
From DC to explain a little bit what's going on here -- what is what is happening with this so Ron Paul sponsored bill.
Well it seems to -- gaining a lot of support when I wrote the column last week you had a 149 co sponsors and today.
It's gone up 265.
Which is almost like pretty vote.
You've given the wide support.
That it has and it's bipartisan.
While most of the co sponsors are our Republican.
There is you know a good 20/20 five Democrats -- also.
Joined -- and in general it seems to reflect feeling in congress that.
There has to be more accountability.
At the Fed given the role that it's played it in this particular crisis.
If so what exactly is that that they wanna deal I guess would be one of the questions that have been the what our viewers actually brought out the putt OK this sounds good.
We should have more transparency but one of the metrics that are going to be used to actually accomplish that the couple cycle.
Well I think they just want to find out what exactly the Fed has done.
There's reports that in addition to two trillion dollar balance sheet the Fed doubled its balance sheet.
In connection with the crisis.
That there's -- another seven trillion dollars out there -- off balance sheet that nobody really knows about so congress wants to.
How much money the Fed has deployed in this crisis.
In what forms and also.
How it arrived at the decisions it made you know some of the decisions seem obviously good like.
Injecting liquidity into the banking system.
But other decisions.
Like bailing out AIG and bailing out AIG's.
Counter parties -- a hundred cents on the dollar.
Are more questionable and what congress once -- to know is.
How -- these decisions arrived yet what with the motivations what -- the reasons.
-- -- there and in certain.
Okay what we do this is just even simple fight for their -- might tax Payer money be used to then.
Do some sort of audit of the government -- using my taxpayer money to.
Try to see the economy.
Well the Fed's money it's not strictly speaking taxpayer money it's just money that's.
Permit any of you and has -- an important a lot of I want it again and clearer idea of the food chain here in the -- -- -- that resource is that.
And it should be.
It had to be behind he's -- it's it's it's time it's money it's looking into whatever they're gonna look into what I -- know how they would really do it right so who would do it right.
So -- yeah and well I.
Whether the the Government Accountability Office would be the ones doing it that's.
-- congressional institution that read the reports to congress.
They have a staff of auditors.
That conducts that this kind of -- So they would be the ones commission to do it they would have to report finish it by eight the end of 2010 so we're not talking about.
Even if anything like to stress tests which -- done in -- matter of weeks retired about an extensive.
Long term audit that would be would be done thoroughly and had.
And like -- brokerage firm says have consultants and sent us wondering.
I don't think that's the plan -- you know that the GAO is is actually set up to conduct audits.
The problem with the Fed is that by law it cannot be audited.
By the by the G -- or by anybody.
Outside of the Fed.
So what what this law -- Intends to do.
Is to change that exemption for the Fed.
You know any other.
Government agency can be audited is routinely audited you know whether it's the FCC chair you know the GAO has had audited.
So it's basically there again to see that in the the -- under the same accountability that.
That other government agencies you know what C -- this is Washington somebody's gotta be vehemently opposed to it right what's the argument against doing this.
Money just spending resources on -- I have not heard the arguments against it -- it you know specifically -- with regard to this bill so much.
In general the feeling is that in order to fulfill its mission of conducting monetary policy.
The Fed should be free from political control.
What you know opponents would say obviously is that this is a stalking -- this is the beginning.
Of more political control over the Central Bank so you have to as always -- balance the two things to what extent.
Do -- you know in a democracy do you need to have control over this but even Paul Volcker a former Fed Chairman.
Has said that he doesn't think that a democracy can tolerate and that's his word tolerate.
That type of power the Fed has exercised without some sort of review.
Interest thing all right Darryl thanks a lot -- -- -- for MarketWatch in Washington explaining this bill that was one of the co sponsors is.
Congressman Walter Jones who is a Republican on the North Carolina who joins us now.
Mark good to see congressman so lob.
You know -- was telling us that this seems to be getting a lot of support now -- things gone with this bill.
It's going very well eyes Darryl said there's a 165.
Co sponsors Ron Paul's on my best friends in congress and I've been sitting on the floor Wear them when we have votes on other issues and it's been amazing -- -- colleagues.
Come up to arrive and say Al wanna get don't you bail you bills gave me twelve -- seven the transparency act for the Federal Reserve System and I really think that we're gonna get enough votes that we can put -- you -- that you can have what's called a a discharge petition if you get 218.
Co sponsors on a petition at the desk of that in the house you know actually bring a bill out of the committee but is my hope that -- -- Will see that the cut the House of Representatives and as well as the American people which is more -- it.
They want and -- -- in the world is the Federal Reserve System operating without any.
Any oversight at all and all of -- -- does and that's what Darryl said.
Was we just tried to make to say to the Federal Reserve.
You must commit an audit.
From time to time you must.
The end of position when congress -- you look ask about monetary policies that you come and make an appearance before congress they don't even do that now.
We have no oversight over the Federal Reserve System at all and again I don't think it should be at a point.
Where that the Federal Reserve feels that they have to curtailed to congress but does it don't week.
The American people have a right to know how they.
Decide on some of these policies they even have contracts with foreign government foreign banks that nobody knows what's in the contract -- -- it's a great points there but you know we've threatening the argument about you know the Federal Reserve have to come before congress and and answer some of these questions we've seen some of that happening.
Which is you know had been sending that we watch very closely here on Fox Business.
Why now and why the -- why is that the white now the right time to do this and if your getting pregnant let it -- the first.
Are you kidding me distant from the Fed giving you information about what they're doing during this crisis.
What -- absolutely say they say you congressmen know we are not giving union that information we are not answering question that you last.
Well if -- if the committee tried to bring that Federal Reserve for the purpose.
Of explaining a certain issue that they involved and it's my understand -- my dear friend Ron Paul.
That they can say no we're not I have vacation this week is an example on and saying no we're not giving you the answers in this question.
Well I would ask you this like Gina and Janice gave me they look at Hal so much of this talk money.
How much of the billions and billions and billions of dollars and download a little bit all of sudden it.
But I mean we can't even get an accountability of how the days of dollars of the taxpayers money's been spent -- -- Federal Reserve has the authority.
To regulate an influence monetary policy -- I think they have an obligation.
Because there decisions could negatively as well as positively.
Impact on -- the -- -- We don't have any best -- after treasury debt -- in her junior -- we don't have any evidence right now have you saying that the Fed is keeping a black box on something that we've asked them congress men like yourself.
Have asked them about what they're doing we are having an extended their -- -- I -- I thought that that it had that happen.
-- Well I'm not.
I mean I've been joined Ron Paul he's taken legal majority this -- I'll tell -- this when the GA.
Is pretty prohibited.
From all the TIC the Federal Reserve System that in itself is an -- to concern the American people.
So the idea here is we don't know what might be underneath that quote unquote black box absolutely let me go but at least we should be up and ask the questions to find out right is that that that's not figure out how to -- -- that's exactly what we're trying to do is a bipartisan -- with a 1065 -- sponsors.
And we -- saying that the Federal Reserve does have a certain responsibility.
To allow the people to know how they make these decisions and how they influence and the policies of this country.
But you know whenever viewers heard it and that is is throwing.
Good money after bad is -- the same -- -- situation like you're working hard on what seems like a very valid.
You have a -- to get some more transparency.
Maybe you should be working -- creating jobs may be used to be working on helping the housing market made it is this really worry what I think your energy -- Well we we're what we're doing that as well I mean -- again this is Ron -- initiative and many of us -- because we think it's the right thing to do for the American people.
No we're still doing many other issues of place in place in congress and we try to -- best we can't.
But again when you've got a monetary policy in this country.
Where I didn't vote against the bailouts because all it was was mr.
Paulson -- -- -- taking care of their friends who were greedy and made bad decisions.
So but I guess than the larger question becomes did add that when the money you know safe passes and what what's the goal what's the end goal of this.
And in and why do we need to commit resources to something that -- -- and that's essentially what can rest his -- what's the end goal what do you hope to accomplish.
I don't think I think a democracy if we all want all republic whatever you'd like to call it.
I don't think we survive unless we have openness and particularly when we have an entity such as the Federal Reserve that is sort of private.
That it can influence the monetary policies of this country in a negative way as -- a positive way it needs to be.
Expose it needs to have sunlight.
You know upon -- -- -- one of the things that we see -- -- you know of course being part of this is network is -- -- that the congress testimony -- for example of Federal Reserve Chairman Ben Bernanke happen.
It seems like.
Quite frankly circus to not -- to beat him.
More appropriate term it seems like sometimes -- wasted time.
So how how would you be -- is the information from -- as an effective way.
Because it seems like again no -- your -- -- to yourself but there needs to be a real education.
By politicians on the working -- the business world before it could have the government audit.
You know a big part of it.
Again I don't know see where it whether it be a member of congress or the tax -- Anytime that you bring openness anytime you bring education.
And had the heck can you explain how the Federal Reserve System works and -- people have that opportunity.
To question and they question in the half of the taxpayers of this country.
I does it -- they're good work.
Well the Federal Reserve in my humble opinion is an entity that's created in 1913.
By Woodrow Wilson and that in itself.
Any thing that was could that was created in 1913.
A hundred years a light at all to be reviewed to see if this if it's if it's outlived its they -- what do you think of the job -- doing I mean personally -- -- how would you rate is his performance to this point.
I -- and probably a it's a plus B minus all right so what's the -- what's the negatives.
Well the negative in my humble opinion is how in the world and I heard this on you show a little bit earlier.
How in the world can this new administration this government.
Say to these banks who were almost coerced to take -- money now you can pay it back.
Committed the whole thing up here is really and a chaotic situation.
It -- what is it that's an interesting point yeah I congress that he -- live -- some points but it.
Exactly that's still haven't -- -- we talk about anxiety in the marketplace and on Wall Street and how that can affect investors that it -- anxiety amongst your peers that you're still not getting.
The answers to questions -- name.
I think there's there's great concern that we need to have more openness and that's why again Ron Paul's foot 1207.
The -- number in.
This transparency bill I think that right now the American people.
And so it may mean many of us in congress as -- we need to see.
The truth because I would say to the day that the lord calls me -- -- never believe that we should have bailed out Wall Street.
Think a lot of people have him here.
All right congressman thanks very much for coming on we appreciate to joining us from walking on his congressman type Republican and North Carolina there today with -- Ron Paul sponsored bill.
Paul one thinks about and the since he got -- -- caricature in and well in many places and become.
We'll put off kilter because you even for president -- -- -- -- -- mistress in its category and you think Ron -- not clear to speak to I think it's like he's come on have heart attack coming at the end back yeah I think it is a lot of things he's not not -- totally makes sense like.
Right you may -- you may agree with -- or disagree with them but the guy has thought about everything Ron Paul talking about.
Rob Paulson thought about everything he says before and their interest and I think they I gotta go antenna here alright I do have -- -- on fox.
News for the next few minutes and -- -- watcher there and George -- -- a judge might just global insight here.
Onset George good to see it thanks for coming in to talk cars Bob this is a big topic because and we were showing the president talking.
Why he was on on TV there a moment ago with these new emission standards that are being put forward -- DC and we'll get to Peter.
In just a moment when he gets free from from that announcement but.
This is the big topic of the day right that these emissions standards are gonna come in.
And they're gonna come in four years earlier and hit a pretty big changes in terms of miles per gallon and the and the type of Sanderson to be put in place in the national basis.
Jamaica it's a ground breaking the and he's right here and -- the issue.
It is it's going to be a single stated that is the big plus that this is why.
Who's watching you -- is why you have all of those people from different groups the union's stability factor is the legislators of people.
Who are looking out of for the environment why everybody's come to an agreement that let you know this is this is really.
Something it is notable was a long and it's going to clear the year.
You have literally and figuratively maybe it both ways that's the whole idea is certainly with the environment but you -- the single standard is important because.
United States California being the most notable example that wanted to kind of go out -- their own and -- more stringent standards in place and other states were comfortable with.
But now a level playing field means what for for industry do you think what what first oval you know we had different standards they were going to be administered differently right some going to be averages have wanted to meet with the you know.
Based upon what you sell with the state so that's a nightmare for car company -- anybody few dvds he did he'd do it content that the course of compliance -- We'll be ridiculous and people would.
Wanted to leaving the marketplace -- it it makes it a lot.
Easier they hit the standards it makes a lot more -- -- -- -- focus should your product development.
-- to get your product line in shape for the future standards that are coming down even though they are it's going to be an additional course.
And they are coming down earlier this -- there's no way around it yet aren't so that it brings that this larger issue and it's funny because you and I actually talked about it on the telephone there may have been last week before.
Her for I was gonna do -- the the Fox News Channel about.
The government's role in the auto industry and if -- if the government is telling the car companies what types of cars to make long term good or bad thing.
Well see the issue here right now.
Is to comply with those students we do not have a cost effective technology in place right now.
So the only way you -- do it is by downsizing the fleet selling quote unquote.
Small fuel efficient cars.
Public would gas prices -- -- really don't wanna don't mind and -- happens -- the government is gonna have to put some weight and some muscles and some incentives.
Even getting to the consumer to buy those fuel efficient cars otherwise.
You definitely get the standards people who -- -- by -- bigger cars will go back.
The big sport utilities.
And of course you know what -- -- say they say and we've had a number of arguments on our air today that say you know what.
I don't wanna be told what type of card about a -- by big SUV that's my choice and you know -- gas prices are dictated by the marketing -- -- higher maybe I'll make a different choice but in the for the time -- I want to be able to make my own choice and not have this have forced down my throat for a lack of a better term well.
-- like the way it seems right now that you go to that you have less choices period and then that he's -- -- fortune choice okay because.
What is going to happen just in one of the hit that stated that the manufactures have to make and sell these small fuel efficient cars.
And so when you go to a -- -- you don't gonna have -- choice you have today.
-- with a big sport utility of course over.
Or maybe call them a bigger agent -- you like to see a lot of these bigger engine cars.
Not be -- reproduced or the option of safer big V8 or something like that is not going to be of that car anymore one of those bigger cars and suvs right and you correctly -- -- in the industry better than I did -- -- -- -- high margin.
Vehicles for many of the auto companies so they're selling less of them and they're trying to recover from -- have been a terrible run for them for the last few years.
What's that industry gonna look like.
Because of these standards and that is he gonna hurt the recovery or what reality do you think coming at a time we're we're at a reorganization Bohn and -- we need to conserve -- and we need to get close.
Down even further.
And the issue with those cars even with to do concessions from -- unions and and it and it cost savings that the manufacturers put -- place.
The real small cars still cannot be made here.
Profitably and they don't generate today there are those are really looks leaders and in the vehicle fleet right okay so is that gonna change -- and because of the -- I mean over time a lot of these things might change but we do we have that time to work our way through -- be given how fragile.
The -- in the economy as head and -- and these companies are that are you know took two of the 38.
A month from now probably be in bankruptcy protection and and now you're putting these standards in place at the time.
At that exact time -- with -- -- -- is going to be detrimental about it disruptions in the industry even more so than what we have to make some would argue is it easier to do it that way to just get it all out of the way when things are bad -- -- -- -- -- -- that's been -- I think it's a risk -- an edit it there is this is too much pressure.
The manufacturers -- but either way it's something that's coming down I mean is that there's no way we've we've made the move now when we're on this road and there's no backing off from so.
The commitment has been made by the government of the government is gonna have to.
That we don't put -- he wouldn't -- -- what else out of business is gonna have to underwrite some of this this is gonna have -- have to put the funding in place to make this happen.
-- Ben and Alabama has five kids and has to drive -- -- says now he gets punished by the government -- have a lot of people that have written in.
And have that kind of feeling today its interest they were talking to George -- -- I'll buy it just.
Do a comparison -- -- you probably looked at this between here in Europe if you can because everybody says -- -- -- -- -- -- European cars and it works over there we -- gas prices are a lot -- is there more to -- -- that an innocent.
Is cultural and in -- will this ever work here the way it's well -- there.
-- tremendous differences but more than that in the United States we we travel.
Tremendous difference the distances we tend to use our cars and trucks for a lot more than they use -- over in Europe.
They are the air space constrained it is cities -- -- and they really just heaped with these vehicles on the road of course they pay more for gift should have higher -- stated they have.
Also to regulations and there it is it you deer in the marketplace and it and and at the end of the day the mix of vehicles that are on the road there.
Is a lot different it's a lot smaller and so.
A small car today on an American road would would the big export utilities and pick up trucks -- that tend to be on the roads today.
It doesn't can be in the road people have safety issues and it's it it it and and and I have been at the end of the day you get a lot less functionality out of that vehicle and and we we've looked at don't -- kids we look the whole -- -- -- had five children we looked at.
Yeah it we look to do work around the house would do you know we constantly putting stuff in the back of of the box which is which has of the pick up would be.
Sport utility and the story we heard and especially in the southern part of the country this is true that commutes to work and -- types of cars that are being used to make this commutes or not.
Yeah you hear that they're not these little -- certainly not -- driving FiOS.
You know down south forty miles to work the -- -- pick -- trucks for pickup trucks a lot of cases because that's what does some people use for work as -- generalities but the numbers support that right.
They did you know that the the and they drive these big cars and they burn a lot of gasoline real life changing and plenty of you who have been caught -- like the comfort they like the power -- been like this that you don't.
It's gonna go get to the affair started in and give -- much more comfort so.
You -- a small car.
It -- fuel efficient but it has a lot of drawbacks to disadvantages as far as the American consumer goes -- joking around here a while maybe not somebody says -- just wrote in Andrew about it.
-- him to make a hybrid escalade and everybody will be happy city the I didn't technology is we have a high a real big cars but that doesn't really solve the problem than what the women.
It doesn't -- mean like can we have our -- -- -- -- -- Witten just have a better technology and it will cost more but will be able to come solve all the problems will be fourteen you used to -- it's -- coolest moment of course.
On a hybrid.
Those who say UConn is still it's still feel about 151000 dollars more something you know that -- That's a lot of money.
That technology has to be made.
Cheaper and had three -- produced war and that it's got to come down that -- that price point cannot be justified.
Just want fuel economy alone to wonder what that price -- look like when everybody's in the game when standards are in place and it's.
You know ten years from now on we're looking back and that you know that there will normalize itself over time -- it.
Well we spread over the -- ten years a great deal of money on power.
It performance all of that money now.
But unfortunately it -- think about a money -- the isn't there anymore but all that money has to be channeled.
-- -- to better fuel economy in developing the technology.
Power -- performance.
And fuel economy at a reasonable price that's a difficult task and right now it doesn't exist one of our viewers Donald has a very simple question what's in -- -- cost so much more.
-- it cost fifteen grand more for that car because the technology inaudible what is it Baird and candidates in the end the economies of scale are varied and we we make a hybrid we offer it.
We -- very few of them that I mean if we chip we mean we're best effectively forcing that to change right would have to sell -- that will.
Over time change all of this to -- to -- question over time.
But it's gonna take how much time do you think I mean this is there's going to be ugly period I'm trying to get a handle -- whether you're in support or against this does that you see both sides -- -- on you or you see the reality that it's gonna happen we have to deal with that.
But from what you're saying that the blast five or ten minutes doesn't sell -- you think it's it's going to be very pretty.
-- it's going to be.
Fairly ugly because let's put it that way at a time horizon it's not gonna happen in order to use we -- working yet we still haven't we still haven't hit that at that point we with the technology is taken off OK we still.
You know we've still wrestling with.
Say the Chevy Volt which is you know as it is of course 40000 dollars the company like every week we gotta we -- week he'd do that we -- -- And then it for right now.
It's very hard to envision how -- it's gonna take what is probably gonna take at least four or five years.
Go through this transition period -- -- we he'd get the course today and win the technology will be in place.
And what will say is is on the big vehicles of prices probably coming down and had the technology and then only a smaller vehicles the cars the prices will have.
To go -- -- -- get them to Peter Barnes and Washington is recovering the president's side of this and not come back get a final comment.
From -- that.
We didn't get a chance ourselves Jen and I Peter to watch the president's announcement since we are on the at the same time to bring us up to speed on what he said in.
-- George and I've been talking about some of the ramifications for the future but I know that the -- wrapped up down Iraq.
Yeah that's right actually Governor Arnold Schwarzenegger California's at the center of this as you know because California who has been pushing.
Four -- more action on greenhouse gases and climate change he's now the microphones commenting on all of this but.
-- the president.
Verifying and confirming all the reporting we've been doing here the mileage standards will go up to about 35 point five.
Miles per gallon by the year 2016 that would be four years faster than required under current law the current standard is 25 miles per gallon so we're talking about a 40%.
Increase here in a fuel efficiency.
And but the administration's saying.
Briefing us and telling us last night.
An official saying that this will not come without a cost and effect it will increase the cost.
A vehicle a man -- -- -- manufacturing a car in this country by thirteen hundred dollars.
Per unit but the administration saying that that consumers well actually.
This will be -- in terms of higher prices car prices for consumers because they'll save on gas.
-- you know that that that that's at least the us selling point for them.
Right president also talking about this as as you know.
Trying to change the way things work in Washington.
Which has been one of his major themes as he's been president here for just the last the three or four months or so.
You know you know the politics of this Peterson let me ask a question about that and have Peter making -- -- told -- moment of the Governor Schwarzenegger some of the governors -- making comments now which I believe is being taken on the on the Fox Business Network or there's a look at them full screen as governor.
Governor Schwarzenegger of of California and I believe that's a Governor Patrick of Massachusetts Peter but I -- -- wrong about that.
And the it this should give us an idea of the politics in terms of the calculation they made by the White House here is this is the time to go after this because we have pretty much have control of what these car companies to do right simple as that.
Now that's that I would say that was a factor -- at all that's -- -- no question about it the fact is the government is that going to be a major shareholder of Chrysler.
And Chrysler Fiat and that GM is also going to be -- continue to be a major lender.
One of the issues here that.
We haven't really been able to get him -- we can do it on the web show.
As that this is gonna cost.
The auto manufacturers tens of billions of dollars to accelerate this process the Department of Transportation.
The study last year I showing that if carmakers were required to get them mileage standards up -- just 31 and a half miles per gallon by 2015.
It would cost the industry nearly fifty billion dollars so there is some talk down here about not it continued assistance for the car companies.
From the federal government to help -- them accomplish this.
Mean yeah exactly right so -- interest they only get one final -- thanks Peter O'Neill one final comment from George.
And we'll let him go through wanna cover housing here real quick as well you see -- Governor Schwarzenegger -- making comments on news emission standards so.
You know final thing here this is this is happening.
You know like it or not so the industry will be able to adjust you think yes most definitely no choice candidate -- no choice in the matter and obviously.
The administration is the power it it is it is willing to put the muscle behind it and who's also willing to put money behind.
-- that's gonna make it work environmentally you see the argument for that you think it's a good thing on the on the on the front most definitely a really argue with it was gonna happen at some point anyway so now now I guess it's gone sixteen to 20/20 wouldn't you know right that's my point -- -- -- for -- sooner and that's ambitious effort are.
George regularly on -- thank you very much for coming in hiatus curable in site here in New York who analyzes.
Car companies are just back from Fox News and density issues they -- governor.
-- -- -- Typical type -- diabetes and -- -- New York Times and then perhaps it happened.
I appreciate that Jeff Smith is an economist at national association real realtors and we were talking earlier he joins us now from DC we were talking earlier about the housing starts data today and -- I think the first question the last few is is this good or bad news we've heard both arguments that hey we're working through the inventory here and other people say -- another -- -- still in trouble.
It is it is next we are however working through the inventory but more importantly.
If you look behind the numbers the residential.
Single family houses actually went up.
By 3% in terms of housing starts to decline that was offset in the multifamily area.
Where it went down that's more of a commercial lending issue.
That anything else so overall I'd say that yes it's good news that the inventory -- down a little.
But the single family actually went up slightly.
Exhausting event -- this news on the housing market seven server.
Very good for you as well.
There's been a lot of talk about the second wave or a third wave of foreclosures that's gonna hit the country.
That you what do you think is an economist read what you see as as far as if we look at -- coming.
Should we expect several more waves on residential and the commercial side what do you what do you foresee happening on horizon.
Well in terms of residential.
About one out of two houses right now as -- distressed property or foreclosure.
Or short sale.
This is probably going to continue for a while.
There are a lot of people who are under water there are losing jobs so it looks like we will continue to have some additional foreclosures and short sales.
The administration has day and ambitious plan underway to try to refinance mortgages and help help us through that's.
But for right now save for the next six months or so I think we could continue to expect to see significant foreclosures and short sales and they -- residential area.
And sorry you're in a similar rate than we've seen in the last couple the couple months of 2000 nine's and eight and in that case I think is what -- But the question they have for the rest in years is -- pace that we expected to about one out of two.
Well the pace is it's a little bit unpredictable because we really.
Another -- can't predict how many people are going to get into this situation.
Right now it may make it increase the -- may decrease the level.
I would say we see one out of two had trouble right now on -- that'll be the case for a while I don't think it would get a lot worse but we'd like to see it get best there.
What's the catalyst to make it any better and it sounds like you think these people have been talking about glimmers of hope and all this kind of stuff for Krejci right.
Well we actually.
Do some polling of our membership in and out for months ago.
71% of our members said that they thought prices we're gonna decline -- in the next twelve months.
Now two thirds of them say that prices will be stable or start to increase so at the grass roots level.
They membership -- some glimmer of hope out there.
Similar -- we pulled them on how to date what's their overall level of optimism.
And that went up by about 70%.
It's still fairly low.
But I think as the administration's.
Bailout starts that take effect.
As people realize that there's an 8000 dollar tax credit out there that they can get.
And as they realize that the interest rates are at historic lows.
I think we'll start to see people come back into the market and I think that might be a little bit of a glimmer of hope.
Is it little hope that glimmer of hope that -- is Agassi talked about or Ben Bernanke has talked about meeting is it manufactured cents.
I've optimism or is it something that what you're hearing from.
From your folks as real optimism because of real anecdotes that are out there.
-- -- wind our surveys just telling us what they think they're not I don't think they're trying to.
Move it one way or another just telling us how they feel about things.
They -- -- is that is that tied to a motion.
Or does it matter like that it's tied to the I think it's tied in the fact the prices are fairly low.
Interest rates are very good.
And 90% of the people in the economy continue to have jobs it's tragic that 10% down but 90% -- of the administration's spending a lot of money and I wouldn't.
Ever bet against Washington when it comes to spending money.
Right especially I think that'll help the economy what do you think is gonna happen you that you brought up jobs how many think it's gonna get -- unemployment goes how high and -- one.
Projections are that unemployment will peak at 10% maybe even ten and a half percent.
Probably and they have first and second quarters of next year the housing are we even more than a year after.
We think housing will start to turn.
In the third quarter of this year probably towards August it'll turn very minimally but -- start to turn a little bit.
-- live before and we'll take it exactly say -- all right Jeff Smith thank you very much National Association of Realtors thanks for coming out this today we appreciate it.
Thank you all right so again we got through a lot in an hour as usual so -- interesting to see a lot of comments coming -- And housing and an endorsement you know screw them through a lot of comments on that the emissions story with the cars has a lot of people.
A fire announcement we'll do some on this will be continues.
We can't remember if you guys like -- -- certain topic or -- have Sarah's suggestion breast.
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