tv Squawk Box CNBC September 13, 2013 6:00am-9:00am EDT
2013, but don't be afraid. "squawk box" begins right now. good morning, everybody. welcome to "squawk box" here on cnbc. i'm becky quick along with joe kernen and andrew ross sorkin. on today's agenda, we have a final batch of key economic numbers coming ahead of the fed's two-day meeting next week. at 8:30 eastern time, we have august retail sales and a producer price index. comes um at 9:55, we get consumer sentiment. five minutes later at 10:00, we get business inventories. these are the last numbers the fed will get to look at before that meeting next week. reports that larry summers will be nominated as fed chief as early as next week are moving markets today. it says president obama could make that announcement after the fed's wednesday meeting. again, the source coming from the nikkei newspaper, an interesting one because you wonder who has been talking to whom about this and where their sources are. the dollar, as we mentioned, had
that rally overnight. you can see right now at 99.65. the dow is still within about 2% of its record close and on track for its second biggest weekly gain of a year. the futures as we head into this are looking at this point like they are up about 35 points above fair value for the dow. the s&p is up by over 1 points and nasdaq up by five. we have a great number of people ready to talk about the markets this morning, including haung paulson who will be joining us in studio at 7:00 eastern time. plus, we have marc lasry. we are former wells fargo ceo dick kavasovic. >> it's going to be a big show. thank you, becky. we have corporate news this morning, that music when you first saw becky this morning, that tweety bird song, the
reason we're doing that is because twitter filed for its ipo with regulators. making an announcement in its tweet, the social networking site following for an ipo confidentially under a new law intends to help emerging corporations with less than $1 billion in revenue go public. now, goldman sachs is the lead underwriter and we're going to have more about this throughout the whole forecast. but julia boorstin will be live at their offices in just a minute. and we're going to talk to a buzz representative who says the twitter ipo could be worth between $10 and $20 billion. some saying it's $16 billion right now now. jpmorgan reportedly plans to spend an additional $4 billion and commit 5,000 extra employees to fix risk and compliance issues. this comes as the company faces a number of investigations by regulatory authorities. that's a lot of people. the bank will spend $1.5 million on managing risks and complying regulations and plans to@add another $2.5 billion to its
litigation reserves in the second half of the year. and pimco and the blackrock got more than a quarter of verizon's billion dollar bond buyout this week. together they bought about $13 billion of version rienzon's bond deal. that means that hundreds of millions of dollars on paper gains were made for those two firms. joe. you're not happy about this twitter thing, right? am i wrong? >> no, no, no. >> you're happy? >> yes. i'm happy. i'm happy. i think it's interesting that it is able to do the under a billion thing and its market cap is going to be huge. i also think it's interesting from the perspective that we're almost seeing a mini -- it's not a bubble, but we're seeing a mini sort of 19 mid '90s move in the social media stock that remind me of excite dot whatever those things were back then. pets.com or whatever. my point was, and it was kind of -- i don't rm like twitter.
i mean, i try to cut -- >> but you're addicted. >> no, i'm not. i try to cut down on the number of people that i follow. most of the people that i do follow i don't really want to hear every waking thought from them. i don't care what they're thinking, but i sort of have to know. i was saying that i hope the ipo, since it had to happen, i hope it's getting to closer to when the whole thing goes away. >> five years -- >> you can't turn it off. >> that's because people -- you happen, the haters nudge me into responding. five years from now, are we still going to be doing this, andrew? and if so, will anyone ever leave their house to actually have any actual social contact or will it -- >> it's great as a news wire. it does work great as a news wire. >> i know. but you know what? there will come a day when we won't need to have to know about every bit of news and maybe we could watch a sunset. >> kim kardashian is getting $10,000 and $20,000 a tweet.
one day, you can, too. wow. that's ridiculous. >> what i just said and what you just said, don't you see us rushing towards some apocalyptic ending? can't you see that the world is going to end badly when this is happening, andrew? this is like -- this was written about in the bible. i think they mentioned -- knows tra dammus mentioned kim cash dann when she's making $10,000 a tweet. >> look out. >> exactly. meantime, new jersey, information coming into the news wires this morning on two horrible disasters on the shore. a fire destroyed 80% of the boardwalk in what had already been ravaged by sandy. seaside. it kept jumping from one to the next and the boardwalk is made out of wood. new jersey governor chris christie did address reporters on the scene. >> when i got my first full
briefing before i left trenton to come here, i said to my staff, i feel like i want to throw up. and that's me. after all the effort, the time and resources that we've put in to help seaside heights rebuild, to see this going on i said at the top is unthinkable. >> scott cohen will join us live in seaside in the next half hour. and then, where i went to school. they showed the fountain on cu, just flooded which was the main part of the campus. but a lot of boulder, heavy rains, like 7.5 inches in 24 hours caused some dams to overflow. flash flooding. at least three people dead. authorities have called on thousands more people in the city of boulder to evacuate. it's a creek that -- where all the water collects. it began rising to dangerous levels. really tragic. i don't remember anything like that in the '70s when i was out
there, but they referenced something that happened in colorado. 140 people died in flash flooding back in the '70s on one of these things. so it's not like it hasn't happened before, but shocking to see it happen in boulder. and it happened so quickly. people were in their houses, they looked out and it was like a -- >> a lake. >> yeah. >> we get flash flood warnings now on the smartphones, all of them pop up and tell you beware. >> power outages, about trees down. they come in on, you know, landlines. texting. phones ringing. i'd never get any, no one contacted me. then something was going off. >> and you got caught up in the weather, too. >> go to chicago for the day? >> go there on business, after you've done -- you get up at 4:00. you come in late. but then you leave and go on a plane to chicago, do a bunch of
stuff, get on the plane last night. >> late. >> and then get on a plane last night. >> the dow is on track for its second big day of the year. s&p futures up by 1.25 points. oil prices, which we've been watching so closely because of syria, they're down by just over a dollar. and take a look at the ten-year note. you can see the yield this morning at 2.921%. the dollar, as we mentioned, did rally earlier in the session as the nikkei was reporting that larry summers could be named as the next fed chief as early as next week. you can see this morning, the euro is at 1.3292. the dollar/yen trading at 99.59.
>> if i'm ever nominated, i want the first line of mirror nomination to be the dollar strengthened on reports that blah, blah, blah, blah. that might not have been the case if it was reports of jan the yellen. >> but that races the question is larry summers really left of janet yellen? >> what is the one thing that every treasury secretary needs to learn how to say? >> it's like when -- if the stock goes up on the company that you're ceo of when you're resigning, that is bad. this is what got me.
they're moving them so as many as 50 sites to make them harder for the u.s. to track. >> the opening offer from syria was that we would do this and jerry said that is way too long. >> did you see robert franks, a piece on putin yesterday? >> i didn't. >> guess what his net worth is. $40 billion. that's minimum. >> that's what they know about.
>> he's kgb and he was lecturing all of us yesterday on human rights. look at the situation with gay rights and -- >> and i told you how reasonable he sounded. >> i know! robert menendes, our senator in jersey said he wanted to bomb it. >> you can want to bomb it. did you think it was then like if a sociopath or a psycho path writes something about all of his murders in an elegant way, do you think it sounds reasonable? >> yeah, i do. >> the problem is it's going to influence those who read this in the paper. in all honesty, i was not in favor of this before, bit swayed me. >> the point that every american is -- >> that could happen. >> something else that came back, i didn't -- wasn't that happy about was that, you know,
someone gave him that line about not being exceptional. obama said, you know, people that live there think they're exceptional. i don't think there's any question. i don't have any self-doubt. it was late in the history of human civilization. we finally figured ow how to do it. and we put everyone together from all around the world and sat down and figured out how to do it. if you don't believe we're exceptional and you're running this country, that is depressing to me because this is what happened. >> if you're a gay athlete in russia, do you think he understands other people's point of view? >> who, putin? >> yeah, putin. >> absolutely not. i'm talking about obama.
>> that was part of the apiecement tour. anyway -- >> we're going to go across the pond, a little closer to russia, time now for the global markets report. carolin roth is standing by in london. good morning to you. good morning to you. i don't necessarily have a view on this, but let me tell you what the markets are doing in europe. >> the xetra dax is off by 0.1%. ftse 100 off by 0.25%. the ftse 100 off by 0.3% because metal prices have been falling and that's putting pressure on some of the metal sectors and some of the metal stocks.
in terms of the bond markets, we have been focusing a lot of the ten-year italian paper. the yield at 4.53%. it has shot above that of the ten-year spanish paper in all these political tensions. what is the future going to be of former prime minister berlusconi? in connection with that, i wanted to bring you comments from the current prime minister. he said italy must show it is credible, serious and able to service its debt. it's taken a lot of effort to keep the government in place. there are other reasons for the rise of the dollar in japan. maybe because the government in japan has upgraded its economic forecast. it's the seventh time it's done that this year. sterling/dollar, up by around 0.10%. back over to you guys. >> all right, carolyn, think
about it, then. maybe the next time we come to you, you can just give us a wink or a nod on how you feel about it. >> it's a pretty touchy issue, so i'll still steer clear of that for the moment. >> you weren't fortunate enough to be born here, either. we understand. thank you. now back to our top corporate story of the morning. twitter confidentially filing an ipo with the s.e.c. julia boorstin joins us from outside twitter's headquarters in fran. i was going to tweet something about toss you to you and then i decided i'm not going to get caught up in this whole mess, julia. >> oh, come on. you've got to tweet, joe. you figured out how exciting twitter is as, obviously, have 200 million other people. so here's the situation, joe. filing confidentially as twitter yesterday did means that twitter doesn't need to disclose any details about his business in the public just yet. now, twitter can file confidentially because it has less than $1 billion in revenue.
the question then is what is twitter's valuation? we have key estimates. at its most recent funding round, twitter was valued at around $10 billion. but based on light trading in the secondary market, it's currently trading at $15 billion or $16 billion. it could include the likes of video, ads or fees from, say, microsoft bing. hemarketer expects revenues to be lower. but it projects $950 million in revenue next year and $123 billion in revenue in the year 2015. so who is going to catch in on this ipo?
twitter has raised $1.16 billion since 2007. its first round of investors included mark andressen. the next round, a year later, included jeff basos of besos expeditions. and twitter's -- >> it sounds like we just lost julia. >> but we do have somebody else who can talk about all this. but joining us to talk more about twitter's fans, jeff steinberg. how much do you think this thing is really worth? >> i hope it stays at 10 or 15. the beauty of this thing is that everybody is getting to it earlier. it will have $1 billion in he are knew the year it goes out. $200 million users facebook has.
so this is the company of the future, right? >> how often do you click on advertisements? >> if you think lamar is a good company, right, this thing is 100 times better. >> and when you think about this whole issue, and maybe we can bring julia back into the conversation because i think we got her back, when you think about this whole idea that this has been done confidentially, that is the big twist on this relative. >> what does that mean? >> it means we're not going to hear about any of the numbers. >> three weeks before the road show, the numbers will come out. >> normally, when they file for an ipo -- >> i think it's going to leak pretty quickly. it's too big of a company for it
not to. but i think it's nice. this can get companies going public again. if you're less than $1 billion in revenue, you're not a massive, massive company, you can do this with -- >> it is a massive, massive company with $10 billion, right? >> well, on a relative basis. >> when you're fee, yes, a company can put an ad in your feed. what? >> if it's television, they can put a commercial. >> i know that. but i'm not going to look at it, i'm not going to click on it. >> you don't have to. you don't have to. >> i'm not going to. julia. >> joe, if you haven't noticed, there are ads in your feeds and that's probably a good sign that twitter is doing a good job. we've talked to analysts in the past day. to a lot of people, twitter ads are less intrusive because they flow less obtrusively than facebook's ads. an advertiser will get to pay less per person who see that's ad if people like the ad, if they engage in it, if they click
on it, if they retweet it. so twitter is encouraging advertisers to make ads that are more compelling. >> if you think media has a future, media generally, young people are not subscribing to newspapers, the average television viewer is late 40s, early 50s. we're seeing the birth of media again. >> twitter, i use differently. facebook, i have an account, but i don't check in very often. twitter i'm kind of addicted to because it meps with me job. >> and also, as i say, joe, you said you didn't want to tweet this morning and i gave you a hard time about that. but the truth is that most people would use twitter don't tweet. people come to twitter to use it as a contemporary news feed and they go thereon to get information about entertainment, news, sports, to follow their favorite chefs or celebrities. and people see it to get contest. >> you do brand recognition.
>> yeah. dolean was saying the other day that maybe they will be just a broadband company, right? cnbc will continue to push out televisions. in the future, maybe you'll be putting it out on video, on twitter, delivered over cablevision or comcast pipes. that could happen over the next five to ten years. >> twitter could be the new cable network. everything else could be pipes. why won't they go to hour long specials? >> this can take better technology. >> becky, even more before we see what jon is talking about happening, we have to look at the partnerships twitter has done with various tv distributors. look at the partnership twitter has done with espn. twitter has been a lead honor in figuring out social television. they're working with espn. they're letting espn imbed clips and there are ads in those clips. >> this is what's going to
happen to me tomorrow. less has been able to get $1 billion in retransmission. everybody else is blind, but we're going to try. tomorrow night, i'm going to easily sit down and surgeon on high def cbs and sit down and watch alabama. why is there not a place for that in -- >> there is. unless you think people get to 47 years old and they just start watching television, that's your possible argument, right? or people are not going to start watching television and this is how people will get all their content. >> maybe it will be add on to the way things that -- i'm not getting old. >> it's not going away, right? >> but there's no more -- >> joe, you're one of a kind. there's no more joe kernen coming out. >> joe, it is an add on. you're going to be watching tesionaying attention to your iphone, but many other people are going to be sitting there watching the sports game and tweeting about it. >> it's going to be a wonderful world. >> one last question. why is this not going to be
facebook? because everybody got so bummed a year ago. >> why isn't it my face? >> look at where facebook is right now. to your point, my hope is that it stays at $10 billion. that it doesn't run away. >> the private market is trading on shares around $15 billion to $16 billion in terms of valuation. >> and you think it will show up at 10? >> i'm saying i hope it would be more around that level. i hope it doesn't crash up to 15 or 20 or even 25. >> the private market is what was blamed for what was wrong with facebook's ipo. but is it the same saturation in the private market here? >> no. it's a totally different situation. it's a very different situation. only about 5% of twitter shares are being traded on the private market. twitter has kept much smaller number of shares total and a tiny, tiny percentage of those are trading. so a huge number of facebook shares are trading relatively. but twitter has kept that trading under control. >> the issues, if you want to be invested in the future, if you want to be invested in native
social advertising, you want to be invested in mobile, you want to be invested in content, this is one of the very few stocks you can buy. so the problem is, people can bid it up because there are so many ways to get in on it. >> i'm not going to tweet, but -- >> all right. >> jon, thank you. >> thank you for having me. >> thank you julia in san francisco for being up early this morning. >> jeans are big, too. >> no one sees me below the desk. >> so why wear anything, then? >> i would have worn the suit pants if i was going to be over there. >> i think it's a cool look. jeans and a blazer -- >> i know, i know. >> i was with cramer last night and now i'm going to start wearing a tie. >> it's a thin one, a hip one. >> right. but i need someone to -- you know, my kids are 13 and 1137 they're not quite -- i'm starting to see this. >> tweet me anytime. >> tweet you? >> you can call me, but if you want to at reply me -- >> can i call you on a landline?
>> i don't have a landline. >> i didn't think you did. >> i have a cell phone. >> you do? >> of course. i don't talk on it. it's mostly for data. >> i think those are a fad. coming up, california takes -- >> you think i'm the -- >> you don't even have a smartphone. >> no, i don't. >> take steps to raise the minimum wage, plus we're going to tell you what -- i like this thing that jim said because i didn't -- he looks a lot closer than we do at what's happening. and the internals of the market can tell you thing. it's got jim cramer amazed, awed and astounded this morning. and these are his words. plus, in fox sports news, the patriots starting the nfl season, they just found a way to do it. they squeak out their second narrow victory of the season, holding off the new york jets, 13-10. the patriots managed nine first downs and 234 yards total offense, but that's all they needed. first, as we head to break, let's check on the weekend forecast with the weather
channel -- oh, you see? he's back. hey, reynolds. >> hey, guys. let's take a look at that forecast. let me tell you, it is still rough going through parts of the central rockies, boulder, colorado, intense flooding there. ongoing issue for now. unfortunately the forecast calls for a 100% chance of rain and storms today. in the pacific northwest, hot for the gulf coast and skourms for parts of the northeast. as we march into your forecast for the weekend, it will be cool and dry in the ohio valley. could see showers and storms still in the rockies. scattered storms in the gulf coast. dry conditions at college station for the alabama and texas a&m game. traveling today in denver, you might have some backups. take a look in chicago examine atlanta. partly cloudy skies. no delays to worry about for now. folks, we have more on "squawk box" coming up around the corner. sit tight.
thank you orville and wilbur... ...amelia... neil and buzz: for teaching us that you can't create the future... by clinging to the past. and with that: you're history. instead of looking behind... delta is looking beyond. 80 thousand of us investing billions... in everything from the best experiences below... to the finest comforts above. we're not simply saluting history... we're making it.
welcome back, everybody. it's time for our executive edge. this morning, washington state currently has the top minimum wage at $9.19 an hour. that's an amount that is pegged to rise with inflation. some city webs including san francisco, have slightly higher minimum wages, but, gentlemen, the idea of california doing this, to me, it seems like the way to do it state by state versus a federal ruling.
>> i agree. i think it's going to be an interesting test because i think we've start to see what happens in states when you raise the wage. you can start to tell when you're going to see more employment or less employment as a result of doing it. >> wa bothers me is the last line, that it's just by the ap, which is just put forth so normally. they don't even hear it. it comes amid a national debate over whether it is fair to pay fast food workers, retail clerks wages that are so low. and you remember nixon? well, you don't remember him, but there were these things that he put on. he was an idiot about certain things. wage price control. whenever you set either one, it's not the way it works. if there's people that are here and they don't have a job and they're willing to work $9, they're not going to get the job that they would have been willing to work for. and then you saw what your buddy achuthan cusper, mr. twitter
said, he was there was never a job -- i never quit one job before i had another job. he said luck is not luck, it's working. that's where you find luck. >> i started as an intern. >> huh? >> i xeroxed tables as an intern. buckeye has issues because she wants to be paid -- >> i think they're privileged to have those internships. >> he didn't make enough money to pay his driver. he was paying his driver more than what you made. >> but i do think internships are a wake of making sure that it's who you know not what you know and a way of making sure only the most privileged people can get those internship that's lead to the best jobs. and the point i was going to try to make is there are jobs, a lot of people sort of apprenticeship jobs where you might be willing to take less money early on. the issue is, you have so many people working as clerks in fast food and all these other jobs at
30, 40, 50 years old and that was never the intent. how do you deal with that? >> here, it's just really hard to figure out that if a chain, a fast food chain pays a certain amount and it allows them to raise more money, it allows them to he up more franchises b, allows them to open up more people or more franchises or maybe the opposite happens, it hurts margin webs they have to close, and people don't want to connect the dots of that. it's another knee jerk liberal idea that i'm going to look on the front en, i'm well intended here .no one wants to connect the dots to see what the actual outcome is. and i don't know how you -- i don't know if you can design an actual experiment to test the data. >> well, no, but there has been some test. >> depending on who you are -- >> you look at a city like san francisco where they have raised the minimum wage and you have
not seen job loss. >> you don't know the counterfactual. >> you don't. but if you look at a chart, you would say to yourself, why is that the case? you could say that's a strong market. >> do you want me to find the other study that shows this, where it did hurt? everybody has one in their pocket. another person comes on and -- >> i think it doesn't work. i think it depends on where it is, frankly. >> think about it logically. it's like when people argue with me about the high taxes don't matter, do you really think that money is better spent by the government? >> although minimum wage is out there, it exists, what you think is it's better for it to be done on a state by state or landlordlandlord ty locallity by locallity. >> i a fed minimum wage completely discounts that something that works in california may not work in tennessee or mississippi. >> when you say prices, it goes back to the 18th century and the
invisible hand. >> it's probably not -- you know, it sounds good like so many things. >> you're going to love this next story because goldman sachs is facing pressure over working hours in zurich. this week, offices were visited by the members of the local labor inspector. the zurich office for the economy in labor is responsible for ensuring that swiss rules on working times are observed and, guys, we were just looking up some of those numbers. i think in switzerland, the average workweek is something between 41 and 42 hours a week. there are laws that prevent you from having people work more than 45 to 50 hours a week. >> i'd be arrested for the amount of work that goes on in the united states and what we do. but -- >> because you do -- well, you were in chicago last night. >> last night, i'd be ruined. >> what's five times three? >> 15. >> 15. >> what is that? >> that's your workweek. >> three hour show, five days a
week. >> the important part is -- >> kidding, kidding, bosses. >> bank of america and the intern who died because of the long hours he was putting in. >> do we know everything about that? >> no. >> here is a question. do you think you should work 80 hours? do you think that's okay? >> i have. >> we talked about this, andrew. as we've gone through the centuries, it used to be 80 hours and now it's now 40 there are people arguing that we should get rid of mondays and we should do four-day weeks. there are people in europe that work to live, not live to work, and they think that 35 hours is right. and maybe try to go down to 30 as we get -- >> this comes back to your idea of the invisible hand getting involved in it. >> right. >> if there are weeks that you need to see more. there's something called over250i78 people can make for putting in extra hours. >> if you look at people that don't do anything but have money, their lives do not seem very fulfilled. and then you look at other people, no matter what -- if you
make 50,000, 500,000, whatever you maybe, if you earn success by doing something that you decided you wanted to do, you live a happy life. so anything that sort of makes it sound like you just want to lay around i think is wrong. can't you just figure that out? and in switzerland, think about it. they make all those watches. so they're obsessed with time that they're looking at everything -- >> and they make good chocolate, too, though. and good coffee. let's talk about market news. something just amazed, awed and astounded jim cramer. 10% of the s&p 500 stocks hit a new 52-week high. and 3 the 32 of those stocks traded at all-time highs. >> i have to stand in awe of what's happening here. it sure is unlike any market we've had for the last 14 years. that's the last time i remember the bdhr of gains. so many sectors are trading
higher all at once. >> among his examples, oil and gas produce honor are rallying at the same time at plane orders. plane orders typically come from airlines which are typically loogz money when oil is high. jim is going to join us last at 8:45 eastern. jim is looking much more closely than a lot of other people are in finding these trends. >> i read it quickly and he said you have to be aware of where you have your money. this was a bullish sign, wasn't it? there are times where if you just have a few generals leading and the troops aren't following, there are times that i think he was making -- let's ask him at 8:45. he was making the case that it portends higher prices, not lower. because if you say it hasn't happened in 14 years, well, we're flat for 14 years. so we need a whole new, like, launching pad. hopefully the launching pad is in the mid 14,000 or 15,000 on the dow because all we've done is consolidate that move from 1,000 to 15,000. >> we'll get the chance to talk
more with jim about that coming up in just over two hours. when we come back this morning, there's a new nbc news "wall street journal" poll that finds republicans are gaining favor on key issues, including the economy. john harwood has the details, right after this. then in the next hour, not one, but two squawk newsmakers former treasury second hank paulson, five years after the financial crisis. plus, famed hedge fund manager marc llasry, he's found great success. he will tell us where he's putting his money to work, right now.
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welcome back, everybody. a fire as destroyed 80% of the boardwalk in seaside, new jersey. >> let's take a look at what the scene was yesterday and well into the night. the twist of on fate here in seaside park where these areas were just rebuilt after hurricane sandy. just got through sort of abbreviated summer season and now this. 50 businesses destroyed. 20 buildings. and we're still waiting to determine what the full extent of the damage is and what the cause of this fire was. new jersey governor chris christie who was here yesterday evening said pretty much what everyone was feeling. >> when i got my first full briefing before i left trenton to come here, i said to my staff, i feel like i want to throw up. and that's me.
after all the effort, and time and resources that we put in to help the folks at seaside park and seaside heights rebuild, to see this going on i said at the top is unthinkable. >> the iconic fun town pier collapsed, it had been restored after the hurricane sandy damage appears to have been destroyed. they made a heroic effort to stop the fire, digging a trench, knocking down part of the boardwalk to keep it from spreading, but it did spread from seaside park into seaside heights. we're expecting a briefing here shortly and maybe we'll get a sense of what caused this as, again, this area of the jersey shore tries to rebuild. >> scott, i know it's still early, but just last week i was talking to some businesses, some people who own businesses down on the jersey shore. they said this summer business for a lot of them has been 30% to 35% below what it would have been on a normal summer because
the they didn't have as much traffic as they had. my guess is a lot of these businesses were scraping to get by as it was. you have to wonder what happens next for them. >> that's right. and the 40% was an improvement from what they were looking at early on where they were down like 80%. that, it's a tough, tough climb back. and they've been jock on canning i and this is literally a punch in the gut. >> scott cohen, thank you for that. coming up, a new poll finding the republican party is gaining a public opinion edge on several key issues ahead of the 2014 electrics. john harwood is going to bring us the details when "squawk box" returns. and later this morning, you don't want to miss this, michael dell in a cnbc exclusive, he's going to join maria on "squawk on the street" at 9:00 eastern
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welcome back. john harwood joins us with the findings of the latest nbc news "wall street journal" poll. sometimes i see these, john, and i think we're on two-year cycles now as quickly as people change their mind. 2010, 2012, 2014, maybe this isn't is that surprising. >> no, it's not. this is the poll that we had for the five-year anniversary of the financial crisis. and what it shows, basically, is that the american public is still anxious, still worried, still concerned about the economy. you've got only 27% of the people saying that the economy is going to get better over the next 12 months.
two to one, americans say the country is headed on the wrong track. when you ask people how they feel about wall street, overwhelmingly negative. 13% have a positive view of wall street firms. 42% have a negative view. and it just shows you that the recovery that we have had is simply not robust enough to make people feel optimistic and that they're sort of back on track. when you look at the two parties and how they're situated, democrats have a much more positive image than republicans, but on some issues, you see republicans building an advantage. republicans on the deficit, double digit edge on handling the economy. slight edge. that's bounced around a little bit. but when you ask people who is better for the middle class, democrats have a huge edge. so they're offsetting advantages. it looks like we're headed for a very competitive 2014 congressional elections that is not going to be a wave election
for either side. but the economic attitudes of the american people are still pretty sour. >> that's one of those weird things with the middle class. you know? that they -- that the policies we're pursuing are the ones that have left in all right. this morning we have a story for all of you road warriors out there, including andrew. if you have to be in a position where you own your own private jet, listen to this, you could be due for big executive perks. some companies are paying executives to fly their own private jets. last year google spent $400,000 to lease aircraft from eric schmidt. paid more than $2.5 million to use their personal aircraft for business flights. and las vegas sands chairman and ceo sheldon edelson sold his for $34 million. many of these companies do say their executives are not profiting from this. so you may wonder why the companies are paying out. well, the companies claim it's
for security, convenience and even for bargain pricing. for more on business travel, go to roadwarrior.cnbc.com. >> did you see the story about google planes? >> yeah. they were getting much cheaper gasoline? >> they were leasing -- they lease a hangar on a government -- at a government airport, military airport. and as a result the only fuel sold at that airport is sold at a much lower rate because it's -- >> 40% discount. >> so for years have been fueling these planes at remarkably low prices. >> is that evil? >> i don't know if it's evil. apparently the government was getting -- >> taxpayer dollar? >> that's a loaded question. they don't do anything evil. >> apparently the government was getting either fair market or at least was not losing money on the deal and it was sort of like -- it was like cost plus plus. >> they were using it for more flights than they were allowed to. >> how do you know it wasn't traded for more nsa access? >> think about it.
who knows more than google? former treasury secretary hank paulson's going to be joining us. also mark lasry. both of them joining us in studio. they're there in the green room. we'll be right back. thank you orville and wilbur... ...amelia... neil and buzz: for teaching us that you can't create the future... by clinging to the past. and with that: you're history. instead of looking behind... delta is looking beyond. 80 thousand of us investing billions... in everything from the best experiences below... to the finest comforts above. we're not simply saluting history... we're making it.
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minds behind the government's efforts to save the economy. >> this troubled asset purchase program on its own is the single most effective way we can do to help homeowners, the american people and to stimulate our economy. >> former treasury secretary and goldman sachs ceo hank paulson joins us for a very special interview. a "squawk" exclusive. he's made billions off distressed companies around the globe, now he shares his secrets and tells us why he took himself out of the running as the u.s. ambassador to france. and with a tweet, twitter goes public. >> if we wait until tax day, i'm sure the tax man will show up. >> you should tweet that. >> okay. >> this guy's hilarious, i'm going to retweet this. social media is bringing us all closer together. >> the most anticipated tech ipo of the year is here, but will investors follow the company?
the second hour of "squawk box" begins right now. >> good morning, everyone. welcome back to "squawk box" here on cnbc. i'm becky quick along with joe kernan and andrew ross sorkin. you can see that the futures are indicated higher. dow futures up by about 38 points. and by the way, we were already on track for the second best week of the year for the dow. in our headlines this morning, japan's nikkei newspaper says that president obama will name former treasury secretary larry summers as fed chairman. now, obviously this is not the first time a report like this has been out. but this one has been gaining traction this morning in the currency markets where the dollar has been rising pretty broadly. this report says that the announcement could happen after next week's fed meeting. also, twitter has taken the first step toward a widely anticipated initial public offering. it's filed with the sec for an
offering like this. although, the details of its filing remain secret. that's because allowing companies of twitter size to file confidentially. we have much more on this story coming up later in this hour. new jersey seaside park has been hit with another disaster, this is less than a year after being devastated by hurricane sandy and rebuilding in time for the summer season. a fire destroyed or damaged at least 50 businesses and several blocks of seaside's boardwalk. officials say that the fire apparently began in an ice cream shop. our scott cohen is there and we'll be hearing from him later this hour. andrew? >> thank you, becky. we should say that five years ago this weekend, the nation was on the edge of financial disaster. and our next guest was on the front line. i would say at the front -- the head of the line helping to pull back the nation from the brink. joining us now on the set, hank paulson, the former treasury secretary, also the subject of a documentary. hank, five years from the brink, which is going to begin streaming exclusively on netflix
on monday, also the chairman of the paulson institute at the university of chicago and has a new prologue to your book "on the brink" that's also out. you're a busy man. thank you for being here. >> andrew, it's good to be here. >> take us back five years, if you could. i remember this weekend like it was yesterday. you probably, unfortunately, remember it was like yesterday. and here's my question, i think of you as an american hero today. and i hope that history views you that way. however, i know of one person during that weekend maybe watching today. and you had a very special relationship with lehman brothers, in part, something you write about in the book with your brother. who worked at lehman brothers and you had to call him that weekend. tell us about your relationship with dick fuld. i don't think people understand it. >> first of all, the call to my
brother that weekend, it was the following friday. so that lehman brothers went down on a sunday, and the week afterwards was like nothing i've ever experienced. we were juggling multiple balls, we had the money markets, had aig, we had concern about other institutions, the big emphasis to go to congress and get the t.a.r.p. and it was really -- i called my brother dick on the friday morning. it just occurred to me, with everything going on -- and i had not and called him. he's a good friend, he was my best friend, senior vice president, veteran fixed income salesman at lehman brothers. what i remember best about that call, it was quite an emotional call for me. i was calling to explain we'd
done everything we possibly could. he just didn't want to talk about that. he said i know you did everything you could. how are you holding up? because he knows i don't take defeats easily. >> what was your relationship like with dick fuld, though? there's always been a perception that you either didn't like him or he didn't like you. i'm not arguing that played into it. but tell us about the relationship. i know you spoke for many months before the actual collapse. . >> well, he was a -- i knew him as a tough, able, competitor when i ran goldman sachs. and so you don't have a close personal relationship with a competitor. but i clearly respected him.
and then obviously when -- when i'm treasury secretary and i sever the relationship with goldman sachs, i'm thinking, you know, about the financial system, about the united states of america. and the way i would describe the relationship is from the moment bear stearns was going down and we learned that we didn't have what it took to rescue or keep a failing investment bank out of bankruptcy without a buyer from that time on we became very concerned about lehman. it was obviously the next most vulnerable investment bank. and from that time on, we started when i say we, it was ben bernanke, tim geithner and
i. as i say in the prologue. incidentally, the publisher's making available free online. 8,000-word prologue that the -- that, you know, wasn't too long after bear stearns went down that ben bernanke and i went and talked with barney frank who was terrific during the problem. and we'd asked -- said we needed something like this. and barney explained it would be virtually impossible. of course, he was right, look how long it took president obama to get these authorities. it would be hard to get them from congress without saying we have an emergency. and from that time on we talked and i talked quite regularly with dick. encouraging him to raise capital. >> you think he didn't
understand? he called you the day after trying to undo the bankruptcy. >> it was very sad. can you think of anything sadder than someone running a firm it was their firm. it was his firm when it failed. my view, i'll say this just generally about the ceos because i interacted with a lot of ceos running major firms during the crisis. and i looked at some of the ceos more able than others. i think they were all good men and they were dealing with a crisis of which they haven't seen in a lifetime. the excesses have been building for years and years.
and most of them performed very, very well under stress. most of them did everything they could to cooperate. >> one of the things we talked about a couple of weeks ago when i was working on the column. probably one of the first times i'd ever heard you say it was you were upset with the bankers and some of the ceos, ultimately for the fact they paid out those bonuse bonuses after the bailout. why hadn't you said anything earlier? >> the reason i had focused on what i thought the positive was, which i think is a huge positive. i think that the capital program we designed and to get out and put capital into hundreds of banks very, very quickly and recapitalize the u.s. financial system is a huge success. and the money has come back. plus $32 billion, so i've
focused on that. and i focused on some of the other things. i haven't been speaking publicly. so how much have you seen me out there? so you asked the question, the question got asked also in the documentary. and i -- i told the truth. i was after the fact -- and this didn't have anything to do with legality. it just to me, i thought it showed a stunning lack of awareness and sensitivity as to how this would be viewed by the american public and rightfully so. and -- but, to me the big story is, remember, the reason this program works so well, it was voluntary, it was getting to some firms had more stress than others, some that had much less
stress while they were healthy before they were failing. historically, i think every other time that -- that during crises when capital is injected, it's injected as banks are failing, after they fail and then you can put all kinds of conditions on. >> mr. secretary, i want to thank you too. i can't tell you how fortunate we were as the american people to have had you in that position when this all happened. you just pointed out that a lot of the ceos were very capable and very qualified. it does bring up the position you have to have people who know what they're doing and understand the markets. and i guess my question becomes five years later, we have different people who are the treasury secretary. are you confident in the people who will be in those positions will be able to handle a similar situation if it were to arise
again? >> well, without -- first of all, we don't know who the fed chairman will be. this is a very big decision that the president will make. it's -- president bush, i think one of the very best decisions he made was one of the most important decisions was choosing ben bernanke. so this is a huge decision for, you know, for president obama. he's got some qualified candidates. i think you learn -- first of all, i think people rise to the occasion. i've had an opportunity to work a bit with jack lew, worked and talked with him about u.s./china relations. and i've watched him work there and interact. with the chinese. and he's a very able man. now, what you -- what you learn
when you're treasury secretary, relationship with a president is very important. you're able to do what the president lets you do. that's where your authority comes from. and what people sometimes forget is i had a year to build a relationship with president bush. and he was a terrific boss during the crisis. he didn't micromanage, we didn't have a lot of debating with the white house staff. i had great access to him. early, late, he always knew what was going on, he delicaegatdele. so a lot will depend on the guy at the top, what happens there. then, you know, with the with the fed chairman, this is just an enormously important job.
>> if you had to pick one. >> you know larry well and janet well. >> well, i know larry a lot better than janet. they're both able. i'm -- i declare myself. i like larry. i think larry's very able guy, i'm a friend of larry. but this is, again, this is the president's decision. >> when you say you're declaring yourself. you're supportive of larry? >> no, i'm declaring myself as someone who knows larry well and likes him. >> that sounded like -- >> i am -- >> i'm writing that down. hank likes larry. >> i am not entering into this. and the reason i'm not, quite frankly is because i've been distressed as to the extent it's been politicized. i really have been. i don't know how this happened, but it shouldn't be. >> never before. >> it shouldn't be.
it's too important a job. >> can i ask you one real quick thing? and that is, your actions that were taken that really averted the near term crisis. and then there's been a lot of things since then. there's been the stimulus program, $800 billion. there's been fed one, fed two, fed three, qe-1, two, three, four. there's been all these things. was it all in your view necessary? or did it prevent clearing the system which would've allowed us to have a quicker recovery? >> well, i would say there is great policy continuity with a capital market stabilization programs. tim geithner worked hand in glove with me of putting those together. so when president obama picked
him, i think that he resisted temptatio temptations. that worked. in terms of the way i would characterize what came after is i am a believer in the ben bernanke stimulus programs in the sense that i think it's remarkable even though we have low growth. this economy has been growing at 2% since the end of 2009 while we've undergone this sort of massive and necessary deleveraging. look at the leverage that was necessary. but we need to look toward the time. there's all this focus on how will it end? when will it end, et cetera?
but we know for certain and ben bernanke knows for certain we can't keep these extraordinarily low interest rates forever. it is going to end. we're going to be looking to the day. they trade by what are their returns on those assets? economies -- economies are going to, you know, be judged by fundamentals. >> there weren't any that caused this recovery to be slower? >> i'm not going to speculate. i'm not an economist, but i would say this, i happen to believe, joe, that what happe d happened, although housing was a huge part of it, this was a massive credit bubble that burst.
i think we're fortunate to be where we are right now. now, that isn't to say that i don't think we need to do some really fundamental things to get this economy growing where it needs to grow. >> like what? >> well, like tax reform -- >> you weren't talking about another stimulus program? >> no, we need immigration reform, tax reform. i'm talking -- >> structural. >> structural reforms. everywhere around the world. brazil, their economy's not going to continue to be driven by commodity prices and low interest rates, they need reforms. we need labor reform in europe. but to restore competitiveness, we're going to be talking about fundamentals. you can only do so much with low interest rates. >> we could take this right till monday. >> we're going to see you in chicago in a couple of weeks. >> how many things -- >> one final question, and it's about the banks, though, the risk in the banks.
it's something you said in the documentaries. i never heard you say it either which is that you now seem to be concerned about the concentration in the banks. and i wonder given jpmorgan today, now spending $1.5 billion just to deal with regulatory matters. are these firms now too big to manage? >> well, i -- i had said in the "on the brink," that i thought size and complexity. but when i take a look at the fact that we've got these, you know, these liquidation authorities to deal with failing banks, look at the capital rules, i am much more concerned about other big issues. we need to fix fannie and
freddie. and the biggest thing that is not getting enough attention is we've got five regulators all competing with each other falling all over themselves dysfunction. >> hank paulson, the book is "on the brink," the movie is "hank five years from the brink" on netflix starting on monday. and we'll see you in chicago in three weeks. >> i look forward to that. >> awesome. >> i look forward to it. thank you. >> thank you. if that wasn't enough, that interview, a big show still to come. with a tweet, twitter starts on the road to the next big ipo with over 200 million users and some 400 million tweets a day. i'm not going to go 400 million and one, i'm not. i'm not going to do it. although i might tweet paulson picks summers. that's a lot of eyeballs -- >> you can tweet whatever you want. >> does hank have a twitter account? >> that's a lot for potential -- we're going to take a closer look at the twitter ipo and what
indicated higher once again. 42 points above fair value. in our headlines this morning, jpmorgan reportedly plans to spend an additional $4 billion and commit 5,000 extra employees to fix risk and compliance issues. this comes as the company faces a number of investigations by regulatory authorities. the journal says that the bank will spend 1.5 billion on managing risk and complying with regulations and plans to add $2.5 billion to regulation reserves. banks already paid about $18 billion in regulatory issues since 2008. >> guest host this morning is one of the pioneers of the distressed debt market and up over 60% coming out of the financial crisis. and since then the firm has made billions of dollars for investors across the global funds joining us is marc lasry, chairman and ceo, the fund is over $12 billion in assets under management. marc, great to have you here. the other day, we had a
conversation about how t.a.r.p. had worked out. how much money the government had made. and we made the point that when it's darkest and there's no market that these securities go to levels that really don't represent what their true value is. and you've made a living out of doing this. but it's the idea of buying things -- and i don't know, i don't think i could -- >> scares me too. >> i don't think i could do it. but, you know, hedge funds do different things, long, short, all that stuff. you make it your business to go find distressed problems. it's been unbelievably profitable. how, why? it's amazing. >> i think we've been lucky. >> we've gotten pretty lucky. when you think back to the financial crisis, i remember we started buying a security, and
we thought it was actually good and we started buying it at 70 cents, then it got 60 cents and we started buying it at 50 and all of a sudden, the trader asks us, there's 50 million for sale at 50, what should we do? and do you think we're going to get hit? and he says, no i'm not that worried about it. i think it's fine. we end up bidding for 50 million at 50 and all of a sudden we're told good news you own it and you weren't really dying to own it and this is sort of in the heart of the crisis and right after we bought it, the next bid was 30. and you like to think that you'd like to buy things when they're going down and you actually do, but trust me, it doesn't feel good. >> there's an expression about a falling knife and throwing good money at bad. >> and we were catching the knives. and i think during the crisis, a lot of it, at least for the firm, and for the team, we sort of believe, look, we think we're right and we think we're right long-term.
and the problem ends up being you never like buying something -- >> we're going to take a break and continue this after. but one thing we have learned is that if you can't step up to the plate, maybe mark to market wasn't really real. maybe it was just no buyers. >> no buyers. >> and mark to market may be a figment of the imagination. may need to just really take a step back and think what is the inherent value of this? but we had to do it. >> you're sort of put in a position where you've got to market the last trade, and we ended up buying that and became one of our biggest positions. >> nice. >> over time, it went back to par. >> we'll be back and talk more about this and get some sectors in parts of the world that look good. >> okay. also, we'll talk about twitter taking the first steps for following an ipo, but keeping details secret, "squawk" will be right back. time now for today's aflac trivia question. which computer game first made it into space?
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which computer game first made it into space? the answer, "star craft" was sent aboard shuttle mission sts96 on may 7th, 1999. >> aflac. wondering how much twitter might be worth? you may have to wait for that info. i don't know. a new rule under the jump start our business start-ups or jobs act, companies with less than $1 billion in revenue can keep the details of their finances hidden. i think back to the go go years of the internet, eamon javers, and there wasn't a single one of those companies. not a single one had -- i don't think they had 100 million in revenues and it's kind of the same case here with $1 billion limit on twitter. >> yeah, that's right, joe. there are a lot of unintended consequences from things they do here in washington. this is one of the intented consequenc consequences. this is what they actually
wanted to happen when they passed the jobs act. the whole idea of this obama-era law is it would jump start ipos from tech companies and they would use the proceeds to create jobs. so what exactly does this jobs act do in reference to the ipo process? well, take a look at some of the key points here. signed into law on april 25th, 2012, it allows the secret ipo but only if the company earns less than $1 billion in annual revenue. we can assume that's where twitter is at this point because they filed this confidential filing. it allows the secret filings until 21 days before the road show. they will have to make it public at some point, just not yet. it's all about creating investment, creating jobs and jump starting the economy. we'll have to wait and see if this has this effect. the idea is these companies will have to raise a lot of money and they'll spend that on hiring. and you'll assume that's what twitter will do. the problem as you guys know,
these tech companies, they raise a lot of money but they don't need enormous staffs. a lot of these companies are technological and don't need a lot of human beings on the payroll. whether or not this creates jobs, we'll have to wait and see. >> thank you, eamon. we should note tonight that carl quintanil quintanilla's documentary will be on "twitter revolution." a lot more with marc in a moment. especially today, as peoe are looking for more low, and no calorie options. that's why on vending machines, we're making it easy for people to know how many calories are in their favorite beverages, before they choose. and we're offering more low calorie options, including over 70 in our innovative coca-cola free-style dispensers. working with our beverage industry and restaurant partners, we're helping provide choices that make sense for everyone. because when people come together, good things happen.
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welcome back to "squawk box" this morning in the he week for economic numbers. we're about an hour away. we'll be getting the latest numbers on retail sales and producer prices. economists looking for a rise of .2% for the august producer prices and .5% increase for the august retail sales. also, gold prices, they're down again this morning headed for their biggest weekly drop since june. gold falling on receding fears about a serious strike in anticipation of what the fed will begin tapering its stimulus program next week. perhaps that's the expectation, at least. the california legislatuor has approved a bill that will raise the minimum wage to $10 an hour
within three years. and governor jerry brown says he'll sign that legislation. let's get back to our guest host. marc lasry, avenue capital chairman and ceo. this fund has over $12 billion in assets under management. and marc, we were talking about how during the financial crisis, you were one of the people there catching the falling knives. really difficult to deal with. joe said he couldn't stomach it. how did you handle it? >> oh, trust me, i think it's hard for everybody. in retro spect, you like to make believe it was really easy. but i think it was probably one of the most difficult times for us as a firm and for me. just every day you're constantly being told by the market that you're wrong. and that's just really hard. i mean, every time you buy the market's telling you that was a stupid buy because every day it was going lower and lower and lower. so it's not, trust me, it's no the that easy. i think a lot of it is you have to have a lot of confidence in what you're doing and you've got to believe your analysis is correct over the long-term. and most of the time, we are.
and sometimes even though we think we were right turns out we were wrong. >> $12 billion you have. and i don't know how you raise $12 billion. >> dollar at a time. >> and you're known -- >> we introduce people as billionaires. we're not going to introduce you as a billionaire, but you are. you've got to be right. people complain about the 2 and 20 and all that stuff but the only way for it to work and to grow to $12 billion, you have to do the leg work and the due diligence to be able to be right or else it doesn't work. >> yes. >> you had a down year, but the next year you made everything back plus another -- >> plus more. >> plus more. yeah, right? >> i think at our peak we were about $22 billion. we ended up returning about $10 billion around 2010. look, a lot of it -- what you said, the way you grow, the only way to get big in our business is by doing well. the better you do, the more capital you end up doing. i think for us what we try to do is when we see opportunities, we
end up going out and investing in those regions. >> and the reason i preface it with that because you're saying things that i would not have figured out. and one of them is that at this point, there are many companies in the united states that are running out of time because they're leveraged. now, see i thought that at zero interest rate, i thought everyone had gotten their house in order. there are still places that are hoping for economic growth, they needed economic growth, it hasn't come and they're not going to be able to -- >> could they not refinance? >> why can't they refinance? but there are going to be more opportunities as thee companies run out -- >> right now you have about $1 trillion in the u.s. markets of distressed debt or defaulted debt. your question's actually a great question. any company that could refinance has already refinanced. so the problem you've got right now is for all those companies that are out there that couldn't refinance, they're going to be hitting a wall. whether they're hitting the wall this year or next year, it's because the market isn't lending them money. and the main reason for it is
they borrowed too much money and borrowed money on a belief they'd have rising ebitda and that hasn't happened. ebitda remains constant or gone down. so as that debt's coming due, they're not able to refinance. that's the problem. >> so how do we -- how would someone at home figure out how to try to do something similar? can you tell us sectors? and what would you do? go in and buy it on pennies on the dollar and restructure? what do you do? >> i don't think it's -- first of all, some of this isn't pennies on the dollar today. there's a lot of debt trading around. the most we can buy is probably $12 billion. >> are you going to play in this market? are there more attractive opportunities? because you've got great comments about europe and what's happening there. >> i think there's quite a bit to do in the u.s. there's more to do in europe. and the reason there's more to do in europe, their financial system, the banks are actually still net sellers.
and one of the things hank was talking about i think on the banking system, the banks have been increasing sort of their capital requirements and they need to. so europe is still a net seller. the problem is in the u.s., we sold all of our debt and we cleaned up our balance sheets over two or three years. in europe it's going to be over a sort of five, ten-year process. >> if there's $1 here, how much is over there? >> well, there's as much if not more. >> the 60 cents on the dollar, are those the opportunities in the united states or is that europe? >> no, here in the u.s., somewhere between 60 to 80, in europe, ends up being around 50 to 70. >> and during the depths of the recession, you were talking about what? 20 to 30 cents? >> 20 to 30 cents on the dollar. >> those opportunities were -- have you ever seen, once in a lifetime opportunity to see things like that? >> you saw -- you saw it in 2002 when enron had gone under sort of the -- on when you had all the fraud. you saw it in 98.
but i think probably 2008 was the greatest it ever was. what you had in 2008 was literally 85% of the high-yield market was trading at stress debt levels. >> the stuff in europe is trading at 50 cents on the dollar. does that come with greater risk too? >> absolutely. >> it's greater risk, it's more liquid. it's much more restructuring. you've got different legal systems so it ends up being much more difficult. >> one of the things hank said is we will have another crisis. >> right. >> are there things you are nervous about? >> when you think about where we are -- the real risk you've got is much more in europe. i don't think you have risks much here in the united states. i think our banks are fine. i think in europe is much more of a sovereign risk and that risk is there.
it's gone a lot lower because of european central bank. i think if you've got low gdp, negative 2% or 3%, it ends up putting more pressure on the banks. >> did we have a ten-year runway? >> i think you've got five years. >> because there's not too much debt in the system? do we think the debt is ultimately the thing that -- >> yeah, i think it's about leverage. i think it's really leverage. and one of the things people don't want to talk about -- the reason we had the crisis is you had sort of lehman brothers that was -- i forget, 35 or 40 times bear stearns. so everybody was levered to the max. today that lever has been taken out quite a bit. so people are levered about 10% or ten times or 15 times. remember, back then, if you're levered 40 times, all you have to do is lose 2.5%, and you've lost all your capital, right. it's just people don't focus on that, but that's the big risk. >> how levered is your fund? >> we don't use leverage at all, we never have. >> you play in asia. >> yes, we do. >> but you don't want to play in
asia now? >> no, we don't. well, we're still investing in asia. i think there'll be much more opportunity. asia's actually had a great run. china's slowing down a little bit and you can buy distressed debt in asia today at 80 cents, not something we want -- >> it'll be a replay of what happened -- you may be buying -- >> we'd like to wait. >> what about japan? is that a special situation? >> we haven't played in japan, haven't invested in japan. i think you need to be there and it's very hard. you have to be a local. so we haven't really invested there. >> but the points you're making is this growth, the weak growth we're seeing in u.s. and europe, that will hurt these emerging markets in asia. >> yes, it will. >> and that will cause as much as a two-year sort of hiatus before we see a resumption of all that excitement in that area of the world? >> yeah, i think it'll take another couple of years for things to start -- >> because of us? >> yeah, we're having the growth they're not having the growth. >> not enough to help them. >> you'll see maybe next year or
the year after. i think what the projections for next year is 3% gdp growth. >> yeah. >> and you are -- we'll talk more to you, but you're a friend of bill. as a result, i figure you're a good friend of larry's. will you say outright, larry should be the guy? >> i'm a big fan of his. so, yeah. >> do you know yellen? >> i don't know her. >> i was curious. >> larry might have to build more consensus, but he's brilliant and he can respond to things. >> look, everybody who has met larry knows he's absolutely brilliant. i don't think that's an issue. i think he's an exceptionally smart guy and he's -- look, he's been treasury secretary, head of the national economic council. so he knows the president. and i think hank's point was really well, knowing the president and knowing him well is a huge plus. >> all right. that last -- you know, one of the last great republican presidents, bill clinton. as you know. now we know what a democrat is.
>> yes. >> we'll have more from mark, a lot more -- sorry. i couldn't. when we talk about -- you're such a good friend with that side -- if i had just another couple of minutes with you. we're going to leave the lights on. to come home to the other party. >> to the party? when we come back, twitter files for an ipo. we're going to talk more about the filing and what investors can expect. and make sure you catch twitter revolution tonight on cnbc. it starts at 8:00 p.m. eastern time. "squawk box" will be right back. it's official -- >> joe kernan is cnbc. >> yet another reason why you need to watch "squawk box" daily. >> rock it out. >> i feel like i grew up watching you even though i probably didn't. >> "squawk box" on cnbc starting at 6:00 a.m. eastern time. profit from it. ♪
by clinging to the past. and with that: you're history. instead of looking behind... delta is looking beyond. 80 thousand of us investing billions... in everything from the best experiences below... to the finest comforts above. we're not simply saluting history... we're making it. when we return, less than one year after hurricane sandy, destruction hits the jersey shore again. scott cohen is in seaside heights. looking at pictures of seaside park where this fire began yesterday. we'll have the latest on the fire that destroyed more than 50
a raging fire strikes at the heart of a new jersey town hit hard by superstorm sandy. just a week after the tourism season comes to a close. scott cohen is there on the ground, they were able to see what happened last night. >> reporter: well, that is the business at hand, becky. even as they put out the hot
spots and still try and get this fire completely knocked out. investigators from the ocean county prosecutors office are on the boardwalk now. and this is standard procedure and their task is to find out what caused this fire. and they're doing that even as firefighters try to make sure the last of the embers are out from this fire say it looks like a bomb went off. take a loan at the scene. a fire chief says it was more like a forest fire last night, 30-mile-an-hour winds out of the south just push that fire, whipped it along, sent embers from one building to the next. 50 businesses knocked out, at least 20 structures destroyed. total destruction, they say, on about four blocks, at least of the seaside boardwalk. and in the back of their mind as they're fighting this fire last night, these are areas that were only just rebuilt.
>> i feel bad for all the business owners here. after what they've been through with sandy and trying to get themselves reopened, you know, and now to go through this and start back all over again. i couldn't imagine being in that situation. >> and that is going to be a huge task now. obviously this area all just rebuilt after sandy. businesses struggling to get on their feet, weighed down, obviously, from a year ago because of the sort of shortened summer season. and now they've got to start rebuilding all over again and the headaches and the issues they're going to be dealing with just boggle the mind. back to you. >> scott, thank you very much again. that's scott cohen, and we will be checking in with him throughout the day. coming up, could twitter have a growth problem? it's the big question. raising the question as twitter prepares for an ipo and we're going to speak to him in the next hour. and then the global market perspective from gary parr the financial crisis five years later and where he sees
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twitter filing for an ipo. >> number sign, time to hold them pants up. >> hashtag, exactly. >> we're going to ask analysts how much the company's worth and how soon we could see an offering. >> former wells fargo chairman and ceo joins us five years after the fall of lehman. we'll get his reaction to our interview with former treasury secretary hank paulson. >> i think that the capital program we designed is a huge success. >> breaking economic data on inflation and the consumer. cpi and retail sales hit the tape at 8:30 a.m. eastern. it is friday the 13th. and the third hour of "squawk box" begins right now.
we're thinking about, you know, putting animals on the set, andrew wants to get a parakeet to tweet. but you wanted a monkey. >> i've wanted a monkey for a long time, "squawk" chimpanzee. >> welcome back to "squawk box" here on cnbc first in business worldwide. you had no idea what i was talking about. guest host this morning, marc lasry, chairman and ceo. but first, andrew has -- it was a good idea. because dart throwing monkey, i don't think you can train a dart. what if it throws it at you? >> i don't think -- >> keep it over there. they also don't need privacy to
gratify themselves. and we don't need it either. >> in the meantime, let's take a quick check of the markets. the nasdaq would be up close to seven points. also this morning, the u.s. dollar gaining against the yen, after japan's nikkei newspaper reporting that larry summers could be nominated as the next fed chairman as soon as next week. the former chairman and ceo of wells fargo. then at 8:40 a.m. eastern time, gary parr will join us and he was behind the scenes throughout the financial crisis five years ago. twitter filed an ipo, the company making announcement, of course, in a tweet. the social networking site filed for an ipo confidentially under
a new law we'll have much more on the twitter ipo filing in a minute. two horrible disasters. in new jersey, a fire has destroyed 80% of a boardwalk. three dozen businesses have been destroyed. chris christie addressing reporters on the scene. >> when i got my first full briefing before i left trenton to come here, i said to my staff, i feel like i need to throw up. and that's me. after all the effort and time and resources that we've put in to help the folks in seaside park and seaside heights rebuild. to see this going on as i said at the top, it's unthinkable. >> and in colorado, days of heavy rain caused flash flooding. nearby creek began rising to dangerous levels.
back to our corporate story, twitter filing, and julia boorstin with more on the west coast. >> reporter: they did final confidently for an ipo, that means we don't have any financials from the company just yet. all we do know is the fact that twitter's revenue is less than $1 billion. we do have some very good estimates. now, emarketer projects that twitter will double the revenue and bring in $538 million with revenue of $950 million next year and $1.3 billion in 2015 revenue. now, mobile is expected to be about -- responsible for over half of twitter's revenue this year and expected to contribute a growing percentage moving forward. so the question then is what's twitter worth? its last round of funding put it at around $10 billion. the recent light trading in the secondary market values the company at more like $15 billion. cashing in on this ipo include co-founders chairman jack dorsey
plus evan williams and stone no longer working a the the company. since 2007, twitter has raised $1.16 billion. its first round of investors included marc andersen. now, twitter's other investors, include union square ventures, morgan stanley as well as the big facebook investor, dst global, we'll have to see who cashes out at the ipo. >> maybe an investment in hair club for men for those guys. did you see those three guys? >> did you see those three guys? >> isn't it a masculinity? >> look. can't they do a start-up with sperling or something? >> they say no hair, more testosterone. that's what they say. >> i don't think that's true. joining us now to talk more
about the twitter ipo and the filing, asenior editor. you more than made up for it. >> rocco's got it all. he's got it in his head -- >> i don't have any make-up on this morning, my dome would be shining if i didn't have hair. social media director and really a keen eye for talent with news people. we noticed that yesterday, rocco. in fact, after you said that about me being cnbc and all, i don't know if you notice, we called you the very next day to come back. what are you doing? >> i don't mind driving here at 3:30 in the morning. >> we will see you monday. guys, i guess this is not a surprise. it's kind of neat to do without tweeting it, isn't it, mike? >> yeah, i guess it sort of speaks to exactly how twitter sort of operates. they want to be in the public
sphere, they are the platform to go and speak your global town square. i thought it's a cute way to announce their intentions. it's not completely surprising because we've been expecting something like this for a little while. >> rocco, you've seen what happened with facebook and where it is now and linkedin. when it finally comes, where could we be if it catches fire. we could be over 20, if it gets in? that would be 200 times earnings. >> yeah, probably somewhere in the middle. i think this is great for the employees, great for the investors. from that standpoint, i'm happy. i like to see these people be successful. i don't begrudge them for making money on the ipo. and the stock will probably do well. we learned from facebook and now facebook is flying. but twitter's further along, at least in terms of having a more
mature mobile advertising business. i think investors will give them a pass at the beginning and not scrutinize the businesses as much. i think the stock's going to fly, but i'm not about today. when you're twitter, facebook, pandora, it scares me. when you look at facebook and pandora, they both have sold their souls. what happened to the social mission that zuckerberg had at facebook. he still talks about it, but come on, this wasn't a business when they had thinker s1, all of a sudden this -- >> he said that yesterday. he said i thought being public was going to be -- he said he's worth -- >> i don't buy that. when you log into your facebook feed and the video, the ad auto plays, which is going to be happening down the road. i mean, this is a business. 110%. and that's fine, that's great for wall street, that's great for investors, but does it degrade the user experience a few years down the line and maybe not make them a great long-term play? >> you can't create these businesses if they're basically
running as nonprofits forever. >> i don't disagree, but it's a double-edged sword because short-term results to pump the stock and get wall street happy. again, hurts the user experience so you're not a company that's going to be around for five, ten, 15 years or as successful. >> go ahead, mike. >> i think right now, i was going to say, i think right now the big problem for twitter is actually understanding how to use the service, right? your mom or your dad can easily figure out facebook. but, you know, for the past five or six years, twitter, you know, they're still trying to figure out what @ or hashtag is to some people. >> i am that person you're talking about. in fact, i don't have the facebook thing you said i know how to do. i don't know how to do that. >> don't make me whip the bald testosterone out. >> i'm not really doing it so you go anywhere. it's just sort of making --
>> that's the use for it. that's -- >> the ironic hashtag. >> it isn't really to aggregate anything -- >> i know how to block people. >> i don't block them anymore, i report them as spam. do they get in trouble? do they get in trouble? >> yeah. they have police. >> what happens if you report them as spam? >> i believe that twitter's user protection team checks them out and actually sees if -- >> they're checking out -- >> hundreds of people i've done that to. hundreds. >> you're the guy misusing the 911 system. >> i am. i'll tell you what you gentlemen were talking about what will probably do well. does anyone see that suddenly social and mobile and media is reminding me of where people don't even look at metrics anymore? marc mentioned, our guest host, apple's at ten times earnings and people will only be happy to pay 100 or 200 times earnings again for a story stock, mike?
>> yeah. well, i mean look at the, you know, the facebook ipo. again, at the shareholders meeting. >> facebook got above 38. >> well, i think that's one part. i think that's one part. but i also think, like investors are, you know, sort of armchair investors weren't looking at, you know, earnings back then. they were hearing what their kids were saying and, you know, facebook's ipoing, you've got to get on it. i think twitter will be the same thing whether you look at revenue multiples or not. >> one thing, guys, we're not talking about one thing, mobile advertising has a handful of players. you've got google, pandora, facebook, twitter. in a few years, the big media will come in. time warner, comcast, they'll get mobile dollars. i don't think the growth of these social companies will be as great as people think. once these big media companies get their act together and start doing more mobile and digital. >> thank you. you got that release form for that -- we're going to put that in the cold open. you know, you talk about me and
everything. you're good with that, right? >> i'll waive my normal royalty fee for you. >> you're in the cold open of the show. thank you. he was today, actually. >> he was. >> no, it was his own little -- >> there it is. >> you should make sure to catch the twitter revolution which is tonight on cnbc starting at 8:00 p.m. eastern time. carl quintanilla's terrific documentary on that company. >> is that one of your favorites? >> carl is one of my favorites. is it one of my favorite docs? it actually is a really, really good doc. >> that's what i mean. when we come back, former wells fargo chairman and ceo dick kovacevich will join us. this was a massive credit bubble that burst. and i think this was a major dislocation and we're fortunate to be where we are right now. get paid to do something wd
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all week we've within recapping the lessons learned in the five years since the fall of lehman brothers. earlier this morning, we spoke to hank paulson. >> i think that the capital program we designed and to get out and put capital into hundreds of banks very quickly and recapitalize the financial system is a huge success. and that money has come back, you know. all that plus $32 billion. so i focused on that.
>> joining us now is dick kovacevich. he was in those closed door bailout discussions during the crisis. and thank you very much for joining us. >> good morning. >> i know you were there at the time and i know you have a slightly different opinion than hank paulson does about t.a.r.p. why don't you tell us what you thought about it? >> i think it was one of the worst economic decisions in the history of the united states. everybody was well intentioned. but the proposition that hank put before us was if we took this money, the confidence in the industry would go up. and i was arguing that day until i was told to be quiet is the opposite would happen. and let's look at the facts. shortly after t.a.r.p., the stock market fell by 40% and the banking industry stocks fell by 80%. so how can anyone say that t.a.r.p. increased the confidence level of an industry
when its stock market valuation fell by 80%. i think it caused the crisis to get much greater than it would have been if it would have been handled differently. and i think as we look back, you know, we could've handled it differently. and i think the facts support that handling the crisis differently would have made the crisis less severe than it actually was. >> you know, dick, there's no question that the crisis put a lot of companies in the position, a lot of banks in the position where they weren't going to be able to continue to function. if t.a.r.p. wasn't the right answer, what was? >> well, see, what you should have done in my opinion is that most of the financial institutions after bear stearns and lehman were having a liquidity crisis. because they were not -- they were funded with wholesale funds and therefore in the markets
were seizing up. so i think what they should have done is to say that because of the seizing up of the markets, the fed and the treasury is going to provide electriciliqui those institutions who we do not think will fail but who need support at this time from the liquidity standpoint. and therefore you should have done that -- they could also have said so that, you know, you don't convey that there are safe banks and unsafe banks. you say the other institutions, at least at the moment are not suffering from liquidity. however, if they should, we are prepared to help them, as well. and if you would have done that, you would have then not conveyed as you did with the way this was operated is that the entire industry is in deep, deep trouble. the world is coming to an end and even banks that were aaa
rated the day before now need $25 billion. the market reacted as you would expect it would and that i would argue that it would. it would be devastating and the confidence would decrease significantly not increase. >> what do you make of this argument? a, that you would be putting a scarlet letter on those banks that were in trouble? and, b, that we would be following the model of japan and the uk where we serially, serially bailed out banks only when they needed to be bailed out but it took a much longer time. when you look at their economy and, frankly in the uk, i think you could argue and in japan, it took too long and the idea of recapitalizing the whole system at one time, even though i recognize you think it was a liquidity issue, there was still a capital issue, at least for some institutions. >> well, it was only a few institutions that were capitalized. how can you have an industry that could come back within six months of receiving this money and paying it back. and within a year, practically
everyone paid it back if, indeed, it was other than a liquidity crisis. we had record earnings in the first quarter of 2009. you think the reason we had record earnings in the first quarter of 2009 was because we received $25 billion in capital in october? the difference is we weren't in as bad of shape as japan. and my point is you always have the opportunity to do something differently if it's not working. everyone knew there was a liquidity crisis. what they -- what you don't understand is that everyone understood who needed the money and why. what shocked the market is that institutions they thought did not need the money that were performing reasonably well who didn't take the risk that other companies took in the crisis also needed money. oh, my god, the whole system is in bad shape. >> paulson described the program this morning as a voluntary one.
i take it you take issue with that too. >> come on. he even says in his book about me as i was saying i don't want the money. he says he looked over at ben bernanke and said that if you do not take this money, your primary regulator is going to call you capital deficient on monday morning. is that voluntary? >> no, it doesn't sound like you have much of a choice there. let's talk a little bit about the fed. next week, the fomc is meeting and the market is speculating, at least, they will begin tapering. you think it's about time? >> they have to taper now. the price has already been paid. it's built into the market today, it would be shocking to the market if they do not taper. so they have to taper. and the amount is not relevant, just do something. whatever you think, the minimum amount, if you're worried about it. i don't think that the qe-3 is working. so, you know, i would definitely do $20 billion. but if you don't like $20
billion, do ten and do it in treasuries because that's the least valuable. but you have to taper because the market is expecting it. and the market will not understand anything if they do not taper in september. >> one question i have, back to the banking system for one second. it's a question i'm asking all week it's about concentration. and all of the mergers that took place during 2008 really to get through the night to the extent you believe that was the right decision, i'd be curious about that, as well. but, you know, now -- given where we are, wells fargo, your former bank now controls about 30% of all mortgage origination. does that make sense for the country? from a policy perspective? >> well, yes, in this sense. we really don't control 30% -- in fact, it was probably 25. but half of the mortgages -- half of our market share, mortgages originated by us through our retail network.
the other half of our business is simply helping other originators by channeling multiple originators together to get enough of a volume so that they can be given to fannie and freddie and put out to the market. so it's a wholesale function and someone has to do it. so the real concentration, if you want to call that, is the originations that you do yourself and that's about a 15% level for us. so it's still very diverse in terms of retail originations. >> dick, i want to thank you very much for joining us today. and we hope to see you back here onset again soon. >> thanks, becky. >> thanks, dick. before we take a break, dow jones is reporting that the white house says reports in japanese press today suggesting that president obama is set to name larry summers next week are wrong. the white house says the president has not made a decision about the position. cnbc has reported and continues
to report that the job is larry summers' to lose. that's come to us from our john harwood. >> yeah. you know, so it'll be, you know, a week from monday. you can say it's wrong but you never know what they mean by saying it's wrong. >> probably the idea they're going to announce it next week. that might be what's wrong. >> that's what i p meamean. that's the part i don't believe. >> the white house is saying i haven't decided, but john harwood has announced that it's larry summers' to lose. >> i still want dick kovacevich to call in next time we have hank paulson on. we're going to get retail sales and producer price index numbers. also known as, becky? >> the ppi. >> i'm not going to say it. if you want to say it, go ahead. and hearing everything from our marketing partners, the media and millions of fans on social media
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welcome back to "squawk box," everyone. we're just a few seconds away from the retail sales numbers and the ppi figures for august. rick santelli is standing by at the cme in chicago. the futures have been indicated higher. we'll see what happens after we get these numbers. >> and here we go, up .3 on ppi if we strip out the all important food and energy, unchanged, no revisions of any type. let's move over to retail sales, shall we? up .2. much less than we were looking for. now, let's do the xs, autos, up .1, autos and gas, up .1. they call a control group blending it together in the mixer and letting go. they're positive numbers, positively smaller than expected. ppi a little hot on headline. not a little hot when you strip out the things we really are worried about paying the most
for the most in fuel and energy. and obviously there's been a boat load of volatility, a lot of it based on foreign policy regard to energy. up 23 in dow futures, yields, still hovering around a super important, one of the first significant tops. and the auctions are behind us, and we now know who may have the biggest belly full of those verizon bonds. just who you'd expect, the big bond funds. we'll continue to monitor verizon, governments, back to you. >> we were just talking a little bit about a story earlier that had moved to the dollar. it'd strengthened the dollar on a report in the nikkei newspaper in japan saying that larry summers -- >> summers? >> yeah, summers will be named as early as next week. >> the white house has since come out and said that report is wrong that the president is still deciding what is going to happen. but as john harwood has pointed, the job he thinks is larry summers' to lose.
what do the markets really do? the dollar was up earlier on this report. >> yeah, you know, listen, i guess i understand why the dollar's up because i think in this theater of who's coming next that the notion of him contrasting what the quote, unquote, dovish yellen puts them in a more hawkish role. i'm not sure i buy any of the gentlized labels. and i'm not sure that whoever you place in that job -- whoever it is is going to need some real guidance from above. >> rick, we had paulson on talking about what the t.a.r.p. did for the country and we had kovacevich on. it was like -- >> night and day. >> really. one is that we may not -- we might all be dead if we didn't do the t.a.r.p. according to one side. and the other side said it ruined the banking industry and caused the banks to lose 80% of their value because they all looked like they were ready to go under.
did you watch any of that? >> i caught a bit of dick's comments. and i was lucky enough not too long after the crisis to be on a stage with him. i, obviously, see it his way. and i think that, you know, mr. paulson in many ways, you know, is going to be the most famous treasury secretary in history and i really do think his heart's in the right place. but to me, you know, we ended up creating a dynamic where the banks ended up sleeping with the government. and from this point forward, first of all, i don't know i'd ever totally believe anything that comes out of a headline from any of the bankers that received $125 billion. some of the antagonism i used to enjoy i don't see as much anymore. but more importantly, you know, once you save them, now you end up kind of tinkering with them and making rules about them and wondering what's too big and what's too small. if you'd just used the only regulation that ever worked, what i call the 11th
commandment, failure, you wouldn't have any of these issues. >> yeah, i think george hamilton was, by far, more famous than -- was it not george. no, i'm thinking -- all right. he is pretty cool, though. always looks the same. all right. >> we'll continue to hang out with our guest host this morning. marc lasry, the chairman and ceo. we've talked a lot about the investment themes. i want to talk about the hedge fund industry at the moment. right now feels like the industry has not kept up with the major indexes by a long shot. you may have but others not so much. >> we've also heard that thieves have come under pressure in a meaningful way. people have been talked about fees coming down and a shift in
the industry, but it hasn't happened yet. is that something -- >> i think it has happened, actually. i think what ended up happening is it's come down, whether it's 1 in 20 or 1 1/2 and 20. the people that aren't -- >> and if you're making money, you can still stay. >> i think you can still end up charging that, but ultimately you've got to make money. the whole industry was 2 and 20. i think what you're going to find is there are more and more money going to people who are doing well and you're going to see more and more failures over the course of the next couple of years. or people just money being pulled out of guys. >> the journal had suggested it was closer to 1.6 -- >> i'd say 1 1/2. >> maybe 16, 16.5%, something like that. >> i don't see the reduction as much on the incentive fee. i think the reduction is much more on the management fees.
>> right. >> do you think you could start your funds in today's market in today's environment? >> no, i think it's -- i think it's exceptionally hard to get started today. >> because? >> i think to raise money today is very, very hard. people who already have capital have a huge advantage. and the reason for that, nobody wants to take sort of risk with the new managers. >> so the cleverist kid working at avenue capital now who wants to spin out on his own, will have a much harder time today? >> a much harder time. you're not leaving -- used to be, you could go out and raise 250, 500 or $1 billion. today you're leaving with $50 million or $100 million and it's much harder to gain traction with that. think of it this way, in 2008, the risk-free rate, right, so three-month libor was 5%. so all i had to do was four times the risk free rate and i
was viewed as doing well. making 20%. so for me to make 10%, i've got to do 40 times the risk-free rate. it's so much harder. and if i'm in cash, not investing, i'm not getting anything. whereas before, i'd be getting 5%. so the pressure is so much greater on you to succeed that you're -- if you're an investor, you're going to go with people who have proven themselves. >> one of the other issues we're talking about last week, i thought it was an article in the journal, we were talking about pension funds, a number of pension funds have started and have decided at least in the private equity space and other spaces that they're going to invest for themselves. they're better off and not paying the fees at all. t does that make sense to you? would you decide we're going to do this on our own? or do you think the allocation of money makes ultimately is -- and the talent, the other issue is from a policy perspective, can't pay people the same way you can pay people. >> that's correct. >> what does that mean?
>> theoretically i should be able to have more talented people, our industry should have more talented people. saying we want you to manage, but we're going to end -- we'd like you to charge us lower fees. i think for them to manage it, i think it's much more difficult. but i think there's a lot of political pressure on these organizations to do that today. >> do you think bernanke could stay in business as a distress debt hedge fund manager? >> no, i don't think that's his forte. >> but do you think he'd be good at it? do you think he'd know how to do it? because he's kind of doing it for all of us, isn't he? >> i think theoretically he'd know. >> it's our balance sheet that he's messing around with. >> and he's done a great job. >> and we'll be able to get out of this okay. you think he could be a hedge fund guy. >> will you hire him as a consultant? >> i would hire him as our head
guy. come work at avenue capital. >> wow. >> wow. >> why not? >> but we also talked off camera before about everything the fed's holding right now. >> right. >> we've seen the upside. we've seen the good part of this already. the bad side of the trade is already to come. the fed is going to lose huge amounts of money. but hopefully that's offset by increased revenue because you've got an economy that's doing better. i'm not an economist, but it's definitely going the other way, it has to. >> yeah. >> that's a big hope, marc, you know. it just seems -- i don't know. you don't see a disaster as they exit? >> no. >> okay, good. ma marc is going to be here for the rest of the show and we'll await to see if ben bernanke will give you a call before the end of the show. does he go back to princeton is that what happens? >> i think so, yeah. coming up, lessons from the crisis, fed tapering and the next fed chair. we'll cover what we've been
talking about already, but with gary parr. and big news after a short hiatus, the talking "squawk" blog is back. does it talk? get all the buzz behind the scenes on the week that was and the week to come. go to squawk.cnbc.com. [ male announcer ] let's say you pay your guy around 2% to manage your money. that's not much, you think. except it's 2% every year. go to e-trade and find out how much our advice and guidance costs.
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welcome back to "squawk box." making headlines, a poll by the "wall street journal" now expecting a tapering announcement from the fed yesterday. but despite weeks of speculation, nearly 40% of those polled forecasters don't think markets have fully priced in a move in september. that's surprising, at some point we should also talk about the bond move. bonds already moved and, anyway, longer conversation. >> earlier on the show, you probably saw former treasury secretary hank paulson. he talked about the lessons learned from the financial crisis. >> i think that the capital program we designed and to get out and put capital into hundreds of banks very, very quickly and recapitalize the u.s. financial system is a huge success. and that money has come back, you know. all that plus $32 billion. and so i've focused on that. >> joining us now with his reaction as well as what advice he has for treasury today, gary
parr, vice chairman. gary, thanks for coming on. you know, you heard what hank said and, you know, my atm card still works. it was a rough four or five years, but here we are. but the point that kovacevich made. bankers are still probably less popular than, you know, funeral home directors. even at this point. so was it the right move? >> well, good morning, joe. i think it was the right move. one part of the banking system is confidence. that's so important. and we were at a point in time where people lacked confidence. including whether their atm card would work at the point in time. so i think hank paulson did the right thing to do something very big to remove the risk from the system so that people believed and had confidence. and i think trying to fine tune that or tweak it, there may have been a more elegant answer. but the most making a decision g
it. >> we have time to figure out more elegant solutions now. but it's hard to second guess. >> and when you're in a battle making that field decision, yep. >> yeah. what do you -- go ahead. >> no, i was going to say, joe. i think interestingly if you turn the calendar forward five years to where you were headed with the second part of your question was regulators have made a fair amount of progress on some number of fronts to anticipate the next time. but i must say, i'm disappointed that they are now bogged down in the weeds. they seem almost lost in the weeds. you know, roughly 40% of dodd/frank is done, so much is left undone, including fundamental issues like rick santelli talked about earlier. okay, if someone's going to fail, are we ready to let them fail? do we have methodology in place? have something to the rest of the system is protected? and five years on, i would suggest that hasn't been fully
figured out. people are now lost in drafting pages upon pages upon pages. >> and all the fed action and with the upcoming, you know, decision next week, did qe-1, work, qe-2? did they all work? none of them work? >> from a financial system point of view, i would say certainly one and two helped because they pushed liquidity into the system, brought rates down where people would have confidence that the financing markets would work. i'm not sure it's the most effective mechanism for making the economy grow but it did stabilize in the early days, stabilize the system. that was useful. i think it then passes the useful life. >> are you ready for life without qe? >> i think, again, not an economist, i will say one of the risks to the system you all just touched on it a bit earlier with mark. and that is rapidly rising interest rates. were they to go up quickly, and they did jump quickly here in the summer, if they were to jump
again or continue to move quickly, a lot of financial institutions are not well positioned including the fed for a rapid rise in interest rates. a slow rise is more manageable, people know how to deal with that, but a rapid rise in rates is one of the risks that exists in our systems today. >> the prevailing view on wall street is that larry summers is going to get the job as the new fed chair. where are you on that issue? >> i'm, i know him, i know larry, i do not know her. it's not fair, i don't have a fair comparison between the two. >> i like the way you said that, though, that it's fair to say that the fed is not well positioned. >> sharp rise in rates. >> yeah, saying it, well, they're not well positioned. could it get ugly? >> it's how fast, how quickly. there's real risk. by the way, there's more risk in the banking system than there is in the fed. but i just identify that. now the fed does have a couple
of risks. and, indeed, it is hank paulson earlier said we've done well as an economy with the delevering of the system. but, again, one party has taken on massive leverage in the meantime and that is the fed. now the fed has to delever. >> gary, real quick, news this morning about jpmorgan and jamie dimon. they're going to spend $1.5 billion to bolster the lawyers and all the people dealing with regulators. does this make sense to you? >> i don't think that's unique to them. i was three weeks ago i was in china talking to the head of the central bank of china. and one of the discussion points was that we were complaining that the chinese banks were complaining about too much regulation and oversight and i posed a question to him, how many banks in the u.s. do you think spend over $1 billion a year in dealing with regulation? and the answer is at least six if not 15. spend over $1 billion per bank dealing with regulation.
so jpmorgan is not alone and having this large expense. and i'm not saying that's necessarily bad, but that's reality. >> all right, gary. you would make -- he's an elegant man. you would make a good character actor in a lot of -- did you notice that? >> i'm waiting for the offer, joe. from your lips -- >> have you really? >> gwyneth paltrow. >> has a good memory, yes. i did make a few movies along the way. >> "phantom of the opera." >> are you not -- >> no, the new york philharmonic. >> i'm adding him to my list. >> i have my band. again, i have my band as joe has his. >> i've got richard engel, tom brady, i'm adding -- zblaung, joe.
welcome back, everybody, we have more on the twitter ipo filing. kayla tausche is with us onset. >> there are a few things we don't know. let's run thing and handicap what we do know. they'll add more banks over the next few months to help allocate those shares. we know some are valued over $10 billion and that's likely the valuation where they'll go public and look to raise roughly $1 billion, possibly as much as
$1.5 billion depending on demand. the big question, though, is when. i've heard from my sources the window for twitter to go public is anywhere from november until the end of the first quarter of next year. going public by the end of the year may sound soon but it's the jobs act makes it possible. here's why, they can fill in a lot of the information like additional banks and additional finances as it goes and it has realtime feedback from the sec. it took facebook, for instance, roughly six took facebook roughly six weeks to get feedback from the s.e.c. every time they made a change to the s-1. the full thing needs to be filed three weeks before the road show. if twitter is motivated to go public before the end of the year, that expedited information flow is what's going to be possible. >> let's bring in jim cramer from the new york stock exchange. jim, i wanted to ask you about the shock and awe in the markets last night. first of all, what do you think about twitter? >> i think this is a very important deal.
i think it's going to be more like $20 billion than $10 billion. they do have what's known as native advertising. this is a way to reach 200 million people, go into 400 people. it is a featured way for advertisers to connect with young people. it works. >> wow. is that going to be -- >> not a way to connect with us, though, jim, unfortunately. you said young people. >> it's interesting, because i had john on last night from buzz feed. he regards it as the railroad that. >> has to go through. they apparently do not want to be bought by anybody. they do have great ambitions. they made a lot with this documentary. they've made a lot of roads to become the other than facebook way that you can advertise. >> do we know if it's a dual class share? >> we don't know. and we don't know whether they'll let employees cash out.
that was a huge issue for facebook. the market was flooded with new facebook shares. >> i would think they would try for dual class, given just the facebook and everybody else. >> i don't know if they have time to build that and iron out all the details. >> jim, what is youawing and amazing you right now? >> everything's going up at once. it's not supposed to happen! you shouldn't have the oil stocks going up when the airline stocks go up, shouldn't have oil going up and people going out to restaurants and those stocks going up, defense stocks with the sequester, health care stocks going up at the same time as the big industrials? i mean, this is 1983, this is 1992. >> that was a really good year. >> those were fabulous times. everything was on fire. >> they go on for five years. for once i thought you were making the point it was just the generals moving but you're saying because it's so many different sectors that maybe
this has some staying power. >> we've had since 2001 if you have one group going up, it's been zero sum, the money comes out of another group. you have the verizon group taking a huge amount of moneys are doesn't seem to matter. there's a lot of money going into the market. you should not have the health maintenance organizations going up at the same time as the rails and the airlines. china and europe are coming back, the united states some are slowing so they're buying a lot of health care but this is unprecedented for the millennium. it's not unprecedented from the 80s and 90s. >> jim, thank you. we'll see you in a few minutes. kayla, thank you. >> when we return, we'll give mike lasry the last word. if you have the audacity to believe in straight talk,
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let's get back. we don't have a lot of time left with our guest host mike lasry. i thought of one last question. the entire planet five years ago was a distress situation, distress debt. we're not anymore. is the fed taking on all the leverage or is it a totally fixed situation, different than it was? >> well, you always have problems. it's sort of what i talked about
earlier in 2008, 85% of the high yield was either distress or defaulted. today now it's about 15%. >> so we're in much better shape. >> much, much better shape. >> nothing looming, no black swan -- >> nothing that i can see. >> thank you for being here. >> always a pleasure. >> have a great weekend and join us on monday. "squawk on the street" starts right now. ♪ ♪ >> but you've given no clarity as to which path u might take. for all we know, you could be private forever. >> mm-hmm. >> you could be private forever. >> i think we're going to continue to keep our plans to ourselves. >> the ceo,
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