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Had a bad day everybody and welcome to foxbusiness.com.
Live that is -- It is that day although it seems like a non fed day and at what we'll -- a couple of hours from the Fed's decision.
Do anything with those.
This -- and you know.
-- just something that's coming it'll shut them until something that's that the details.
I wanna Peter Barnes is ones with the the Peter just a moment about that we get me.
That health IT czar for lack of better term -- -- like being called -- but the head of the administration's efforts on information technology.
On the health care side that'll be very interesting -- -- Blumenthal who had a little accident on what happens that you're gonna sit here that is.
-- you did you have what happened -- Well I worked at a doctor's office and that was part of it is that we're making the transition to HMO I worked several years during high school in the business side with -- -- And it was really it was at that really turned to finale yes we get to it but -- a way to get -- a nice look clean because I guess there's never any.
Analysis here is to say I was very different anyway that military attacked him because if they -- had anything of lost in your medical records or files -- -- -- -- My -- or my medical -- that there are all about right.
Hey they're not streamlined most of the -- so this a little conversation nothing bad ever happens to me to have sort Peter though on the -- for the White House I believe talking about the FOMC meeting which is coming up which is -- -- -- should say in the decision which is coming up a couple of hours.
So as -- as it could be a non event for the same time we could get a little tweaking read that language in the statement that may be.
Until something about the future right here.
Well -- -- and doctor Lee that's exactly right -- There early expecting thank you thank you.
So I couldn't help myself.
It's -- -- shall we didn't have fun.
Right now yeah -- there's rights that.
And look ahead.
Do we do we have the graphics get that that what that that -- dealer graphic element that everything you do that Peter we wish we did because you're yeah.
Producing for I love producing from the White House lawn and -- -- And I know Jane great knowledge engine interest rates -- you mention nobody is expecting that that we will be looking of course that language on the -- -- outlook for the economy for any clues.
To whether or not the Fed will get ready to.
Make its next move -- interest rates -- everybody believes will be up since they're basically to zero right now on the Fed Funds rate very short term.
And then we're also expecting the Fed -- -- -- comment revealing comment on a couple of these financial stability programs that the Fed.
Were launched during the financial crisis to try to help.
Increase liquidity in lending in the banking system as well let's try to keep interest rates low one of them.
Is this 300 billion dollar treasury treasury purchase program medium and long term treasuries.
At the Fed has bought 250 billion.
Of those treasuries in an effort to keep interest rates low and thus keep mortgage rates low and that's.
Helped the housing market help homebuyers.
That program expires in September.
And analysts are expecting the federal what that one go simply because in reality it really hasn't moved the needle that much.
On interest rates the other one we're going to be watching for some.
Guidance on the term asset backed -- loan facility.
Forget the words expect how often that's that.
Program that the Fed set up -- to try to get off to a trillion dollars in consumer lending and commercial real estate lending.
Going again both of those markets locked up a little bit you know for credit cards and consumer -- The consumer -- real estate lending market really really locked up a lot of developers at the turn over hundreds of billions of dollars roll over debt.
In the next 23 years -- like a trillion dollars worth so the Fed.
As expected -- to keep that program going.
At her potentially extend that that's actually decision by the Federal Reserve board itself not by the FOMC but the FOMC can give an opinion on it.
That programs only got about thirty billion dollars worth.
New lending so far so there's still a lot of capacity -- that went to expect to hear get -- here's something from the Fed on that as well done potentially some of these other programs.
That it could extend or let expire start to wind down.
Right it looked underneath it and a tough spot by the way.
Guys we have our Ben Bernanke animation yet -- do we have to ask needed to do it again.
-- I think it says -- Where there.
Let's look Barry White version of Ben -- Soothing voice like that it might make a big difference in the way that he's going -- I think so -- -- go to those old -- -- -- -- -- Movies hater like they do in Europe that might -- the way they -- they they take it calmed things down to him you know I mean.
All right Ed Ed that's it I mean I don't know where to go from here I've got to know why we better not get Peter -- trouble still -- -- -- -- and.
All right guys have a have on vacation the next couple weeks -- -- Jackson Hole.
Haven't gone out Charlotte Jackson Hole next we have what it takes a -- on vacation gonna take a break for a medication for my vacation go back to work for.
The run of the Jackson Hole.
Conference bankers' conference little weak conference and we'll be there the Kansas City fed annual conference and we'll do that -- go back on vacation and -- -- but -- be checked it and you know next week LCS from.
Yeah we can't -- that have -- separation -- -- each -- application -- -- -- in the west to make it easier to.
Didn't just roll -- clap and do it do a double box probably don't know where you.
That -- Bernanke.
You know I was hoping you'd react to -- drag -- separated at birth well yeah that's it all right Peter -- -- -- -- OK okay you know he's gonna get bad attitude of mind after -- festivities you.
Yeah right let's get a job lake effect Portland down from leader capital who's gonna join us right now you -- -- -- jettison last week when -- -- come on after one of those who might otherwise chilly day.
You would one of these days -- an empty chair but John hopefully it's O'Meara.
To talk to us about the Fed hey John good to see you.
And about the markets in general.
Aren't so -- -- we heard -- put on our board that you're one of these that this is great to have a little diversity of opinion because it seems like everybody comes on as saying.
Hardware -- to get things turned around we bottomed out recession may be over.
And from -- notes of -- said.
You don't want this recession hasn't even started yet we've asked our viewers what they think many able weighing in what do you mean -- that.
Well first of all you know it's a great question couple of things.
The the the Fed probably will not raise your short -- -- -- that's your topic of discussion.
But more importantly we think that with a weakness in the in the currency we think we'll get another -- pretty good doesn't inflation in the federal be forced to.
Begin raising rates up precipitously we think around the 7% level by.
Right and so were -- are our view differs a little bit from from the norm.
Oh yeah I'd say that does that that is actually a lot from the norm let me ask you about this idea that the recession hasn't even started yet -- argue -- trying to just did you know.
Did you just.
Put a statement out there didn't to have conversation about it.
Beating you really technically mean the recession hasn't started yet or used to are you talking about what's known as double dip recession that will come out of it briefly in the we'll go back.
What's your question what will we think should happen is occurs gonna -- meaning that the short -- -- goes higher than -- long and 7% on the short in the curve and we think what we're about to 75 on the thirty year bond.
Just in just naturally the thirty year tends to follow GDP which we think it's negative.
And will continue to get worse the real culprit here is not the amount of debt in the system the real culprit is the fact that most consumer debt as well as corporate debt.
Is maturing within the next three or four years and it's trillions and trillions and trillions of dollars.
And unfortunately with a credit markets the way they are and I think you alluded to -- earlier with -- tell program really not working for a fact most of the stimulus program now working.
Credit markets are very -- so so for example Ford Motor has forty billion do between now and 2011 they'll probably costs them between twelve and 14% to refinance that.
And that is that is untenable they cannot pay that that that -- so we think that that that that.
That shortness in the in the debt market who -- a lot of a lot of debt coming due very quickly.
Is gonna is gonna if -- -- over the boat so so interest costs are going up.
And top line growth is going down and that's just not a good marriage.
You know that makes it that makes yeah it does make sense because all we've been hearing over the last while second quarter here is an advice did this earnings season is that the cost cutting.
It's actually been done.
And as far as soon but the real major shocks -- the economy.
We might be over that period that's -- son having telling us beer telling us something different so.
Describe just a scenario you just give -- -- good scenario for Ford but how would that impact consumers what would we see it this is indeed it's an -- Well well -- forget it it's a great question -- really what's going on its top line growth has been down anywhere between ten and 40%.
Bottom line growth has been down anywhere between 45 and 60%.
Yes got companies be you know assessments but.
But -- -- like for like basis they were all across the board negative with the exception of banking.
What what -- companies made money with by cost cutting mean firing people that that's one of their largest.
Cost really in any organization and so -- we believe what happened as they try achieve bottom line growth it will fire more people.
And unemployment will begin to move up we think in the 16% area.
Consequently people spend less money top line growth gets worse than we -- we have all the -- spiral down and pricing across the board from.
From cars to boats planes trains.
And we have a spiral up in borrowing costs both for the consumer and miss -- palate he's I might -- -- in the same boat.
-- a lot of money short term -- very mismanaged Kennedy's.
And -- you sort of have a huge demand in a very short term for this.
For borrowing money and the money in and not enough money to do so since you took companies continued to can't cut costs.
And that just fuels the fire -- spiral down.
Period and then we'll just go in and outside -- let me stopping this that would mean.
More layoffs even at the low level that would mean a tougher tighter credit environment still what else -- that mean.
It just it just means that that we haven't really hit a bottom that we you everybody's just a little literally on it's going to be it's going to be 2011.
You know and and so that's that's our take on we -- a short term bond fund.
So so whether whether you know the Fed raises again interest rates the level we think.
Or notes of the 5% level we benefit immensely from that were about 10% this year we think.
-- will continue that -- so they'll we we recommend -- be in the short end of the curve Brian and keep him and think you can make sure and I think the tortoise wins the race.
In the next two years not the hair.
You know I think that the only in this and we have to run a John that you see -- these points is again they go again you can you said this yourself kind of counter to what it.
-- a lot of people been saying lately which is which is good to have that discussion the only thing maybe if you would say is a criticism of it is that got.
Hey you know I -- jobs coming on here just talking his book you just mentioned a moment ago you would benefit -- these things happen by rates going up.
The stock market is already shot up I'm guessing if this was your view already that you probably missed a lot of that and maybe you're just hoping.
To get that back we say.
Actually -- you know it's interesting because.
We put a call out in December -- -- put a -- out or in his that are -- called -- bill in December 07 we predicted the marketing go to 8800 where he's in the same fundamental analysis.
-- used then the reason now we actually said in march of this year which children and our web site.
That the market to go from it was about 7000 that time to 9600.
Ground a look it you know things are moving straight lines but.
You know given the fact that the stimulus plan didn't work unfortunately.
It just hasn't work and that and that's really too bad because I wish for more in this position but it didn't work and so they're gonna have to come and honest and another stimulus plan they've got two trillion dollars in debt to finance.
That's not counting the -- particularly do I mean it's just the numbers just don't lineup and then and I appreciate that that's a looks a little self serving but that's shall not the case.
I appreciate I appreciate the answer and that appreciate that I can hope to see and seeing -- it was nice speaking with you.
Thank you thank you John okay.
Health care is obviously one of the big topics that we talked -- the -- is -- already but health care is one of the biggest topics in this country right now and one of the biggest players in that debate.
Is doctor David Blumenthal he heads up the information Jeffords to the information the administration's efforts on -- -- -- -- -- -- you Fox's dot com live the national coordinator for Health Information Technology that's a full title.
A doctor David Blumenthal is joining us now for the very first time actually see doctor.
Thank you for having me we we said at the top of the show that affectionately.
Sent me refer you it'd be health IT czar.
And we'd love to get your perspective fine.
Where this stated that the stated health IT at this time the transition.
From some of the records being paper records now being online -- where where is it.
Well we are they're really historic point in the evolution of our health care industry and health care sector because the congress the administration.
Have launched a very bold new agenda.
To bring electronic health records the benefits of electronic health records to all Americans over the next to five to seven years and we are.
Working as fast as we possibly can to roll out that agenda taking very carefully the privacy and security.
Of the information.
Respecting the rights of physicians and the rights of patients.
In this process but we're optimistic that we can make a big difference -- in terms of.
So -- stat because -- I don't even know how you would that you start to approach this.
This kind of undertaking what is the very first thing you sure you.
Well -- fortunately we have a water implement and the law put aside.
About 45 billion dollars over five to seven year period.
For incentives for doctors and hospitals.
That become what are called meaningful users.
Electronic health records.
And in addition to that those incentives which go to hospitals and doctors who pick up this technology -- use it effectively.
We have about two billion dollars worth of funds to assist them in making that transition.
Our god those funds are sufficient by the way and in them and money -- -- in the number sound well here at the two billions enough for now.
It's a great start.
Then I think we can make a lot of progress -- another -- more at some point we'll need to.
Did it because it costs a lot up front right so that's the ideas -- you'll -- do when will we need to add to that if we're gonna really be realistic about getting it done.
Well you know I think physicians and hospitals want to do this as well and they will bring a lot of resources to the table in the process so.
I think it's not a foregone conclusion that we will need more money.
This is -- pump priming -- activity it's an incentive it provides.
And an extra push.
-- an evolutionary path that I think we were already on.
I think it'll mean it will get there faster but I'm not at all sure that we will need more money to get there.
That the health reform bills that are pending if they were -- I think would.
Give a big boost along this way just by emphasizing primary care more by emphasizing.
And Health Information Technology is a very important mechanism for achieving.
Cost reduction and -- efficiency improvement.
The avoidance of fraud waste and the also the improvement of equality and health care and the health of populations as well.
You know thinking that we just time that the stimulus and I'm.
-- -- seems like a lot of money though in the stimulus dissent has heard snow forty point eight billion dollars allocated for the health care and domestic information technology.
I'm where I'm always talking about bringing this back the business world as well.
What kind of boost do you think this would be for the economy do you have to hire people -- and -- It -- kind of business cited this as we understand they can make -- who doctors' offices more efficient and and actor -- -- few doctors' offices good to right now that are all.
Electronic and it is very very efficient.
But it's -- to boost the economy and that's where we've been looking at the scene has what do you think that benefits.
Well we think that being a health care.
Information technology specialist.
Is going to be a very very important occupation going forward.
The congress directed us to help train the Health Information Technology workforce.
And we are making plans to assist with that.
Through educational supports -- community colleges and other and other educational institutions.
So if you are planning a new career right now and our ancient computers and shouldn't health -- and this is a great feel to be and because it's going to be here for the rest of our lives and for the rest of time.
This is a long time modern way.
Welcome on this in the modern way.
To handle health information.
And I don't think we're gonna go back from this sure you know the web -- And the web and other technologies will become part of this process right again we're.
We're going to be protecting security and confidentiality.
I think that there will be lots of new jobs in the area of health and from haven't.
OK you hit -- one of the key question mark Simon not -- this widespread agreement that.
Technology as a general statement that helps health care and you know him.
-- streamlining records and everything else is -- is generally accepted as being a pretty good idea but the concern everybody brings up.
In the next sentence is all what about security is my information secure online.
What's the latest in that debate -- what are you telling people.
Well we are committed to.
First of all enforcing a whole series of new laws that were enacted by the congress as part of the stimulus bill.
To increase in the privacy and security of information and to punish.
People who intrude in an unauthorized way on the health information so that's number one.
Number to no one is going to be forced.
To allow their personal health information to be processed electronically you're gonna have to give your permission for that to happen.
And we are also looking at all the latest encryption technologies that our intelligence communities and others have come up with -- to try to make sure that we have the most modern.
But this is a look at that down the line do you think -- people carried -- Cardin in his Middle -- ways of thrown around about how we're gonna keep it secure is it did some military credit card as -- -- different anatomy and how how we -- Identify ourselves for doctors.
You know years -- -- -- all this is implement it.
Well I'm not I don't have a crystal ball on this and I'm not gonna predict exactly what are very innovative technology industry is going to create.
But I can guarantee you that -- -- going to keep up with those latest technologies.
To make sure that we have put them in place as part of the health information system in the United States.
Is there any preference for what systems the doctors use when they set up let's say doctors transitioning it during this time period and they wanted to put all of their medical records online or.
An electronic system.
I've referred different systems are different technologies that are out there division is there incentive changed with.
-- this and they decide to go it.
No it doesn't we -- it completely neutral with respect to the different technologies we really want to create.
In which industries compete to meet the needs of patients and physicians.
And other health care professionals.
We think that's the best way to meet people's needs.
We do you have to create certain basic standards.
That allow records to talk to one another just like we have basic standards that allow the Internet to work.
So that information can pass.
In an intelligent and intelligible way over the Internet.
We're gonna need some basic standards so that one electronic record or one.
A personal health record can talk to another.
That's that's -- critical congress test us with that.
But aside from those basic standards we're going to let.
The market determine the winners.
In this effort to make electronic health records and their Health Information Technology.
Much more broadly available.
But doctor we appreciate you joining us today answering to this question venture will have a lot more -- we -- -- -- you again.
Nice to be here thank you.
Thanks for coming up next David Blumenthal heads -- the administration's efforts again on Health Information Technology Luis canal is up next -- -- Inglewood California.
-- with another angle of the story right -- where there.
What -- -- free health -- today what's going on out there.
Free health can't cut eight days in Los Angeles in fact done enough you can see people around me that -- these people outside -- they waiting Alice in.
Just some of the 16100 that will be treated today.
And Gaza as the days go on a -- to -- money is one of the dentist volunteering his services.
And right to tell me you're actually you need more dances because of him on his being so -- We do we today where have more Dennis than we had yesterday.
We can use another -- when he Dennis easily we've got the chairs and we certainly got the patience.
Is in your opinion is this an example of how many Americans I'm missing out on health care in this country.
It's certainly an example we we we can't even gauge the need because we're only taking the first 15100 we know yesterday it would cut off was at 4 AM.
And there was a traffic jam out here.
Hundreds of thousands of patients -- wanted to get in.
Sorry planes are flying over.
So we just don't know we certainly can see there's a tremendous name.
Now guys that I should judge just mentioned that this is -- whole pot at the remote area made excellent nonprofit group.
-- clinics that they not finally sell hold here in the United States -- so instead -- countries.
Then budget is only around 200000 dollars -- -- and they supply Italy -- millions of dollars in medical care and it's not only -- here.
People getting medical checkups.
-- having their eyes -- ticked inside the least guys on.
But there is another problem I was told.
That's only Tennessee is is the only state that allows.
-- -- and dances from other states to work in that space sun is setting issue facing you heat today.
It is and we didn't realize it was an issue but we will try and get something through our state dental board that'll allow volunteer dentists are coming from out of state that will be very worthwhile.
Now you look -- -- LA county dentists clinics are you really have one of they sort of free health -- clinics going on five days a week in LA and it's funded by the county how is that how is the cutbacks affecting you.
Well the county hasn't been cut back the county has not cut back our budget but the state has cut back the budget.
For the state dental program which is -- -- to count the -- part of Medicaid.
And that just ended on July 1 so that's about almost a million patients in Los Angeles county that are now going to come to our county dental clinics.
Which is basically about twelve -- in four locations.
Doing what they can we're totally backlogs.
You know rethink this you do you know waiting list here of them here and the county it's even was dead just -- -- question is president Obama's health care plan does coming in.
What will let him that day to clinics like this.
I have no idea.
I don't see as it did it may be a capacity problem if you don't have enough physicians and dentists and locations and infrastructure.
It doesn't seem to me that however used structured the payment program -- you still have to find some place and some people would take care of those patients.
And guys I should just mention that I am not asking any of the patients here -- all of this citizenship.
Whether they're employed unemployed.
And sometimes I want.
So there -- a lot of people still waiting you've -- Right treatments and it will be -- days to come back to you.
Knowing what California but yet another angle to this health care story which I think we -- donor.
-- all the time and had those town halls and certainly proven is probably the most hot button cared about passionate issue in this country right now -- -- 200000 dollars more million people that's amazing I mean to be able to provide that care and that incredible writing mean -- imagine if he was afraid.
We see how many people come forward that's and we want to talk a little bit more about this Kia soul -- -- a senior health policy analyst for capitol street research.
If CD you -- why police now the story that was there we hadn't had this -- this free hoping clinic for a few days.
In California and if we -- to switch your take on that is that emblematic about them out of people that come forward if that health care is provided by that the state or.
Is that just.
A one off.
Well I think that prevention and wellness is a pretty crucial part of the health reform package that's being discussed in congress so.
I think it actually could be good news for the smaller community clinics.
Down below I guess Agassi implication here is whether or not.
You know people are going to use the health care system and or abuse the health care system at some point and you know if it's free.
-- you use it for.
You know things and maybe -- aren't necessary and drive up the cost long term -- -- -- is that something we should be thinking about her now.
-- I think it's bad.
A basic level of health care I think that for the 46 or 47 million whatever number you wanna you -- of the uninsured.
Having that basic access to preventive care to hospitalizations.
To post acute care.
I think that maybe down the road you could see some.
-- -- but I think this is something that this country is is ready for and I think congress is looking to achieve that goal this year.
You know nine pages get hit a lot of reconciliation on both sides really and within certain parties -- it comes at price tag -- it acceptable not only.
Inside those circles but off into the public -- -- achieve that.
I agree I agree I think and that's reconciliation.
What you're mentioning which is basically a budget tactic.
Where in the senate you would only need 51 votes to pass a health care bill.
I don't think that there is many people that want Health Care Reform to be passed that way.
There is an appetite to pass it in in a bipartisan.
Way and fell I think that something will pass.
This year and I think that the town hall meetings you know listen people are passionate about health care.
And particularly the elderly they're scared they're gonna lose benefits and as I read the bills and and analyze.
The various bills running through congress that's not something that's being discussed.
Yes okay so what said that the town hall you -- -- no senator -- so we got -- an earful yesterday senator McCaskill and others have had the same.
The last a week or sell the president's of course was a little bit more tame but.
Your take away on that is that the issues that are being brought up all our are legitimate and if so which -- -- we really be thinking about the most what do we learn from these from from people speaking out.
I think that there are probably three areas of of big concern not only -- Americans but also the members of congress that's the price tag number one.
Number two how we gonna pay for this weather is doing your taxes or through cutting certain health care providers.
And then number three the notion a government run plan.
How will the government dictating health care and I think that's that's scary to a lot of people.
So as far as the town halls themselves.
You know is screaming the most effective way of of getting your message across right you know I'm not sure -- Even I think gotten into an issue here because you're right that is obviously -- -- this is -- look let's talk about that a little bit because one of the things that's come up.
And you analyze decision but I -- some are inside them.
And we've gotten from a lot of others is the idea of private not for profit co ops as opposed to a government run option.
You talk about the difference between those two if you can and if people are worried about a government option.
Are they better off supporting these co ops that might.
Maybe they won't would they still drive down the cost could you have the same effect without the end result of a single Payer system which is the fear.
Of going government run at all that the end result will be single Payer death somewhere down the line.
Break well I would say on the public health insurance option -- -- government run option.
The idea there is to actually have the government.
You know create a plan and negotiate with providers hospitals a million physicians in America -- -- track.
And it's that concern is is they care would be rations.
And the difference between that and a co op.
Is that the co op idea while it is still a little -- we don't have all the details.
But that is the major.
Type of of public plan that's being discussed in the very important Senate Finance Committee a co -- is more of a nonprofit.
I would think of it almost like the blues blue cross blue cross blue shield and -- I think that there is certainly a way to hold down costs in the co op option but again the -- is in the details.
The whole idea of a co -- by the way just for a historical.
On there there are collapsed in the midwest actually the idea came from senator Conrad who is.
The chair of the Budget Committee but he was also a midwestern senator.
With farming cooperative with electric cooperatives have cooperated so I think.
That's an idea that actually has.
Tom has a good chance.
So we heard this one trillion dollar price -- time and time again one and half -- we've heard the different accidents -- In your firm firm bear a variety of different people what do you think would be if you -- look it feminist cost savings said that you were mentioning what what do you think that final price tag would be far.
For Health Care Reform.
Well I think that -- one trillion or so that we keep hearing about will likely come down.
This month actually the White House and the Congressional Budget Office -- waited to come out with their mid session review this for 2010.
And just you know I don't have to tell you that the deficit picture -- is pretty bleak.
So I think that will push the price tag down.
You know if I had to make -- guess is at 700 billion -- -- -- 800 billion I don't know but really these subsidies.
And expanding Medicaid are what it costs the most so I think that members of congress are gonna have to come back and think about how much they -- -- They want to know provide in the way of affordability credits -- Medicaid expansion.
The -- to thank you very much so that gives -- some rational analysis at least no screaming yelling Ayatollah Al probably are fun.
Now not -- this lets you thank you from my capitol street research center DC talking health care.
There you have any sense that.
So this is Erica said this is too big issues -- -- -- health care I was who could.
Go back and forth on and then what this these fed -- it and do.
And they did to show the markets by the way they talked about it this must have been like about it and remember relax -- percent across the board yesterday camera that 1% across the board -- -- that decision which is an interesting gets -- mostly I get back to where we were and then wait to see what they say.
We'll talk about an economist Mike needs that are almost become -- still to come on the Fed.
Ben Bernanke's future as we continue on foxbusiness.com -- All right so the question becomes what will come out of this statement today.
From the Federal Reserve if we all make the assumption that Edwards.
Broadcasting live from New York -- 1232 -- or.
An hour and a half away from a decision we'll make the assumption they won't -- anything on rates Mike Haynes joins us need services in Chicago where he's an economist and heads up that organization Mike good to have you on the show what's your take on -- -- everybody's weighing in and say.
Called that you know they're tough balancing act they've got a city economy getting a little bit better without saying it's going gangbusters again everybody had been considered but -- say what -- -- -- -- so.
How do they do it today.
I think it's going to be the same old same old -- They're not gonna increase rates I don't think they can afford to do so.
Be a big question is what they're going to be doing.
With their financing.
-- and so whether they're gonna be continuing.
With their mortgage.
That might be discontinued because I just don't think it's working anymore.
Can you be more specific about that what he thinks not working in and work.
Gosh there's so many different plans that are out there what which went specifically can be peeled back first thing.
Well that there's a number of facilities and one that overall.
I would say anything and buying the toxic.
Assets I think they've.
Gone as far as take him with that.
Let's -- take a look at some numbers.
The balance sheet of all 161000.
Banks and credit unions is about.
Fifteen trillion dollars.
-- there is.
Point three trillion of that in commercial.
And they would love to buy some of those commercial loans.
But they can't.
Primarily because if they did there would be such a -- to capitol.
-- by the banks.
That it's they couldn't afford it.
The same way on first mortgages.
And -- second send home equity loans.
Plus they have.
Approximately still one point two trillion dollars so -- And Fannie Mae and Freddie Mac.
And they've taken us about as far as they can in all of those categories right and the -- -- -- It has not worked they've seen that.
In trying to pull -- provide some supplemental our capital.
So I think there could be pulled -- combat I think they could come out and say something there.
The problem with that.
Is what are they gonna replace it -- some how can they help these banks we still have eight to 9000.
Of the 161000.
Banks and credit -- out there that still have toxic assets on the balance it.
Well and we've got to work those out -- let's talk a little bit about that just because we spoke with them Elizabeth Warren yesterday Matt Dowd said that progress in -- -- what -- thinks she says his lead -- don't know how much of this toxic assets remain on.
The books since last October she -- it could be as conservative is 600 billion -- could be as high as.
When half trillion but there's really no way of knowing so.
It -- the Fed have a better idea and just how much toxic assets are out there then that say the congressional oversight panel and then that information provided by the treasury.
The Fed definitely does.
The Fed head is access -- and assistance.
From all the other agencies.
The -- basically deal with the same data that we deal would.
We supplemented with those surveys that that we do and so did they do.
Elizabeth Warren's comments yesterday I heard them.
And I think she's underestimating it.
I don't know how -- -- more like.
I think it's more between two and three trillion well -- ends up -- but we have stressed tested all 161000.
Lot of -- It does it does not look good.
It really doesn't we you know what I name suggests why you continue those -- -- facility continues his second and I thought one of the most interest -- things that agendas interview with.
Elizabeth Warren yesterday and you could I wanna bring in -- now could you mentioned what's been stress tested vs what hasn't.
Is when she was talking about the timing of the actual stress has ever done by the government.
Ending in the year 2010.
With her prediction in yours is more dire.
The resets on a lot of these commercial mortgages in 2011 and beyond having not yet been tested so.
That -- -- -- the -- what people maybe who didn't see that interview in a lot of ways is that.
We don't know how bad it might be because we haven't tested it where's Mike you're doing it on your models and coming up with something that looks pretty brutal is that is that fair to way of describing it.
-- all -- I think he stated it very well.
When we take a look at this and then when we go out and talk to especially the community banks and the credit unions.
I think it's a lot worse.
And going along what you what you just said it's a lot worse than what Elizabeth Warren is -- And because of that the banks have got to earn their way out of it.
At the community level or what I call the main street bank level.
The only way they get capital despite earning their way out of it.
Then and that means not only the remainder of this year but all of next year and in the 2000 and Apollo eleven.
To earn their way out of it to get that capital position that they need.
Where they're gonna feel comfortable about lending it yet.
OK still let's talk about that Elizabeth Warren often mentioned that -- these smaller community banks I think greater sad amount of risk is you're just -- right there as well.
What -- things that she highlighted is because.
Bill along with the Federal Reserve programs the other programs out there that they're not getting the help the kids.
-- -- for example deals with the securitized market if you look at cal that says similar situation these are not necessarily.
Where the commercial or community banks really need the help so.
Movie scenario of well let's move a photo over the next couple years let's say that the Fed -- to peel back some of these.
These -- baton different programs that they have out there.
The kid that commercial real estate is still a problem a couple years from now.
-- what what needs to happen what is your prediction of what needs to happen to the whole assistant come under threat again as we decide in October of this last year.
Or is there way to prevent that from happening.
Jenna did so -- question that I have been raised seeing and I was with you about three months ago in and we talked about the same thing now there hasn't been anything that has been done on it.
And what needs to be done are -- your basic question.
The basic question is we've got to figure out way too because generate capital.
Aren't they out there the -- midsize and smaller institutions.
Now that could be debt.
If debt would.
Be added to the whole capital equation.
And you could have private equity firms and hedge funds.
Go into these banks.
And if you adjusted the credit unions because we've got a thousand of them also -- two.
Assist on this capital question.
Not -- nobody is really addressing that.
And I think that's critical if we would address that.
And address the capital question and unleash the private equity firms and the hedge funds to assist.
Both the the community banks and the credit unions.
I think we would start seeing things moving in the economy.
Why is that.
Well if we take away the 101000 registered.
Companies that are on the various stock exchanges in the United States we still have 27 million businesses out there.
They provide somewhere in the range of seventy to 80% of the jobs.
No we also saw earlier this week that productivity increased.
Now what is that telling us in that sector.
-- when -- take a look at that that it's telling us that -- the cause small businesses did.
Was they increase their productivity by cutting.
Their employees' hours.
Mean that's not good.
But I really am -- you're -- how do you prevent it from this system becoming over leveraged again with that private equity guys involved and everybody else.
I think that's a matter of -- -- hearing to.
A capital standard.
That would be the same for the too big to fail group.
As well as to be too small to save group.
-- I think there has to be a uniform capital standard for all 161000.
We cannot say to the Morgan.
Chases and the BO days of the world.
Are that -- you can have a capital standard of 4% right on it we're just gonna take a look at your tangible equity.
And then we turn around to 161000.
And say no no no you've got to have 8%.
Right now 8% means they have a 12% are leverage ratio 4% things that the big guys can have won it.
That's rather that's that this economy and and data has got to be corrected.
This Jenna and Connell comes down to just very basic accounting.
Right that is we have got to standardize the capital situation in the United States forever that's something that's on the table -- -- him that.
Adaptive -- that -- tonight -- better right.
I I think that we would and we'd get this economy moving because we are not help being.
The banks and the credit unions who are hurt -- Providing the credit.
Of the jobs of the small companies were not doing that -- that's why.
I think there is a lot of falsehood in the economy as we're seeing it we're seeing the big guys cutting our costs and doing well in the stock market seeing that.
And reacting to it.
But underneath all of that.
-- upwards of 27 -- million of our small businesses out there are still hurting.
And there are hurting because the people they rely on the community banks and the credit -- there are hurting too.
Mike thank you so much for your perspective is always great talking -- -- and that we would love to talk to you again soon check in with us.
I I definitely will thank you for having me back again Mike neighboring Chicago from -- services we're gonna continue talking that the Fed with the Dow up 114 points right now.
-- of -- conspiracy theory.
Then I'm gonna run by Elizabeth McDonald -- -- -- That's next on Fox Business -- -- -- Little -- McDonald's like that growing classic kind of -- shakes everything.
Yeah I mean that would spit balls get like this very yeah yes she does it increases the conspiracy -- -- went -- I don't care if you don't mind some imaginary line and they were about -- Kinda -- like fifteen seconds ago -- talk.
Mike -- -- -- and -- needs just -- and an email came in from our friend.
-- bookmarking appear that a military veterans on the show lots anyway I was reading his email and trying to and we were talking to Mike in the east of the subject line in the email he sent out to clients and a media and everything else was was trying to tipped off to what the FM mobile the FOMC is gonna say ahead of the ten year auction and his view is.
That -- maybe China knows what the Fed is gonna say.
Because he says I can only imagine the -- look in the face -- these Chinese officials they participate today at the auction a decent pace.
And the influence he comes -- an hour later pulls a Bank of England increases the side of the treasury buying increases -- as opposed to.
Cutting it off so if we're seeing strong.
And activities these auctions maybe somebody's gonna we gonna -- And he is saying is that the Chinese have been threatening to rotate out of yeah.
Buying treasuries not just unloading them so I think they would do that -- that hurt that you won because he was attached to the dollar peg to the dollar.
-- and is aggressively and -- -- aggressively didn't show up for two losses and within the past couple weeks at least two options as -- also pointed out.
I don't -- they were tipped off I really don't.
I got to the point is is that you know Ben Bernanke now has been talked about it but since that time magazine's -- -- next man of the year.
Because it's on such a fantastic job you look good on that it out of -- well because I think that's jumping ahead of the gun here because you know he's just.
I should win this -- it you should.
You should and -- -- -- -- he has yet to exit out.
Right now you know pulled out.
Trick off and we are at historic levels of that intervention in the economy not just monetary but fiscal intervention they understand the Fed intervention since the economy plus I -- justice in 194647.
When the -- is that when the Federer is buying treasuries to help you know get us out of -- or -- they're doing that now so the question is on Wall Street.
We'll dates that will -- lengthen the time the duration of the program to set to expire in coming months in September I think.
And also it will lead by you know mortgage backed securities -- in -- -- that program as well they're on track to hit those targets.
So you know so can they do all this without you know pulling the trigger and yet and -- raising race and it raising rates have -- of stalled.
Inflation you know it.
Anywhere let it -- Gross exposure -- -- to -- but -- reserves on exposures would be about six point eight trillion.
It's doubled its balance sheet in a year's time it's in buying US treasury says by mortgage backed securities suspect in the commercial paper market.
It's backing of the term auction look facility in.
Program you know so can't can they -- -- do it in remember Ben -- -- of the Great Depression.
-- criticized central bankers during that era for not being generous enough.
And given that he has thing -- you know basically helping out the US government congress with its deficit spending.
Will we have the courage -- all of a sudden relax and miraculously have a backbone transplant and pull the punch -- at the right.
Tell -- this writing a shopping spree that suggests it's incredible the amount of money that's gone out either through guarantees or otherwise is not necessarily -- money going to the system right there -- back in there that's out there that's so launches the value -- if everything were to collapse of a weird the only thing they hit the worst case scenario do you think it on the top.
-- -- buyer's remorse lists.
Sleeping on it -- is.
Treasury because it's a drop in the bucket and it put the central facts straight in the cross hairs of congressmen like Ron Paul saying why are you helping.
-- of the US congress with its out of control deficit spending by buying the treasuries.
You know so what do we -- so for the first scene of big defense are to be audited under Arthur Burns.
And Arthur Burns has said you know their exposure to -- hurt his ability keep inflation in check inflation went crazy wild out of control by the early eighties.
You know so it is so.
-- the auditing that the Fed you know if you want Barney Frank and Maxine Waters waiting warrants monetary policy.
Than ever spent before getting what -- with Fannie Mae and Freddie Mac it's a real danger zone Ben Bernanke took a lot of time in capitals less hearing answering those questions he's saying actually not don't let it happen.
And with the effects for you know for those of us who you are not involved in that -- the stock market bond market or otherwise what is he expected the Fed go and fill in and buying this treasure -- Prices could go up and here's why.
We you know when you have the Federal Reserve effectively hitting the button and creating reserves that the banks have about seven and 82 billion dollars at the home loan banks.
You know how they remove that cash out of the banks they're Bernanke says well I'll keep them.
You know at the Vatican and the banks they're bankers incentive to keep that those reserves -- the -- -- paying interest so -- flood into the system too much money chasing too few goods.
Given way to do it is he's saying still those banks' bonds.
Well if you sell bonds that creates a bond cracked up right right Khatsava bond glut of -- central banks around the world that are -- -- -- dealing with their own treasuries -- their own bonds.
So all those bonds chasing the same amount of finite investors not to have yields rise to -- those investors sent.
And then mortgage rates are tied to the ten year note that this field goal I had is still out -- -- -- -- I -- up and rates go up yeah that -- so that consumers to borrow the yellow background that's where it can -- who knows that.
And I announced a matter of timing because we know we will deal with a higher interest rate environment at some time and to your point earlier.
That's why you're saying hold off on the Carney that -- -- Ben Bernanke is the time magazine man of the year whatever the case may be the god of carnage now runs let's hold -- five car.
Let's hold off on making judgments either way right list yeah yeah hold -- now because eventually it's gonna have to look raise rates now it's a matter a -- I mean other.
Well when he's gonna do that the one who's to say he won't get it right it -- because it is -- it is possible to do this at a measured pace now my read on your first comment of him being a student of the Great Depression is that he's going to.
The grist for Bernanke is not that he's gonna raise rates to -- says in -- way too long because right I mean that's that's what his history shows that with a second and I think it shows today.
The -- long as he possibly can that -- -- -- right right that's right those are the mistakes and of the past.
That's right and you know the subtext here by the way watch the Federer -- you know use the new -- new.
Fed doublespeak -- quantitative easing this massive.
Influence the monetary programs -- IQE candy now calling credit he's saying I love that I'm calling quantum these -- because that's a quantum leap in the size of it's program bureau giants tried to exit -- that it got.
So you know if we remember Ben Bernanke at the Fed did not do anything to stop the subprime bubble in 2006 when it really exploded out of control.
Didn't nothing there also said the sub prime crisis and uncle vial viral in the summer of 07 until congress but for the credit crisis looked up in August looks of it.
A hint that -- Greenspan -- and I said that the Fed can't prick bubbles to can't to anything.
-- you can you can you can by raising rates and not by exploding at the money supply that it started not tracking you know not paying much attention money supply since -- that's sense.
You don't think he handled the absolute downturn.
Mess that we had last fall pretty well when committee I don't know I don't decent mileage out of eastern do you look at may have Fannie Mae Freddie Mac -- of congress basically politically captive organizations such funds.
Going under Lehman Brothers AIG Citigroup BankAmerica luckily -- -- Big -- -- stepped -- at the right time to wasn't too generous that's the question will the beef rampant inflation that's question.
Did he let the Federal Reserve you know settle trades at 100% on the dollar with Goldman Sachs another you know banks at -- 100 cents on the dollar.
When maybe didn't deserve that by using taxpayer money your colleges yet did it give the Federal Reserve -- -- -- bank gave back America twenty billion dollars that the treasury.
The -- blessing to buy Merrill Lynch no strings attached -- taxpayer money no strings attached.
That was a really and that wasn't real about the whole other can -- -- the bailouts the X -- Federal Reserve's role.
You know I wanna read those emails sent her an ever shut -- ad hoc basis they were making up -- -- went along the play got here.
-- -- -- -- -- -- -- -- Plus it was a pleasure I -- even got a car that's planned second plane before I would not want to be -- plain mean anywhere angry.
Think you've got a card -- did you ever -- a long time on the runway and none of an idea how long -- I would say it our hollow record one of 35 -- it was -- -- that crazy -- eight.
Curse like a sailor just the -- to -- -- am.
During Arizona -- -- isn't just that the ear -- and involved.
Think you know beat up and -- to analyze the workers -- a passengers eventually -- in Jeddah yesterday.
-- -- -- -- -- -- -- -- He had sent an -- Elizabeth you vampire -- eleven we got some help for you guys that have been stuck on runways with them -- not with -- but by yourself.
Coming up next thought this is dot com live.
All right the reason why they were tiger having second runway because a lot of other -- a red of course this summer and we -- to talk a little bit about.
Well what kind of -- we have yes passengers' bill of rights which impassioned all right -- to have a look.
We lost a lot of attention and the president -- flyers right -- Ford is joining us via Skype right now Kate is -- he.
Hot night is that how we -- K.
It's actually like hand High Court time.
And playing Riviera and I in the Napa valley's just think hand eye coordination and an exact rain wishing me -- she -- still -- you know what's going on here every week -- he first of all your story went -- -- -- get involved.
Well my -- -- what is on that very special vacation over New Year's weekend coming into 2007.
And over Clinton's campaign just adults or order that we got to burn it is just like -- like that we've been talking about this week.
We were diverted to Austin pilot should -- be on the ground for a few minutes and then get to our destination and nine hours and seventeen minutes later.
We were still sitting there.
And that and if you ask the flight time that's thirteen hours and seventeen Munich an MD eighty with no snacks.
No water potable water overflowing toilets all of those things that woman -- me he diapers for the media and T shirts because he ran out of diapers like so it was a very dire.
Real mental collapse lesson people on the plane just -- absurd.
That an airline -- told us this -- and then -- most of us it took three days to get to our destination.
All of backlog of people that were -- that night it was 67 hours from San Francisco to Mobile, Alabama but we took off.
They not only -- Paul yeah crazy one of our viewers is ready and Jonathan about jet blue's big problem with this is just one of the well known.
-- she's the one nice thing kind of things happen Keita people most of the time for joking around -- the end of either -- mumbling curses under their breath they're telling other friends about it and you actually go -- -- start this organization.
You're I think you're real estate agent correct me if I'm wrong but you yet they have put your job on hold you you and you're doing this.
Now and you've accomplished -- along the way.
Well actually we have a lot of accomplishments and the ability not still right now at all but it was in the last congress can show the person accomplishment was that we discovered that diverted and canceled flights that they didn't have to report to the government held on reach out on the tarmac we got it will -- -- with the Department of Transportation that is mandatory early.
Airlines now have to report the number of jets that -- on the tarmac it doesn't include international flights but.
It does include a large number of pledge not -- an example in June.
There were 278.
Flights in June got on the tarmac from three to nine hours.
Know -- hearing about it because there -- other things in the media that are more important I guess that he will need to be talking about that.
That's how many stranding happened in June -- the government statistics -- that doesn't even include the ones that work that we are not counting international flight show.
Basically what happens I got angry about our event and then started an infrastructure.
To the Internet -- That allowed us to gather signatures and -- happened six weeks after our event of the day.
And so our membership was at 121000 people like the end of jetBlue and are ahead -- in Washington DC three times lobbying which -- never done that or either.
And it's been exciting and very.
Even though I have given up my lifestyle I have given -- my incoming tire -- was appearing just the real estate broker.
Every day -- wake up and I'm excited about what I'm doing and we have bipartisan.
The real true bipartisanship working on this legislation in the senate and the house.
We just are built.
Voted through the commerce committee which was a huge step winner 83 hour maximum inning which is what everyone watch.
The hardest deal -- to get that because the airlines don't wanna.
Sure me happier -- he's having their -- out of that day yeah we were talking about how what he would do -- has situation this kid and we got in on the tarmac for very long and you we can pull in anywhere -- -- -- Sitting on the runway for about two hours.
And yet now it's in the public consciousness right that.
That you could be one of those planes at six for ten or twelve hours it could be huge you know it's it's -- it in the -- that on the plane what's your suggestion.
The people that find themselves stuck.
They don't really know what's gonna happen they don't want to overreact but they often don't want to under reactive -- their -- means they at this spend.
In ten hours on a plane with no water and -- kids -- -- -- so what ought to -- you know.
Honestly the very first thing that we tell people a lot of people call us from the plains while they're stuck.
And when that happens we're able to coach them and say okay here's the first thing you do take photos.
Get photos of the village get video of the baby's screaming children -- you're -- you know trying to get a refund from the airline you have improved.
And and always get a video so that we can buy it to the media and let the public to see what it's really like being stuck in these situations.
Second -- -- then we tell them that we will call the airport manager and the media over to the airport.
Deplores that airlines -- those passengers off and I only -- that passenger that calls have you kind of taking a poll of the general -- The other passengers are real frustrated do they want off.
-- -- out there here there at tipping point where they no longer want to fly and generally after three hours he answers yes no one really wants to continue.
All right so what are reasonable suggestions having repeat if you can what's in this bill that would be airlines would have to abide by I guess maybe the concern from their point of view is if you start -- only add to the delays to hear.
You make them shuttle people at -- -- if they have a little glad they don't know how long it's gonna last not have the stuff but.
What's reasonable because you can't you look -- something in place that did kind of both sides -- -- -- threatens.
I think we can all agree that three hours on a domestic flight if you're sitting on the ground for three hours that the long time yeah.
And outlook for most of our members they'd like it to peace order and England NPR did a survey give back that people wanting few hours not three.
Now the national surveys show three -- is really a middle ground -- we feel we've struck.
We've given up the maximum play of what people are really comfortable -- And by the -- Canada has already adopted a ninety minute standard.
-- on our air -- airlines have to follow that standard and they've got a built reading through their parliament right now one hour.
Minimum standards are maximum standard -- three out of his long time plus we get the Irish thirty minutes extra if he thinks he can take -- he really believes he can take -- He can say I'm not gonna you know do this optional the -- -- until the three and a half hour mark but at that point you have to give passengers the option to get -- Eight that lobby group -- airlines ATA want everyone to be afraid of this passenger bill right.
It keeps you might be delaying your flight might be canceled but let me tell you it's all -- -- Yeah -- has done studies there -- -- that government account.
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