it is the number one hurdle in this economic recovery and everyone knows it. this country has got to get people back to work. welcome to "your money." i'm ali velshi. the latest jobs report is excellent, period. here's the breakdown. in the month of january, we created 243,000 jobs. take a look at this. from january of last year all the way, we had great job creation for the first few months of last year. then it cratered in the summer. still not a lot of jobs but it cratered and we've been building back since then. now 243,000 jobs in january. where are those jobs? let me show you how it breaks down. of the 243,000 jobs that were created, 257,000 jobs were created in the private sector. that's where everybody wants them created. you subtract the jobs that were lost by the government, 14,000, and you end up with that number, 243,000. let's talk about this with diane swonk, a chief economist, and with will cain and my good friend, richard. what a treat to have all three of you with me in the studio. diane, these numbers are very strong. there's a disconnect between what some of our economic numbers and forks say and what the american consumer has been feeling. the american consumer has been telling us they have been feeling a little more energized about this economy and nothing helps them more than jobs. >> absolutely. this number is good and i want to underscore any way you cut the data, there's noise in it. we had people playing golf in chicago in january. that just doesn't happen in january. so there were some seasonal things. a lot of construction. even if you take all that out, it still is a good number. oh, thank god. you know, the only thing -- what you look at is where is the pain still. the pain is in the 42.5% that are still long-term unemployed. >> more than six months. >> five and a half million unchanged. so we're employing some people coming back into the labor force, maybe they're just graduating from college or deciding they're going to look for a job now. but the labor force did grow so people look for a job and got some jobs. we also are seeing in the breakdown of data, it looks like not shown in the overall data, but we're starting to see movement in small business creation and that's the backbone. new business formation. talking a lot of larger companies, they're not hiring out but they're starting to seed smaller companies for innovation. that's what you need to see for more sustained recovery. the world is not perfect. 8.3% unemployment rate -- >> still 50 million people still looking for jobs. still the problem of our time. even you have a hopeful view about this. you're sort of saying this is a long-term process, something that we all know but that the public demands faster results on. >> look, you'd have to be a partisan hack to spin that in the wrong direction. we're headed in the right direction. the most important number is that chart that shows growth over the long period of time. that being said, i think unemployment is unfairly or inappropriately treated as the economic scoreboard. there are so many other things going on, from private debt to gdp growth to indicate how people feel. and there are greater threats. from foreign policy issues like iran to china slowing down to the eu. these things will impact not only how the economy goes but how people vote. >> what a great way to get into our resident european. i will tell you, richard, there is even some theory, it's just been floated by a few people, that if our growth continues to be as strong as it is in the united states, rather than worrying about europe sucking america down again into another recession, it might be the other way, we might be able to help you folks out. how can we help you, richard? you need it. >> hey, hey, hey, one at a time, please, one at a time. look, i don't think you're going to be able to. i think with the euro zone and the european union being the second largest or the largest in the world -- >> we'll run with second largest. >> all right. there's nothing you can do about it because the problems in the euro zone are so deep and they threaten to get worse and they threaten to get worse before they get better. and, and before you all start beating up on me, your growth is fragile. >> absolutely. >> there's no depth to it. >> we're sitting here celebrating what should be 500, 800,000 jobs a month. the threshold is easy -- the hurdle is easy to clear now in terms of what we've been through and what's good. >> and i would love to see europe having those sort of numbers instead of what i know is going to be the story in q1 of this year, which is higher unemployment, 10.4% within the euro zone. the u.k. is going to get higher. >> let me show you something. let me go back to the wall if i can for just a second. when we look at the jobs report and we are trying to parse them and find things not great, one of the things we want to look at is where the jobs are. are they sustainable and are they broadly based. look at manufacturing. it's always a pleasure to see manufacturing numbers go up in the united states, because for about 15 years we saw them going down. in january, 50,000 manufacturing jobs added. leisure and hospitality, 44,000 jobs added. some of that has to do with, as you said, climate, some of it has to do with currencies and where people are traveling to the united states from. retail trade was up 10,500. health care jobs which have continued every single month even through the recession, we added health care jobs, 31,000. and mining jobs were up 10,000. these are just a sampling, but generally speaking it was broadly spread. the question you mentioned it in your first response, is this kind of stuff sustainable? >> that's what's interesting. some of the leisure stuff was seasonal, construction was seasonal. manufacturing, a lot of it auto related and machinery. the good news of that is there is some onshoring going on and we're actually building up machiny for that. also machinery for those mining jobs. natural gas, we need machinery for that. automakers are opening idle plants. retail trade, one of the biggest increases, automotive. auto dealers. >> we saw december, we saw record sales for automakers. >> well, not record. >> not record. >> we're back to the recovery level. >> and you're from detroit originally and you live in the midwest. when we talk about jobs the same way we talk about autos, we're not talking about records necessarily, we're talking about the new realities around them. so they weren't records, they were great numbers for this world in which we live. >> and some of the manufacturing jobs, some of that is catchup and some of it is really fundamental. that's good news. but there was a seasonal component to some of the other things. still a good number. still would love to see more. my forecast for the year, it's only 2.25%, i'm probably going to be marking it up. i'd love to eat crow but i haven't killed a bird yet. >> will. >> sir. >> we don't want to go -- there's enough politics on tv that you can watch and you are a great contributor to it, but if i were a republican -- >> there's too much politics on tv. >> how would i deal with this? this is really messing up my narrative. let me add something to this. if this pace of jobs creation continues, president obama will recover every job that was lost under his presidency by election day. >> okay. so here's the deal. i've told you over and over, i don't think the focus should be on jobs, i think it should be on debt. i don't mean federal government debt, i mean private market debt. to extend our battle across the pond, we're headed in the right direction on debt. these guys are headed in the wrong direction. >> whoa, whoa, whoa. no. >> your debt is through the charts. >> how can you say -- >> we are a highly indebted economy. deleveraging is not nearly as far along. >> what about these guys? >> so i'm on the titanic and you're on -- >> the disaster that killed 800 people. so the debt situation is still very bad. the political uncertainty, the inability to make -- we've got the end of year is enormous and we've got major drag on growth. >> agreed. >> because of that. >> hold that thought. very good distinction to make, by the way, between debt as all of us have come to talk about it, which is not the debt you're talking about. you're talking about people's debt, household debt, the degree we are indebted as individuals. stay right where you are. richard, great to see you here. that's a great tie. we'll talk about that when we come back. will cain and diane swonk. it happens to be my tie he's wearing. americans want this economy fixed and they are ready to hit the ballot box. is your vote going to make any difference and what's going to make you vote one way or the other when we come back. this was the gulf's best tourism season in years. all because so many people wanted to visit us... in louisiana. they came to see us in florida... nice try, they came to hang out with us in alabama... once folks heard mississippi had the welcome sign out, they couldn't wait to get here. this year was great but next year's gonna be even better. and anyone who knows the gulf knows that winter is primetime fun time. the sun's out and the water's beautiful. you can go deep sea fishing for amberjack, grouper and mackerel. our golf courses are open. our bed and breakfast have special rates. and migrating waterfowl from all over make this a bird watcher's paradise. so if you missed it earlier this year, come on down. if you've already been here come on back... to mississippi... florida... louisiana... alabama. the gulf's america's get-a-way spot no matter where you go. so come on down and help make 2012 an even better year for tourism on the gulf. brought to you by bp and all of us who call the gulf home. two parties, one promise. whether you end up voting for president obama or the eventual republican nominee action both sides claim they have what it takes to fix the u.s. economy. but the director of the congressional budget office warned this week that despite all this optimism, america is many years away from an economy that's hitting on all cylinders. >> we expect economic activity to quicken after 2013, but will gdp to remain below the economy's potential through 2017. >> will, first of all, we don't usually have him on our show. he's a good guy and he makes a very important point. as excited as we are, and it's legitimate to be excited about some of these numbers, bottom line is we are still well away from a real recovery and most thinking economists have told us that. >> that's right. >> there are unthinking economists? i hope i don't resemble that comment. >> they will tell you that it doesn't really have all that much to do with who wins in november. >> but it can have an effect. the historical averages on a credit bubble recession, when you've built up large amounts of debt, it's like seven years. if that's true, we're following that model, we're three to four years into a seven-year process. meaning expect three more years of slow growth out of this thing. how will your vote actually impact that? let me say this. short term, not a lot of things that can be done. i do believe and this is going to sound cliche, but conservatives believe in the principle of certainty. certainty on taxes. shouldn't have spent time working on health care, carbon trading, taxes. these things are distractions. long term i trust conservatives but i don't want to overstate the short term things. politicians have limited control over. >> the one issue we've got is whether or not europe will mess things up for us. as you have observed astutely in your covering of this, it is -- talk about slow. we may be four years into a seven-year recovery, but europe seems to be taking four years about making a decision of what to do. >> we are going backwards. i always find it very dangerous to argue with somebody that might have a philosophical point of view, as my friend on the left does. no, my physical left, my physical left. but the battle that is now raging in europe between those that believe in full throttle austerity, to squeeze the countries, probably portugal next and ireland and spain and the u.k., versus those who are pushing really hard for it, versus those who now believe there should be some form of growth. the problem is it's all talk and not much action. the risk is still very real, and that's why the ecb basically lent half a trillion last time and it will do up to a trillion next time. >> diane, i saw you tweeting the other day when ben bernanke was talking about ben bernanke, which is why -- let's listen to this because he conceded this week that the recovery has been frustratingly slow, particularly on thissish you have getting people back to work. >> nevertheless as shown by indicators like the rate of unemployment and ratio of employment to population, we still have a long way to go before the labor market can be said to be operating normally. >> you say you stay away from the politics w no politicians in the room, there was a hint in a number of things ben bernanke said that in fact politics and policy are getting entintertwin. politics are messing up the ability to fix this economy. >> it gets back to something will said. when i talk to audiences, i say i don't care who you vote for, vote for someone who's going to be willing -- i always thought a good politician is someone that wouldn't be my best friend because they'd be willing to compromise their own personal ideologies for the good of a whole to come to a deliberate decision. >> it wouldn't be partisan to say that that seems to have gone out the window. >> on both sides. >> on both sides. >> and that's the problem. we need to vote for people who are willing to make decisions for the certainty going forward on the tax code. i think some major reforms need to be made in the tax code that could eventually be more pro growth. >> totally agree on that. >> long-term changes to entitlements that still protect enough people but people like me, i don't need a lot of those entitlements and i'm fine without them. so there needs to be some major changes. some of them tweaking, some of them major changes, and thehey n be made over a period of time. make the decisions now. why do we want to wait until we're in europe's situation where we're forced to make changes by financial markets that are draconian. >> being forced into a corner doesn't help you make changes faster. will, is there any chance, because you are a political commentator with a philosophical perspective, is there any way that any of the parties at this point can decide they're going to take this sensible approach, because that's the approach that would really help, wouldn't it? if diane were running, i would vote for her. >> neither party could contain me, by the way. >> the answer to your question is no. by the way, neither party has the monopoly on the things that are needed. >> but if you go with diane's idea that you elect people who are not so attached to their ideology that the other party has the better idea, you can support that. that used to happen in american politics. >> but let's not all dump on ideology. ideology gives you long-term perspective and allows you to think about where this should be in 10 to 20 years. i think we're in emergency circumstances right now. we're doing things that we think shouldn't be done for the long term. that's why i'm very honest about my political perspective. i think conservatives have a longer term perspective that is better. they don't have infrastructure, democrats are better at that, but these are the ideas i think we should be talking about. >> you always have a welcome place to talk about them on this show. we enjoy having you on here. diane, what a pleasure to see you here. you are always welcome as well. richard, you're not only welcome, you can't leave. we need you back after the break, so to you, stay there. the middle class, we've discussed this, the middle class in this country is in trouble. what some solutions the middle class can count on now and in the future. that's next on "your money." whwhatat's's i it t lilikeke d e fufusisionon h hybybri? yoyou u cacan n rereadad e evet isis o opeperaratitingng b by ya bubuttttonon.. itit's's l likike e drdrivivin. whwhatat w wououldld b be e thtg fofor r yoyou u toto g gi? ththe e mimileles s peper r gag. whwhenen y youou'r're e ususeder cacar r upup o oncnce e a, ththenen s sududdedenlnly y one weweekeks,s, bebelilieveve e meme i it'tg didiffffererenencece g go. oh, yeah? [ chris ] you can call us 24-7, get quotes online, start a claim with our smartphone app. you name it, we're here, anytime, anywhere, any way you want it. that's the way i need it. any way you want it. [ man ] all night? all night. every night? any way you want it. that's the way i need it. we just had ourselves a little journey moment there. yep. [ man ] saw 'em in '83 in fresno. place was crawling with chicks. i got to go. ♪ any way you want it ♪ that's the way you need it ♪ any way you want it ♪ have more fiber than other leading brands. they're the better way to enjoy your fiber. it's no secret the middle class in this country is struggling. in morris county, new jersey, one of the nation's wealthiest counties, one family of five went from making six figures to living together in one small room in someone else's house. cnn money's poppy harlow has the story. >> reporter: one room now home to a family of five. >> the two girls sleep on the bottom. and then our oldest sleeps on the top. >> reporter: mom and dad somehow manage to sleep together on the couch. >> most of the time honestly i lay on top of him. >> reporter: if you think you know what long-term unemployment can look like, think again. >> you can't understand something until you've lived it. >> reporter: adam and talia brought in more than $100,000 just two years ago, by all measures middle class, until they were both laid off. frightening new numbers show 50% of the unemployed in new jersey have been out of work for more than six months, and it's a similar story elsewhere. >> i was a lead technician for comcast. >> you had it made? >> yeah, i had it made. >> i was customer service rep. >> reporter: what's the hardest element of this situation that you think people might not know? >> it's definitely not financial. it's emotional. if you're not strong people, it could break you. >> reporter: their unemployment checks have run out and they have exhausted their savings. >> the only benefits we get right now is assistance with the food. >> reporter: human services of morris county, new jersey, where they live has seen their food stamp caseload surge 140% since 2007. >> the duly unemployed families is unusual for us. >> reporter: so the bottom is falling out of the middle class. >> i believe that. >> reporter: have you seen something like this before? >> no, not like this, never. and i've been here since 1980. >> reporter: this is one of the wealthiest counties in america, where the median household brings in over $91,000 a year. but when you can't find a job here, you can't get by. >> you send out a lot of resumes and pray to god someone goes back to you. >> reporter: 500 resumes later, nobody has offered her a job. >> how long do you think you can go on like this? >> honestly not very much longer. >> what's up with you? >> reporter: afternoons are spent at grandma's with their three kids. then it's back to laura sullivan's house where they're living rent-free. she took them in after knowing the mobleys less than a year. >> people ask why would you take someone in and you have no privacy. i'm like honestly, you want to compare my privacy to a family not having a home? like is there any comparison? >> reporter: it's far from ideal, but when you've been out of work this long, there's no room for ideal. and, ali, just to let you know, just the kicker in all of this, the wife there, talia, she went back to school after she lost her job. she retrained as a certified medical assistant because she heard, like we all do, that the jobs are in health care. she still hasn't gotten a job. she did have a second round interview, waiting to hear back on that one. her husband, in the meantime, started his own t-shirt company with his brother trying to do something, but no funding to get it off the ground. >> good point. right. so they have hit on two other problems, retraining into health care is useful, but the jobs aren't evenly distributed around the country. and starting a business, this may be one of the best times to start a business, but the availability of funding or credit is a problem. this sounds like an extreme situation. how common do you think this is? >> reporter: well, talia said we're not the only ones going through this. a lot of my friends are going through this. if you dig into the numbers, even in the very good jobs report that we got on friday, they're not really any better for the long-term unemployed. you have five and a half million americans out of work six months or longer. it's about 43% of the unemployed. and it was little changed in this jobs report, even though a lot of the other numbers are significantly better. that's a big area of concern. >> it does seem to show some prejudice against hiring the long-term unemployed. all right, poppy, thanks very much for that. we want to move into solutions now. what can be done right now for families like the mobleys who are slipping out of the middle class. i want to bring in christine romans, and don peck, a features editor at the atlantic and the author of "pinched, how the great recession has narrowed our futures and what we can do about it." that's exactly what we want to talk about. christine, let's start with you. what is the best solution you've heard for helping these folks get back to work as soon as possible? >> so far it's been mostly people themselves figuring out what their solution has been and mostly unemployment benefits, food stamps and like that family lots of different things that they're trying to rely on. we talk about a safety net. there's a lot of talk about a safety net or a trampoline. what are we going to do for the long-term unemployed. we need to be focusing our national strategy and all of our resources on turning a safety net into a trampoline. revamping our retraining programs and figuring out how to connect, ali, the people who say they need a job with the companies to say for some reason they can't find qualified workers m there's a disconnect there. >> there's a mismatch and a disconnect. connecting them still won't solve it because they're not trained for the right job. don, you think that the best solution for the americans currently unemployed could actually come from germany? >> i do. you know, when you look at the u.s. economy, it's incredibly dynamic. we lose maybe 2 or 300,000 jobs each month and gain 400 or 500,000 jobs each month. what germany has been doing since the crisis has been a short work program, which encourages employers not to fire workers, but rather to put them on part-time with the government making up a large part of the difference. if we could do that right now and reduce some of those job losses that we're still seeing every month, it would reduce the queue for the unemployed and allow people like the mobleys to get back into jobs faster because they would be competing with fewer people who are newly unemployed. >> but don, doesn't that suggest that companies would have to say that they're in partnership with the government or that there's some sense that they hold some responsibility for helping solve this problem, even if they're not to blame for getting us into it? that sort of partnership doesn't really exist here. >> well, it doesn't really, but circumstances i think call for it. and we're not really asking for companies to do something that would be in any way against their interests. we're just really giving them an alternative. instead of firing one worker, put two on part-time work. that's really in companies' interest because it's costly to lay people off. it's costly when the economy picks up to find new workers and train them. so by keeping more people in work now, not only would we be helping the unemployed, we'd help businesses be more efficient. >> do you remember this conversation years ago when we said maybe the banks should work harder to keep people in their homes because it's a lot easier than having empty homes trying to sell. let's be forward thinking about this. we've talked about immediate solutions for people struggling to stay in the middle class. what about the long term. both of my guests have excellent ideas for protecting and rebuilding the middle class for the long term, something we don't think enough about. that's next on "your money. " ♪ side by side, one, two, three ♪ ♪ count the birds in the big old tree ♪ ♪ la la la [ male announcer ] the inspiring story of how a shipping giant can befriend a forest may seem like the stuff of fairy tales. ♪ ♪ you and me and the big old tree side by side ♪ but if you take away the faces on the trees... take away the pixie dust. take away the singing animals, and the charming outfits. take away the sprites, and the storybook narrator... [ man ] you're left with more electric trucks. more recycled shipping materials... and a growing number of lower emissions planes... which still makes for a pretty enchanted tale. ♪ la la la whoops, forgot one... [ male announcer ] sustainable solutions. fedex. solutions that matter. in your breakfast cereal, what is? now, in every box of general mills big g cereal, there's more whole grain than any other ingredient. that's why it's listed first. get more whole grain than any other ingredient... just look for the white check. get more whole grain than any other ingredient... when bp made a commitment to the gulf, we knew it would take time, but we were determined to see it through. today, while our work continues, i want to update you on the progress: bp has set aside 20 billion dollars to fund economic and environmental recovery. we're paying for all spill- related clean-up costs. and we've established a 500 million dollar fund so independent scientists can study the gulf's wildlife and environment for ten years. thousands of environmental samples from across the gulf have been analyzed by independent labs under the direction of the us coast guard. i'm glad to report all beaches and waters are open for everyone to enjoy. and the economy is showing progress with many areas on the gulf coast having their best tourism seasons in years. i was born here, i'm still here and so is bp. we're committed to the gulf for everyone who loves it, and everyone who calls it home. take the privileged investing tools of wall street and make them simple, intuitive, and available to all. distill all that data. make information instinctual, visual. introducing trade architect, td ameritrade's empowering web-based trading platform. take control of your portfolio today. trade commission-free for 60 days, and we'll throw in up $600 when you open an account. welcome back to "your money." how do we protect and strengthen the american middle class. since 2008 americans have collected more than $434 billion in unemployment benefits. christine, you made the point that unemployment benefits are just one of the things helping prop up the middle class. we've got food stamps, programs to help underwater homeowners, just a few. this is designed to be emergency assistance, not long-term assistance. so what do we do for the long term? >> well, that's a good question. right now it might -- you might want to keep that kind of assistance going on forever, but the political conversation is much, much different of the and, you know, the fiscal situation of the country is much, much different. what we need to do is recognize that you've got people falling out of the middle class and we have to redesign how we're spending money -- >> why does it matter? let's be clear on this. it matters to keep people in the middle class because the middle class is our tax base. >> they're paying taxes, funding your schools, buying your products. earlier this week my producer had a conversation with a ceo who told us the news media is talking down the jobs market. 92% of americans are working if you take the unemployment rate. >> i've heard this so many times. it's a highly uninformed way of looking at it. >> and i have steam coming out of my ears. 58.5% of the working age population is working. 58.5%. even on friday when you saw the jobless rate get better, this number did not get better. >> put this into perspective. it was 1983 when it was last this low. >> 1983 really hurt and took the american middle class a long time to come back. manufacturing helped the american middle class come back after 1983, so we need to have a national strategy and decide in a very bipartisan way how we're going to spend this money so we have, again, a trampoline for the middle class to get into it and to stay into it so that we're really focused on keeping people there because it's good for the country. >> it's just a good lesson to remember. tell everybody you know that 8.3% unemployment doesn't mean that 91% of the population is employed. don, you think in order to protect and rebuild the middle class over the long term, our education system needs to build our students' work skills rather than simply teach academic subjects. what do you mean by that? >> well, i mean of course we should continue to promote college access and four-year college degrees. that is the best ticket into the middle class. but you know when you look at young people today, even among young people, only 30% of people have a college degree. i think we need to recognize that number has been growing only very slowly. so when you're talking about the middle class, in reality you're usually talking about people who lack a college degree. and for those people, i think starting in high school we need to offer them apprenticeships, part-time apprenticeships, role models and a real sense of what jobs are out there, what's available to them in manufacturing, in health care, and what it takes to get there. you know, if you talk to machinists, for instance, in south carolina, making fuel injectors, machine operators need to know calculus. they need to know computer languages. and by creating apprenticeship programs in high school, by doing some applied skill learning in high school, we can motivate learning for more americans who might recognize that a four-year college might not be right for them. it gives them skills and a career path from high school. >> but we need those students in high school and as they enter college to have had this discussion. and one of the guests i had last week argued we don't have all the data about how much you'll earn when you graduate, no matter what you do is out there and yet we encourage people to study things at sometimes $17,000, up to 39 or $40,000 a year, depending whether you're in state, public or at a private university. >> and we get them there unprepared. i think that this discussion should start even before kindergarten. i mean we talk about k through 12 education in this country but even some of the people on the president's job council are saying that's not the right model for education. by the time a kid is 5 years old, if a kid is not in the middle class, if he is socioeconomically suffering, they're already behind. so this great equalizer of american public education doesn't help them. now you're seeing a worker who's going to have that much more trouble being in the middle class from then on. >> every day i thank my lucky stars i'm not christine's kid. you did point out, however, this is a very interesting statistic and i need you to help me understand what it means. of every dollar of income earned in the united states in the third quarter of 2011, the last three months of 2011, every dollar of income that was earned, just 44 cents went to workers' wages and salaries, making it the smallest share since the government began tracking this in 1947. what does that mean? >> what it tells us is that the american worker has the smallest share ever of the economic pie, and that is shrinking. so as the economy even is starting to grow -- look, the economy has recovered to its pre-bubble -- you know, it's prerecession levels but the american worker hasn't. what is that disconnect. what are we doing to make sure the american worker shares. companies aren't american companies anymore, they're multi national companies, they're global companies. they're focusing on profit growth else wrchlt so what are we doing to make sure that the american worker is still enjoying the benefits of a growing american economy. >> great conversation. christine, as always, thanks very much. you can watch christine on "your bottom line" saturday mornings at 9:30 a.m. eastern. and remember to follow her on twitter. don, thanks very much. great article really worth the read. don is a features editor at the "atlantic" and also the author of "pinched, how the great recession has narrowed our futures and what we can do about it" but he's written about this particular issue in the "atlantic." long and worth your time. so many questions about the facebook ipo. we'll answer some next on "your money." ♪ my sunglasses. [ tires screech ] ♪ oh, it was the first time i fell in love ♪ ♪ the first time i felt my heart ♪ [ man ] people say i'm forgetful. [ horn honking ] ♪ ...all through the night [ man ] maybe that's why we go to so many memorable places. ♪ [ male announcer ] the subaru outback. love the road you're on. oh, there's a prize, all right. [ male announcer ] inside every box of cheerios are those great-tasting little o's made from carefully selected oats that can help lower cholesterol. is it a superhero? kinda. ♪ it was one of the most expensive status updates ever this week. facebook filed for its $5 billion ipo. the social media giant generated $3.71 billion in revenue last year. with you, me and the roughly 845 million users the site has, will facebook going public make it a revolutionary stock or one that just might start out overpriced? matt mccall the president of penn financial group back with us, richard quest. questio gentlemen, welcome. for all the stuff on whether you like facebook and whether they have to advertise more, the question most people ask me on twitter and in person is how much will the stock cost and am i going to make money. they had $3.7 billion in sales last year, 845 million active users. what's it going to cost you on day one. it could cost as little as $30 a share. that is not going to be likely. some of the better guesses are $45 to $50, taking into account all of the hype. what are we comparing this to? let's compare it to google for a second and you can take exception to that because some people have been calling it zynga or groupon or yahoo!. what happened to google in its first year? it priced at $85, closed above $100 on its first day and closed at $280 a year later, but even on day one, you had people, including me, saying this is expensive. this is a different paradigm, matt. i wonder whether we shouldn't be thinking of facebook as a google. >> you know, if you're going to compare it to anything, i think you have to pick google, that's probably the closest competitor. you're looking at 27 times revenue last year versus google trades at five times. so you're over five times overvalued than google. >> and people that look at price to earnings, it's at 55 to about 100. >> it would be 100 versus -- >> 20. >> so again five times overvalue of google. but it does have the hype and the hype can keep a stock valued that high for a short term. >> what do you say, richard? >> i'm going out on a limb here. it may well be compared to a google, but facebook is not google. google has become the modern day equivalent of the phone book. facebook is not the modern day equivalent of anything in that sense. >> but that's good. isn't that good? >> no, because google is unlikely to suddenly have the fad element. i had a great analyst say once the moment your parents start using facebook, that's when the kids go in the opposite direction. >> let me hit you with this, richard. this is interesting. mark zuckerberg, the founder, put out a letter when the ipo is announced and in it he said this which i cannot read with a straight face. quote, it was built to accomplish a social mission, to make the world more open and connected. we think it's important that everyone who invests in facebook understands what this mission means to us, how we make decisions and why we do the things we do. it went on to say things like that. he'd like you to think that facebook is all about opening up the world. and i don't object to that. i also don't object to the fact that it is a business. and quite likely a very lucrative business. the question is should you invest in it? >> and when you look at the numbers underneath the ipo, it's not that much of a remarkable business. nearly a billion users, 800 million, the revenues are not that high, they're growing. other than that, the metrics of this company are not that extraordinary. >> more than half their users use facebook on a mobile device. when you're saying it's not that profitable, my view is this company hasn't started hitting the gas pedal yet. >> no, there are opportunities and it's going to be all about mobile. everybody has everything on their phone and five years from now everything will be mobile. if they can monetize that and like richard said, somebody may jump in whether them and take this over and then where is the revenue going. >> or something else comes along. come back to this idea, i think it's an argument to look at it as being google. we use google every moment of every day as part of our everyday life in our work action whatever. >> but think of google when it originally came out. it was basically just a search engine. >> there were other search engines. >> so facebook has built a better whatever it is. >> yeah, but it's not essential. >> what about china, you cover the rest of the world, what about china. facebook isn't in china. there's a competitor that has about 200 million users versus 847 million users. facebook has made lots of noise that it wants to be in china. does that change the game? >> not really, no. it will just get bigger proportionally, but no, it doesn't change my fundamental point. at some point, a rival to facebook will come along and that's where the risk is. >> plus, when you look at facebook, the majority of their revenue comes from just ad revenue, which grew 44% last quarter. >> but it is highly specific. it knows everything about you. it knows what i want, how tall i am. >> myspace, myspace. exactly. you fell for it. >> it is not myspace, ignore that. i ask the jury to ignore that comment. matt, on twitter i asked the folks following me to send us comments on facebook and twitter, facebook included, on their questions on the ipo. one asks should small, meaning private, noninstitutional investors, regular people, for instance, try to get in early or is the deck too stacked against us? >> let me give you the second one because they're related. what's my chance -- this is from at go hoke. what's my chance are buying a share on the first day. your chance is excellent. >> you can buy one shaeriff you want. a lot of the other social networking ipos, that first day will be crazy. everybody is buying it. two weeks later, once they realize, wow, this is valued six times probably at that point more than google, we're going to sell into it and big money will sell into it. you'll be stuck holding a share that you may not hit that level for another year or two. >> i have made my entire career and keeping this on my back by not predicting. >> very good. you all are terrific, thank you. you look like a million bucks, as always, matt. richard, you are looking splendid in that tie of mine. are you leaving it or taking it? >> no, you can have it because you admire it so much. >> it was on the back of my office door. on this show we are constantly looking for innovative solutions to america's greatest challenges. why our next guest says you shouldn't be surprised if those solutions come from students who have yet to earn a college diploma. we'll explain next. this is an rc robotic claw. my high school science teacher made me what i am today. our science teacher helped us build it. ♪ now i'm a geologist at chevron, and i get to help science teachers. it has four servo motors and a wireless microcontroller. over the last three years we've put nearly 100 million dollars into american education. that's thousands of kids learning to love science. ♪ isn't that cool? and that's pretty cool. ♪ and who ordered the yummy cereal? yummy. [ woman ] lower cholesterol. [ man 2 ] yummy. i got that wrong didn't i? [ male announcer ] want great taste and whole grain oats that can help lower cholesterol? honey nut cheerios. it's time for the big fix. we take a look at a problem facing america and break down solutions. over the past few weeks we heard some of the biggest names in business offer solutions to problems that affect each and every one of us every day. you may not have heard of my next guest. we want to introduce you to ancur jane. he helps entrepreneurs you turn ideas into business that's tackle the world's most pressing issues, not issues you would normally associate with students. it's called the cairo society. they put the most promising student entrepreneurs from around the world in contact with global business leaders. thank you for joining us. you have a gathering this weekend in new york city of some of these people. what's your thinking? what do you think these group of students can do that hasn't already been tackled? >> yes. right now we have a unique opportunity with the next generation of entrepreneurs. this generation is not only more interconnected than any previous one, but they're able to look at problems from new angles and new ways. so we take the brightest talent. you have to look at the cross disciplinary approach. we say how can we look at health care in a way that hasn't been look at before? >> right. >> can we take the ai knowledge that our students in china are learning about and combine that with some of the mechanical iphone applications that are being built in silicon valley? we can create a platform that can diagnose patients. when you bring the students together and focus them on specific problem spaces, that's what we're doing this weekend. >> what do you do? do you open it up to them to determine the biggest problems out there to be solved are? >> it's a combination. we have gone out. if we can focus the world's most influential young entrepreneurs, what would that be? we came up with 10 spaces. 40% of health care diagnosics are incorrect these days. education today is not personalized to the individual. it's tailored to the masses. take the specific problems and now take the students, put them if a room not only with their peers but with leaders to have day. so we can take the wisdom of what's happening today and merge that with a new way of thinking. >> what's the benefit? i know you're not a great person to observe it. you're young and smart yourself. you don't have the ability to say why does this group of students, why are they able to look at it from a different angle or look at the same house rather than going through the front door through a side door or window? it is just the nature of the young entrepreneurs that they don't look at things the same way? >> one is a generational thing. when you're younger, you don't have the experience to tell what you hasn't worked in the past. you can look at thins in totally new ways. if you look at the x provides foun tag, it's people that had never been in the oil industry and they developed the world's best solutions for oil cleanups. you take a totally different approach. >> they tripled the industry standard of cleaning oil out of water. >> unbelievable. you're seeing 21-year-olds saying why are we treating kans we are these images? why can't we take them to individual cancer cells to determine awhat type of cancer they have. >> so they're not invested in whatever system is not working as efficiently. we really admire you're doing. this we're focused on big fixes and new takes on it. you're doing that. i look forward to coming down and joining you for a little while and listening to the great entrepreneurs. >> definitely think of me. as you celebrate the entrepreneurs, cairo is 50 this year. it is really promoting and showcasing how the young entrepreneurs are specifically solving the world's biggest problems. thank you. >> he is the founder of the cairo society. the whole segment you have seen the words big fix all over the screen. i'm going to explain why we're doing this and how can you participate in it. my xyz is next on "your money." i love that my daughter's part fish. but when she got asthma, all i could do was worry ! specialists, lots of doctors, lots of advice... and my hands were full. i couldn't sort through it all. with unitedhealthcare, it's different. we have access to great specialists, and our pediatrician gets all the information. everyone works as a team. and i only need to talk to one person about her care. we're more than 78,000 people looking out for 70 million americans. that's health in numbers. unitedhealthcare. and they make my life just perfect. we were having too much fun, we weren't thinking about a will at that time. we were in denial. that's right. [ laughter ] we like our freedoms, but at the same time we have responsibilities to the kids and ourselves. we're the vargos and we created our wills on legalzoom. finally. [ laughter ] [ shapiro ] we created legalzoom to help you take care of the ones you love. go to legalzoom.com today and complete your will in minutes. at legalzoom.com, we put the law on your side. at meineke i have options... like oil changes starting at $19.95. my money. my choice. my meineke. time now for the xyz. there is a change in the works here at "your money." i have grown tired of the discussion that's dominate political discourse and by extension, media coverage of it. instead, i want to offer you highly informed conversations between people who have worked hard to study or develop solutions. we need to think big. less than a month ago, we sat here in the studio and said we have o find a way to get the role of government to be pro growth, pro middle class by investing in science, technology and education. he said you can't cut your way to a new generation of prosperity. mort zuckerman lamented the mismatch between the number of people coming out looking for jobs and the qualifications that those people need for jobs. going forward, we're going to discuss new ways of looking at the same old problems. it's not enough to say we want to create jobs and better education. there are specific things we can do to achieve these goals. and they are what i will be talking about. we have in the last few years become unsure of ourselves as a society and in some case as individuals. even as indications seem to show that we're heading into some sort of economic recovery. it's as if americans have stopped believing that hard work and drive can lead us to prosperity and a better future for our children. look, we know what the problems are. we're looking for solutions. i'd like to know your biggest concerns and the best solutions you heard. if i could do one good thing in this year of half baked ideas being pitched to earn your vote, it's to