Transcripts For CNNW Your Money 20121125

Washingtoninduced catastrophe, and frankly, it looks like a pretty good life. If all goes according to plan, 2013 could be a big turnaround year for the u. S. The start of a recovery that feels real. Most of it will have very little to do with washington policy, though your state and federal government will have to step in to make it happen. Let me explain. First, there is an energy boom under way in the United States right now. Fueled by the joint forces of hydraulic fracturing or fracking of natural gas out of shale and buy mo by more drilling for oil. Natural gas is increasingly cheap and abundant and not only used for gas in homes and businesses but for the manufacturing generation. Its not just about cars and homes, more domestically pro du duced energy will provide fuel in manufacturing goods. Combine them with rising costs in china and other countries and already high shipping costs, and you make made in america products more attractive to people abroad, and thats good. Home sales rising for the first time in years. Construction is start to go pick up. And historically low Interest Rates now averaging below 30 for a 30year fixed mortgage will only fuel a rebound next year. And remember, a house will still be the most important asset for most americans, so a rebound there helps americans feel better about their financial situation and ready to spend a bit of money. Stephen moore is a senior Economics Writer at the wall street journal as well as a member of its editor board. Michelle is a senior economist at rbs and daniel gross is a columnist and Business Editor at newsweek daily beast. Now were likely to avert the worst of a fiscal cliff, unleash some of those spirits. We have things going on that will lead quite possibly to an economic rise, start bg now. Am i wrong . I dont share your optimism about us not going over the fiscal cliff, but i also dont think it will matter. The coverage weve seen has been largely in spite of government, and energy, manufacturing, housing finally coming back. Housing starts up 40 in october year after year. Our exports are at our highest level ever. Our goods and products have a big audience overseas. And the American Consumer that was so down and out in 08 and 09 is back. Consumer confidence, highest level since prerecession. More people are working now at payroll jobs than at any time since january of 2009. Their in connection with acomes. Everybody is doing a better job at credit card debt, et cetera. Its a better shopping season. Stephen moore, you and i dont share views on everything, we share the view on wanting america to be prosperous. Weve been riding the same gloomy ride for a while. Do you join my opinion that the renaissance is appealing . Theres nothing more that i would like to see, and you are so right, there is so much right in america. You and i disagree pretty profoundly on a lot of policy issues, but when it comes to these industries you talk about, im right with you. I love the American Energy story. We can be the saudi arabia of oil and natural Gas Production, and dont forget coal. Weve got hundreds of years of that. We can and by the way, youre exactly right. Because we now have access to cheap and Abundant Energy in this country, that has real peripheral effects with respect to manufacturing. I love the manufacturing story because our electricity and energy costs are now lower than the rest of the world. I agree with you on housing. We havent built any housing in this country in five years. With these low Interest Rates, you could see a renaissance in housing continue. You and i agree on those things, but i do think policy matters, and its not just solving the fiscal cliff, in my opinion, its solving it in the right way. Who are you and what have you done with Stephen Moore . Stephen, hang on right now. Susan, let me ask you, any recovery depends on American Consumers. Heres the interesting thing. American consumers have been telling us for months that contrary to lots of other economic evidence and indicators, things are looking and feeling better for them, and guess what, michelle, they have never, ever been wrong. Every time the American Consumer says were going down, we go down. When they say things are getting better, they get better. They feel okay. And i think it gets back to just like you said, the housing turnaround. I think thats helped consumers feel much better about their own financial positions, and of course the fact that the equity markets through the summer, were seeing a rebound, certainly not within the last month but prior to that. These things coming together, i think, could certainly bolster consumer confidence. Although i will say in the end, so much of how the consumer will do is tied to jobs, and thats why you do get back to business, and thats why what stephen said is so important. How you resolve this fiscal cliff is incredibly important in terms of businesses not only having uncertainty removed but actually feeling like theyll be a better environment going forward. If that happens, then you can finally see more hiring and more investing, and ultimately thats what gets the economy going at a rate that we havent yet enjoyed so far in this recovery. Then, dan, are we feeling this way . You share the view that we are not were not done with the fiscal cliff. Were not going to suddenly solve our fiscal problems. We certainly havent been talking it up on the spending side. Weve agreed we havent agreed but there seems to be a Movement Toward the idea that some taxes will go up on the high end and the middle class wont see much of a tax increase. Are we justified . I think the typical consumer is not like you and me and the other guests there. The typical consumer makes about 60,000 a year for their family. Theyre not getting tax dividends so theyre not freaked up about those going up. Theyre concerned about their paychecks and paychecks have been more steady for the first time in several years, wages have gone up a little bit, and the biggest asset people own is a house. Its not just a volume of sales rising and construction but home values. And so with every passing week, a certain number of people who are under water on their mortgages are now in positive territory. And that contributes to what we call the wealth effect, people feeling more confident, theyre more likely to spend. Its procyclical. When things are going in the right direction, it forces to propel them further in the right direction. Stephen, you feel very strongly tax rates should go down and not up. These procyclical things, the idea that the price of your house might go up. If youre stuck with your house and you might be able to sell it, credit it with it being a little easier. Obviously youre more interested in the paycheck than the houses you pay on the paycheck. Do we see a little tax increase . Im not asking you to give up your position. You will always be here arguing that taxes should be lower. But does it outweigh your ongoing concerns that taxes are going to krip pel us . Yes, i think we can get through this and also if theres growth the tax rates wont be so high. I think michelle is right. It all starts with jobs. If people dont have jobs they cant pay mortgages, they cant buy anything. I want to stay on this optimistic theme, and maybe because its thanksgiving weekend, but i made this point before on your show. When it comes to america relative to the rest of the world, were the least rotten apple in the cards, right . That gives us a huge advantage in terms of investment, coming to the United States, building new business, and thats why im somewhat optimistic despite the fact i dont like the direction washington is heading. We were always the least rotten apple but it had a worm in it, and maybe this fiscal discussion will remove the worm. Michelle, what do they have to do to not return the worm to the apple, to get this feeling that we are doing better . Bottom line, i do believe we are talking about an economy, if we can do the right thing, to grow 2 and if we can get some longer term certainty in terms of a grand bargain and release the constraints in this economy that businesses face in terms of uncertainty, i think we could look at an economy that could grow better than trend in this economy. I look forward to it. I want to reach out and hug all of you. Its a useful time to at least point out the good things. We spend a lot of time pointing out the bad things. Well continue doing that as necessary, however. Dan gross, and Michelle Girard and Stephen Moore. Thanks to all of you. Coming up, we just touched on it, but global recession has chipped away at manufacturing jobs in the last decade. Those jobs are coming back. Dont forget to wear a tool belt to the manufacturing site, though. Well look at the manufacturing jobs of the future when we come back. You are watching your money. These smartphones come with a bonus 100 walmart gift card . Thats right. So its like i won. Sure. Oh my gosh i won i won [ male announcer ] get a 100 walmart gift card when you buy any android or windows 8 smartphone. Through december 1st. From americas gift headquarters. Walmart. Throughout our lives. One a day mens 50 is a complete multivitamin designed for mens Health Concerns as we age. It has more of 7 antioxidants to support cell health. One a day mens 50 . To support cell health. Take the steps to reach yours, everyowith usgoals. With real advice, for real goals. The Us Bank Wealth Management Advisor can help you. Every step of the way. From big steps, to little steps. Since 1863 weve helped guide our clients, so they can take the steps to help grow, preserve, and pass along their wealth. So their footsteps can help the next generation find their own path. All of us serving you. Us bank of green giant vegetables its easy to eat like a giant. And feel like a green giant. Ho ho ho green giant can i still ship a gift in time for christmas . Yeah, sure you can. Great. Wheres your gift . Uh. Whew. [ male announcer ] break from the holiday stress. Ship Fedex Express by december 22nd for christmas delivery. Made in america, its one of the keys to the american renaissance and its the backbone to the middle class. Or is it . The economy is adding jobs but the jobs the u. S. Is adding are not the same ones it has lost. Take a look at this, jobs in leisure and hospitality. One of the big growth areas in the last few years pay 13. 35 an hour. Retail pays more, 16. 43 an hour, but neither of these pay as well as manufacturing with an average hourly rate of about 24 an hour. Since january of 2010, the u. S. Economy has added 508,000 manufacturing jobs. Thats since the gij of tbeginn the recession. Thats a blip, by the way, compared to the last 25 years. Since 1997, take a look at this. The u. S. Has lost 5. 5 Million Manufacturing jobs. But at the same time americas manufacturing output has increased by 84 . Weve increased our output as weve employed substantially fewer people. Technology, automation. Scott paul is the director of American Alliance manufacturing. My friend will cain, cnn contribute toror contributor. Scott, we are producing more with less as an industry, but do manufacturing jobs look good . Well, and thats the real question, ali. I do think there is a good future for manufacturing jobs in this country. No, we wont have factories that are employing 10,000, 20,000 people like we did in the heydays of the 50s or the 60s, but there is a lot of reason to believe we could invest in manufacturing that we could actually add jobs on and that its a viable career path for young people today. We have an aging manufacturing work force. Secondly, production costs are coming way down in the United States. Youre seeing firms that are reshoring jobs, youre seeing lenovo open up a laptop manufacturing facility in north carolina. These are things you couldnt have imagined a decade ago. Let me bring will into this conversation. Will, listen carefully to this. President obama, as you know, during the campaign promised, and people said all sorts of things during campaigns, that hes going to create a million new manufacturing jobs at the end of his second term. He also wants to tax the rate on lower the tax rate on manufacturers, provide incent e incentives for companies that reshore or bring jobs back to the United States, and you say just the opposite of what scott just said. You say its a policy that takes us back to the 50s. What you just put up on the screen, thats the fly in the ointment. Weve seen a small renaissance in the last decade, and bravo. Manufacturing needs special tax rates, incentives, tax subsidies, so forth. Why does it need special treatment . Scott . There is a good answer for that, and yes it does need special treatment. First of all, there is no sector in our economy that has a higher multiplier effect. When you create a job at a factory, you create spinoff jobs and logistics that the cash going to the economy creates jobs at the grocery store. The opposite is hardly ever true. Second, we now know that manufacturing production in innovation are linked together. When those two are separated by an ocean, it doesnt work very well and thats what firms are discovering. In fact, some of the leading researchers at mit and harvard have included the same thing, that if you want to have innovation in an economy thats going full freight, you need to have production. And finally, lets not forget exports as well. Well get to exports in a second. Let me hold up an example, though. Apple, you could make the argument, managed to innovate very effectively and manufacture everything an ocean away. They have a very risky manufacturing strategy thats depending on 250,000 workers in china that are working in deplorable conditions, as we know. There is a smarter way to do it, and yes, it would be highly automated, but they could be employing thousands of engineers in california making those products. It wouldnt raise the cost of an iphone more than a couple of bucks, but the returns for our economy would be fabulous. It would be great. Heres the deal, scott. Heres why i disagree with you, and thats if this those benefits all exist as you laid them out, the innovation to manufacturing need to be geographically linked in order to be fully op pi timized, wone country itself figure that out . Why do they need the government to step in and realize those goals . If its there, it will be selfevident and the company will choose that path. Manufacturing is in a tradeable sector. We have global competition. Other sectors of the economy dont necessarily have that. Manufacturers do, and every other country out there has incentives to attract manufacturing, whether its the low road like china or the high road like germany. If were not in that game, were going to be sitting on the sidelines. Were going to lose jobs and weve seen that. Our manufacturing goods trade deficit has gone up. That might be true that some play dirty, why dont we as well. The risk is we encourage malinvestment. All these things made unique and special in the last 100 years in the economy, and thats innovation, thats resilience. Had little to do with subsidies, but rather a unique playing field. Lets not corrupt whats made dirty to keep up with the dirty players. Im not suggesting we play dirty, and i disagree with your economic history a little bit. Every successful history thats been incubated in the United States has been in yonurtured. Someone makes cars in the United States. Id like to see them made here. China, germany, japan, they all have car manufacturing. I think it should be smart, i think it should be sophisticated, i think it should be based on incentives and what the private sector wants. You can control that manufacturing. Thats why ford is bringing manufacturing of the fusion back to the United States. Its why gm is bringing back some of its functions from india to michigan. Its why youve seen lenovo bring laptop manufacturing from china. American manufacturers have a great work force, as youve pointed out, will, we have great energy costs and we can successfully compete if were playing that game, but weve got to play that game. Hold on, will, because until i get the 90minute version of this show where we can discuss where anybody in the world can supply manufacturing, and i know what youre thinking, that nobody should be doing it. I think we should do this again. Will cain said something very uncharitable about my suit, by the way. When youre taking pictures of ali velshi, make sure you note this is not Colonel Sanders suit. Its tan, not white. Fracking is putting americans back to work even as Environmental Concerns grow. Im going to squeeze some energy out of this topic. Right after we pay the bills. Your money is back after this. Wow. Nice place. Yeah. [ chuckles ] the family thinks im out shipping these. Smooth move. You used Priority Mail flat rate boxes. If it fits, it ships for a low, flat rate. Paid for postage online and arranged a free pickup. And im gonna track them online, too. Nice. Between those boxes and this place, im totally staying sane this year. Do i smell snickerdoodles . Maybe. [ timer dings ] got to go. Priority mail flat rate boxes. Online pricing starts at 5. 15. Only from the postal service. At meineke i have options. Like oil changes starting at 19. 95. My money. My choice. My meineke. For the first time in a long time, im seeing past the dangers of a fiscal cliff. And things are looking up in this economy, particularly when you look at the Energy Sector in the United States. A new report from the International Energy agency predicts that the u. S. Will become the Worlds Largest oil producer by 2017, temporarily surpassing sawed a rab ya. The same report projects the u. S. Will be nearly Energy Efficient by 2030. These are the terms you heard in the campaign talking about lower energy independence. That includes canada and mexico which are big oil producers. But all of this business was something unthinkable not too long ago. There is an Oil Shale Boom in the United States. New drilling efforts are deri deriving growth and creating jobs. That number is expected to grow to nearly 2. 5 million jobs in the next three years. Could reach 3. 5 million jobs in 2035. Its because of a job called fracking. Hydraulic fracturing is the full name. Is involves pumping sand and chemicals into the ground at High Pressure to crack rocks open. Theres gas in them rocks. Its a costly process. There are Environmental Concerns. Some people say they even cause earthquakes. Investment officer of lead Capital Management is author of the oil factor and several other books. First i want to ask you this. According to the department of energy, they say between 2008 and 2011, crude Oil Production in this country jumped 14 , natural Gas Production climbed more than 10 in this country. Tell me what you think of this. Well, i think thats basically a good thing, ali, but i would not get that excited. I mean, im thrilled, and i didnt know that number about the number of jobs created. I think thats wonderful. But i hope this country has the sense to realize this is a temporary phenomenon. This is not anything resembling a longterm answer to our energy problems. One point i have to make is the same agency that is telling us were going to surpass saudi arabia about five or ten years ago was telling Us Saudi Arabia was going to produce ten or 15 Million Barrels a day. So they tend to be a little optimistic and a little is sarcastic. Your other worry is that with more Energy Production, there is a disincentive to use energy properly, or the concern. This is so true. What you see now, nobody is making money fracking. You may see profits on the bottom line but Natural Gas Prices have plummeted. Natural gas prices have plummeted, but even in the oil area, the oil shale formation, you have these cotton Energy Resources producing great earnings. But once you take out the cost of those rigs, guess what, negative, negative cash. They have to continue to borrow because the depletion rate on these wells are so great. So its basically a shortterm fix. I mean, definitely i think Oil Production will continue to go up maybe for another year, maybe for two years. I dont think the iea will be right. But it will allow us to buy time to really develop other kinds of energy sources. And, you know, im not a green guy or anything else, im a resource scarce guy. It makes you seem green, but you want it for the same reasons. You want to say lets have resources for Energy Production that are renewable and always going to be there. Right. Ill give somebody the argument that we dont understand whats going on with the environment. It could be the sun, it could be the hydrocarbons. Ill give them that argument but the argument i wont concede is that resources are getting forever scarce. We have abundant sun, abundant wind. Lets spend the money, lets roll up our sleeves, take advantage of this little hiatus, this little gift of time that fracking has given us and develop what will sustain us in the 21st century. Thats what china is doing. I dont want to be beaten by china. Steven, always good to see you. Steven leib is chairman of his company. You might finally be able to sell your house, but should you be buying a new one . Reports say the Housing Market is back. Im convinced, but not everyone else is. Can i help you . I heard you guys can ship ground for less than the ups store. Thats right. Ive learned the only way to get a holiday deal is to camp out. You know weve been open all night. Is this a trick to get my spot . [ male announcer ] break from the holiday stress. Save on ground shipping at fedex office. Thats right. So its like i won. Sure. Oh my gosh i won i won [ male announcer ] get a 100 walmart gift card when you buy any android or windows 8 smartphone. Through december 1st. From americas gift headquarters. Walmart. Welcome back to your money. Look up for a second. You can start to see the clouds part and the sun breaks through when it comes to the u. S. Economy. I am not done hammering away at the fiscal cliff. It is still an immediate threat to the countrys wellbeing and i will not stop until it is worked out. Today im looking at the possibility of a renaissance, what ive been calling a golden lining on that storm cloud is the Housing Market. This week we got more encouraging news. Existing home sales rose more than 2 in october after sagging earlier in the year. They are trending higher. Now, with sales of homes picking up, the number of homes on the market, the inventory, is falling. Inventory, look at that. This is all wait back from december of 2002. This is for the last ten years. Inventory is at its lowest level since december of 2002. And that low inventory is putting upward pressure on home prices. The median sales price, thats the price where half of homes settled for more, half for less. The median price for existing homes, used homes, if you will, rose more than 11 in october compared to last year. 178,600 is the median price. Housing starts jumped 3. 6 last december. Thats the number of homes starting to be built. Is the recovery real . Warren buffett, selfdeveloper and one of the worlds richest men, says yes. We have Building Supply companies and were seeing prices moving up somewhat, were seeing demand improve, were seeing the overhang of houses diminish, so were coming back. N the other hand, the former Federal Reserve chairman Alan Greenspan told me, dont get excited yet. Whats happening is real, its slow, but we can exaggerate how big it is but its certainly going in the right direction. Joining me now is chris mayer, hes the professor and mayor of business school. Jonathan, let me start with you. Median home prices have risen for eight months in a row. The shiller index is up five months in a row. You say dont look at these prices so much. I think home prices is the worst thing to look at. The reason were seeing prices uptick is were seeing foreclosure activity at a lighter level than it would have been. Banks discovered during the process while they held back on foreclosures, short sales were the way to go a couple years ago. We have a lot less distressed property in the mix right now and its skewing the metrics. Dont you think the recovery makes things more affordable, like housing . I have trouble with the record recovery. I think the record recovery means getting worse. Alan greenspan says slow down. We also heard from ben bernanke this week. Listen to what he said. Unfortunately, while some tightening of the terms of mortgage credit was certainly an appropriate response to the developments of earlier accesses, the pendulum appears to have swung too far, restraining the pace of recovery in the housing sector. I completely agree with chairman bernanke. I think the housing recovery is going on despite problems in the mortgage market. Now, hes been very critical about tightening of credit, but that may very well be, at least potentially, a cloud that could open up. This combination of low Interest Rates is probably a combination you wont see for a long time. The only thing im wrong on is the Interest Rates have actually gone lower. But now the feds say their rates will stay low until mid 2015 before starting to go up. It does take that urgency out of my argument that you better buy a house now. Absolutely. I think thats one of the key issues. And if you look at sort of all of what i call happy housing news, all of the metrics that were seeing that are favorable generally are influenced by credit being tight. Theyre basically saying credit hasnt eased for mortgage lending since lehman. Listed inventory is falling because credit is tight. Listed inventory is falling. So in other words, we dont have as much inventory because some people are not people forget that sellers become buyers. So if you cant qualify to trade up on your house, it doesnt mean youre underwater on your mortgage it just means youre not getting out of your house. Let me just pull that out. If credit became more lenient, if more people were able to get credit, more people would want to buy homes, some of those people would be sellers so you would see more inventory . Absolutely. I think you look at that end. You also look at new construction. New construction is clearly seeingen uptick all part of the masrket, though. Very tiny part of the market. Part of it is we have lower cesspools in the pool, and we have record low and seemingly another couple weeks a new record low. A Mortgage Rate thats pushing people through despite that credit. Foreclosures, small part of the pie now. But there are still foreclosures. If we got to the end of foreclosures, if we got to a historically normal level of foreclosures, what would happen to this market . Well, i think the foreclosures are actually part of why we have sales volume that is around 5 million as opposed to where it would be which would be much lower. I would take a more positive spin on the things. I think it would be hard to see a tradeup market, where people who want to trade up in their homes would see a challenge. People coming in, if they want to clean up their credit, this is a good time to buy. If youre selling and youre just getting close to not being under water, is this the time to sell or do you hold on . The problem with selling is youre going to have to put cash in to buy a new home. So 40 of home buyers have less than 20 of equity in their homes. Thats tens of millions of households that are really having a hard time trading up. What youre seeing is the new construction market, first time home buyers using fha loans which arent the rock bottom 3. 5 but might be 4. 5 with the insurance premium, and for those people relative to renting, where if you go in and try to rent a home from one of these private equity guys, youre going to pay 12 to 14 of the home value. Borrowing at 4. 5 is a bargain. It is useful for my viewers to have your opinion, guys. Thanks for being with us. John miller and chris mayer. All right, Superstorm Sandy is over. Now the u. S. Has the opportunity to build its infrastructure better than before. Ill tell you how that can protect us from storms like sandy and why its the best thing to do to protect america from economic storms as well. Youre watching your money. Well be right back. Were sitting on a bunch of shale gas. Theres natural gas under my town. Its a game changer. It means cleaner, cheaper americanmade energy. But weve got to be careful how we get it. Design the wells to be safe. Thousands of jobs. Use the most advanced technology to protect our water. Billions in the economy. At chevron, if we cant do it right, we wont do it at all. Weve got to think long term. Weve got to think long term. I wish my patients could see what i see. That over time, having high cholesterol and any of these risk factors can put them at increased risk for plaque buildup in their arteries. So its even more important to lower their cholesterol, and thats why, when diet and exercise alone arent enough, i prescribe crestor. In a Clinical Trial versus lipitor, crestor got more highrisk patients bad cholesterol to a goal of under 100. [ female announcer ] crestor is not right for everyone. Like people with Liver Disease or women who are nursing, pregnant or may become pregnant. Tell your doctor about other medicines youre taking. Call your doctor right away if you have muscle pain or weakness, feel unusually tired, have loss of appetite, upper belly pain, dark urine or yellowing of skin or eyes. These could be signs of rare but serious side effects. Is your cholesterol at goal . Talk to your doctor about crestor. [ female announcer ] if you cant afford your medication, astrazeneca may be able to help. Superstorm sandy reminded america of the fraj gile state its infrastructure. It left 8 million homes and businesses without power. It flooded the Transit System and it shut down parts of Lower Manhattan for days. The infrastructure was in a sorry state even before sandy hit. Engineers gave it a d grade in 2009. They said then that it would take 2. 2 trillion over five years to bring it up to snuff. The investment never came. We know investment can protect us from storms like sandy but it can also be the best investment we can make to protect us from economic storms. Because investment in infrastructure creates construction jobs in the short term but it also make the u. S. An attractive place to do business in the long term. But the u. S. Has been slow to invest in its infrastructure. In 2005, Hurricane Katrina destroyed parts of new orleans. Now they have a 13. 6 billion flood protection system. In 2007, this bridge in minneapolis collapsed. That bridge was rebuilt, but many of our nations bridges are still in a sorry state and it takes Extraordinary Events for us to upgrade our infrastructure. Well, i spoke to infrastructure enthusiasts and my cohost, fareed zakaria. When we talk about infrastructure projects, there are many people who feel its stealing, its government spending, its ineffective. How do you convince people there is a way to spend that 2. 2 trillion that the Engineering Society says we need to spend and get a payback. There is also a very smart way to do it, which is create a National Infrastructure bank. Have the federal government feed it with capital but then get a lot of private sector money. Have the projects and this is the key have the projects awarded by a group of technical experts who would evaluate the projects on their merit rather than congressionally. Now guess who doesnt like this . Most of the congressmen. Because they want to be able to reward them. The truth is they dont want an infrastructure based on pork. They talk about how they want pork but then they want the baseball field back home. This is where president ial leadership can come in, this is where bipartisanship comes in. Infrastructure is what everybody believes the government needs a part in. Does it do things like i just said, it increases trade and it increases protection from storms, or can these things actually be generating a profit . No, no, they can easily generate a profit or they can generate a return. For example, airports, the simplest one where we do it is airports. Youve seen it. You walk through an airport. Youve noticed that the fancyiest airports are the ones with the most retail in them. They figured out how to make money because they know how to release those planes but we have a good runway, good technology, that kind of thing. The same could apply to train stations. You and i both travel to high growth countries where the idea of a high Infrastructure Bank or population exist or flourishes. What is it with the United States . Were such a free marketplace but yet we dont take advantage of this. You used airports as an example. It doesnt exist the same way in the United States as it does in other places. Its a fascinating question, ali. We do infrastructure in a socialist way compared to other parts of europe. We believe infrastructure has to be paid for by the government, run by the government, the projects have to be executed by the government. Thats not how they build roads or trains in europe. They have a lot of the private sector doing it. In europe they privatize roads, privatize railroads. Its partly a mentalityship that we need to take here. If we were to do it, very important thing you pointed out and that is there is a huge payback. We used to spend a whole percent gdp more in the 1960s than we do more. If you look at the American Economy, the big thing weve stopped doing, taxes, regulations, roughly the same as they were 30 years ago. The big shift in the American Economy is weve stopped investing. Weve stopped investing on infrastructure and other things as well. But this is also the best shortterm thing we can do. The area of the income economy which has the highest Unemployment Rate is construction. Its still 24 down from 16 . If we could Start Building the roads. And it would make a huge dent on the infrastructure in america. Youre probably worried about the fiscal cliff. Ill help you get your money in the right place regardless of what happens in washington. Of pain and fever relief recommended by pediatricians and used by moms decade after decade. Part of a whole new line of tablets from dell. Its changing the conversation. Its changing the conversation. When you take a closer look. At the best schools in the world. You see they all have something very interesting in common. They have teachers. With a deeper knowledge of their subjects. As a result, their students achieve at a higher level. Lets develop more stars in education. Lets invest in our teachers. So they can inspire our students. Lets solve this. But with advair, im breathing better. So now i can be in the scene. Advair is clinically proven to help significantly improve lung function. 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Its a stench thats been getting stronger and stronger in an otherwise strong year in the market. November 7th, the day after president obama was reelected. I dont think its his fault. But the perception that he would not be able to work with republican members of congress to avert the fiscal cliff has caused investors to run for the hills. Take a look. At the s p 500 over the past two weeks, s p 500 probably resembles some of your investments. We dont know what might be included in a deal to raise revenue instead of raising tax rates. Youre probably going to see taxes on the rich going up. Its giving investors the heebie jeebies. Their instinct is to sell stocks. What are they worried about . Concerns have a lot to do with the expiration of the bush tax cuts which could be painful for investors. Capital gains taxes rise from 15 to 20 for most people who file taxes. Taxes on dividends rise from 15 to your top income tax rate which could be depending how much you earn, as much as 39. 6 . Given that a lot of people rely on those dividends for their income, its no surprise to see some of the highest dividendyielding stocks get slammed in the past few weeks. Take a look at some of those. But as ive been saying, today, if we can get past this fiscal cliff standoff, there are going to be a lot of opportunities for businesses to blossom and investors to make money, even if there are higher taxes on the horizon. Mike holland makes money for his clients. Good to see you, welcome to the program. I havent talked to you for a while. Tell me about this drop from november 7th, first of all. How much of that is fear of fiscal cliff, how much of it is people who dont like obama, what was that . Its all the aboff. You used the word heebie jeeb bebefore, thats a good, professional description of whats going on. Its an exextension of what weve had since 2008. People have had a negative fear psychology which is only exacerbated by the november 7th time that you talked about. We actually have had ben bernanke say what you said before, if we get by these negotiations, referred to as the fiscal cliff, in the next few weeks, next several weeks, we could have, according to ben bernanke, a very good year in the coming year. Weve spent the show talking about housing, about energy, about manufacturing, about infrastructure. The things that could really work, light a fire under the economy here. Lets say some of this goes right. Not all of it, some of the stuff weve been talking about goes right. What does my viewer do about that . They should be prepared for a surprise to the upside, rather than the downside. With the fear psychology of the last few years, has been one that, we dont want to lose more money, lets get out of stocks, hide the stuff under the mattress. Under the mattress includes money market funds which yield virtually nothing. Or nothing. If there is a surprise to the upside, just any one of the few that you talked about, how about all of them could happen . Stocks and some other things will be going up in price and you probably want to have some exposure to that. Im not suggesting for people who sold all their stocks or mutual funds several years ago, that they take all that money they took out and put it all back in. They should be prepared for a surprise to the upside dont find out that your stuffs all in a house that you wanted to invest. I heard people say, they sold all stocks and bought properties. You may be able to do better. Lets talk about china. New government there, some of the tension between america and china dissipated postelection because you dont have that Heated Campaign talk. Theres been a slowdown in china because of europe. Theres some sign that its stabilizing. Still growing at 7 . What do you tell your clients about china and asia generally . Ive been going over there for many years, investing there for many years. They, the government, said in 2008, we are going to stimulate our economy, they did it, they did an incredible job. Very different than what we had here. In fact, to the point of being so hot that they had to pull it back, which they said a year ago they were going to do. Its all predictable. They said it. You can look it up. Now they said this third quarter, where they just did the 10year handover of the leadership, that this will be the time when we bought them out at 7. 5 growth, which is incredible for the worlds secondlargest economy. They said, we will be growing in a very controlled way in the future, and thats what the companies i was there in taiwan. Thats what the companies are telling us as well. Mike holland, chairman of holland and company. Do you believe in this economic renaissance in america that weve been talking about . The economy may be on its way but there are hills to climb before we get there. Im going to put it in perspective when committee come back. [ male announcer ] this is steve. He loves risk. But whether hes climbing everest, scuba diving the Great Barrier reef with sharks, or jumping into the market, he goes with people he trusts, which is why he trades with a company that doesnt nickel and dime him with hidden fees. So he can worry about other things, like what the market is doing and being ready, no matter what happens, which isnt rocket science. Its just common sense, from td ameritrade. I gave you some things be hopeful about. The American Economic renaissance is a viable possibility but it depends on the men and women you voted for to do whats right for the country. The fiscal cliff, 12 million of you are still unployed, many who have a job want a better one. The situation in the middle east remains volatile. China presents a complex problem that wont be solved overnight. Europe stands as a tough reminder the direction this country could go if we dont get our fiscal house in order. Im an optimist it when comes to u. E