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YOUR MONEY

Europe's Crisis, America's Problem; Eyes Off on the Economy; Europe's Crisis, America's Problem; Congress' Super Committee Making Slow Progress; Keystone XL: Pipe Dream or Environmental Nightmare; Molly Katchpole Took Bank of America to Task

Aired November 12, 2011 - 13:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.


ALI VELSHI, CNN ANCHOR: America's economic future is uncertain. The crisis threatening it is on the other side of the world. Welcome to YOUR MONEY. I'm Ali Velshi.

Concerns over Italy soaring debt and borrowing cost this week are the latest chapter in the European crisis that is threatening the global economy and certainly the economic recovery in the United States.

Stephen Moore is an editorial writer at the "Wall Street Journal," Chrystia Freeland is an editor at Thompson Reuters Digital and Rana Foroohar is assistant managing editor at "Time."

Stephen, let's start with you. We know that Europe's debt crisis has a very direct impact on the U.S. economy. So with Europe's future still uncertain, how much influence do Americans, does Congress and President Obama have on what's really happening around the world right now?

STEPHEN MOORE, EDITORIAL WRITER, "THE WALL STREET JOURNAL": Not so much. Look, a lot of people probably wondering how can a small country like Greece and a little bit bigger country like Italy throw the entire globally economy into this turmoil right now.

I think the answer is it's the first domino to fall and there's a real threat that you're going to get a kind of contagion effect. Where you know, if Italy falls we're now seeing their interest rates rise on their bonds.

That this will affect other countries like Portugal and Spain and maybe even France and Germany. That's where the interconnection comes in. The United States, the banking system here is very interconnected with what's happening in Europe.

VELSHI: Let's explore the contagion for a minute with Chrystia. If I get the flu shot and you get the flu, I'm not getting it from you. So the issue of contagion depends on -- it's based on the fact that other countries do not have the back stops or the ability to prevent what is happening in Greece and Italy. Is that what we're worried about that this could really spread?

CHRYSTIA FREELAND, EDITOR, THOMSON REUTERS DIGITAL: Yes, absolutely. It's worse than your flu shot analogy would suggest, Ali because as it were -- you know, the European countries are all living in the same family and eating the same food from the same bowl. That is the euro.

VELSHI: You're worried if it does get out of hand -- we don't know if we're there yet, but if it did get out of hand, you're saying the impact would be substantially greater on credit and capital flaws than Lehman Brothers.

FREELAND: Absolutely, I interviewed George Soros this week and he's a guy who knows a little bit about currency and currency crisis and he's in Europe right now.

And he said to me this could absolutely be worse than Lehman because the truth is although we're still suffering the after affects of the Lehman crisis, the rescue happened. The rescue worked, financial markets were restored.

I think the real nightmare scenario we're looking at in Europe is what happens if there is a disorderly collapse of the euro, of the euro currency. The really scary thing is that was the currency that was designed kind of like a roach motel.

You could go in, but there was a never a system designed for countries to go out. That was on purpose. The architects of the euro wanted it to be the first step towards closer political union.

So they didn't create an escape clause. There's no way to get divorced. But yet, right now, the members of the euro, the strong countries that Stephen referred to, France and especially Germany, they have to decide now, are they willing to pay up.

VELSHI: They might be interested in a divorce. Let's bring this into perspective because I still hear it after all the reporting that all of us have done on this, I still hear people say how is Greece, which is the 32nd largest economy in the world.

And it's not been central to these kind of affairs in over 2,000 years, how is it that important and why is Italy -- obviously we kind of get why Italy is more important. But let's have the argument one more time.

RANA FOROOHAR, ASSISTANT MANAGING EDITOR, TIME: Well, I think Greece was important not economically in the absolute sense, but because of underlying these incredible political problems within the European Union.

Greece showed that the European Union was not a proper political union, but a rather selfish economic union. When times got tough, people weren't willing to come together to back each other up. You saw these differences between the rich countries and the poor countries.

And the hardworking Germans and Greeks, and you know, these are generalizations, but they're meaningful. I think Italy, of course, is an entirely different story.

Italy is the world's third largest bond market and actually, I spoke with Mohamed El-Erian, the head of PIMCO this week who's the world's largest bond trader and he agrees with George Soros that Italy can be worse than Lehman. It's a big deal.

VELSHI: You call it the most dangerous country in the world.

MOORE: Can I bring this back to the root cause? Because I read so many stories about this, what's the big problem in Europe? In my opinion is that they have built up these incredibly large overly generous entitlement programs that they are incapable of reining back in.

VELSHI: In a vacuum, that would be fine. We don't live in a vacuum. We here in the United States think we're not competitive with Asia. Europe is less competitive.

MOORE: You know what? That's the big problem for Europe right now. I mean, let's -- I'm going to get a lot of hate mail for saying this, but the Europeans are kind of lazy, right? And the Asians right now are eating their lunch.

FREELAND: I would like to push back against Stephen's analysis, right? Actually Germany, which has very generous entitlement programs is incredibly productive, a much more successful exporter than the U.S. actually a more successful export-led economy than China.

Sweden, another country, which has very generous entitlements is not suffering a crisis. The countries in Europe, which have slashed their government spending, really drastically, countries like Ireland, actually have not have the markets say hurrah.

The markets had said you're chilling your economy. Hang on, final point. The real European crisis is not at the moment a structural one. It is that countries are issuing debt in a currency they don't control. If you control the printing press --

MOORE: I don't agree with that.

FREELAND: You're never going to have a sovereign debt crisis.

MOORE: It's the fact they can't control their spending and there's no hope of controlling their spending.

FOROOHAR: I think actually there's a lot of similarity between the problems on both sides of the Atlantic. You've got rich countries that are in debt and they still have to grow. That's pretty impossible.

VELSHI: But however, let's go back to the people who are coming out of the woodwork now saying 10 years ago, I warned you or five years ago, I warned you about the euro.

I probably -- I'm going to put it out here that I don't know that the Euro was the problem, but they didn't create a super structure. So you said, the problem is there is no divorce mechanism.

I'm saying, they never really built a house. They created common currency, didn't come up with a way so you always get these pronouncements from the E.U., but nobody has power to tell anybody -- FOROOHAR: There is no Hank Paulson of Europe.

FREELAND: And there's no Ben Bernanke, right? So in order to have a currency that works, you need to have a central bank, which is the creditor of last resort.

What we are finding in Europe is the ECB is not allowed to do that. That's their big question. You know, this crisis could end tomorrow if the Germans and the French agreed that the ECB could provide unlimited backstop.

FOROOHAR: But they would have to get over --

FREELAND: Of course, they would, but that's why I'm saying it's fundamentally -- that's why it is fundamentally a political crisis.

VELSHI: Rana after it was Greece, it became Italy, and it could -- can go back to Portugal and Spain. It's going to keep buzzing around. Nobody wants to bail anybody else's banks out. Here in America, we don't want to bail our own banks out.

FOROOHAR: Absolutely not. And I think going back to this point about why not let the ECB just print money. Well, that goes to deep European fears about hyperinflation. There's really deep sort of psychological stuff going on here that's hindering efforts.

VELSHI: One other thing, if you are Greek and you have been under this austerity program for sometime already because all these European countries have been cutting back.

Your economy is already recessionary or if not close to it in many places in Europe. Now you're asked to do more to save bankers in another country or investors in another country. This is unappealing for everybody involved.

FREELAND: You have the Greeks running a primary -- Greek actually now -- not today. Greece today is on the verge of running a primary surplus. That is, if Greece defaulted on its debts, were not going to pay, their current budget is on the verge of surplus. And that's why you're starting to hear some Greeks say let's forget about Europe --

MOORE: Italy is at the forefront of this. The problem with Italy is partly demographic. They have thse huge entitlement programs. You know what? The birth rate is 1.2 per married couple. So they've got all these people retiring and there are no kids.

VELSHI: OK, Rana, Chrystia, Stephen, stay where you are. Normally mild mannered Treasury Secretary Timothy Geithner, well, he came out swinging at Republicans this week in an exclusive interview with CNN. Stephen Moore is going to get his chance to swing back next on YOUR MONEY. Stay with us.

(COMMERCIAL BREAK)

VELSHI: This was a week in the United States where a lot of the political discourse was focused on anything, but economic issues, whether it was Rick Perry's memory lapse or the continued accusations of sexual harassment against Herman Cain.

Chrystia, is there a chance, and I'm hoping not despite everything else, is there a chance that this election could turn on things that are not economic.

Even though for three years now the voters of America have said the economy is their number one concern. We are spending a lot of time on things that are not about the economy.

FREELAND: Yes, but it's 2011, not 2012. I think that when push comes to shove, people are going to focus on what really matters. I have a lot of faith in American voters.

Look, I think these other issues. They are easier to think about. They are more fun. They also are less scary, actually. They are about other people making mistakes.

VELSHI: When I was at the G-20, I said, you know, Herman Cain fascinating though he is and his story is can't wreck the world, Greece could.

FREELAND: Right and also, you know, talking about euro bonds and exactly how the ECB should average, the ESSF. I mean, this is not that fun.

VELSHI: But you know, Stephen, you conservatives take some of the credit or blame for making this such a big issue, for making Americans understand that the economy and debt and things like that are serious.

It's also you conservatives are derailing the conversation with everything that's been going on this week. For guys like you --- it's your presidential candidates who are diverting the conversation.

I mean, as a conservative, who in the Republican race is keeping this conversation as focused as they should be? Whether you agree with them idea logically or not, I feel like it's Huntsman, it's Gingrich, Romney we haven't heard a lot from.

MOORE: But, look, I mean, there's no question the last week or two have been bad for Republicans because all the talk has been about Herman Cain's sexual harassment allegations when they want to be talking about the economy, tax reform and so on.

But this is, look, this is a celebrity culture. It's amazing to me that 90 percent more people know who Joe Paterno is than better than Ben Bernanke. So this is part of the problem.

I mean, you turn on TV, nobody is talking about the economy right now. They are not talking about Herman Cain's sexual allegations, Joe Paterno and all those things. And I think it's too bad because we really should be focused --

VELSHI: I'm hoping Chrystia is right. It's 2011. We have some time to go. In an exclusive interview with CNN's chief White House correspondent, Jessica Yellin, Treasury Secretary Tim Geithner came out swinging against Republicans. Listen. (BEGIN VIDEO CLIP)

TIMOTHY GEITHNER, TREASURY SECRETARY: Unless Republicans are willing to do more things for the economy right now then unemployment will stay too high, won't come down fast enough, growth will be weaker. That's just a basic reality. It's not a political statement just basic reality.

(END VIDEO CLIP)

VELSHI: Stephen, have Republicans reached a point where they have more to gain in November 2011 by stalling, by not having this economy improve dramatically in the next year so that they win the election?

MOORE: Well, certainly, I mean, a weak economy is going to help Republicans win the White House, but I think that's an unfair allegation. What's the big thing going on in Washington right now?

It's the "Super Committee." Guess who is not represented at the table there, who actually wants the "Super Committee" to fail? That's Barack Obama. The reason he does is because he wants this narrative for the election season that the Republican Congress is --

VELSHI: Isn't that too dangerous?

MOORE: I think it's dangerous.

VELSHI: You believe the president wants the risk of these automatic cuts that come in that will cripple this economy?

MOORE: The Republicans I've talked to in that committee and even some of the Democrats say Obama has not been represented. He has no interest in seeing this succeed.

VELSHI: Chrystia, what do you think?

FREELAND: I don't agree. I mean, I think it's very clear what's going on right now. Stephen is right. The Republicans don't have an interest in the economy getting better.

MOORE: I didn't say that.

FREELAND: Right now. Right now, but I don't we shouldn't blame them for that, right? You know, politics is an oppositional race. I think it's perfectly fair and justified for them to say we don't believe in your policies and we're not going to help you execute them. That's not their job.

VELSHI: The danger is that it feels like everybody in Washington got sprayed by the same skunk. If this economy gets worse, they are going to smell exactly the same.

FOROOHAR: I think so. I want to start by saying I don't think anything ever happened in the "Super Committee" and I don't expect anything to happen there. It's really all about jobs. It is all about the economy. It will continue to be. That's why Europe matters. If Europe goes into recession, will that push the U.S. into a recession? That's why "Occupy Wall Street" matters because it's all about jobs. It's about the end of the American dream, feeling you can do better than your parents. So I think that will be the focus.

MOORE: The gridlock is dangerous for both sides because what you could have in November 2012 is throw all the bums out.

FREELAND: Except someone does have to win. You know, ultimately, there will be someone who is the president. So it's not a case where everybody can lose, one person will be elected president, either Barack Obama or --

VELSHI: I don't want a partisan judgment. I ask you as financial journalist, both of you actually, because we know where he stands. Is there someone who stands out as making sense to you in this race regardless of their politics or the likelihood that they might win?

FREELAND: I truly think that it's impossible to give a purely technocratic answer to that. I think in the Republican field, you know, the technocrats will say Mitt Romney and Jon Huntsman are that guys who makes the most sense on the economy. I think that Barack Obama and Tim Geithner are pretty strong economic team.

FOROOHAR: I agree Romney is sounding better than he did four years ago. He's sounding less like a salesman. That's a good thing for him.

But I think ultimately we haven't seen a real coherent what are we going to do about jobs plan from either candidate. Obama is trying, but he keeps getting gridlocked. So whoever can do that is going to be the winner.

VELSHI: But Stephen, if Europe fails or gets worse than it is now, what are we going to do about jobs plan suffers greatly.

MOORE: It affects the U.S. economy. We're in a global economy right now. Look, I do want the economy to get better. I think jobs are number one. I just think there's a complete ideological difference now.

Republicans say they don't want to raise taxes. I think they're right about that, but I do hope they get an agreement on the "Super Committee." Look, if we can't cut the first trillion dollars out of this debt, how are we going to get to the next $9 trillion?

VELSHI: Well, we're going to talk a little bit more later in the show about the "Super Committee," but there has been some movement. Pat Toomey, the least guy I've expected to do it is actually responsible for some of it.

So let's see where we're going. Europe's debt crisis is partially, in fact, may be more than partially America's problem. What the economic crisis across the ocean means specifically for your investments and your job search coming up next. Stay with us.

(COMMERCIAL BREAK)

VELSHI: As I told you before the break, Europe's debt crisis has real implications for your job and for your investments here in the United States.

Our good friend CNNMoney.com's Poppy Harlow joins us now with another of our good friends, Jim Awad. He's the managing director at Zephyr Management. Poppy, take it away. All eyes were on Italy this week, but what does that mean to us?

POPPY HARLOW, CNNMONEY.COM CORRESPONDENT: Yes, we started the week out looking at Greece now. It's all about Italy exactly. Jim, we're going to break down for people why they should care so much about Italy.

I'm going to pull away some of these countries in Europe, all the highlighted countries are sorted on the periphery where we're concerned about a debt crisis. Take a look at Italy. You've got $2.2 trillion economy, seven times bigger than Greece.

The fear now is the lack of confidence and the ability for that country to pull back from a debt to GDP ratio of 120 percent, which is clearly unsustainable.

So first scenario, if we have Italy implement austerity measures and the market believes it, then what happens to jobs in the United States? What does that mean?

JIM AWAD, ZEPHYR MANAGEMENT: Well, that's good news. It means that Europe will not pull us down. We'll continue to grow in the United States, not as fast as we want, but we'll continue to grow. Employers will add jobs and you will have a gradual decline in the unemployment rate say from 9 percent now to about 8.5 percent in a year.

HARLOW: Not enough in terms of creating jobs in the country. But investments, people that have exposure through their 401(k), et cetera to Europe, what should they be doing in terms of the equity market right now, in terms of their bonds? What should they be doing to protect themselves?

AWAD: Well, Europe is going to have a recession, one way or the other. Many would say they are in it now. So you want to invest where the growth is. The growth is in the United States and in the select emerging markets, India, China, and Asia.

So you want to own the biggest, most conservative U.S. corporations with a global footprint, leverage for the emerging markets, leverage for the United States with dividends and then you want to own select high-quality companies in the emerging markets.

HARLOW: Be very conservative. Corporations, they have been able to weather this recession better than consumers. You've got record corporate profits for a number of companies of the question is, what would this situation mean for corporate profits? AWAD: Corporate profits would grow next year. The decline in Europe would be offset by the growth in the emerging markets in the United States. And you'd probably see corporate profits grow 5 percent maybe even 10 percent next year.

HARLOW: So when you look at this scenario right now, you think this is more likely than the other scenario I'm going to give you and that is that Italy either does not implement then necessary austerity measures, or they do, but the market doesn't believe that. In that case, what does it mean for jobs in this country, obviously a worse situation?

AWAD: Yes, it would be a problem because what would happen is the financial markets and the economy in Europe would freeze up. It would blow back to the United States. Corporations would have fear, would not add jobs and you would not see an improvement in the unemployment rate.

HARLOW: And then what do you do with your investments? How much more conservative should you be if this is the case with Italy?

AWAD: Well, you would probably want to have more bonds in that case, more fixed income, U.S. government debt, corporate debt in the United States and to the extent that you had equities.

Again, you'd want to lever where the growth is, which are the emerging markets and to the extent there is growth the United States would participate. So again, you'd want to own big conservative stocks.

HARLOW: For corporations, obviously the situation then gets a bit more perilous for corporations. What do we have flat earnings for corporations or we see a decline?

AWAD: You could actually have a decline in corporate profits under that scenario. Europe could pull the whole world down and you could have a 4 percent or 5 percent decline.

HARLOW: And the reason why we care about corporations, obviously, Ali, is because we're so exposed to them in terms of our long-term investments.

VELSHI: Sure, they are in our 401 (k)s. They are employers. Jim, great description of the various scenarios. I want to take your temperature on this. You keep your eye on this closely. What's the scenario you think is most likely. Does it get worse in Europe or does it level out or does it start to get better?

AWAD: I think it will level out. I think you have technocrat governments coming in now. They are going to build a bridge for the next year or two.

I think we will not collapse in the next year or two, but Europe is long-term no growth modestly negative growth situation. So we've got no growth in Europe, slow growth in the United States and some growth in the emerging markets. HARLOW: I think one important point, Ali. That Jim has reiterated, is that the United States tipped Europe into this position, really led Europe on its knees, right, Jim, to get to this point because of our housing crisis.

AWAD: The housing tripped up the whole financial markets worldwide, which exposed the problems in Europe. Ultimately, the problems in Europe would have been exposed anyway, but it would have happened more gradually over time so it could have been handled.

VELSHI: What an excellent, excellent explanation. Thank you so much for the two of you. We really appreciate that, Jim Awad and Poppy Harlow.

Now to our debt issues here in the United States. Yes, we have some. Less than two weeks until a critical deadline for a plan to lower the U.S. debt over time. Have U.S. lawmakers learned something from Greece and Italy? We'll check that out next on YOUR MONEY.

(COMMERCIAL BREAK)

VELSHI: Six Democrats, six Republicans, one "Super Committee" charged with cutting America's debt. Since nothing gets done in Washington until the last minute, no one should be surprised that we do not have a deal yet.

(BEGIN VIDEO CLIP)

REPRESENTATIVE JEB HENSARLING (R), TEXAS: Even though time continues to run off the clock, we are not giving up hope on reaching an agreement with the Democrats at the stroke at midnight on the 23rd.

(END VIDEO CLIP)

VELSHI: Until the stroke of midnight on the 23rd of November. The goal is to reduce our nation's deficit by at least $1.2 trillion over the next 10 years.

Jean Sahadi is a senior writer at CNNMoney. She knows more about this story than pretty much anyone I know.

Jean, there was once hope, however faint, that something monumental might be done by the Thanksgiving deadline. They have to have a deal by then it has to be voted on and passed without change by Christmas or something bad happens. I'm not even sure we should hold out hope for anything monumental. Do we need to change our expectations?

JEAN SAHADI, SR. WRITER, CNNMONEY: The hope was very faint that it would be monumental. It was always a possibility. What we are hearing now, in terms of the plans they seem to be trading back and forth on are closer to minimum target of $1.2 trillion. People will be happy enough if they get to $1.2 trillion.

VELSHI: Right.

SAHADI: They have proposed more, but there's still a lot of disagreement between Democrats and Republicans on the revenue side of the equation in terms of the magnitude of entitlement cuts.

VELSHI: In your opinion, have the two sides, which seem to be intractably opposed to any measures toward coming together?

SAHADI: Pat Toomey, is a conservative Republican, put out a tax plan that sort of was against orthodoxy because it

VELSHI: Because it would increase some tax revenue.

SAHADI: Would raise some tax revenue. I didn't increase the tax, per se. It would reduce tax breaks that would raise revenue. Democrats rejected it out of hand. They countered with another proposal that raised with more revenue. Republicans didn't like that. But the fact that Republicans put revenue on the table even if you don't like how they did it, or how much they did it, it's a step forward.

VELSHI: Right. OK.

SAHADI: It's a step forward.

VELSHI: Let's hope they get how serious it is.

Bob Bixby, is the executive director of the Concord Coalition.

Bob, despite the S&P downgrade following America's debt ceiling debacle back in August, the U.S. remarkably is still able to borrow money at remarkably low rates. Something you say is part of the problem here. Because it doesn't get us to underscore the urgency of the situation. Do the events of the last few weeks, in Greece and Italy, will they scare this super committee into serious action or can they continue to ignore this problem?

ROBERT BIXBY, EXECUTIVE DIRECTOR, CONCORD COALITION: Well, I certainly hope they take a look at what's going on over there and see our potential future here, if we don't get the act together.

There seems to be a great amount of hubris that people can look what's going on in Italy and Greece and say it could never happen here, we're the United States. There's no particular reason why it couldn't happen here. I mean, it's good that we can borrow money cheaply right now. But the fact of the matter is, it is allowing us to take on a huge amount of debt at a low interest cost. When that debt has to be rolled over at a higher interest cost later on when the economy picks up, it will leave us with an incredible interest burden.

VELSHI: Very much like exactly what happened in the mortgage crisis, right? We took low interest mortgages at low rate mortgages. When it came time to refinance, rates had gone up.

Bob, what is your solution to this? You have some interesting ideas. You don't think the process of the closed-door meetings, back room meetings of the super committee is the way to do this.

BIXBY: Look, I think the committee made a mistake retreating into the dungeons of the capital and closing the doors. How we solve this unsustainable fiscal problem that we have-and it is a matter of great urgency-is something the American people have a big interest in.

VELSHI: Sure.

BIXBY: Because it's going to affect the basic entitlement programs, revenues, that sort of thing. So the American people need to be involved in the decisions. So I think the committee should have been much more public, had public hearings, even maybe gone around the country, do some things, involve the public more in their deliberations.

VELSHI: Which by the way is what your group has been doing for years, trying to draw attention to it. Clearly it's been difficult to convince people.

Jean, just remind us in the worst case scenario they do not come to a deal by Thanksgiving.

SAHADI: I was talking to market strategists, the response isn't going to be that dire. Stocks may become very volatile in the near term, because they are going to be disappointed. Generally traders are like, yeah, they are going to fail. That's the expectation.

VELSHI: That's where we've gotten here, with politics. The expectation is they will fail and if they don't we'll be a little relieved.

SAHADI: Bonds probably won't get hurt mostly because Europe is such a problem now that we look better in relation to Europe.

In addition people are thinking, so super committee fails, in law that means a trigger of spending cuts of go off equal to the amount of super committee was supposed to come up. Congress may cancel that trigger but they have to deal with Bush tax cuts in 2012, that cost $4 trillion over 10 years. So this issue is not going to go away in 2012. So, places like Moody's rating agency are kind of looking to see what Congress will do before they throw the hammer down and downgrade us again.

VELSHI: When we look at Greece, Bob. And we look at Italy, and we say, they know what they have to do. Why don't they just do it? I imagine that is exactly how people look at the United States. With discussions like the debt ceiling, or this debt, and they say, they know what to do. Why don't they just do it? Answer this for me, Bob. Do we know what we have to do? It is a matter of making choices, but there have been-in my views-many, many studies. We've sort of studied this thing, it's now just a matter of making political decisions.

BIXBY: I think they know they do know what they have to do. They know they have to put revenues on the table. They know they have to put health care on the table. Those are the two big issues. And the reason we haven't come to any sort of agreement is Democrats and Republicans have fundamentally different views on how to reform health care and how to reform the tax code. Until we make a big deal, grand bargain, you might say, a compromise there, we're not going to be able to really solve this problem. VELSHI: Let me ask you this, though, Bob, because you have-look, we followed you in "IOU USA," we know you have gone-you're a trooper for this. You've gone around, you have held these public meetings you would like Congress to be holding. It's been difficult to get this issue to catch fire with average Americans, has it not?

BIXBY: Well, I think Americans are not as much recently as it has been, three straight years of trillion-dollar deficits has certainly caught people's attention in the past couple years. I think what the problem is Americans are quite willing to face these hard choices. The problem is you've got political imperatives work against substantive accomplishments.

It's quite easy to go on the campaign trail and say no, no, no taxes can't go up. No. No. No, we can't gut Medicare. And accuse the other side of wanting to do those things. I find when you talk to people they are actually quite rational, they are just inflamed by these political ads.

Yeah, I think this is why it requires political leadership by the committee, by the president, to go out, make hard choices in cooperation with the public and then sell it. You know, say this is what we have to do.

VELSHI: This is what we have to do.

BIXBY: I think Bowles and Simpson did a great job. They are the model.

SAHADI: I do think people-well, they are aware of the issue. They are like, hey, I need a job first. I need helped first. My house value needs to go up. They are also looking for nearer term solutions. They are frustrated, that everybody is like, oh, my gosh, this 20, 30-year outlook that everybody is talking about. What about next week? Next month?

VELSHI: Right.

SAHADI: So there is some expectation that perhaps if the super committee comes out with a deal they will have some stimulus-like measures.

VELSHI: Something that is a sweetener for the short-term.

Good discussion, let's hope the one that happens in Washington is as productive as this one. Political imperatives, Bob Bixby says, work against substantive accomplishment.

Bob Bixby good to see you. He is the executive director of the Concord Coalition. Of course, our good friend, Jean Sahadi, senior writer at CNNMoney. You want to read all of Jean's stuff to stay on top of the situation as it unfolds, over the course of the next week and a half.

For some it is a pipeline that will create 20,000 jobs and bring much needed oil from Canada. Others consider it a pipe dream, an environmentally dangerous plan that should be scrapped. Will Cain and Pete Dominick go head to head next on YOUR MONEY.

(COMMERCIAL BREAK)

VELSHI: I'm going to talk to you about Keystone XL. It's not a new beer from Coors. It is the most important pipeline project in decades. Trans-Canada's $7-billion project would pipe around 700,000 barrels of oil a day from Canada's oil sands to refineries on the Gulf Coast.

Now, let me just tell you why this is an issue. The United States uses 18.8 million barrels of oil a day. 18.8 million barrels of oil per day, but it produces only 9.1 million barrels of oil per day. Bit of a shortfall as you can see. Canada is already the largest source of non-U.S. oil into the United States. It accounts for a quarter of total imports. Not Saudi Arabia, but Saudi Arabia, Nigeria, Venezuela, then Mexico, are after them. They are all after Canada in terms of the amount of oil the United States gets from other countries.

The Obama administration faces a political problem whether it approves Keystone XL or rules against it. Because business groups and trade unions support the Keystone project, which is estimated to create 20,000 construction jobs and bring $5 billion in tax revenue. But environmentalists oppose the pipeline. It's a route they have a problem with because it goes over a major source of freshwater through Nebraska Sand Hills.

Now, this past Thursday the Obama administration said it would delay the decision on the pipeline until 2013, after the elections. The State Department will use the extra time to study an alternate route through Nebraska that avoids the environmentally sensitive regions.

I just want to show you. The yellow line is the existing pipeline. The dotted orange line is the proposed extension. As you can see, it is a lot shorter, but it goes through Ogallala Aquifer. And that is where the issue is. Now environmental groups also contend that oil produced in Canada oil sands is dirty, producing oil from the oil sands generates between 5 and 30 percent more greenhouse gas than conventional production.

But stopping the pipeline won't put a dent in global warming, Canada will simply export its crude to energy hungry Asian markets and it will not have an effect on the oil prices in the United States. And 700,000 barrels a day may sound like a lot but it is a drop in the bucket of U.S. consumption.

There's my argument. If that pipeline doesn't get built that oil is going to come out of the ground in Canada and someone is going to buy it.

So, that pipeline needs to get built, Pete Dominick.

PETE DOMINICK, CNN CONTRIBUTOR: It's good to know, Ali Velshi, that the Coke brothers finally got to you.

I know we disagree on this. And we put this map back up, so Will Cain and I can look at this? Listen, here is the problem with this pipeline. OK? The pipeline is going right down there in the Gulf of Mexico to a port. Why is it going to that port? So all of that oil, most of it, can go to our economic biggest competitor, China. Why not just build the pipeline that way, right to China? Because that's whose going to benefit from the oil.

VELSHI: Yeah.

VELSHI: You just have to go left, from Canada.

DOMINICK: Maybe over, over the North Pole.

Consumers are not going to win from this. Oil industry and the oil companies are going to win from this. That is why we shouldn't be paying attention to their figures for jobs.

VELSHI: The oil companies-

DOMINICK: They say 20,000 jobs. Cornell did an independent study that said fewer than 5,000 jobs would be created. Who wins? People who invest in and make money off the oil industry. Who loses, consumers?

VELSHI: If you had a 401(k) invested in the oil industry. The oil industry wins either way.

DOMINICK : Gas is going to go up. And these jobs will be temporary.

VELSHI: Hang on a second, Speaker Boehner, John Boehner, put out a statement after this delay was announced by the president. Here is what he said, quote, "More than 20,000 new American jobs have just been sacrificed in the name of political expediency. By punting on this project president made clear campaign politics are driving U.S. policy decisions at the expense of American jobs."

Will Cain?

WILL CAIN, CNN CONTRIBUTOR: Pete Dominick just illustrated that the reason being given for delaying this pipeline approval is a complete farce. The reason being given is it is going to be environmental damage to the Ogallala Aquifer, which we just saw on your map is massive. Right?

VELSHI: Right.

CAIN: It is going to have some horrible environmental impact. I'm going to use visual aids, too. Right now there is something like 8,000 wells being drilled through the Ogallala Aquifer.

DOMINICK: High tech?

CAIN: Now, surely laying a pipeline over the aquifer won't have the environmental impact of drilling through it. The point is that argument makes no sense. It's not true. The truth is, this is an argument for climate change zealots who are worried that this new pipeline is game over for climate change. DOMINICK: We did draw a sign, those who are on the side of environmentalists, or a draw a line in the sand, the tar sand, on this issue. It is a huge win for environmentalists that pick this issue that will build a lot of momentum.

VELSHI: Here is why I don't think it is.

DOMINICK: But forget the environmentalist impact, which environmentalists have over-exaggerated, just as the American Petroleum Institute has over-exaggerated. John Boehner used that number of 20,000, it's nowhere near that number. We in the media shouldn't quoting that number.

CAIN: But why oppose it?

VELSHI: Let me tell you this-

DOMINICK: Because of its negligible impact on the economy.

VELSHI: Let's be clear, for the viewers, that there are two issues of environment impact here. The first one is, as you said, is that it is going to through an aquifer. There's fear that pipelines leak, because actually pipelines do leak. I think that is a valid concern. There may be ways around it but that's a valid concern.

The second and probably bigger environmental concern is what happens up in the oil sands in Canada. You can see it from space. Because it has denuded the forests. It uses hot water, and hydrogen. It is a very energy intensive way of producing energy.

Again, a very valid argument. I'm not arguing that somebody shouldn't like or should like the way oil is produced in Canada. All I'm saying, is that oil, every drop of it, will still get produced and bought by someone else if the U.S. doesn't buy it.

And we only-

(CROSS TALK)

DOMINICK: The oil goes on the market.

VELSHI: Right.

DOMINICK: But why do we think we're getting this oil? Why are we building a pipeline to our biggest port?

(CROSS TALK)

DOMINICK: And it is not even going to go to us. It's going to China, which is why China is buying up the seven biggest Canadian oil companies, aren't they?

We're shipping oil across America to send it to China.

CAIN: If this pipeline is not built it won't even go through us. The pipeline will be built directly west and go straight to China. Wouldn't it just be nice to have the option to have it go through our refineries, our manufacturing jobs? And perhaps even enter our markets?

(CROSS TALK)

CAIN: It is an option. Why not?

VELSHI: That's OK, you know what, I'm Canadian. When this all doesn't work out, you can all come and live with me when I move back to Canada. And we don't have any oil shortages there.

DOMINICK: Hope you have a big house.

VELSHI: It is a valid and interesting discussion, that pipeline, whether or not it's getting built. The Keystone Pipeline, you will be hearing a lot more about it, the Keystone XL.

It seems that everyone angry at big banks and Wall Street these days. One young woman decided to do something about it. Find out how her fight may have saved you money, coming up next on YOUR MONEY.

(COMMERCIAL BREAK)

VELSHI: As you certainly know by now, Bank of America will not be charging customers a $5 a month debit card fee. What you might not know is the woman behind the influential campaign against the fee. Molly Katchpole is a 22-year-old recent college graduate who -- you have maybe seen on TV before.

Molly, it's good to see you. Thank you for being with us.

MOLLY KATCHPOLE, ONLINE ACTIVIST: Thank you for having me.

VELSHI: You closed your accounts at Bank of America because of the fee, but a lot of people did that. But that is not where your stopped. You started an online petition, that went viral, you got more than 300,000 signatures. I don't know what the final figure was. Do you believe you're the reason Bank of America agreed to repeal this wildly unpopular fee?

KATCHPOLE: No, I don't believe I'm the only reason. You know, there were people closing their bank accounts, Bank of America lost thousands of customers. There were protests and actions across the country. They were getting bad press. And then, I think, you know the 300,000 signature petition had some impact certainly.

VELSHI: Nobody ever before this changed their bank. Nobody ever closed -- I really think the number of people who ever did anything like that was very, very small. Were you doing it because you didn't want to pay the $5 fee? Or were you doing it in protest?

KATCHPOLE: I was doing it both. You know, I really obviously am against paying the $5 fee. And I believed there were thousands of other people who were also against it. I figured that if I made a Change.org petition and thousands of people signed on, there would be a chance of them repealing the fee. VELSHI: Tell me the mechanics of this. I work in TV. I Tweet. I use social media. I don't think I've ever done anything remotely as effective as you, who has none of that background. What are the mechanics of that? What went through your mind? You closed your account and said I want to see what other people are mad about this and what they will do. What do you even do?

KATCHPOLE: Well, Change.org is a platform for a petitions online. And I'd signed petitions there before. So I knew it had the potential to be really effective. So, I created the petition. I wrote it up. And I sent it out on Twitter a little bit, and also on Facebook. And it just went viral. I mean, you know, over 300,000 people signed it. So, it was kind of, I think, a combination of the fact that people are so upset right now with banks to begin with. You know, and just the fact they really liked the petition.

VELSHI: You're a little bit of an activist, though, to start with. Right? It's not like this is the first time you've ever done anything that is described as activism.

KATCHPOLE: Right, I had never created a petition before, but I certainly do consider myself an activist.

VELSHI: Now, did you -- what was the interaction between you and Bank of America once you decided to start this activity?

KATCHPOLE: Well, so I launched the petition, and then after about a week and a half, Bank of America executive called me up to acknowledge the petition. He said that he knew about it. Bank of America knew about the petition. That they were following it, that they were aware of all of the press. And he called me, basically, to tell me that. And also to explain the fee to me. And I haven't heard from Bank of America since.

VELSHI: Very interesting. And you're not going back to them?

KATCHPOLE: No.

VELSHI: OK. I want to ask you this. Are you still -- you earn very little money --

KATCHPOLE: Right.

VELSHI: And this has made you one of the most effective campaigners in the country. I've got to imagine somebody wants to hire you at this point.

KATCHPOLE: Yeah, I have gotten a couple of people who are interested in talking to me so that's exciting.

VELSHI: You are very effective, Molly, we always wonder about how people can effect change, and you've done a great job of it. We salute you. Molly Katchpole, is an activist who has actually made some things change in this country.

Thanks, molly. KATCHPOLE: Thank you so much.

You've got to stick around. There's something very important to me that I want to tell you about. It could make a big difference in your life. I'll explain on the other side of the break.

(COMMERCIAL BREAK)

VELSHI: If you watched me on TV at all this week, you'll know that Christine and I have written a new book together. It was published on Tuesday. Christine and I have worked together for a decade, as financial reporters and anchors. We've covered the same stories, but deliver them differently for slightly different audiences, on different shows, and at different parts of the day.

But we are both committed to our audiences' understanding money. And by money, I don't just mean markets. I mean jobs and global economic trends and effective schooling for your kids, and retraining and budgeting. The decision about whether to buy or rent, how to budget, or if you're more than a financial novice, and you might be, how to fine tune your investments so you get the most out of them in volatile times like these.

We wrote the book based on the conversations we've had with you over the last few years. Your e-mails, your calls, your Facebook posts, and your Tweets, working hard to answer the questions you have. But more than that, we've answered some questions in the book that you haven't asked. Like how your small business here in the United States can profit from the growth in China. How your kids can best position themselves for a knowledge-based economy, and how you can completely reinvent and reposition yourself out of a dying industry into a burgeoning one.

I spent almost my entire working life reporting on the economy, for you. Doing so is a privilege and a responsibility that I take seriously. And I know you have other things you could be doing right now than listening to me.

So whether you're a doctor, a trucker, or a lawyer, or stay-at-home parent, or construction worker, or a teacher, Christine and I have written a book that will help you get fluent in the language of money and be better able to discuss money with your loved ones, co-workers, or other important people in your lives.

We live in complicated economic times right now and you can't control the stock market. You can't control what the elected officials do in Washington, but you can control how you invest your money. You can control how much money you put away for retirement. You can control how you and your family handle daily finances.

I can't promise many things, but I can promise you that if you invest a couple of hours into reading the book, you will be equipped to make better financial decisions. And as always, we welcome your comments about the book-and your criticisms. How we can do it better every time. And how we can do it better every week on our shows. Thank you as always for joining the conversation this week on YOUR MONEY. We're here every Saturday at 1:00 p.m. Eastern and Sundays at 3:00 p.m. Eastern. You can stay connected to us 24/7 on Twitter, my handle is @alivelshi. The show's handle is @cnnyourmoney. Have a great weekend.