Transcripts For CNNW Your Money 20120512

collaborative fund, an early facebook investor. all right. so there are four kinds of investors viewing for a cut of this ipo. early stage investors like craig, they got involved a long time ago. institutional investors, the people who will buy it before it goes public, high net worth retail investors, relatively rich people who trade often, and then there's everybody else, the average joe retail investor. that's likely most of you out there. starting with ned i want to go one at a time. ned, good to see you, my friend. we'll talk later about whether one should or shouldn't buy this. what do you think a retail investor who gets opt their trading platform at 9:00 on friday will be likely to pay for facebook when it opens? >> you know, you said $90 a share, i said a 50% premium. this is one of those situations depends how much stock -- by the way, craig, i want to congratulate you. this is incredible. you must be waiting for next friday. as a retail investor i wouldn't approach the stock on friday or the next monday, tuesday, or wednesday. i wouldn't go near it. would not go near it. >> you think $50 bucks somebody gets it, 50% premium? >> 50, $60, $6 billion in flow. that's what's it's going to trade. i wouldn't be surprised trades three times in the day. >> ned sis 60, do you buy it on the first day. ned says no. ned, what do you think that does in a year? take a guess. where do you think it goes? >> i think it will be lower? i think it will be lower than the highest price we see next friday. without going into the fundamentals, it's just another new kid on the block that eventually will burn investors and the prices and new offerings and ipos are absolutely ludicrous. look at linked in and the others. they are selling a little higher than the original but a lot haven't. if you look at the history of ipos, it's not been a good bet to go out and buy particularly in the opening day. >> interesting conversation, ned. you and i don't usually talk about stocks you don't like too much. come into this discussion. what do you think it opens at. what do you think somebody gets to buy the stock at at 9:00 on friday. >> i think more in the 70, 75 range when it opens. i think it's going to trade somewhere in that neighborhood all day, maybe it ticks up from there. i have to agree with ned, that's a tough to buy on the first trading day. >> no on one as well. where in a year? i remind viewers, google was almost double, triple a year from the date. >> that's a good question. it's going to depend on a couple of factors. the two factors i'm going to look at. how are they going to monetize the business. everyone knows it's a cool company, the subscribers, what are the market conditions. if the market is doing well, monetize, sell ad revenue, i think the stock can go higher electric there. >> your guess is higher under normal conditions. a good point, markets do have something to do with this. it may not be just about facebook. craig, you're one of the early stage investors, venture capitalist, you get involved in startup companies, some which do very well, return your money, some don't do well. you're hoping for the big one. what do you think somebody buys it out on friday. >> in it's going to come out strong on the gate, my hunch is $48, 50, i'm not sure it's going to shoot up. the valuation, even where it's pricing at, it's fairly rich, but i think it's warranted. >> so ask you the question whether one should buy or not is a tricky question. you were an early investor. you've got facebook stock. if you weren't you and it came out at 50 bucks, would you put an order in. >> to clarify, i would buy regardless on day one. in fact, i learned a lesson with google's ipo, it felt rich coming out in the '80s. i thought, you know, i'm going to hold off. >> your general view -- this is a key point for our viewers. you may still be able to invest in the stock. it may not be important you invest at 9:00 on day one. >> absolutely. absolutely. >> did you say you would -- you said it felt rich. you're saying you would or wouldn't buy on day one. >> i would buy on day one. >> let's change that to a yes. there we go. all right. i would say the answer to that suggests that in a year you think the stock is going to be higher than it should be, that it came out at. >> yes. i think for sure over the long hall, they are a team to bet on. the executive team there and touching nearly a billion people is extremely powerful. and he's absolutely right, if they can figure out how to monetize that effectively, there's a lot of room to grow. >> you and ned and craig all have reasons why you think this, so when you see the tweets i get, e-mails i get, seems like people are gambling. i hear people saying should i cash out this and buy a whole bunch of stock. how do you as a retail investor, my viewer, calculate whether it's a fairly priced stock and how much you should put into it of your portfolio. >> i think it's back to the individual investor, how much risk in the portfolio. for me and my clients, i deal with a retail population that's rather conservative. i'm going to have to see a couple good quarters of earnings growth. and then to continue that earnings. again, as i mentioned earlier, if you can monetize, it's a great company. i would agree with the last speaker, their team is as good as any team out there. google obviously is doing it. i owned google and apple for clients in portfolios. i would love to own facebook and will own facebook if, in fact, they can monetize it. the valuation side i get, the reality is a lot of momentum. social media is here to stay. again, if they can monetize this thing, it's going to be a really good investment, long-term portfolios should own it, if, in fact, we see earnings growth. >> ned, final question to you. you're not hot on the ipo, tech ipo concept. if at some point it settles, you wouldn't buy it friday or monday or tuesday or wednesday. is there some point you might think this is a good stock to get into? >> i'd like to see a little optimistic about the switch to mobile. when they come out and amend and say looks it, it's hurting us already without conversations, i get a little nervous. they are telling you all at the outset maybe the earnings aren't going to be good. i'm paying 100 times earnings. i don't know what the heck i'm going to pay for it. what does bother me, i have been a part of so many stocks that had great potential, 1999 and 1998, and went to the ashes. there was no phoenix rising from a lot of those stocks. i'm not saying facebook isn't the greatest novel idea in the world, a billion subscribers. that opens up the competition out there. you had the linked ins and other internet companies. there's no barrier to entrance. facebook is there. they did a great job. i'm not knocking them for that. the competition is going to be intense going forward. making money, you guys are right. monetization of the product is going to be really phenomenal. i don't know how they are going to do it if they don't know how they are going to do it now. >> craig, answer those questions. everybody going mobile, everything happening on your device. it's tougher for facebook to get the advertising that's relevant onto a phone. >> two things have me optimistic. i see the cap table of a lot of startup companies. mark zuckerberg's name is never on a cap table. that's unlike virtually any other executive founder certainly in silicon valley. it shows me that he's laser focused on growing this business. and the second is, you know, i read yesterday about mark's influence in bing's redesign, integrating social into the search. he participates in the hackathons on facebook. it shows me he understands the product and where it's going. very different from yahoo! and other businesses that are available to investors. >> craig, thank you so much. it's interesting to me the one -- go ahead, ned. >> one comment. craig, i don't know if you were there or not. i know another inventor, and i would call mark an inventor. another inventor many years ago got laser vision on one particular product and drove the company right into the ground. that was something called dr. lamb back in polaroid when he came back with a polaroid camera. amazingly he's right. he drove that company into the ground because he spent so much on the product and couldn't make it work. >> interesting the guy invested in this, craig, thinks it will come out at the lowest price. here is what you've got, 60, 57, 50. last week matt mccall saying you may not get it for less than 90 or day one. ned and nadav say don't buy it if you're a retail investor on day one, craig says lower the first day. the two others say yes. good information, good discussion. you still have to make your own decision whether you put your money into the stock. guys, thanks very much. i appreciate it. coming up later in the show mark zuckerberg courts wall street billions and does it in the hoodie. is it a sign of the times or immaturity? up next four years since financial crisis, wall street betting bigger than ever. it seems the lessons were not learned. no one better qualified to answer that question than my next guest. sheila bair is credited with saving the banks during the financial crisis. you're watching "your $$$$$" on cnn. rewards you with savings just for getting a check-up, and it's only from aviva. last season was the gulf's best tourism season in years. in florida we had more suntans... in alabama we had more beautiful blooms... in mississippi we had more good times... in louisiana we had more fun on the water. last season we broke all kinds of records on the gulf. this year we are out to do even better... and now is a great time to start. our beatches are even more relaxing... the fishing's great. so pick your favorite spot on the gulf... and come on down. brought to you by bp and all of us who call the gulf home. who have used androgel 1%, there's big news. presenting androgel 1.62%. both are used to treat men with low testosterone. androgel 1.62% is from the makers of the number one prescribed testosterone replacement therapy. it raises your testosterone levels, and... is concentrated, so you could use less gel. and with androgel 1.62%, you can save on your monthly prescription. 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to androgeloffer.com and you could pay as little as ten dollars a month for androgel 1.62%. what are you waiting for? this is big news. jpmorgan chase is the country's largest bank. also one of the banks that emerged from the financial crisis of 2008 in relatively good shape. throughout the crisis jpmorgan made a profit every quarter. ceo jamie diamond led wall street's war on regulating the banks but his stunning announcement after the closing bell on thursday that jpmorgan has lost $2 billion in trades over the past six weeks and could face an additional $1 billion of losses made jaws drop on wall street. >> a new strategy was flawed, complex, poorly reviewed, poorly executed and poorly monitored. the portfolio has proven to be riskier, more volatile and less effective as an economic edge than we thought. >> the addition will hurt jpmorgan's reputation as one of the best risk managers among the big banks. what does it say about our financial system overall? sheila bair credited with saving the banks, former chair, senior adviser of the pew trust. good to see you again. >> thank you a lot of things going through my head. took me back to 2008 when i had to struggle to understand this thing about credit default swaps and aig and how they are engaging in this business of in insuring themselves against risk without regulation. i'm thinking, is this happening again? >> no. i don't think it's happening on a broad scale. i would attribute jamie diamond for being very clear and opening up to the fact his bank made mistakes. a good contrast from 2008 when you saw ceos getting up there and saying it wasn't my fault, it was the market, other banks were doing it. he deserves credit for owning up to the fact this is something particular to his institution. they made serious mistakes. it does make you wonder, this is one of the best managed larger banks in the country. this kind of thing can happen. what's going on with other institutions. it really raises broader questions about are they too big to manage. >> it brings us back to the question of regulation. senator carl levin says banks too big to fail we're now learning engaged in risky behavior tell me not about regulations but regulators. they are going to hire the highest price people to work around stuff. people find it difficult to keep up with this kind of financial engineering. >> they do. the top of my reform list has been getting a lot more capital into these banks. you are always going to have unexpected losses. you're always going to have bank managers, even well managed banks. things happening at those banks are stupid and generating unexpected losses. a thick capital cushion to absorb losses, you're going to be able to stay ahead of it. trig to micro manage institutions or hordes of examiners going in there, hordes of regulators saying you can do this, you can't do that, things will fall through the crack. first and foremost we really need to get capital levels up. they have been increasing. they need to increase more. also regulators need a high priority on simplifying banks, dwirg commercial banks from security forms, direct oversight of these institutions. i think that would be a tremendous boon to better management and help shareholders understand what's going on inside of these institutions. you know, i was speaking to a fairly sophisticated investor group recently before all this came out obviously. i said to them, i said, raise your hands, who in this room understands what's going on inside jpmorgan chase. not a one of them raised their hands. i think shareholders have an on us to put more discipline and find out what's going on inside of them. >> we should tell our viewers because i imagine not many of them would understand the highly complicated world of credit default swaps. >> right. >> this was done by what was called a pro priority area trading desk. all banks have them. in the old days investment banks made money by matching up investors and we'll who need money. these trading desks, they are something -- a relatively new creation. they have traditionally made a lot of money for the banks. >> they have. this is the core of what the volcker rule is trying to get at, ban a bank taking directional bets on the market not to generate for the customer but generate profits for itself. it appears -- i'm still learning about this -- it appears this was a hedge or what they call an economic hedge, a hedge designed to protect jpmorgan chase against broader economic risks confronted in the market. the volcker rule, at least as currently proposed, may actually allow this. a lot of advocates have been saying the fed and other regulators need to narrow the hedging exception in the volcker rule to make sure those hedges tightly correlated to underlying risk they are trying to hedge. if you have a good hedge this shouldn't happen a loss on one side, should have on the other to offset it. one side is quite problematic and going to lead to a lot of questions and a tightening of the hedge on the volcker rule. >> you have an article in fortune about the discussion we've been having over the last several weeks about interest rates and what the fed will do. i'll tweet that to our viewers and we'll continue that conversation. sheila bair, great to see you. thank you very much. >> nice to see you. >> could mitt romney's brag about the auto industry cost him the key battleground state of ohio and maybe the election? for three hours a week, i'm a coach. but when i was diagnosed with prostate cancer... i needed a coach. our doctor was great, but with so many tough decisions i felt lost. unitedhealthcare offered us a specially trained rn who helped us weigh and understand all our options. for me cancer was as scary as a fastball is to some of these kids. but my coach had hit that pitch before. turning data into useful answers. we're 78,000 people looking out for 70 million americans. that's health in numbers. unitedhealthcare. today is gonna be an important day for us. you ready? we wanna be our brother's keeper. what's number two we wanna do? bring it up to 90 decatherms. how bout ya, joe? let's go ahead and bring it online. attention on site, attention on site. now starting unit nine. some of the world's cleanest gas turbines are now powering some of america's biggest cities. siemens. answers. republican presidential candidate mitt romney told an ohio tv reporter last week that he can, quote, take a lot of credit for the recovery of the u.s. auto industry. >> there was the uaw and the president that delayed the idea of bankruptcy. i pushed the idea of a managed bankruptcy. finally when that was done and help was given the companies got back on their feet. i'll take a lot of credit for the fact that this industry has come back. >> romney was a vocal opponent of bailing out the auto industry. in 2008 he wrote a "new york times" opinion piece entitled "let detroit go bankrupt." in it he wrote this, if general motors, ford and chrysler get the bailout their chief executives asked for you can kiss the american automotive industry good-bye. the government shelled out $4 billion, it's credited with helping them through bankruptcy and many experts contend avoiding liquidation, saving million of jobs, especially in places like michigan and ohio where auto is king. political contributor james carville summed it up best. >> i mean like today this auto bailout thing, i thought it was an onion headline when i first saw it. joining me from washington, cnn national correspondent john king. john, i have a thesis i want to run by you. mitt romney has already lost the election because of this. voters in ohio, auto workers and union members are alienated. you know, john, because you spend a lot of time in ohio like i have. it is gm country. they will hand that state to president obama. romney doesn't get to the white house. >> without ohio romney mostly doesn't get to the white house. no one has won it without ohio. if you do the math, how do you get to 270. yes, there are other ways but it's much harder. he needs to get ohio, he needs florida. auto is king, largely general motors state, about 75,000 jobs in the state that are tied to the auto industry, not just manufacturing but the parts and supply chain and all that. look governor romney needs to get off this. he made the point they shouldn't have gotten the money up front unions got a sweetheart deal, if you had gone straight into bankruptcy without the government aid, they would come back. would have, could have, should have, this isn't an argument for him. he needs a broader argtd to win in ohio, michigan, win elsewhere. he has to get away from the auto industry bailout and more to the fact to make his case, that in his case higher taxes, more regulation are keeping the economy in a straight jacket and keeping from blossoming. if he's debating from now to november it's a losing proposition. he did this last night in another interview, he's trying to convince himself he's right on the facts he's not ongoing to win. >> union workers make up 12 perps. they are still a force. better or too politically dangerous for mitt romney to change course and say, you know what, what i said in 2008 was wrong. >> i asked him about it, in some of the debates, if he was going to change his mind, he would have. yes, in the end they went through a bankruptcy. he says they should have done it first. you're arguing the semicolons. in the big picture, it's back. president obama will travel to those states, surround himself with those workers. if you go back to ronald reagan, reagan democrats, a lot were union auto workers. unions traditionally back democrats but maybe they own guns, conservative, romney needs their votes. he can't be arguing about their job today but the broader economic conditions and make his case he would give you a better growing economy and create better auto jobs and more everything jobs. if he's debating this bailout to november. you put it, in one state it could turn the election. without that state he probably can't win. >> i suspect we'll both be spending a lot of time in ohio in the coming months. as always, excellent political analysis. thank you for that. stephen moore editor for "wall street journal" joins me now. it did seem reading mitt romney had taken credit for that did seem like an article out of the onion. >> i think it was a dumb thing to say. i disagree with you and with all due respect my buddy john king. i still think the auto bailout was an economic loser and more importantly a political loser. you're right, there are a lot of auto workers in ohio and michigan. i live in the balancing ground state of virginia. do you think the auto bailout is very popular in the state of virginia or another battle ground state north carolina? i would make the case that for mitt romney to win this race, what he has to say, look, the other guy, barack obama, is president bailout. if you want free market policies and end to bailouts, elect me. a very populace line he could take. >> you know there are plants in every state. frankly the auto bailout was more detrimental in your communities because of car dealerships and things like that, because of advertising and things they did. i'm not sure anybody looks back on the last four years and says this was a mistake. do you really believe it was a mistake despite what it said about what the role is. it did work auto industry is back. >> no question about that. i agree entirely. it's back. booming right now. big percentage of the gdp was auto production. you're right about that. look, where i disagree with you, i just think the american people outside of washington, d.c. and new york where you live think that the word bailout is a four-letter word. i just don't think it's a very popular policy to say we're going to bail out every failed company. what are we going to do, general electric, cnn, every fortune 500 company every time they get into trouble. by the way, one other point i think is important in this, ali, the auto company that's doing the best is ford. >> the one that didn't take any money. >> they didn't take any money at all. what i objected to and what a lot of people object to is the way they went about the bailout as well. as you know the people who really got shafted in that deal were the bond holders. essentially what i think the president did was he put the interest of the union members ahead of the bond holders. by the way, who are those bond holders? me and you and anyone with a pension funds. >> stephen, good to see you. as always, thank you for a robust discussion. use the auto industry as an example, the right thing to do, bail them out or cut off their life line. same debate, same debate in europe as here, austerity or more spending. 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[ spokesman ] when you refinance your mortgage with quicken loans, you'll find that our rates and fees are extremely competitive. because the last thing you want is to spend too much on your mortgage. one more way quicken loans is engineered to amaze. ♪ from paris to washington and seemingly everywhere in between it's the big question, is it time for governments to spend more or save. there's no magic formula. stimulus can produce growth, spending can produce growth. austerity is when they cut back on spending to get debt under control. voters generally tend to dislike cuts because they get less. governments typically don't impose austerity in many cases until its almost too late. that was the case in greece and france. people in both countries pushed back and voted out their pro austerity leaders. on the other hand stimulus is when the government pumps money into the economy in order to stimulate demand and aid business. the obama administration used stimulus in 2009, as you know. but at the same time the federal government ramped up spending, state and local governments cut back. in effect we tried stimulus and austerity at the same time. ben barber, a distinguish fellow and will cain is a cnn contributor. let's all agree on something. the debate actually isn't austerity versus growth, which is how it's been painted in france. those two things aren't necessarily opposites but let's talk about the best way to grow and economy. that is where economists -- and americans disagree. take a look at this, guys. a recent poll from cbs news and "new york times" finds 56% of americans believe spending more and raising taxes will stimulate growth. 37% say we should lower taxes and cut spending instead. those are opposites. well, governor mitt romney -- governor mitt romney supports paul ryan, the budget chief's ideas in terms of cutting the budget. they represent in an american context the austerity side of things to some degree. has austerity ever created a job? >> yeah, man, what kind of question is that. does north korea have more jobs than south korea? who has a more vital economy? if cuba created jobs, fill in the blank. does austerity create jobs, that's the logical input of the argument. >> the logical input is austerity should create jobs. >> by extension does the private sector create jobs. i think by this point we all clearly know the answer to that. the real answer to your question is though, it depends. right? it depends on the scenario you find yourself in. if you find yourself in a scenario where you have high public debt and low private debt as we did after world war ii, then, yeah, austerity would make sense. the private sector would take off and we did after world war ii. if you had the reverse, high private debt, indebted society and low public debt you'd have a hard time arguing for austerity. in europe you have both. bond holders are like, look, you may need to borou borrow but we trust you. in the united states -- >> just to be clear in greece the voters have said we don't want austerity. to people who we depend to lend the money say we don't care what you want, you're not getting the money if you don't do it. ben, help me out here. at times when private enterprise doesn't do what will described, does it fall to the government to do that. >> you haven't talked in europe about the third partner in the negotiation, the bank, imf, germany. the greek leaders are not saying screw what the greek people are saying, they are saying we will get it from the bank if we don't do what they are asking for. socialists, we're in the going to do it anymore. it's not working. merkel, i know we want to talk about the u.s. it's important. we're in a situation where america is trying to be more like germany and europe was for the last few years and europe is trying to be more like america is supposed to be. the answer is does government have a role? of course it has a role. the federal government is the institution of last resort in times of crisis. if this isn't a crisis, the recession, problems we're having, if it doesn't have a role in getting jobs moving, stimulus, tax increases if that's necessary, in cuts, in the more fat parts of the budget, not the kids, not food stamps, then the federal government isn't doing its job. you know what, 56% of the american people agree with me. >> will doesn't. >> it is not the federal government's role to create jobs. it's the federal government's role to create conditions for job growth. historically we're clear conditions are low tax, low spending, clear confident low regulation environment as possible, as possible. that's the best conditions for growth in the private sector the best engine for job growth history has ever shown. >> will and i agree on that. but let's take detroit, perfect example, difference between the parties. romney said let's have a structured bankruptcy. obama says fine, everybody agrees with that. who pays for it. romney said the market. bain capital didn't, nobody had money. the only people who could fund that was the taxpayers and federal government. that has now -- first of all the government has been repaid everything. the taxpayers got back their money. second of all we have a world in which american motor companies are very, very competitive, 800,000 plus jobs were saved in detroit. that's the feds intervening. i agree with will, they didn't create those jobs but acted in ways that allowed those jobs to be recreated and saved detroit. that's exactly the kind of thing the government does brilliantly. >> the thing everybody agrees on whatever we do we want job creation. europe worse than here but bad here. the next thing people concern themselves in this debate between austerity and nonausterity are taxes. when we come back that's what we're going to talk about. is it time to cut or raise taxes? 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[ baby crying ] ♪ what started as a whisper ♪ every day, millions of people choose to do the right thing. ♪ slowly turned to a scream ♪ there's an insurance company that does that, too. liberty mutual insurance. responsibility. what's your policy? ♪ amen, omen compared to europe we're discussing the best way to grow economy in the united states. will cain and barber are back us. president obama wants to raise taxes on wealthiest americans, raise corporate taxes and close loopholes that will allow some companies to pay a lower rate. governor romney says we need the u.s. tax code flatter, fairer and simpler, like obama wants to reduce corporate taxes but to a lower rate. ben, how do we lower taxes to stimulate growth without at the same time killing the economy because the government doesn't have enough money to do what it has to do? >> as always, the question is revenues from whom austerity for whom. my problem with the present discussion with republicans is that it's austerity for kids, austerity for the poor, austerity for the disabled, they are cut back in the budget proposal passed yesterday in the house. it's more money for defense, which is already 56% of discretionary spending in america. more than half the budget, where the next 17 armies don't make, including china and france and germany don't put in as much as we do, that's a full 26, 27% of the budget. i say let's take fat off the defense budget, leave the money for the kids and raise revenues marginally in places people can afford it. right now we're asking people to -- families to give up food stamps, kids to give up school lunches while we refuse to tax millionaires. that to me is absurd. >> will, it's interesting the amount of extra defense spending in the budget would top $2 trillion. our polling shows americans find it jaw dropping. for everything we're talking about, it does seem like a strange priority. >> it's a source where you can find government cutbacks. i agree the department of defense -- your original question about taxes is interesting. i'm going to borrow a phrase from the father of stimulus john maynard keynes. getting consumers brave and ambitious and motivated to spend and invest in society. how does that apply to the tax code? i would offer you the best way to stoke animal spirits, get people ready to move, invest, spend, is to simplify this tax code. i want to curse before i say tax code, to simplify. raise revenues and create a conducive environment for growth by simplifying this tax code, dropping rates, getting rid of loopholes, more tax revenue and higher growth. >> you've seen my copy of the tax code, 73,000 pages, binders and binders. >> stretches across the room. >> everybody has to get together. >> that's not on the table. >> at the end of the year, tax and spending cliff by the end of the year, packed into the last two months of this year. >> a country that wants to raise defense spending on the backs of children, the disabled and those most vulnerable in society is really barbaric. i think that's why 56% of americans say we've got to get a little more funds coming in so we don't have to cut the kids, we don't have to cut the disabled. we don't have to make horrendous cuts to make it impossible for poor people to go to emergency rooms for treatment. that's where the cuts are coming on. we're not doing anything on that part of the budget that has fat in it. i'm not talking about cutting back on defense operations for things we're involved in, i'm talking about carrier fleets, nuclear weapons developed for the cold regard, no use, we spend billions every year in maintenance. i'm talking about cuts that will not affect america's capacity to fight wars. >> there's rooms for cuts in the department of defense. >> okay. you see, i love it when you guys agree. all right. can you imagine a world in which the tea party joined forces with occupy wall street? >> i think we're on the verge of a political movement that says, essentially, we're going to take back the economy, take back democracy. we're not going to let the big guys run everything. >> that seems like odd bed fellows. i sat down with robert reich next on "your $$$$$." w i'm a ge, 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. ♪ who have used androgel 1%, there's big news. presenting androgel 1.62%. both are used to treat men with low testosterone. androgel 1.62% is from the makers of the number one prescribed testosterone replacement therapy. it raises your testosterone levels, and... is concentrated, so you could use less gel. and with androgel 1.62%, you can save on your monthly prescription. 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this is big news. time magazine named robert reich the ten most effective cabinet secretaries for his time heading the department of labor under president clinton. his new book 'n' beyond outrage" is dedicated to occupy wall street. whether you agree with, despise or are confused by occupy wall street it has raised the debate over fairness in the upcoming election. so i had a very simple question for the secretary, what is fair? >> when somebody has asked themselves is the economy fair, what they are asking themselves, am i doing better, am i working harder, am i seeing the results of my work? also are the gains from growth being distributed in such a way, people at the top like ceos, my company, my ceo earning $25 million, $30 million, my job is on the line, my benefits are decreasing, my median wage is decreasing. that feels unfair to me. >> the problem is it then becomes subjective, right? what is fair? how much should the ceo be earning? where do we figure the way to figure it out? >> two ways. one, we can look in the pafts and say it's wildly different than what it was over 50 years and look at the economy raw. there's not enough to keep the economy going. the top 1% would do better with a smaller share of a rapidly growing economy than the current large share of an economy that's struggling to grow. >> would that happen if we distributed economic wealth better? >> i know that's a touchy topic, but if 99% got more, would they grow it more. >> we would. demand side is the problem. most people agree the reason they're not hiring, the reason they're not expanding is because there's not enough consumption. there's not enough consumers who have enough money in their pockets. so if we did that, had a distribution of gains from growth, again not a zero-sum gain but distribution sim through what we had in the '50s, '60 0s, early 1970s, we'd have more robust economy. >> let's talk about the fact that people on the left think the rich have stuck it to them. yet we can't make that into a broader political movement. for some reason you've gotten people in the tea party who have that view as many of the occupiers do. why does that not become -- if this is that southeast of a problem, why has it not created greater co-hergs in terms of political force? >> i think it will. i've talked to a lot of tea party members who say they're outraged by the bailout on wall street and all the subsidies going to the oil industry or agriculture or insurance. we want government to get out of the job of providing tax base subsidies. a lot of people on the left say the exact same thing. i think of the overlap there. a lot of people on the right in terms of tea partiers say the problem is not the size of the government but who it's for. it's the amount of money, big money, that is controlling government. a lot of people on the left say exactly the same thing. i think we're on the verge of a political movement that says essentially we're going to take back the economy, take back democracy, we're not going to let the big guys run everything. >> former labor secretary bob reich. coming up next, eight years ago he had no car, no job, no house. today mark zuckerberg is ranked number nine on the people's most powerful list and number five on the billionaire list. how badly do they need mark zuckerberg to sell itself on wall street? 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> >> no. i think it's going sell itself. however, very symbolic moment, the hoodie moment. it's gone viral. everybody's talking about it. it's the culture clash between silicon valley and wall street. part of wall street's frustration is their frustration with facebook which is that mark zuckerberg has full control of the company. he doesn't care about wall street. wall street knows that. that's not kmochblt most people suck up to wall street. >> putting on a jacket and tie might have said you're important. >> it might have been a polite gesture. you're asking for $10 million. maybe you could put on a jacket. >> the bottom line, a lot of these start-up companies as they start to do well far earlier than facebook got into this and the hiring of a grown-up, are there some people worried he's not that? >> what's interesting, that was the model in the 1990s, the quirky founder with the bad hair and the sandals. they can't run a company and so let's bring in a professional ceo. a lot of the companies lose their way. the classic example is apple. they dispense with steve jobs and almost went bankrupt. the new one is you keep them and build great professional underneath them and that's sheryl sandberg. >> that's widely lauded. you teach a young people, though widely symbolic, to put a tie on. >> to mark zuckerberg, i have said very clearly that my mission here is a social mission, not a business mission. if you were not listening to that, that's your tough luck. and i'm not going to alter my routine to suck up to you. >> all right. i think most investors will either get past it or not. nobody who thinks this company is going do really well is going to invest in it because of a hoodie or a presentation, but what night do is be concerned over the amount of control he's going to wield over this company. should they be? >> absolutely. this is a bet on mark zuckerberg. >> sure. >> i think many have the illusion of control they don't actually have with most companies but in this case, there's no illusion. he has 57% of the voting control. anything he wants to do, he can do. you can scream, that's it. as long as he'll listen to your screaming, he'll be fine. >> most retailers are -- >> they have no control anyway, so it's not really that different. i think to sort of bolster mark zuckerberg's view at this, he has seen a lot of companies ruined by ceos making short-term shortcuts to please wall street, boost this year's earnings by firing people and kuflting investments. he's saying i don't ever want to be forced into doing that. if you buy it into, it could worker

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