tv Your Money CNN August 25, 2012 10:00am-11:00am PDT
and the most vulnerable. then at 3:00 eastern time, ken dolan is back us with and his wife joining us from south florida. they're going to be talking about scams targeting seniors. we'll have all that and more straight ahead. in about one hour from now. "your money" starts right now. the presidential contenders may not tell you the truth about the economy. but we will. i'm christine romans this is "your money." ali has been warning us of an economic storm that could hit our shores. do we hear any of that from the campaigns? no, they say this election is about mitt romney's tenure at bain capital. that can wait. right now nothing -- nothing is more important to our recovery than creating jobs. and for america's middle class, job losses and stagnant wages hit them hard. it's the middle class in key swing states that will decide
the elections. the middle class is not created equal. let's have a look. the most obvious metric is the unemployment rate. this shows what you happened to the jobless rate in the vital states since president obama took office. the jobless rate has gone up in the states we made red. it's gone down in the states we made green. let's start off with the states in worse shape in terms of jobs. nevada. look at. that the highest unemployment rate in the country. 12%. florida, above the national average. and this is important. it's got 29 delegates. wisconsin, up a little. below the national average. why does it matter? paul ryan is from wisconsin. virginia and new hampshire, still very low unemployment rates. and i want to take a look really though at where things are getting better. one of these states is critical, ohio. the unemployment rate there 7.2%. this is where mitt romney has to win. he has to win this to unseat president obama. 18 electoral votes. mitt romney and paul ryan are campaigning there this weekend.
iowa, also a very low unemployment rate. 5.3%. president obama is campaigning there next week. it's all about momentum in the market though, right? momentum in the jobs market. so let's look at the trend. six out of the eight swing states have lower jobless rates than the national average of 8.3%. take a look at. this florida and nevada, they have higher than average unemployment rates and high, high unemployment rates. we're going to be seeing both candidates campaign in the swing states right up until election day in november. it's no surprise why. cnn political director mark preston joins me from tampa. mark, if most -- in most if not all of the swing states, jobs are the critical issue. why are president obama and mitt romney talking about medicare and deficits instead of jobs? >> because they're going to try to tie it altogether. it's all about the message of the day. quite frankly for the republicans, christine, they have been taken off message because of this tropical storm that will likely turn into a hurricane. and then, of course, because of
the todd akin controversy. they dwoont they do want to talk about jobs. meanwhile, you have president obama talking about medicare y he is talking about medicare? here where i sit right now in florida in, tampa, florida, it is such a huge issue. and mitt romney has to win florida if he is going to win the presidency. they think that they can take the electoral votes away from mitt romney. that is the obama campaign. and what they say is this is all part of the bigger economy, christine. >> joining me here in the studio, mark, our cnn contributor will cane and bob herbert is a senior fellow here in new york. is it fair for voters to judge president obama based on the unemployment situation in their state? >> it is. i think president obama had a good almost four years of his economic policy. we all admit at this point that president obama inherited an incredibly difficult economic situation. he had four years to put in place many policies to see if we can get a recovery.
i think voters should be able to judge him on that. >> bob? >> sure. i think it's fair. whether it's fair or not, voters are going to judge the president on the state of the economy and what's happening with jobs. i've been trying to say for years that employment is the biggest issue confronting ordinary americans. you know, it's been like that for the longest time. what's happened though is i think really weird. one, president obama would rather talk about these other issues. the economy is not in good shape. what would have made sense was for mitt romney and paul ryan to focus like lasers on jobs and the economy. but they've allowed the conversation to shift off to these other rounds, whether it's medicare, abortion, what's happening, how women are being treated. so i think that that overall is a net loss for the republican ticket. >> i don't hear honest bring -- i don't hear honesty about what the options are here. the options are, you know, things could be tough for next year. you go off a fiscal cliff,
things are going to be very, very tough. i hear about how they're the man to fix it. i don't hear anybody saying exactly how critical this moment is for the economy. i guess you can't win saying it's going to be bad if you elect me. really bad if he elect him. >> that's right. i think you're right, christine. there's no big political advantage to explain the dire consequences to the situation. both from a debt and deficit perspective and from an economic perspective. there is no big win. there bob talked about unemployment, right? i would also say in employment or economic issues, it's what -- which way we're trending, right? can you be bad. is it getting better or worse? that's how we should judge both of the candidates. >> everyone thinks that they're middle class. people show the polls relate to middle class by how much money they make or middle class values. it is the holy grail, right, for candidates to try to appeal to the middle class. the middle class is hammered. it is smaller. it is poorer. it is harder to stay in it. and is there honesty within the
campaigns that a tloflt lot of going on for years and years? >> you know, you're right. the republican party traditionally gets the more affluent voters, right? they're going to get the wealthier voters to support them. then you have the democratic party which tends to get folks who are not making as much money, you know, the poor some might say. but really, you know, the golden vote is the middle class. if you were to break that down more, it is the independents in the middle class and even to take it one step further, it's the independents in the swing states that we're talking about such as florida or nevada, ohio, virginia. that's where the candidates are really, you know, obviously zeroing in on. what i find interesting is that republicans are in a little bit of a conundrum when you look at ohio or some of the other states like virginia where the unplameu unemployment rate is lower. the governors of the states want to take credit for it. the republican governors. at the same time though, they don't want to say that president obama had anything to do with it. i'm not saying he does. it's a tough messaging point to work off. >> one last point.
mark, i know you have a lot of hard work to be doing there. i'm hearing nothing about europe. i'm hearing nothing about china and a potential slowdown in china. i'm hearing nothing about the fiscal cliff from the campaigns. bottom line is whoever is the next president has to navigate through a bunch of stuff they may not have any control over. >> reporter: right at the top, you said they're talking about medicare. they're talking about the other things. i talk about them being taken off message. you're right. it just comes down to jobs. jobs here in the united states. the unemployment rate and we haven't even talked about housing. the voters are concerned about china. they're concerned about europe. that seems like too big of a macro issue for the voters to put their arms around. they just want jobs in the united states. >> i would argue that too much of a macroish sue one of the reasons why the past 25 years we've seen the middle class get hammered. because it's been short termism and election that's have driven economic policy. we'll talk more about that when we come back. mark, have a good time in tampa
working the convention. this election is all about the battle for the middle. >> this is a make or break moment in middle class. >> we're going to rebuild the middle class in america. >> we can't just balance our budget on the backs of middle class families. >> sounds great. but what can these guys actually do for america's shrinking middle class? that's next. ♪ ♪ [ male announcer ] its lightweight construction makes it nimble... ♪ its road gripping performance makes it a cadillac. introducing the all-new cadillac xts. available with advanced haldex all-wheel drive. [ engine revving ] it's bringing the future forward.
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20 years of wealth erased. that's the story of america's middle class. a study this week found it was the worst decade in modern history to be stuck in the middle. but stuck would be better than reality because the middle class is actually falling behind. take a look. from 201 to 2010, median net worth for a three person middle class household fell from
$129,000 to just $93,000. part of the reason there is such a dramatic drop, income has fallen over the past ten years as well. going from $73,000 to $69,000 for a family of three. it's become a struggle for those clinging to the middle to maintain their standard of living. i'm joined now by bob herbert and will cane. what do middle class americans need from the government? what do they need to hear from candidates so that they can get back to where they were ten years ago? >> you were talking about honesty in a prior segment. that's what they need to hear. they need to hear the truth about what is going on in this economy. there is no -- we ought to realize this by now, there is no quick fix for this economy. the economy cannot create enough jobs and not nearly enough good jobs to sustain a healthy middle class in the u.s. so we need a big time national conversation about a long term plan to rebuild the economy. there is nothing like that out. there. >> we're not hearing. that we're hearing differences
of opinion on wedge issues or potentially related issues. medicare is important. you're right. abortion policy is important. you're right. but the big, big story of how we go into fix the economy is not there. >> it's not there. >> i want to talk to you. the majority of americans consider themselves middle class. apeeling to the middle class is the holy grail for politicians. bare with me. >> let me tell you, the heart of my tax proposal is i will not raise taxes on the american people. i will not raise taxes on middle income americans. >> republicans say they don't want to raise taxes on middle class. i don't want to raise taxes on the middle class. so we should all agree to extend the tax cuts for the middle class. >> will, you said neither campaign can be telling the truth here because of the state of the economy. >> i want honesty as well, bob. stop talking about the middle class. >> right. >> the middle class has been overpromised and underpaid. you laid out how bad it is for the middle class. >> they've underpaid or been underpaid?
>> they underpaid. that's why it's going to get worse. let me show what you i'm talking about. if you accept this prem as, if you accept the premise that our moubting de mounting problem is something that needs to be addressed, they say we need to cutted 4dz trillion. let's say we accepted the prem thas actually both president obama and mitt romney promised in that clip we just played. that is not we're not going to raise taxes on the middle class. if you confiscated 100% of the income of people that make over $250,000 a year, you would get roughly $2 trillion in one year. what would happen after year one if you took 100% of th economy you? made a dent in that need but you'reot going to get the based on the backs of the rich or the top 2%. so your eyes feast quickly where all the money s but wait. what if we do what mitt romney said? what if we cut our way to getting our deficit under control? well, as of recently, he's
promised he would protect social security, medicaid and medicare. he is showing no interest in cutting defense. that leaves essentially other programs and safety net programs which we call discretionary spending which is about $600 billion a year. now again, if you cut that down almost all the way to zero, you could get to your $4 trillion quickly. you're dismantling everything the federal government does out side of insurance and armies. so here's my point. the middle class, if you accept we have to do something about this debt and deficit problem, the middle class is going to be who has to pay for that? >> right. middle class has the money. you're right. middle class is the one that benefits from the services. so what services should taxpayers be prepared to lose? clearly can't pay for it all. >> before we start off -- >> we can't afford our middle class. >> before we start talking about losing services, we can't do anything serious about debt and deficits just by raising taxes on the wealthy.
the number one folk us in this country should be on putting people back to work. i think taxes need to be raised across the board. we need to raise the taxes in order to put people to work. because if you don't have the overwhelming majority of american working people actually working at decent paying jobs, you're never going to get enough in terms of revenue do anything substantial about deficits. >> i think we have to focus on the deficit. don't select your president on who's making the most promises to the so-called middle class. ask yourselves these two questions. i do want to pay for the service that's i must eventually pay for? therefore, should i pay more or cut back? more importantly, this is where we might agree, who, which conditioned date can grow the entire economy? who's policies are better for
growing the entire economy? >> you're not hearing that, right? >> you're hearing bits and pieces of that. you're not hearing that whole story about who's going to grow the entire economy. >> we're not hearing any of that. you know, getting a little frightened. i'm starting to agree with what this guy is saying. >> who me? >> yeah. the whole point is to have a serious debate and maybe can you make some head way. we're not having that debate at all. >> yeah, we're not having that debate. the other thing about all this is we've got a bond market that that's at 1.65% for a ten-year note. there is no pressure from markets to go anything right now on the deficit and debt. really there isn't. other than our credit rating which is, i'm very concerned about it. there is some relief at the markets are giving us the moment. we don't know how long that will last. >> as long as you're right, the bond vigilantes might matter. i'm not convinced that our debt and deficit problem is merely an
extension of how the bond market feels about our debt and deficit. >> so many moving parts. thank you so much. really nice to see both of you. election day may be on your calendar. new year's day is even more important if lawmakers don't get their act together. is washington -- is washington really ready to throw you over a cliff? great shot. how did the nba become the hottest league on the planet? by building on the cisco intelligent network they're able to serve up live video, and instant replays, creating fans from berlin to beijing. what can we help you build? nice shot kid. the nba around the world built by the only company that could. cisco. [ male announcer ] if you think even the best bed can only lie there... ask me what it's like when my tempur-pedic moves. [ male announcer ] ...talk to someone who owns an adjustable version of the most highly recommended bed in america. ask me about my tempur advanced ergo. ask me about having all the right moves.
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the congressional budget ofce calls it a certain recessi recession. it's the fiscal cliff. we're talking about the effects of $1 trillion in automatic across the board spending cuts mandated by congress known as sequester. that combined with a series of tax increases including an end to the bush era tax cuts and payroll tax. measures scheduled to start on january 2nd unless congress acts. don't hold your breath, folks. if you recall, the sequester legislation was passed a year ago to end a bitter debate then over extending the government's debt ceiling. intense partisan blackmail by
both sides nearly shut down the government and led to a downgrade of the united states credit rating. now the enormous amount of spending cuts and tax increases, if they stand, will shrink your economy at a time when you expect your political leaders to do everything they can to stave off another recession. and a new report from the cbo says unemployment will rise, will rise to 9% in the second half of 2013. but what happens if lawmakers act and avoid taking us over a fiscal cliff? the cbo says the economy will grow by 1.7% next year. sure, that's a normal circumstance that's is considered dismal. it's still growth. in addition, the cbo projects two million jobs will be created while the unemployment rate will stay steady at 7%. that's if -- if congress gets its act together. greg, we all know that congress won't act before the election. they should. would these guys really, really risk taking us into a recession
because they're fighting politically? >> you know, christine, just when you think you can't be any more disgusted by the gridlock and dysfunction in congress, a story like this comes along. i got to tell you, i think the markets, the stock market in particular have been on happy pills for most of the summer. reality often sets in in the fall. i think the reality is that none of us will know what the tax rates will be in january until late december at the earliest. >> does this idea that people think there must be back room negotiations going on. they must already be talking about how they're going to avert this crisis. i don't think that's happening. >> no. you know, both sides, christine, are using this for their best sound bites. they want to try out their best arguments against the other side. they're all saying we'll get something done it december. probably in december they'll kick the can down the road which is what washington always does. they may extend everythi through the winter. but this is not a great way to run a railroad, to have nobody sure of what the capital gains
rate will be, what what dividend taxes will be. this uncertainty i think already is hurting the economy. >> you know, it's interesting. want to bring in dan gross, columnist in global business editor on the daily beast. you hear a lot from wall street and the business community that it's the president's fault that there is so much uncertainty. you could read it this way -- the tea party did this. the gop leadership could not reign in the tea party. democrats didn't have the skills to match tea party obstruction. really, really how did we get here? >> well, i would blame the tea party, the gop and i would also blame this sort of very large industry of deficit hawks. there are a lot of outfits in washington and new york clammering saying we have to do something about the deficit. we need a big deal. we need a grand bargain. but they were advocating this in a climate where republicans are simply if they're unwilling to cut a dea that would make president obama look good, that's been the dynamic since
2009. and then they're unwilling to raise taxes. you can't have deficit reduction a, without a deal, b, without raising taxes. so the force that we're pushing for the simpson bowls commission and the bang of six and all the editorial boards that were applauding this and pushing this are creating this real impetus for real action. what we ended up with by default is this sequester and the fiscal cliff because the parties as currently arranged, they couldn't make a deal on stimulus. they couldn't make a deal on health care. there was no reason to think they were going to be able to make a deal on taxes and spending especially in an election year. so this -- i feel like this is sort of one of those slow motion train wrecks you could have seen coming for, you know, many miles away. as journalists, i'm not saying this is something we look forward to. but, you know, we always like to be on the front page and for people who cover fiscal and financial issues, this is promising a lot more ink for us. >> i don't think it's a slow motion train wreck.
i think this train is coming very, very fast. i think it's loaded with explosives. and that's what i'm really concerned about. greg, you hear people say -- the cbo even says, okay, there is a recession next year if congress lets us go off the fiscal cliff. but it would put us in a better debt situation. that's, i guess, the silver lining. is a better debt situation worth a possible recession and 9% unemployment rate right now? >> absolutely not. i tend to sharidan's viee dan's the deficit. as long as the bond market doesn't care about the deficit, doesn't keep me awake at night. so, no, i don't think fiscal austerity is the answer right now. i would say this, though. perhaps counter what dan said. there is plenty of blame to go around. >> yeah, tell me about the tea party angle. whenever i talk about fiscal cliff, i get a lot of mail from people who say why don't you say it like it really is? the tea party said we're going
to oppose this president and that's why we're here. do you agree? >> yes. at the same time, i think both parties are the no get much done. president obama advocated on this. he hasn't really taken a very forceful role especially on entitlement reform. i would like to see him get a little more involved and he should because his re-election would hinge on that. >> an election year, a fiscal cliff. i thought the debt ceiling debate was bad last year. i didn't know it could get worse. it has. dan and greg, stay right where you are. inside the head of politicians, we're going to be joined by a political psychologist. he's going to tell you why you let your elected officials lie you to. that's right. this is only an hour long show, folks.
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those ads may sound scary. there is one all problem, the ads are not true. the medicare add is mostly false and the welfare ad had the lowest possible rating, pants on fire. they run misleading ads and run false adds of their own. it's so bad that a team of former mit students created an iphone app that can help you listen to an ad and faverify th claims. 155 of mitt romney's statements. they fnd that 29% of them were true or mostly true. president obama's scores -- a little better, 47%. less than half for both of them. political psychologist jonathan hyte is a professor at new york university school of business. you say we hold politicians to an unfair standard. when did truth become a luxury?
>> first, let's step back and look at our basic moral psychology for how we deal with each other. forget politicians. somebody said why do you complain about the spec in the neighbor's eye when you can't see the plank in your own? we're all hypocrite. we have all this social cognitive software running in our heads to catch other people in deceptions and cover up our own. we're all hypocrites ourselves. then we apply the psychology to politicians. we're put in an impossible situation who can't tell the truth all the time. >> why can't they tell this truth? >> there is this thing called democracy. people always want more services and lower taxes. >> so they're playing a game? they're playing a game to get elected and playing a game to further what they want to do for the country and that includes lying? they have to lie to do that? >> they're playing a complex game that works at multiple levels. there's the lection where it's them versus their opponent. there's the game of trying to please donors. there's the game of watching what they say will be taken out of context and shown in an
attack ad. so we're putting them in this three dimensional chess game which nobody can play and saying, look, you screwed up there. we only do this to the guy on other side. we give our guy a pass. >> if a friend of mine were to mislead -- half of the things a friend told me were misleading, that person wouldn't be trustworthy as a friend but that person can be a president? >> that's right. >> that's crazy. >> that's right. >> you're saying that's the way it? >> i'm a very low baseline, i have low expectations for our spees yez. we evolve to be a tribal species living in little groups in the jungle. it's miraculous that we can come into vast groups and live peacefully. when one side loses an election, there is no shooting. so this is a miracle to me. now democracy comes out of this. democracy has us all shouting at each other. and basically, yeah, they have to lie to get elected. there was a president once who said i will never lie you to. he was not very effective. >> i want to bring in greg and
dan. you know, it's interesting, you say we're all very easily seduced. do we deserve the politicians we elect? >> no. i don't think so at all. i disagree with much of what the professor said. i think that these politicians are doing a great harm, a great disservice to our country. they deliberately dumb things down. they try to seduce people with easy answers. we can reduce the deficit. eliminate it. get rid of waste, fraud, abuse and foreign aid. they talk about ridiculous prescription that's cannot be accomplished. then people get disappointed when these things don't occur. >> dan, why do -- we know that they lie. we know they lie to get elected. do we let them off the hook because we know there is the campaign candidate and then the presidential candidate or the elected candidate? >> i actually take the opposite side of what greg is saying. i think it's our citizens, as citizens, we frequently lie to ourselves. the information is all out there. you did the polls. people think 10% of the budget
is foreign aid. of course, it's like less than 1%. people saying, you know, get your government hand off my medicare. >> do you think the electorate is lazy? >> other people don't pay taxes. the information is all out there. the truth is out there for anybody who wants it to get. i think there are large chunks of the population that when it come to politics are either diluting themselves or lying to themselves. the politicians respond to. that. >> i wonder if it is also people believe what they want to believe or what they want to hear, what fits their own wishes and moral views. >> this is what my own research is on. this is an enormous trend in social psychology. it is motivated cognition and the confirmation bias. we use our reasoning not to figure out what the truth is but to find evidence to support what we want to believe. so whatever you want to believe about medicare or taxes or anything, you don't say well what's the evidence on both sides you? just say can i find some justification? and now that we have cable news channels devoted to every slice of the political electorate,
it's very easy. >> that's why the ads work. and that's why stump speeches that focus on one thing and not another, that's why their work. what do you call it? >> motivated cognition and confirmation bias. >> in a sense, yes, we do get the politicians we deserve. but that is our human nature is we can't just deal with this rationally and equally. >> it's a fascinating conversation. greg, dan, professor, nice to see all of you. let's talk about it again. we have 70-some odd days to be lied to until we start it up again. up next, who is john galt? why the answer to that 55-year-old question could shed light on another question. who is paul ryan? ♪ (train horn)
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remember this -- >> if you have a business, you didn't build that. somebody else made that happen. >> if you were to do 180 degrees from what the president just said, you'd get ayn rand. she is stirring up dialogue and debate on the right and the left. why? because a young paul ryan now house budget chair and candidate for vice president has said he was influenced by atlas shrugged since 2009, sales of this book written in 1957 have skyrocketed. her views on the economy very simply, laissez faire capitalism, less government, much less government, much more private entrepreneurship. her work influenced the likes like alan greenspan. he was a personal friend of rand and clarence thomas. shows the movie version of
rand's novel "the fountain head" each year to the new law clerks that work for him. and hugh hefner as well. of course, not all of these men buy into rand's philosophy lock, stock and barrel. her social views get in the way, particularly for republicans like ryan. but beyond her whole exist only for yourself monday tantra, mana hard time getting past rand being an atheist. i can't believe how much we keep talking about this woman and her work and the fact this her book sales are still so strong after atlas shrug was written in 1957. paul ryan, another reason we're hearing so much about this. he told the atlas society that she inspired his interest in public sfgs. th a few days ago he told fox news this -- >> i really enjoy her novels. it triggered my interest in economics. that's where i got into studying economics and wanted to study the whole field of economics. it later in life learned what
her flog if i is. something i completely disagree with. it is an atheist philosophy. >> can they get around this? >> i think they k thank you for doing the segment on my favorite book in the world. you know, i hope, christine, that you have read "atlas shrug." we call people that haven't read it virgins. >> oh, my. >> go out there and read it if you haven't, folks. you know, it's amazing. that book was written 60 years -- almost 60 years ago. it is still so influential. in fact, a survey came out of young college students and found it is the most three or four influential books. the sales have actually gone through the roof as you just said ever since barack obama came into office. you know, it is really about how do you grow an economy and the story is really about very contemporary to our situation today. kind of an economy that is in slow collapse. the government keeps trying to
do more and more to solve the problems with stimulus plans and cash for clufrpgenkers. >> you're not going to find food stamps in a rand novel. we understand she celebrates the wealthy, successful people. and that wealthy is because of the success and ambition and hard work. they worked hard for money and they deserve it in her view. but why is this that you hate poor people? why don't you celebrate poor people? is there a problem with a lack of morale? is the morality off for the rand ian snchlt. >> the people that wrote the book are the ones that create innovation and businesses and create jobs are the people at the top, the people who took risks. the people who put sweat equity in the business that's employ people. and the point of the book is, look, once you start abusing those people and treating them as if they're cash atm machines, you know, what happens in the book is you know is that the wealth producers, job creators,
they drop out of society and the whole society collapses. i think what rand would say if you were asking her this question, is look, we want a system that generates more people creating wealth and businesses. and if we don't celebrate the capitalist system, the whole economy might collapse. >> does the left have an ayn rand? >> good question. maybe paul krugman. he would be the contemporary version. >> why are the left people so suspicious of people that embrace her? you look at paul ryan now. he is careful about talking and separating her economics from her philosophy. >> because some people think her view of the world is utopian. that, in fact, she doesn't see it nuances of the economy and the good things that the government does. and she believed in almost no government. i'm not in that camp. i want to limit the government. i do think the government does some important things. her book is a very important insight about how wealth gets
created. and one of the things i'm glad you played that little clip from the president saying, you know, you didn't create that. that's a direct attack at the ideas that ayn rand had. yeah, the people who create the b businesses, they're the ones that created the businesses, not government. >> look, as with all -- it's a knox, right? a novel that wraps up her philosophy. sometimes can you explain economics better in a novel. you can like them -- >> by the way, that is something that made her so famous was that she had a way of talking about these issues you and i talk about it every week but in a way that kind of made it really entertaining and in a gripping novel. >> but where is the morality or the -- i mean there is no room for morality or god in these novels. >> that's true. and that's one thing that a lot of conservatives didn't like about rand. she wrote a book called "the virtue of selfishness." some conservatives krifrcringe . that you should be charitable and help your fellow man. the issue is whether the
government should compel you to do it or whether government charity works betteren that private charity. give your money to the salvation army, no the to the food stamp program. >> certainly more interesting than reading economics 101. >> for sure. >> sorry, stephen moore. >> i'm so happy to learn you read "atlas slug." >> thank you so much stephen moore. remember the frenzy around facebook's ipo? they lost half of their value since the debut. coming up, we're going to ask the question that is on everyone's mind. [ pilot ] now when you build an aircraft,
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investment of $500,000 into $1 billion. he's not the only facebook investor selling shares. dustin co founders had it this week, but if you bought in at the ipo and you sell now, you will. the stock has lost half its value since it debuted three months ago. half, but you're still asking the same question, aren't you? should you buy? here to answer that the president of penn financial book. matt, you wouldn't buy at 28, you wouldn't buy at 35, are you buying at 19. >> i'm not buying yet, and i know at 38, melissa said take a look at it in the high teens. i'm still not ready to buy, christine? how come? >> still think the stock is overvalued. the management has not figured out how to monetize the mobile world. now they check facebook all of the time it's also on my ipad or my iphone. they're not making money off of that because there's no advertising. so that's a big struggle to me. until management can figure it
out and until zuckerberg gets out of his own way, i am going to stay on the sidelines. >> i want to bring in richard, host of "quest means business." investors and people who could be investors like matt mccall, they worry about the growing number of users who access facebook on their smartphones. cnn money's lori segal was in california, richard, and she asked facebook's director of product management and how the company plans to use money for mobile users. listen. >> therere many different ways to add value. there's value by letting me connect more deeply with my cousin or keeping me in touch throughout the day with my wife. there's value in helping businesses connect with their customers, and also reaching potential customers, so this is really an extension of things we've been doing all along. >> richard, is that enough for investors? >> no, no, no! he's merely stated the obvious. thank you, sir, for pointing out
that there are many ways of keeping in contact with great auntie bessie in north dakota, like we didn't know that already. he has singularly failed to answer the question, how he is going do it and monetize it. nobody thinks with $900 mi900 m users facebook will disappear overnight. it is going to be part of the fabric of social networking and communication for the foreseeable future. that's a given, but there's a huge difference between being something that you keep in contact with and investors making money, with where we're looking at ebitda, earnings per share and you're making a return on investment and the sort of nitty-gritty, the people want to know when they pass with their dollars. >> when richard quest says ebitda it makes me blush. i want to ask when advertisers like gm are dropping out of facebook because they don't see it as an effective marketing
platform, what does that tell you? >> the jury is out! the jury is not out on whether great aunt bez ney north dakota is using it or whether little tommy in florida is using it. that's a given, but the jury is out on whether this thing will make money in sufficient quantities at the back of everybody's mind, my space, here today, gone tomorrow and always remember what one professor told me, when your mother's on the same social network as you are, it's time to head for the door. >> let's talk about zynga, pandora, groupon, all of those stocks down. there is one bright spot. linkedin is up since it went public last year. linkedin is the only social media company that you would consider buying. >> it's the viable business plan. professionals actually pay money to get on to the website to connect. we're in a situation right now
where unemployment is still extremely high. people use linkedin to find jobs and network with people they worked with in the past and i have friends that own recruiting companies that pay quite a bit of money to find new candidates and to me, i look at linkedin and i thought just before i sat down today and in the next couple of years. you're seeing earnings go from the -- have you bought it? >> i have not, but i am watching it closely. we've seen that that bubble talk and you look at social media stocks, and they haven't really lived up to the hype. >> i sold stocks last week that i bought at the top of the dot com boom. i'd always kept them in my portfolio as a measure of hubris to remind me how pathetic i am as an investor. i tarornad turned a small portf
a large portfolio in value. when i hear about new paradigms, path to profitability and when i hear people talking about social metrics changing i am much more cautious than i ever was before. linkedin has found a niche and found a purpose. facebook's found a niche and found a purpose. unfortunately, great aunt bessie in north dakota isn't prepared to put her hand in her purse to pay for it. >> aunt bessie is getting a lot of air time today. richard quest, some day we'll sit down and i'll tell you about my lucent technology woes. >> that's the one i sold! >> i still have it to remind me every time i log in, don't listen to people, people will be great at 20 and it will be great at 10. it was heartbreaking at 2. >> i wasn't going to mention it, but i have to tell you, i have a
trade note which shows a reduction in value of 99.9%. >> richard, based on your past, maybe i should be buying facebook. >> brad mccall and richard, thank you for the big laugh over lucent technologies. thanks, guys. you don't have to tell me who you'll vote for in november, but i do want to know what issues are helping you decide. i'll tell you how you and ali velshi will join that debate next. great shot.
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>> the presidential election is now ten weeks away. swing states like florida, nevada, iowa, ohio will likely decide this election and middle-class voters which most of you say you are will be casting ballots with the economy in mind. unemployment is still at 8% and unemployment is mediocre, but there are signs of hope like housing and the stock market so it is your choice in november. stick with president obama or turn to governor romney to take us in a new direction. whatever the outcome,