treasuries first. especially superimposed fitch possibly downgrading u.s. credit and of course we know what that looks like, wasn't the worst thing in the world for treasuries a year ago because s&p did it. what you expect, let's tackle treasuries first. >> first bought think regardless of how the fiscal cliff negotiations are ultimately result, there's a pretty good probability over the course we see a ratings downgrade. the good news at least for the markets perspective is we have been through this process before. in summer $2000 was a little bit more. a traditional sort of risk off trading. spread in corporate bonds and treasury yields continu continuo fall despite the fact the treasury being downgraded. liz: it is surprising to me is anybody buying treasuries in this market right now with the yields so low, it is practically throwing money away. they know the federal reserve is buying 70% of the treasury bonds right now, but who else is buying? >> there are lots of investors. for an individual inve

my focus was different because i was inside the treasury department. i have access to all that information. access, and all of their privileges and had a law enforcement function. we were in executive-branch agency. there were a creature of congress and did broader policy tight oversight. she brought her academic credentials, and that type of analysis. so we worked together. we did on joint projects together, and i get to know her. it was one of the most delightful things are going to washington the, i write about some of the lens is i had. we would compare notes about the different frustrations that we had. but i found her to be one of the most principled, admiral people and i get to meet in washington, and i just have nuys respect for her. one of the incidents to talk about in the book is that while she was pitching and advocating for the creation of a consumer financial protection bureau, no secret in washington that she was campaigning to be its first director. it was very clear that treasury secretary tim the gander was going to have input into de

everybody is long treasurys. now you're going to sell the treasurys. everybody has to rush to the other side of the boat and we see, again, a real risk that interest rates will rise very quickly when the fed makes that announcement. it will be a very difficult situation to quote, exit with the huge balance sheet like that from the fed where they're the dominant supplier now. david: not just the fed. central banks all over the world. >> that's right. david: a very dangerous experiment we're right in the middle of now. books will be written about this. let's hope it ends up well. john silvia, wells fargo managing director and chief economist, john, thanks so much. appreciate it. >> thank you, david. liz: he will be prominently mentioned in those books. david: i think he will. liz: there is growing division between big businesses and small businesses when it comes to personal tax hikes. next off to d.c. for a look who is actually saying they should go up and why and we can save you 10% on ground shipping over the ups store. look this isn't my first christ

a lot of times, too much discretion was given the treasury. and that led to not really execution all that well. some the more important mainstreet goals of the program. >> 202 is the area code. you can participate in this conversation with neil barofsky. the phone numbers are on the bottom of the screen. please call if you are in any of the time zones. he worked for a month and a half or so what was your relationship with the two gentlemen? >> i found it very accommodating. he's warming into office. he was very nice from the beginning. he really wanted here where i was coming from. he wanted our input at that meeting about the auto bll. what protections we thought were necessary to protect from fraud. we had serious tension as we were pushing for more transparency and more work conditions. we were certainly pushing back. personally, i did find that he was interested in what we have to say is one of his chief lieutenants. he wanted to make this work. our relationship with secretary timothy geithner was different. it's pretty much dismiss it fro

secretary nobody goes to the treasury department every day and says could you tell me if the u.s. was active directly or indirectly in the markets today but the law says you can look it up it's on the treasury department's internet site the law authorizes the united states exchange stabilization fund to trade secretly in the gold market and any other market that the treasury secretary secretary decides he wants to get into because we don't know exactly what's going on and because we don't know exactly what central banks are doing with their gold in terms of leasing and whatnot because it's all on one line item from what i understand the way they account for it there is a resistance to this discussion and i want to skip a couple questions guys in the control room to go to the sound bite i have a little further down from bloomberg where eric sprott a gentleman who i think you guys know because he cites your work we've had him on our show here he is on bloomberg talking about some recent work he had done in this area was take a listen. i wrote an article recently. questioning whether

treasury rates are what this country needs? well does anyone really think that lower rates right now, which is obviously what this bond purchasing is all about, or trying to do, will spur more lending? >> well, let me, i don't know. let me distinguish between the treasury purchases and the mbs purchases. david: yeah. >> you mentioned both in the lead-in. david: right. >> i think the mbs purchases are potentially more important, more stimulative, holding down mbs rates which holds down mortgage rates and which helps refinancing and so on. david: but if i could put a fine point on treasury purchases as opposed to old type of thing which was just a switch, switching the short term for long term. >> exactly. david: this is brand new purchases. i would argue that is the more important part of today's announcement. >> well that is the more important part of today's announcement because the mbs purchases was announced a while ago but in terms of strength on the economy i put the mbs purchases first and treasury second. look, the fed w

spieger boehner said negotiations are nowhere, period and he called treasury secretary tim geithner's presentation of the white house proposal to avoid the fiscal cliff earlier in week "nonserious." >> i was flabbergasted. i lookedded a him like you can't be serious. i've just never seen anything like it. you know we have seven weeks between election day and the end of the year. three of those weeks have been wasted with this nonsense. >> reporter: here is what has the speaker flabbergasted. the white house would like to raise tax rates on top earners to where they were in the clinton administration, 39.6%. they would also like to raise $1.6 trillion with new taxes over the next decade, while cutting about $400 billion through entitlement reform. although, those cuts are not specific and not guaranteed. but the treasury secretary says the administration's plan is fiscally responsible and would prevent taxes from going up on 98% of americans. >> we think that is a very good set of proposals. we think it's good for the economy. if they have different suggestions they want to go further

treasuries and now the u.s. government takes that money and it spends it into circulation what it sends out so security checks what it sends out plame it checks what it pays the soldiers and now everybody takes this money and they go to wal-mart and they buy imported products or they go to the gas station they buy imported oil and now the money flows out and now china gets it or saudi arabia gets it and what do they do with it did their citizens take that money and spend it on american products you know they take the money and they buy u.s. treasuries with it so even though we're printing all this money it's not bidding up prices in america it's bidding up on prices because the money we create gets sent to china or saudi arabia we're choose to buy treasuries that's where the inflation is showing up you have inflated bond prices but eventually that bubble has to burst because nobody wants bonds for the sake of owning bonds bonds represent a claim on on well a claim on on purchasing power on consumption and at som

treasuries. and the federal reserve continues to promise rates will remain low, at least for the next few years. so what does that mean for bond investors, especially as worries about a bond bubble grow? >> i know those people have been warning about a bond bubble for quite a few years. but the fact is, we just haven't seen it. the fed has made quite clear that if inflation expectations were to get out of control, or even if we got even close to it, the fed would do something about it. >> reporter: don't forget, inflation is the bond market's nemesis because it erodes the value of bonds. and there's concern all the money the u.s. central bank pumped into the financial system in recent years will drive up prices. and then there are those who believe the u.s. economy will improve in the coming months. >> so we're not so optimistic near-term on the treasury market, because we think that economic data is going to get a little better, and that the fiscal cliff resolution, which we do expect before yea

companies and banks in america who own treasurys. the federal reserve owns a lot of treasuries, so we as taxpayers even though we are not buying them with our own money the fed is the largest by year of the treasury's right now. but the foreign central banks, banks all around the world, china is a huge creditor. we owe them over a trillion, we'll japan over a trillion. governments are holding on to this debt. you know, there is a story. i forget where it was run that mentioned from the peak of the housing double until now they said the average american household net worth was down about 40%. it's actually down a lot more than that when you factor in each share of the debt that has been accumulated in their name by the federal government. so americans are basically already broke. that's why we have to just admit that we are insolvent because the american families cannot repay the money that's been borrowed in their name. so we admit that we are insolvent. greece imposed a hair cut at 50% of the bondholders. we tell people that have on

take a look at the treasury market. the government can borrow at that rate. it could go lower if the federal reserve has its way. ♪ >> im lori rothman with your fox business brief. caterpillar is growing on the list of companies adding -- it remains its quarterly dividend. netflix shares jumping after morgan stanley raised its price target $25. pickup is by rating. netflix is on track to temporarily disrupt the cable ecosystem. holiday shopping impacted by hurricane sandy. wells fargo shows shoppers spent more and small retailers then they did this time last year. total u.s. resales increased. that is the latest from the fox business network. giving you the power to prosper. ♪ connell: major-league baseball renewed its contract with stubhub. the thing is, we mentioned this a couple times. not all of the big teams in the league are on board. the president of stubhub is joining us to talk about this. obviously, you are excited. the yankees have opted out. the cubs have opted out. these are big teams opting out. that is not great. >> well, i appreciate you b

they won't print treasuries the way they used to. that means treasury yields will decline sharply. that will force these pensions even more into corporate bonds. while we can create a short-term down draft in stocks, it's like going off the fiscal cliff with a bungee cord attached. >> borrowing costs even lower than what we're seeing now. you heard it from brian reynolds. thank you very much. >>> still to come on the prak, egyptians are getting set to vote in a controversial constitutional referendum. we'll get a preview, next. and we can save you 10% on ground shipping over the ups store. look this isn't my first christmas. these deals all seem great at the time... but later... [ shirt ] merry christmas, everybody! not so much. ho ho ho! this isn't that kind of deal. [ male announcer ] break from the holiday stress. on ground shipping at fedex office. >>> the financial times has picked mario draghi as its person of the year. earlier in the show, we asked who would be your choice for 2012? swing trader tweetsed us in to say his choice would be ben bernanke for his efforts exceeding

breaking news from the treasury department, all about the debt ceiling. we have been focusing on the fiscal cliff, there is the debt ceiling limit. peter barnes with the very latest on this. >> all tied up together. secretary geithner warning it could hit the $16.4 trillion debt ceiling on december 31. on monday, new year's eve. but it can use some extraordinary measures with public finances to create $200 billion of additional headroom in the debt ceiling to push out hitting the borrowing limit for about two more months or so to around the end of february. she later released by the treasury, symmetry rights under normal circumstance that amount of headroom would last approximately two months. whoever given the significant uncertainty that now exists with regard to unresolved taxes and spending policies for 2013 it is not possible to predict the effective duration of these methods. these moves were expected by the treasury in the battle over the fiscal cliff remains unresolved. during the debt ceiling fight the steps include the sales of special governmen

host: what is the benefit for the treasury department? guest: the treasury would get more money. that is money that is no longer coming into the treasury. it is real money. the child tax credit claims in 2009 totaled about $20 million. you can get a sense of how much on the treasury would have gone if that credit were not in place. host: is there a sense of what this has cost the treasury? guest: several hundred billion dollars. host: is a large part or is this a side issue as other things get debated? guest: most of the discussion is what happens to the top two tax rates. that's where most of the political attention is right now. these are important issues for families. they haven't quite gotten the attention yet. host: lower income, middle income, that is where we're talking. guest: this is the heart of tax policy for low and middle-income families. this is if you're making tax policy at those families. host: steven >> the executives are members of the group called the campaign to fix the bad. this is 20 minutes. >> okay, thank you. welcome, everybody. it has been a remarkable

styles how credit write down dot com calls at the treasury minutes a trillion dollar coins the treasury deposits the coin into the treasuries account at the fed the fed asset the coin and liabilities treasuries account increased by the same amount future deficit spending by the federal government could thereby continue to be carried out by minton koreans and depositing him them in the treasury's account at the fed this is the equivalent of us singing around the hidden people to be do you we don't kill them throughout that us oh so back to our gold or silver standard you know they're saying where you get there by continuing the current situation but backing it up by telling dollar platinum coin oh by the way why don't we just go back to a precious metal standard oh yeah why don't we just do that all right stacey newman thanks much being on the kaiser report thank you all right stay tuned for the second half i'll be talking to david smith of geneva business insider dot blogspot dot com about alison. you know sometimes you see a story and it seems so you think you understand it and then yo

speak what will be treasuries. everybody in safe assets, but when you really look at the duration and the treasury curve, there is a lot of risk out there. liz: are there sectors you particularly like that are poised to do well? >> they're interesting. they will be good performers in the next year as well, technology, i think beta will do well, with a fixed income side, still think people getting at the mortgage space and high yield still has some return talking six, 7% yield. having the treasury market will be a tough space next year. liz: housing has looked very good, not trading over? >> not at all. looking at it from the 90s style economy, that is actually the norm. we are going back in time, looking at the asset classes like you used to in the past. liz: if i heard this once over the last 10 years, and hol heart a million times. you think japan is going to do well? >> you're looking at it from a standpoint of global dollars trying to figure out where they can go and get returns. japan is an interesting place.

the treasury complex really, really unfazed by just about all of it. briefly, we're under a 158 yield. haven't been there since second week in november. after 815, 118,000 jobs, interest rates were never as high as they were before that number. that really set part of the stage for treasuries. >> and you guys don't have an exclusive on hoping for a reform-oriented deal. i think everybody does that elsewhere as well. will, let's talk about where you like markets. a lot of guys are mentioning it, you like international have inesting -- investing. >> we very much do. we're about 55% in the u.s., 25% in developed non-u.s., and 25% in emerging. those emerging and developed non-u.s. numbers we pushed up back in october. >> how much risk do you think you're taking by going overseas like that? we hear people say how undervalued they feel the u.s. market is and what a mess many of those emerging markets are right now. >> it's interesting. quite frankly, a lot of the emerging markets have underperformed quite significantly in the past year. >> isn't that appropr

ok did you hear him though gold clean out the treasury before you get there i mean this is just so funny we had to play a clip is there anything you want to say about it while it goes put on the girl just like when you put that in your pipe and smoke. all these expressions i would love to see this goes for secretary but i don't think they would. probably be treasury secretary maybe but i'll tell you he brings a certain straight talking to washington that you just rarely see and it's just really refreshing and a flamboyance of a different kind i mean he's got to. describe before we turn into a total love fest which you know i'm sure he has you know has his share of hypocrisy on his record from when he was a senator they all do so let's move on to the next story because we have. some new developments in the front when it comes to creepy technology ok we're used to companies by now tracking our online habits take a look. at facebook approaching a billion members and in the fight to monetize the business the company is finding ways to leverage its greatest asset information on its users in t

treasury wants out. and, gm needed to shake off the stigma of being known as government motors. >> general motors to wanted do this. they wanted to get the government off its back so to speak and to prove to the people they can pay back the loan, part of the loan. >> reporter: other auto experts says everyone involved wanted to end this year on a positive news note. >> it helps the folks at gm and the government e the year on a high note and send us into 2013 with a positive wind at our t sails. >> reporter: what's not very positive is that taxpayers stand to lose billions of dollars on the g.m. bailout. in fact, if treasury sold all of its remaining shares today, it would mean a net loss of nearly $13 billion, or about a quarter of the government's total investment. for its part, treasury argued today the gm bailout saved amile been lost if g.m. shuttered its factories. still, in order for taxpayers to recoup the money spent on gm, the stock would need to surge to about $70 a share. that's unlikely, par

treasuries didn't even move. you would think there would be a selloff a little bit in the futures alone and there wasn't. the market is looking for something more substantial, a little more substance. they're also looking for some kind of talk about what they're going to do with the debt ceiling. until we get those things i still think you can be in treasuries. >> okay. looks like investors are going to pile in as long as the uncertainty is out there. jim, what about you? would you get into bonds here? >> no. not at all. actually i'm taking the other side. i adopted a negative bias yesterday because to me it still looks like a corrective channel from the big drop over the last couple weeks. now it certainly is testing my resolve as the markets tend to do but my stop out is about 13.09 on the up side. if it traded below 132.16 i'd take it as a signal to sell more. i think we are going over the fiscal cliff and the market thinks so and sometime in the first year things get revolved retro act toiv 2012. the market i

start with the treasury secretary. the man in charge of our treasury is out telling everyone that the administration he works for is a part of is perfectly prepared to go over the fiscal cliff in order to raise a tax rate to 39.6%. does that make any sense to you? are you shocked, surprised? >> well, i guess i'm not surprised given we're in the early stages of the discussion, but for the economists and forecasters out there calling this is the fiscal slope, not a cliff or believe it's worthwhile to go over the cliff, it's not the case. it is, without a doubt, a cliff. it's $600 billion. the economy cannot withstand that shock. it's slowing in anticipation. lou: $600 billion in taxes? >> spending reductions and tax increases. the economy can't handle that. without a doubt, head into recession if we're over the cliff. lou: now, are you in agreement? >> i am, carl's absolutely right, nevertheless, the markets have effectively been yawning. equity markets, go higher, corporate credit market improves, commodity prices risin