tv Fareed Zakaria GPS CNN April 25, 2010 10:00am-11:00am EDT
it, only 18% liked the idea. the new benjamin franklin comes out in february. the new reagan bill may take longer. thanks for watching "state of the union." i'm candy crowley in washington. "fareed zakaria gps" starts right now. welcome to "gps," i'm fareed zakaria. now, imagine that you wanted to make a bet against a sports team, say the new york yankees. you know that the team has had a great run but also players have played badly of late. you think that will ruin their record going forward so you want to place a bet against the yankees. you ask a bookie to take the bet. the bookie has to find someone willing to take the other side of that bet, someone who will put money down because he thinks the yankees will keep winning. boiled down that is the essence of the transaction that took place in 2007 on the direction that the u.s. residential
housing market would go, up or down, with goldman sachs playing the role of the bookie. the now governmegovernment now goldman sachs portrayed fraud. they say goldman had to find someone to bet on the other side. even if paulson had chosen the securities, why is that illegal? somebody picks a bundle of stocks or securities they wish to bet against. they then ask companies like goldm m goldman sachs to find someone to take the other side of that bet. someone betting against the stockses or securities think they're garbage. the guy betting in favor disagrees and it is that disagreement on the quality of the stocks or securities that makes the market.
goldman sachs is the intermediary and collects fees from the buyer and seller. now the government says that had the people who were betting that housing prices would rise know that john paulson was betting against them, they would not have taken the bet. that's absurd. in 2007, john paulson was a nobody, a medium-sized hedge fund manager who had been wrong about the housing market for a while. had the bet been made six months earlier, it is paulson who would have lost $1 billion and the other investors would have made money what is happening here is a familiar trend in america after a boom and bust. we all feel embarrassed and ashamed and somewhat culpable in having glorified industries products and people that then crashed miserably. in order to relieve our sins we turn on the people we used to lionize and throw them to the wolves. we criminalize what were standard business practices, some of which might have been aggressive but none of which
were illegal. i'm all for financial reform. derivatives should be regulated there should be capital requirements for credit default swaps, maybe they shouldn't be legal, but you can't make those decisions retrospectively. i'm in favor of tighter regulation but also in favor of the rule of law, of due process. and of equal justice. even for people who make tens of millions of dollars. that's my view, you'll hear others as we convened an extraordinary panel to talk about this. i think there's a deposition de here. having given them huge sums of taxpayer dollars to bail them out, taxpayers and others are saying this is what they do? >> first, i flew down to washington to have a candid conversation with timothy geithner, secretary of the treasury about all this and the broader economy. stay with us.
mr. second fair, thank you for joining us. >> nice to see you. >> when people talk about you, there is often a mention of your ties to wall street. and in point of fact you have never worked on wall street. you were chairman of the new york federal reserve, but you never held a private sector job. you worked in the public sector, kissinger for a brief period. >> i don't think most people count that as the private sector. basically almost out of graduate school i came and worked as a very junior public servant at the treasury, and spent my entire professional life since in some form of policy job. >> but how does it make you feel when you hear these charges that you are somehow in bed with wall street firms? >> i find that the charge that the myth that i worked in wall street amusing.
but it is part of a narrative that hardened, which is that people came to view the judgments we were making through the prism of a myth, that we were here with experience tarnished by that, which is not true. so i think it's actually very damaging. it's completely false, of course, and it should have been corrected a long time ago but newspapers across the country wrote that, some of them keep writing it. i don't know why that's the case. >> let's talk about financial reform. the financial industry is an area where the united states had the leading competitors in the world. it was an industry the united states dominated to a large extent. is there a danger that in doing the financial reform you make it impossible for the goldman
sachses of the world, the morgan stanleys of the world, the citigroups of the world to be the large global players that they were in the past? >> excellent question. i think actually we will have quite the opposite. i think that our system as a whole ask not going to just be more stable, but i think our institutions will be much stronger on a relative basis, relative to their global competitors in these markets. because, again, the basic strategy that guides reform and guided our response to the crisis is that you bring more transparency, bring more disclosure, you force more capital into the system earlier, and you make sure you put in place basic things that make markets work better. the great defining strength of our system was not just the broader integrity of disclosure requirements, but our system was great at taking the savings of the world and giving them to growing companies to good ideas. so the great companies of our time were built on the strength of that basic system, and we're going to make sure we preserve
that fundamental strength. but to do that, we have to make sure we have a system a bit more stable overtime and does a better job working for the customers of banks. >> why -- if that's the case why do all the big banks feel otherwise? they all feel as though you're actually going to make them less profitability and competitive globally? >> think back and think what this crisis showed. how good was this system for a bank shareholder? it wasn't so good how good was the system for a company that relies on banks to provide credit? they went from banks falling all over themselves to lend them money at unrealistic rates, to credit drying up in a heartbeat. you had companies fail by the thousands because of that. you had companies that couldn't expand, had to delay expansion because they couldn't, you know, finance a patent that they needed. that system didn't work so good for our country. that's why i think these reforms are not just so important for future growth but will be better for the overall public interest and having a strong, stable institution.
the institutions are fighting these reforms, and they're not all fighting it. but some are fighting the reforms because they think that they have the chance to carve themselves out of these protections, and gain some short-term benefit from that. but we're not going to support a bill that is weakened by the exemptions that leave the system in place, because that would be irresponsible for the country. >> you want to get republicans on board. >> and we will. i'm very confident. i think we'll have very strong support from republicans for a strong bill. i spent a lot of time with them. not just over the last 14 months, but certainly over the last few weeks or so, and what they say to me, and i believe them, is that they want to support a strong bill. after a crisis that caused 8 million people to lose their jobs, this degree of pain and suffering, i think everybody has to be for reform. and it's very hard for people not to be against the kind of strong reforms that we laid out. >> but yet you only got one
republican on the senate committee and senator grassley said this does not mean he'll support the final bill. >> true. >> you don't have a single other republican who has come out in favor. >> you know, but they're doing what you would expect, they're trying to maximize the chance they have leverage still to pull this bill in certain directions. but, again, based on all my conversations -- i think if you listen carefully to the tone in washington over the last couple of days, there's ban substantial shift. i think really on balance there are a very substantial number of republicans who want to be for a strong set of reforms. i say this on the basis of what they tell me in private. >> you will get ten republican votes? >> that's up to the majority leader and minority leader in the senate. i think on the substance we are very close now. >> if the reforms pass and lehman brothers had gone -- gotten to the point it got to that day, what in this bill would have made lehman brothers
not blow up? >> excellent question. with this -- these reforms that provide a way of bankruptcy-like mechanism for dismembering banks safely without the taxpayer being exposed, it would have allowed to us come in earlier and in, effect, put lehman into receivership, break it up and dismember it over time without it causing the panic that it provided. so the -- a bankruptcy provision designed for large banks combined with the necessary capacity to spray a little foam on the runway, an example is your neighbor's house is on fire, you want the fire station to come and make sure the fire doesn't spread, and they do that in part by hosing down the neighboring buildings. that's the balance. you want to make sure you can draw a circle around the failing institution, isolate it, make sure the fire can't jump the fire break and effect the entire financial system. >> when you look at america's housing policy, we have all
these massive distortions that we put in place. we -- this interest -- mortgage interest s it deductible? you don't pay taxes on it. you don't pay capital gains taxes when you sell your house. you can walk away from the lone. you have freddie and fannie mae pouring money into the system. is it a surprise it caused this enormous bubble and shouldn't the fundamental reform be that we have to rethink all the of that? >> that's the arguments in some ways for doing reform in these stages t is a very complicated mix of decisions, it's not just fannie mae and freddie mac. that system, that housing finance system worked excepti exceptionally well for many d k decades it was the envy of the world many countries replicated the institutions we built to provide a fixed rate 30-year mortgage that expanded opportunities for homeownership over a long period of time it worked well across a whole series of recessions in this country over time.
we made these two terrible mistakes in basic government policy over this period of time. one was to let fannie mae and freddie build up and hold a range of risky securities that are not centrally related to the basic function in housing markets, making housing more affordable without holding the capital necessary to support that. they did it because they wanted to pass on more gains to shareholders. homeowners didn't benefit from that. that was an avoidable mistake, but fundamental to what made them vulnerable. a second mistake everyone is familiar with, we allowed a whole parallel industry of banks emerge outside the protections and constraints for consumers built around banks in the mortgage market that led to the subprime crisis. a huge erosion in basic protections a huge growth of abuse in that area it was broader failure of policy by governments. those are two important things
that we need to fix. the first we will do in financial reform. the second we have already fixed. we prevented that from getting worse. the second we will do when we take on this broader challenge. >> we will be back with the secretary of the treasury, timothy geithner, right after this. >> i'm much more confident than i have been any time these last two years of crisis because, again, we did enough early to right the ship. fast in all its forms. the is line. at your lexus dealer. they've served for decades as a golden, tasty sidekick to the all-american meal. french fries, and our national passion for them, are legendary. classic. iconic. but times change. and people want better foods. so cargill helped a restaurant chain create a zero-trans fat cooking oil for their french fries. using select canola plants and inovative processing techniques while preserving their famous taste. because no one wants to give up a classic. this is how cargill works with customers.
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we are back with the secretary of the treasury, timothy geithner. in the decision you made to recapitalize the banks, rather than take them over, as many people were suggesting, did you realize that the effect would be that the financial industry would recover faster than the general economy and as a result, of course, banks would going to be profitable quickly? they were going to pay themselves large bonuses and you would have a huge political problem, which is that it seemed as though the bankers were getting rich while the rest of the economy was in the doldrums. >> not nearly as big of a problem as if we adopted the
alternative strategies. the letting them hope the fire burned itself out, letting them fail enmass, was the government of the united states to take them over and take all that burden of losses would have been dramatically worse for the american economy. unemployment would have been much higher. the economy would not be growing today and the fiscal burden for the country, for our children would have been dramatically higher. trillions of dollar potentially for us. this was a classic example of the basic reality of governing by principle which is you do what is right in the interest of making things better, even if it is going to be short-term politically costly because the consequences are likely to be worse longer term. so, i'm sure it was a better strategy than those alternatives. and what you see today in the financial sector is fundamentally a reflection of the fact that the economy is growing again and people can borrow again. so it's not a sign of -- it's a sign of strength, not a source
of concern. you cannot have a system which -- a financial system earns money without people being able to borrow again, raise equity, raise debt, that's part of what is necessary to let economies grow. you cannot have growth without credit. when credit is available you will see banks starting to be able to be in business again. >> the way you guys have been and the administration have been handling this has been the stimulus package, help on the mortgage front, help with the auto sector, the federal reserve has been pumping liquidity into the system. at some point that has to end. do you worry that when the federal help to the economy starts tapering out, we will be in for a double dip? >> i'm not worried that -- the reason i'm not worried is because i think we're going to be careful not to put on the brakes before we're more confident. you have a private sector that can withstand the effects of the
restraint. we are already starting to walk back the emergency measures we took in the crisis. made a lot of progress, putting t.a.r.p. out of its misery. the fed mostly ended its programs. we will start next year to bring the deficit down quite sharply over time. >> you still look at the federal reserve, it has 2$2.5 trillion n its balance sheet, almost 2.5 times as much as it did when the crisis started. still very low interest rates. aren't you worried that you're feeding a new bubble of sorts? if you look at the -- there's a book i'm sure you have seen which talks about the history of the last 500 years. in each case the effort to deal with the financial crisis, what ends up happening is you create a small bubble of its own because you flooded the market with cheap credit and liquidity. >> of course our strategy was guided by that, a history of
crisis which show fuss mismanage them they get larger. but what we did was move much earlier and with force early on. in the financial sector we did an important thing by forcing banks to open their books and recapitalize with private money. we had the government get out of the financial sector much more quickly and have the private sector bear a much greater burden of solving the crisis. because of that the fiscal cost of this crisis, because of those two choices, one is to put overwhelming force right the ship, put out the fire, by adopting a strategy that forced the private sector in charge of recapitalizing the financial sector, this will cost us much less than even the s&l crisis. >> do you feel confident that this balancing act that you are trying to achieve, of pushing enough stimulus that you can keep the economy going, but then withdrawing it so that you don't create another bubble, you don't create other problems, you sure
you will get this right? >> it's a challenge to get the balance exactly right. i'm much more confident than i have been any time the last two and a half years of crisis. again, we did enough early with enough force that we were able to right the ship. really there's encouraging signses across the economy today that the private sector is getting stronger. it's still a very tough economy. and as i said earlier, it will take a long time to heal what was damaged across the basic american sense of security it will take some time. and we're going to keep working to make sure people get back to work, incomes are growing, the gains of growth are shared more broadly, and since i'm much more confident that we'll salvage that, i'm confident we'll have a will as a country to bring down those deficits. the entire tone of the american political debate on budgets has changed. we had a long period where people said deficits don't matter, governments don't have
to pay for things, you can cut taxes for the rich, that's changed dramatically. nobody can look at our fiscal period today and say that we can afford to ignore that later. so i think that helps a bit because that means it's going to be easier for us to do the right and necessary thing when the economy is stronger. >> tim geithner, thank you very much. >> nice to see you, fareed. >> this case is a threat to goldman and the banks because having given them huge sums of taxpayer dollars to bail them out, tax payers and others are saying this is what they do? if this is what they're doing, h why are we bailing them out? wee this a company all americans can be proud of again. that's why i'm here to announce we have repaid our government loan, in full, with interest, five years ahead of the original schedule. but there's still more to do. our goal is to exceed every expectation you've set for us.
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. from goldman sachs to the political economy, political broads in the u.s. and the uk, we have a lot to talk about. eliot spitzer a columnist for slate.com, the former attorney general of new york. andrew ross sorkin, the chief mergers and acquisitions reporter of the "new york times." martin wolf, and amity shlaes a senior fellow at the council on fellow relations, and a columnist for bloomberg.
eliot, let's assume that i am a big oil company, i want to in some way mitigate the exposure i have to oil. if oil goes up, i'll do fine. what happens if oil goes down. so let's say i want to make a bet that the oil market will go down f it goes down i have -- my balance sheet doesn't look awful. i go to goldman sachs and say find me somebody who wants to take the other side of this bet. what is wrong with that? that is, in effect, what goldman sachs is charged to have done. allowing john paulson to select securities. they're denying it, i'm saying even if he did that, isn't the whole point i have this bet, find somebody to get against me. >> those on one side of the bet knows the other side of the betebet disagrees them.
but goldman misrepresented how they put together the product, and that is the predicate for finding them libel. >> that's the crux of the issue. >> the crux is is it material that goldman, when it pretended to neutrality in creating product, which is how it presented itself to its clients, was designing something designed to fail. you're correct that one can imagine a situation where i know you think it's going to go south, i think it will go north. we sell at an agree eagreed-upo, no problem. but if it changes, that's a problem. >> in 2007 if you knew that john paulson was on the other side of a bet from you, you would quiver, john paulson was a mid level hedge fund manager who had been wrong before. >> goldman's defense was people taking the long side of this thought the other side was the sucker. i think goldman's best defense is the sense that they showed
the buyer in this case the entire deck of cards. they got to look through every card, put it in their own model, decide if the cards were good the independent group that was supposed to verify these things kicked half of the cards out of the deck. >> right. >> that -- the only thing they didn't know, potentially, and it may have been misrepresented s that john paulson created the deck. but the fact that you got to see all the component parts is the most material part. >> of course paulson thought this was garbage, that's why he wanted to short it. >> i totally agree. they were able to look at the component parts of the investment so you can say why does it matter who put them in here? this case presents an existential threat to goldman and the investment banks because having given them huge sums of money to bail them out, taxpayers and others are saying this is what they do? if this is what they're doing, why are we bailing them out? >> to be fair, that's a bigger question, and it doesn't -- you
can can't. >> the argument is too good on the other one. >> you can't criminalize things because you don't like what they are doing. >> my view is for some reason it's a cultural thing. americans like to think what's happened here is that something is crooked. and that the real issues, we can only find the crooks, the problem is solved in some cases, as mr. spitzer pointed out that was quite important in other cases. but in this case, this is not the problem. the problem in this case is what was legal. and in this case the interesting thing is who was on the other side. it turns out on the other side was some european banks, which then end up having to be bailed out by their taxpayers. one of those set of taxpayers is me, a british taxpayer for the royal bank of scotland. i don't think they should be involved in this bet at all. that's not what a bank exists for. that, to me, is the really big issue. >> right. >> that's exactly the issue. this case points up the bigger question that you raise in the beginning about whether these
instruments should exist at all. and while i would argue you're correct in that there are certain times when a company might want to bet against something to hedge their own risk, these were really just bets. you and i betting on a baseball game. there was no value, no social utility. nobody was getting an additional mortgage because these people were making these bets. these were literally derivative bets on top of other peoples bets. >> that's why the current law being discussed is inadequate because it doesn't get to this issue. >> one reason that an attack on goldman resonates is people are tired of deal-based wall street. wall street and washington. so goldman is the best one to deal with. the highest. so the attack -- >> i think it's envy. they are the guys who make all the money. >> what is fairness? fairness is prices, it's not deals. so you say if i know the price of something i will buy and sell it. yet this entire rescue period is who you know, how do you deal? do you succeed in your deal? whether you're left or right you
are uncomfortable with that. what is the price? how much does it sell for? that's the motive that inspires those who agree with the investigation. >> i'm struck going forward how do you get rid of this? my instinct is the ceos don't serve any purpose, i don't understand what credit default swaps are, why should i be able to buy insurance on your house and then i have an incentive to burn it down. how do you draw the line? how do you figure out, martin, when it is a company that operates in 25 different countries, and has all these currencies to worry about, and has to mitigate the complexities by creating these financial instruments and how do you say what is the line which says that's all okay. that's the normal balancing of risk, but this is now pure speculation? >> i don't think we can do that. i feel very strongly about this.
but i do think we can say that if you're a major financial institution, which is guaranteed by the state, then you have to put up a lot of capital against this sort of transaction, and then you will wipe out the many institutio institutions of the potential profitabilities. if it's mr. paulson betting against another hedge fund, there's not a systemic issue. there's a systemic issue if major banks are engaging in pure speculative activity. the way to do that is tax it. >> the entry point should be to whom do we give guarantees? when the government is intervening by giving guarantees to institutions, we can prescribe what they do and how they do it. >> let me ask you about the politics about this. you weres whether also an elec governor. the obama administration proposes financial reform. the s.e.c. has to testify, suddenly on that day that the
s.e.c. is testifying in a 3-2 verdict which is very rare for the s.e.c. to proceed with an indictment t comes out with this. it seems fishy. >> i don't believe in coincidences. i think they wanted to get this out there during that discussion that don't mean it's wrong. and it can be both -- >> the s.e.c. is supposed to be independent. >> they are independent and are trying to show the world they enforce the law and they are entitled to use cases that have a general more prophylactic impact to say to the world this is what happens. so it's not wrong for them to make a case and bring it out at a moment when it will have the greatest general deterrence effect. that's what they did. is it a strong case? separate conversation. did they want to get it out there now? i have no doubt they did. >> on that note of agreement, we will take a break. we'll be back. >> are real jobs going to come back that will increase need yam income? i think a longer-term trend line in terms of competitiveness and creativity of the economy this
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we are back with our panel, eliot spitzer, martin wolf of the financial times, andrew ross sorkin of the "new york times," and amity shlaes of bloomberg and the council on foreign relations. martin, we seem to be in a broad recovery, corporate balance sheets strong, but there is great fear about what happens when the stimulus money runs out. >> the obvious question is is this a real recovery driven by genuine private sector activity or the result of government actions. part of it is fiscal action, nearly all of that is the automatic responses to a recession. that's not getting you out of the slump. it's what prevented a depression. the really big thing, i think, is the actions of the fed. the fed became the dominant financial institution in the united states. it lent everywhere, it is supplying free money to the
financial system it had a dramatic effect in reliquidating the economy and is far and away the most aggressive financial bank in the world. >> that's a good thing? >> that's a very big question. it's a very big question. we don't know how this will play out over many years. there are real risks with what they're doing. >> big difference between what the fed is doing now and what the fed did during the great depression. you could argue that ben bernanke learned from the great depression and did the right thing. yes or no? >> overdid it. ben bernanke is overdoing it and overdid it what happened in the great depression was there wasn't enough money and the fed didn't respond fast enough or understand it and the politicians didn't either. both parties at first. finally they realized they needed more money and the government tried to figure out how to make it. that's what chairman bernanke studied. he studied actually home foreclosures and saw how people lost their homes even if they owned 90% on it. just on that 10% loan they lost
it all across the country. and he said i'm not going let that happen again. i think he thinks of himself as a cardiologist, a surgeon. and he sees a heart stopped, and he is going to make that heart go. he promises it won't be like the '30s, but what if the patient who is lying on the table has an endocrin problem and needs thyroid medicine and his coma has nothing to do with the structure of his heart or arteries. it's the monolithic all-monetary approach that is problematic and also in regard to recovery this concern that martin what is right. i don't think we have recovery until we have good employment. it's cruel to say we're okay when we have 9.7% unemployment and more than double that for teens. >> huge unemployment numbers. i worried we pushed all this money into the system, moment tear bounce l real jobs come back that will increase medium income over a ten-year time horizon, not one or two quarters. a longer-term trend line worries
many enormously. that's where we need to make massive investments in the innovation economy-type jobs. >> let's talk about this easy money for a moment. the lowest interest rates ever really. so it probably makes sense now to borrow. but what are we doing to the economy? we know when the cost of capital collapses, when interest rates go very low, people do stupid things. that's what happened between 2004 and 2007. so what are the stupid things we're doing now? >> i don't think they're there yet. i think, by the way that elliott is correct. the disconnect within on the employment picture, which that 9.7% number will get up closer to 10% this year any way, where whether we get real growth, that's a real question. to flip your question around what worries me most is all this money we pumped into the system has to be pumped out. and there is -- has to be a moment of reckoning. that's the real question over the next 12, 18 months, what
happens then. >> you used to write in the new republic when you were attorney general about a democratic party that had a different approach to economic growth. the obama administration seems to be adopting what you were saying and what mart season saying, focusing on exports, manufacturing, trying to say we're getting out of the businesses of selling each other our houses. is it on the right track. >> it's on the right track, the question is can it succeed. it's very difficult to reformulate an entire economy. i'm curious to see where are investment dollars going? all the money we have given the investment banks, are they being invested here or overseas? what percentage capital flows are we seeing? i see arrestticles every day ab major houses sending money to asia. that says to me over the next ten years will not be here, but elsewhere. unless we can create opportunities here which is something the government should be doing with high-speed rail
wr&d investments, education investments, those things that facilitate the market, unless we do that in spades, we'll be in deep trouble. >> do you agree with that? >> i would emphasize that the u.s. remains incredibly innovative. it still is, i don't think that will end. i think it's where people want do this. and that is important for the future. but there are other things that are not happening which worry me. corporate america is not investing. corporate america is not -- >> has a lot of cash. >> it is running enormous cash surpluses but is not investing. that has to do with the tax structure which strongly subsidies cash, but that's a big issue. you need an export-driven economy. clearly it can't continue with a huge account deficit it don't have the means to offset these huge deficits in productive spending at home.
that's part of the problem that occurred. there are taxes that are an issue, but i think the shape of the economy is also a big issue. >> two things to say there. why are corp pragtss not investing? they're not investing because of the environmental uncertainty, which is a policy problem. not a business cycle problem a policy problem. >> you mean the environment of ledger regulation. >> they don't know what will happen yet. >> we have to get off the economy. i want to ask martin wolf. we have the privilege of having martin wolf here because of the ash cloud. why is the third party candidate, the liberal democrat surging so far forward in the polls? vut bizarre situation where nick clegg is more popular than any british politician since churchill. >> politics in the uk has become vastly less ideological over the last three decades so people don't see any big difference
between the two big parties anymore. there's no huge ideological engagement. very different from the thatcher era the second thing that has happened is they are fed up with gordon brown. they really want him out, but this guy cameron doesn't do it for them. it's obvious he doesn't do it for him. here is this man who has emerged from nowhere and he has the great advantage that he looks good and nobody knows anything about him. >> martden wol martin wolf, tha much. what did we make better ?
i'm candy crowley, here are stories breaking this sunday morning. officials in mississippi are assessing the damage from yesterday's tornado. ten people are dead, at least 100 homes are severely damaged. that number may rise as rescuers try to reach isolated rural areas. many of the fatalities are clustered around hard-hit yazoo county where witnesses describe the twister as monster-size. president obama will deliver a eulogy today for the 29 west virginia coal miners killed in an i explosion earlier this month. before the service the president along with vice president biden is expected to meet privately with the miners families. the april 5th blast was the nation's worst coal mine disaster in nearly 40 years. president obama has since called for sweeping review of mine safety laws. cnn will have live coverage of the president's eulogy when it happens. our live coverage begins at 3:00 p.m. eastern. those are your top stories on "state of the union."
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good choice. only meineke lets you choose the brake service that's right for you. and save 50% on pads and shoes. meineke. now for our what in the world segment. what got my attention was a liberal running on a platform of change, born overseas, likes the camera, the camera likes him. a great public speaker who seemingly came out of nowhere. no, it's not barack obama. it's nick clegg. never heard of him? until about two weeks ago, few people had. now he has the highest poll ratings in britain since winston churchill in 1945 after winning world war ii. clegg's approval rating clocks in at an astonishing 72%, and
he's beaten his better-known competitors in many polls in the run-up to the uk's general election. so what made this man who is married to a spaniard, is himself a product of a dutch mother and a half russian father what made this international man a suddenly favored son of britain? >> i believe the way things are is not the way things have to be. >> for the first time in history the brits have put on an american-style television debate. remember the first american american-style televised debate was in 1960 between richard nixon and john f. kend did and nixon had the 5:00 shadow that doomed him. it all but killed his candidacy. the first such debate in britain was all but a kingmaker for nick clegg. before the debate he was referred to as the other one it was prime minister gordon brown, david cameron, and the other one. but with this role reversal, now it's brown and cameron who have been sidelined what also helped
clegg's cause is the fact he doesn't belong to either of the main stay parties in the country. labour or the conservatives, the party of margaret thatcher and david cameron. there is an exhaustion with the labour party, and an apprehe apprehension of david cameron, and here is nick clegg, clean, fresh, representing change. people whether in the uk, the u.s. or elsewhere are looking for a sensible center in politics. someone who will honestly diagnose the country's problems, no ideological purity, practical solutions. that's what people want. ideology is for the extremes, the vast majority in the middle want sensible solutions. so what happens if cleg keeps the momentum up until election day? thanks to the oddities of the british election system, even if clegg and his liberal democrats do slightly better, they will get many fewer seats in parlgment. so it's unlikely we'll be calling him prime minister
clegg, at least in the near future. but you never know how elections turn out. we will be right back. typical midwestern farm.u cr the reason lies 6000 miles away in japan. where a producer of specialty eggs needed corn for feed grown to precise standards. cargill identified the producer's needs then introduced an illinois farmer to grow the exact corn needed. and developed a system to ship it separately, connecting the farmer with a japanese customer who was very appreciative. this is how cargill works with customers.
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remember, to make sure you never miss a show go to itunes and subscribe to our weekly podcast. it's free. you can't beat that price. now, as i do every week, i would like to recommend a book. with all the allegations that banks have been misleading investors, i thought everyone could use a simple primer on investing. the best one of those i've seen is a new one called the "elements of investing" by charles ellis. it is brief, smart and easy to read. everyone will profit from reading it. now, for the last look. ♪ russian rap reportedly has a new hero. it's the unassuming man in the gray sweater right there in the front row. yep, that's president putin. this man who proudly touts his education on the streets of st. petersburg was nominated for the first annual russian street awards honoring the best in russian hip-hop. the award n