"your $$$$$" starts right now. as we count down to new hampshire, the economy is still the driving force in the minds of voters in the united states. but is it the driving force in the republican primary? welcome to "your $$$$$." i'm ali velshi. the latest cnn opinion research corporation poll shows 57% of americans think that the economy is the most important issue facing this country. i want to bring in cnn senior political analyst david gergen. david, the polls say mitt romney has the best chance to beat president obama in the republican field. do conservatives still reluctant to get behind romney feel he lacks what it takes to turn the economy around or is it something else all together? >> he is actually doing well when people asked is your most important issue the economy in iowa. he won a healthy plurality of those voters who thought the economy was number one. he's having some trouble connecting with voters emotionally. they seem stiff, reserved, can't quite understand him, santorum in the case of iowa struck people as i think a little more connected. having said that, i do think it's worth pointing out that if you look at the overall iowa survey, the entrance polls, what you find is ron paul did very well among voters who thought the economy and economic related issues were important. some 42% of voters said the economy was the number one issue and romney won a plurality. another 34% said that the deficits, budget was the most important issue. and there ron paul won a healthy plurality. both voters are appealing on that. you can't discount what rick santorum is doing in new hampshire. that is he's making the argument about manufacturing jobs, white, blue-collar workers. he's trying to appeal to them with a manufacturing strategy. >> let's take this further. will cain is a cnn contributor. the point david is making and a number of people have made, mitt romney is lacking an emotional connection. rick santorum, for instance, was connecting to voters on. there may be a bigger issue here. the inherent definition of what it means to be a conservative in this country. you've got rick santorum, michele bachmann, rick perry, herman cain, all of whom are defining their conservatism differently than mitt romney is. >> it seems that way, right. are we defining at least our priorities within conservatism by economic issues or social conservative issues. let me say this, i'm doubtful it's about the economy, economic issue. i look at stall warts from michele bachmann to newt gingrich. let's focus on the current flavor of the month, rick santorum. set aside his current big government tendencies from the bedroom to the boardroom, focus on rick santorum's policies. he has -- he rejected nafta, rejected free trade agreements. he embraced medicare part d and no child left behind. in the end, just like david gergen just said, he's embraced this economic populism that he is going to, in fact, specifically drop the corporate tax rate for just the manufacturing sector but leave it or reduce it to 17%. this is picking winners and losers in an economy, not economic liberty p, whiches says to me the economy may be important but not principles -- >> economic populism can be handled in a few different ways. one is the way ron paul is handling it saying you're freer to make decisions with your money than the government can do for you. or rick santorum economic populism even liberal economic populism. let's go to the tea party and talk about what influence they are having. mark skoda, founder of the memphis tea party. mark, this is a bit of a redefinition of what the tea party has been doing for the republican party movement. at this point we're at a crossroads. where do guys like you fall on this one? doug the mitt romney road because he stands the best chance at this point of beating president obama and doing things with taxes the tea party would like? do you go down ron paul, less government road or economic populist road with somebody like -- with santorum? >> well, ali, the free market element which we embrace as the tea party movement pushes me towards mitt romney. i think there's a lot of folks that disagree with me. quite honestly the challenge in the tea party is this idea do they trust romney. i think from a business point of view and his practical governance as a businessman i think he would do a terrific job. but the challenge, of course, is convincing the rest of the grassroots movement. i don't think santorum sort of populist manufacturing to taxation doesn't define -- not a free market value. >> as will just pointed out. here is my question, mark. what happens? really michele bachmann was the head of the tea party movement in congress. she was a tea party darling. those candidates who have become tea party darling are not doing what you're talking about. mitt romney wasn't the tea party darling in this thing. >> if you look at what he does, he's about fiscal responsibility, smaller government and free markets. those are valleys of the tea party. the issue is can he kent to the trust issue. the idea which has been in the mainstream media being a liberal leaning governor. he had 800 vetos in his time there. he cleaned up the utah international governance of the olympics. certainly when we look at his platform and what he promises to do in terms of cutting overall tax rates and being able to reduce the size of government, the question is can he connect to the trust issue within the tea party. now for me i think it's very practical. i believe he does. i believe his representations are fair. ultimately the rest of the grassroots are going to have to make that decision coming through new hampshire and of course south carolina and florida. >> let me ask david gergen this then. clearly rick santorum has proved one thing. for a guy who has not been able to raise a lot of money, he has been able to run an effective shoestring campaign where he does connect to individual voters. does that actually matter right now? does this flirtation that the republican party is having with social conservatism matter if the goal is to have a republican in the white house and to beat president obama? >> well, i think social conservatism is a major strand within conservatism. there are many people out there who consider social issues whether it's family, abortion, other social issues as quite important to them. so he does have that and he's appealing to that group. he's not going to win on that alone. he does have to convince people he's got an economic plan that will put the country on a faster track than we are right now. he doesn't have much time to do it. he can't do retail in new hampshire he doesn't have time. these debates this weekend are really, really important. for him, ali, what's going on here now, he needs to come in second in new hampshire and see if he can close that gap down with romney, put himself in position where he slowed romney's momentum some and built up his own head of steam in south carolina. he's running second in south carolina now. if romney wins south carolina he's going to be very close to wrapping this thing up because he'll probably then win florida and that could shut this thing down unless there's some mystery candidate who comes in a side door. >> hold on everybody. stay where you are. as of this week there's a new man in charge of protecting consumers. why are republicans so unhappy about that? i'll explain next on "your $$$$$." ♪ anything? no. ♪ how about now? nope. ♪ [ dog barking ] ♪ ♪ [ male announcer ] the chevy silverado. ♪ [ male announcer ] with best-in-class 4x4 available v8 fuel economy. finally! ♪ [ male announcer ] from getting there... to getting away from there. chevy runs deep. luck? i don't trade on luck. i trade on fundamentals. analysis. information. i trade on tradearchitect. this is web-based trading, re-visualized. streaming, real-time quotes. earnings analysis. probability analysis: that's what opportunity looks like. it's all visual. intuitive. and it's available free, wherever the web is. this is how trade strategies are built. tradearchitect. only from td ameritrade. welcome to better trade commission free for 60 days when you open an account. i've stated many times on this show that the protests of occupy wall street would be better served picketing lawmakers blocking consumer protection bureau from fully functioning. in case you haven't heard of it consumer financial protection brewer is dedicated to protecting you and me from the banks and financial companies that got us into the financial mess in the first place. this week in a highly controversial move, republicans termed an abuse of executive power, president obama appointed former ohio attorney general richard cordray to be the first director of the consumer financial protection bureau. will cain joins me again. will, boehner termed this an abuse -- a remarkable abuse of presidential power. he said the reasons republicans don't support that is because this consumer financial protection bureau is bad for jobs. what do you have to say for that? >> the argument is going to be made, ali, at least at the surface level the consumer financial protection bureau is a probably structurally. we had fdc, fdic, alphabet soup of government watch dogs that have done a poor job. making this uber agency, it would be with a lot of power you're not going to solve the problem. there is problems at the root. transactions between consumer and bank, consumer and credit card company are voluntary transactions, do not need the government being the arbiter of the transactions. the argument it's too complicated. we all sign credit card agreement, bank card agreements, we know they are 10, 20 pages long. when you skip to the back page without reading it, you know you're doing that bad. by outsourcing that judgment to the government, you're not going to solve your problems. >> i'm not sure if we read the whole thing we would understand it. david, opposition predates the controversy over the recess appointment president obama made. we saw the agency's founder, intellectual heart behind it elizabeth warren get into heated clashes with republicans. both parties say they speak for the middle class. why is protecting consumers, how has this become a republican versus democrat issue? >> well, it's always a question on regulation about how far you go. from my point of of view i'm sympathetic with the need to proeblgt consume protect consumers, the federal government playing a role. what is the securities & exchange commissionish to protect consumers. we all agree, i think, that the s.e.c. has been a by and large a very, very helpful instrument. there's always a question of how far the regulations go. ali, in this case there's an additional question, which is serious. that is that the president is permitted to make recess appointments, that is appointments when the congress is in recess. republicans argue, and they have got a strong case here, that the congress is not officially in recess. so this appointment not only of cordray but national labor relations board members doesn't come during a recess and clearly was done with the political intent. the president wanted to stick it to republicans. he's running against the congress. i happen to think going into this last year of his presidency, running a whole year without getting much achieved here is a mistake for the country. it helps his campaign. i think we need -- we need to get some work done in washington and not just politics. >> mark, let's talk about where the tea party stands on this. the tea party does this pride itself being comprised of the wealthiest 1% of all americans. we've been through a lot in this economy. people have been abused by financial institutions. wouldn't the tea party think that americans would benefit from at least some of the protections that this consumer financial protection board offers? >> i looked at this. so many of us talked about this. there's a couple of fundamental problems. first of all this agency is a secret agency in as as much as it will reside in the federal reserve. won't have congressional oversight. antagonistic to tea party values. we want smaller government. third, the last time we had this big crash was sarbanes oxley which has done nothing to forestall the next big crash. yes, i get those 50-page agreements. i read most of them. the fact of the matter is just because government mandates you write something done doesn't ultimately inform the final buyer. >> sarbanes oxley was meant to stop ceos from saying they didn't know what was going on. now it is the law that a ceo -- i guess there's this issue. david brings it up, you bring it up and will brings it up. there can be overregulation but is the answer to not regulate? >> in this case we have sufficient regulation already. you point out, you do for a home loan. first of all, most loans are granted through fannie and freddie mac. we have extraordinary oversight on those two agencies. why do we have to do more. credit cards are a subset of that. there's a lot of reporting requirements. good gracious, if they change anything on your requirements us a stack of paper in the mail every senile time. it is not a problem of fundamental regulation, it's a problem of informed consent as david suggested. you're making a voluntary agreement with the bank or lending institution. be informed. let's stop taking everything to the government -- >> you big anti-regulation bunch. anybody that has a credit card statement open it up and remember the little thing that tells you how much you will pay if you make minimum payment during the term of your credit card is a government regulation. that's the single biggest improvement in the world of credit cards since i've had hair. >> what we need, we do need -- i think consumers deserve something which goes along with the 20 pages which gives it to you in one page. every executive who runs a big company they get the long memo, also the short form they can understand it very simply. that is not too much to ask from credit card companies. if the government needs to do that, let's do it. consumers ought to be protected against these 20-page agreements thank you can't understand. >> can i just -- we have a constant problem of confusing regulations and rules. we had 200 regulators that existed inside fannie and freddie. they did not do their jobs. we're now layering regulations on top of banks completely complicated. make simple rules. break up banks. too big to fail, too big to exist. that's the example of a rule versus regulation. we can do this throughout regulatory bodies. >> it may be semantics. >> not semantics, it's important. >> good to see you as always. thank you very much. david gergen, cnn political analyst. mark skoda, founder and chairman of the memphis tea party. does a better than expected jobs reports for december mean we can finally expect the big economic recovery we've been waiting for? 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[ slap! slap! ] [ male announcer ] your favorite foods fighting you? fight back fast with tums. calcium rich tums goes to work in seconds. nothing works faster. ♪ tum tum tum tum tums the stock market matters, home prices matter, nothing matters as much as jobs. every month we get the jobs report. this the one for december. look at that, 200,000 new jobs created in december. that's a net number, the number of jobs created minus the number of jobs lost. it also combines the private and public sector. we want our jobs created in the private sector. we had 212,000 private sector jobs created. we lost 12,000 jobs in the public sector. the unemployment rate is down. it's 8.5% now. there have been at least 100,000 jobs added in the last six months. that's the first six-month period we've seen that happen since 2006. i want to show you bar charts again. what's important here on job creation is not what happens in a month, it's the trend. you can see we had a trend june through september and pulled back in october. then we've seen this trend october, november, december. more job growth. show you how this breaks down. total population 8.5%, adult men have an unemployment rate of 8%. that is now lower than the national average for many, many months it's been above the national average. adult women have an unemployment raft 7.9%. teenagers, that's a tough group. teenager who are working, the unemployment rate is almost 23%. whites in general have an unemployment rate of 7.5%, lower than the national average. blacks, it is much, much higher. it's been that way for a while, 15.8%. hispanics have a higher than average unemployment rate as well. we'll talk about why this is happening and whether these are good signs these numbers are going down. alexis glick ceo of youth foundation, has tons of experience working on wall street. 1.6 million jobs gained for all of 2011. that is better than the 940,000 jobs that were gained the year before in 2010. it's the right direction. do you think that continues in 2012? >> absolutely. right now the predictions are we could see north of 2 million jobs created in 2012. frankly as you move into this election cycle for president obama, right now the trend is his friend. you know better than anybody, when you look specifically into these numbers, you want to see the workweek continue to improve, average hourly earnings improve. we're starting to see both of those show very positive signs. six consecutive months, ali, you cannot ignore the trend is moving in the right direction. >> that's something we all share, think is important. it's hardly a surprise but republican presidential candidate rick santorum was in no mood to give president obama any credit for this is job numbers. listen. >> i'm very gratified to see in spite of president obama's policies that the job market is beginning to pick up a little bit. i think there might be some optimism that maybe republicans are going to take the white house. maybe that's spurring people to start taking some risks. >> stephen moore, an editorial writer for "the wall street journal." listen to that. he says in spite of president obama's policies, jobs have been created. republicans have consistently blamed president obama for the job losses during his time in office. is it fair for rick santorum or others to say the gains are in spite of president obama's policies? >> first thing rick santorum has to do, ali is lose that sweater vest. i hate that thing. look, i've been a grouse on this show for a year and a half in terms of the jobs numbers. i just read through the entire report. it's a very bullish report. it's hard to find any kernel of bad news in there. as alexis said one good news the workweek expanded. also alexis a rise in numbers. i might disagree a little with the 2012 forecast. it's a little dicey to say we're going to continue to see those kinds of robust job numbers. >> what makes it dicey? what are the head winds. we still have europe. we have low interests going on. we just saw auto sales coin. trucks are being bought again. indicates contractors in this country by pickup trucks. what's the headwind in 2012. >> you're right about everything you just said. these numbers on jobs are consistent 3.5 to 4% growth for the fourth quarter, which is a good number. what worries me is one of the head winds is political. i do think if there's this perception you're going to get the tax increase in 2013, that's one of the big issues in the campaign, i think that does have a negative effect starting in 2012 of employers going out and hiring more workers. >> let me tell you, though, one of the things, i've been looking through the report to see if there are problems. one of the things, chronically high black unemployment rate. >> right. >> we have looked into it. a number of blacks in america joined the work face that put that up. it's not a net negative. >> except, ali, except, let me say one thing. one of the meeting tifs on the labor market over the last three years, we have had a contraction in the labor force. if we went back to the kinds of labor force participation rates we had in 2006, we've have a much higher unemployment. >> very good point, which is why at this point in the recovery -- let's bring greg in, chief political strategist at potomac research group. white house loves to crow about these numbers when they come in. this is a point stephen makes that's valid. at this point in recovery we should forget unemployment rate. it is not reflective of the number of people in america unemployed. the job created rate is important. the 200,000 jobs created is valid. if i were really being critical, i would say to the white house stop talking about 8, 8.5% unemployment rate. it's not actually reflective of the truth. >> they are going to sound tone deaf if they crow about an economy that's really turning around. however, i agree with alexis, the trend is really crucial. i predict over the next few weeks more and more people will talk about 1984. it's not quite as great but we came out of a really ugly recession. ronald reagan had a trend that worked in his favor in the summer and fall of '84. if i'm not mistaken ronald reagan kbgot reelected. >> hold on. this is a good discussion. we need to talk about what we do to sustain this stability, low interest rates, stock market we'd like to do a little more in 2012 than it did in 2011. a lot more to talk about right ahead. stay with us. stantly soothes ans tired, overworked eyes. and comforts them for up to ten hours. visine® tired eye relief. try now and save $3. and during the four course feast, there's so much to choose from. 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[ male announcer ] stop the uh-oh fast with kaopectate. the future of your job, savings, investments, it is the question everybody wants to know. what is in store for the economy in 2012. greg, 2011, i think we're all going to look back at this as a year of political gridlock and economic frustration. is a deficit of leadership in washington going to hold back our economy in 2012 or have we all priced this in and realized washington is not going to do anything to help us in 2012, let's just move on. >> i'd love to say we've priced it in but stephen made a very important point. that is as we get into the second half of this year, there's going tab growing dark cloud. that is, of course, do we extend the bush tax cuts? does the capital gains rate stay at 15, go back to 20, top rate go to 39.6. all these enormous tax issues are up in the air. i think the markets are doing to worry about that as we get into the fourth quarter. >> don't you think we'll sort that out really early with lots of time and great deliberation. >> it's so bad -- one other quick point. it's so bad. what a way to run a railroad. it's so bad we're not going to know until the end of february what we're going to do on the payroll tax cut. it's a crazy way to run policy. >> what do you think, alexis, what happens in 2012 for our viewers, somebody interested in their investments growing, buying or selling a house or getting a job or getting a better job. >> you still have to keep your seat belt fastened. frankly the market, a lot of volatility particularly because of the head winds from what's going on in europe. what i think we need to focus on in the united states, not only what's going on in washington, d.c. you have an election year. that's fine. housing is still a very big problem in this country. we have not figured out how to deal with it. short sales, foreclosures, refinancing, it's taking six, nine, 12 months to deal with some of these situations. i don't know about you but i've heard more than my share of stories about people who can't refinance. >> let me ask you this, stephen, alexis makes a great point. interest rates are remarkably low and they will remain low. the impetus to buy a house has disappeared because you don't have to be in a big rush. home prices are low. there's a lot of reasons to invest in different things. what is the stimulus that causes people to get in. i challenge you to answer this without saying tax cuts. >> on interest rates, i have maybe a little bit of a different take right now. i will make a bet with you -- we've made a lot of bets on these shows. a year or two years will be higher than they are today. >> mortgage rates or interest rates. >> both. they do in tandem, whether up by 100 basis points or 200 basis points, i'm not making a bad bet there because they can hardly go lower than they are. the interest rate risk is negative not positive. to add thing, to add taxes, don't forget payroll tacks also would be going up in 2013. there is going to be a lot of uncertainty come july, august next year about where is this economy going. one statistic i want to point out, i think is the most important one in terms of whether the direction of the economy is going. we've talked about this before, ali. $2 trillion worth of capital on the sidelines, if we start seeing that reinvested in american jobs and businesses, you could see a big boom. >> alexis, what's the best way to get it reinvested. ultimately we're on the cusp of recovery, growth, good job creation. what is the thing that will make companies put the money back in. >> listen, to stephen's point, not only do they have a bundle of cash, but they have access to interest rates that are so historically low that i do believe -- i agree with stephen, they are going to put that money to work. they might not put it aggressively to work in the first quarter. with money being so cheap, i think you'll continue to see mergers and acquisitions. you'll see more and more deals. look at the end of the day, if we don't have a good trade balance, we've got an issue, right? if you look at europe, let's look at china as well. china is an issue. we've got to make sure we're continuing to export but with a slowing chinese economy, that could be a risk. i think if you're a multinational corporation, you've had a great year on trade, a great year on interest rates, a pile of cash, you haven't hired, you've got a good environment. >> great talking to you all. best of the new year to you. we hope to talk to you men more times. stephen moore editorial writer with the wall street general. greg is the chief political strategist. good to see you. with potomac research group. alexis just talked about china and europe head winds, may be a new year but europe facing the same problems it ended 2011 with. why this is something all of you should be paying close attention to next on "your $$$$$." tissue box (whispering): he said nasal congestion... nyquil: i heard him. anncr vo: tylenol cold multi-symptom nighttime relieves nasal congestion... nyquil cold & flu doesn't. an accident doesn't have to slow you down. with better car replacement, available only from liberty mutual insurance, if your car's totaled, we give you the money to buy a car that's one model-year newer... with 15,000 fewer miles on it. there's no other auto insurance product like it. better car replacement, available only from liberty mutual. it's a better policy that gets you a better car. call... or visit one of our local offices today, and we'll provide the coverage you need at the right price. liberty mutual auto insurance -- responsibility. what's your policy? europe's debt crisis threatens the entire global economy. diane swonk from mesirow financial. good to see you. happy new year. we've got employment numbers, continue to look more positive. economic growth numbers look like even europe might not pull us into a recession. the second question everybody asks about 2012 is what about europe. the first one is what is the economy going to do? what about europe. >> europe is one of the biggest risk factors out there. european debt situation is a european banking crisis. as we know from our own banking crisis in 2008, there's nowhere to hide if europe really does melt down and the eurozone fails to maintain the euro. the risk is still out there. i have a lot of faith those in the eurozone are committed to making this work. that said it's going to be a very rocky year. every day, day in and day out, we find financial markets are watching what the italian bond auction is, what the spanish bond action is, german, french bond auction. this is odd. we're not decoupled. can you have a reacceleration of growth in the united states but this is a headwind for us, not only because directly exports to europe is slowing as europe goes into recession but indirectly europe is china's largest trading partner and china is slowing as well and they buy a lot of our stuff. >> richard quest host of cnn's quest means business, richard, happy new year to you. euro fell against the dollar, lows we haven't seen in more than a year in the last week. worries still france's credit rating could be downgraded. what does the crisis in europe feel like in europe? is there a fear things are slowing down. are they retrenching? are we seeing things that indicate it's slowing down. we know the numbers indicate it happened. >> with the exception of germany, lowering unemployment, fast economic growth, but elsewhere the situation is by no means a rosey picture. look to the south of the continent, the so-called peripherals, look to italy and spain's austerity, greece which is still to negotiate and finalize its second bailout. time and again we now know the eurozone will probably enter a recession in 2012. that is the scenario. people are exceptionally worried. what they are particularly worried about is the seeming inability of european leaders to actually get ahead of this. some are suggesting, some like jim o'neill with goldman sachs suggesting leaders are impotent to get ahead of this crisis. if we need to have any look at this, this is the fed minutes just released this week. i just want to quote, i'm the sort of sad person that reads on page six -- >> i read them, too. >> we have shall a sad united meeting. it says the greater financial stress and likely to dampen economic activity in the euro area and could pose a risk the economic recovery in the united states. when the fed is worried about it, we should be worried about it. >> diane tell me about this, you and i talked about this a few weeks ago. as richard said, not just that there's this massive problem, it's europeans concern that their leadership, their financial and economic leadership and political leadership can't get ahead of it. what would involve getting ahead of it. it seems like we have all the research. we know what the options are what europe needs to do. who needs to get ahead of it and what do they have to do? >> certainly germany needs to get ahold of it and they are holding everyone back. there's a balance -- they don't want to reward countries that have gone too much in debt and had problems. in not rewarding them they are taking losses on their own bank balance sheet, that will hurt their economy. it's a bit of a catch-22. one of the key issues is the european central bank. richard points out a very good point, we have to listen to the fed. the european central bank has been very reluctant to actually step in and do the kinds of quantitative easing in the magnitude we saw the u.s. federal reserve do during our financial crisis and also there's not this sort of mechanism to recapitalize the banks. there's this reluctance to stick to the german model. they want to keep the fire on austerity, on these peripheral countries but can you go too far on that. there's a balance it seems it will actually take a crisis for the european central bank to do what is necessary to stabilize the situation. that's not exactly the best solution out there. >> the ecb is desperate not to be caught, a, in the politics of the situation. >> yes. >> which is really absolutely to the core of it. and b, the moral hazard argument. they don't want to have monetary financing of governments, this is effectively what being the lender of last resort will be. they continually hold out this carrot that says make the reforms and we'll do more. make the reforms and we'll do more. but we do get numbers from the ecb and i can tell you just nearly half a trillion dollars every night is parked with the ecb with banks too frightened to lend among themselves. meanwhile the weak banks are lending, they are filling their boots with money, low rates from the european central bank. >> i hasten to remind our viewers credit crisis and credit freezes are the worst thing that can happen at all. we're not there. we've got expensive and tight credit. when it freezes like we did in 2008 we have ourselves a global problem. let's hope we avoid that. diane swonk, great to see you again, chief economist at mesirow financial. my good friend richard quest with whom i will be working much more closely in 2012. have a great new year to both of you. >> take care. the reason i'll work more closely with richard quest starting january 9th i will be anchoring a show called "world business today." it airs 9:00 a.m. eastern. not in the united states, it's in the rest of the world, 2:00 p.m. uk, 7:30 p.m. in india, 10:00 p.m. in hong kong, 11:00 p.m. in tokyo. if you're traveling around the world, make sure to tune in every day, "world business today" on cnn international. one of the most important questions facing your family, where do you put your money in 2012? we'll talk about it next on "your $$$$$." forty years ago, he wasn't looking for financial advice. back then he had something more important to do. he wasn't focused on his future. but fortunately, somebody else was. at usaa we provide retirement planning for our military, veterans and their families. now more than ever, it's important to get financial advice from people who share your military values. for our free usaa retirement guide, call 877-242-usaa. 2011 was a roller coaster ride that dumped off investors pretty much where they started s&p 500, which 0% return. it really did end up at the end where it started. but look at the volatility that got us there. it wasn't a flat line. is that going to continue? and what does it mean for your investments? your 401(k), your i.r.a., the money you use for your kids' college savings. jim, the managing director of zeffer management, and karen, welcome to both of you. happy new year. >> thank you. >> jim, you say that the u.s. economy as we've seen, from the job numbers and gdp growth is doing a little bit better. what do you think that means for stocks? >> well, in its own in a vacuum that would mean higher stock prices. we are definitely doing better in the u.s., corporations are in great shape and profits are going to be positive. so if you had just the united states, it would be a nice up year for the market. unfortunately, we have to worry about europe, in a recession, the potential for a financial accident, the slowdown in the emerging markets. so there are pros and cons as we look at 2012, and it'll be challenging like 2011. >> karen, a lot of our viewers have two ways of looking at the market. one is opportunities for big growth and the other is preserving your money. what should govern you now? >> i think in this volatile environment as jim speaks of with the bears, you want to think about choosing investments that are opportunistic but look at your downside risk. and that is thinking about preservation of capital and minimizing those risks. >> where would you say are the greatest opportunities and risks? whether it's geographically or in terms of the kinds of things you invest in? >> the opportunities that we see are in some of the consumer staples area and some of those areas where people really are going to every day, no matter what kind of environment they're in. they don't want to give up that beverage of coca-cola and they'll continue to purchase those and those companies will do nicely. >> some of those companies, the big companies that deal in consumer staples are great paying companies. and in is a favorite of yours to recommend. companies that will have some good return, they'll be relatively stable, and they'll give you some income. >> right, you getting almost nothing in interest rates, so you can't get any return on your capital by being conservative. and big stocks are cheap. so i'm recommending that people buy the dow jones select dividend trust, it's got 3.5% dividend yield, so it allows you to participate in whatever growth we do have around the world. on the other hand, if it turns out to be a tough year, at least you have that dividend yield providing some return in case we have another year of zero returns in the equity market. >> that's as karen described, there's something where you get some upside. you get that protection a little bit because of a dividend yield but you've got exposure. >> exactly. >> karen, you like consumer staples, and there is a fund you can invest in like this, the s&p global consumer staples index fund. what do you like about this? >> i like the fact that the biggest positions in that index are proctor & gamble, nestle, and those types of names that are multi-national u.s. companies that will continue to grow with these predictable products and some dividends. >> these staples continue to be purchased by americans regardless of the economy. but these people are -- these companies are taking advantage of growth in other countries? >> exactly. so the existing customers want to have their repeat product detergents and alike whereas they're introducing these terrific products across the world. they're benefitting from that growth. >> let's talk about two other areas, jim. i just want to know what you think about energy. >> energy based on geopolitics is at great risk, and therefore the risks are that the price is going to go up. and long-term it's definitely an area where as the world grows and the emerging markets grow, there's going to be more and more demand for it. i think energy's a place you want some of your money invested. >> and as always, you recommend that people look at funds or exchange traded funds. >> where you get diversificati n diversifications and let the managers pick the individual stocks. >> jim is the managing director, and karen is the chief operating officer, thanks for being here, have a great year. >> and you also. in 2011, we mourned the passing of steve jobs, many feared for the future of innovation in america. fear not, innovation is alive and well, and i'll show you where the next generation of innovators are coming from next on "your money." but did you know they're good for you too? 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[ male announcer ] stop the uh-oh fast with kaopectate. time now for the x, y, z. last thursday, announced the winners of two important prizes. the draper prize is often referred to as the nobel prize of engineering. this year it went to four pioneers of the liquid crystal display. lcds are on your smartphone and tv. they use the energy much more efficiently than earlier display technologies did. lcds are a large part of the reason you can watch an entire movie on your hand held device without the battery dying. and the four draper prize winners were cited for their accomplishments in the 1960s and '70s. technology that's now utilized in billions of consumer and professional devices. for those accomplishments, i salute the winners, but they had to learn their skills somewhere and that's what the national academy of engineers gordon prize celebrates. they're being honored for leading innovation in engineering and technological education. tomorrow's tech applications are going to come from today's engineering undergrads and that's why their curriculum, what and how they are taught is critical. all three winners of the gordon prize come from the engineering clinic at harvey mudd college in california. they pushed to integrate the design and making of tools and prototypes into the classroom. they advocated a hands on approach to engineering in which small teams of students are given design problems to solve from the real world. our congratulations and gratitude to the winners of the draper and gordon prizes and to the national academy of engineering. that's my xyz, thanks for joining the conversation this week on "your money," we're here every saturday and sunday at 3:00 p.m. and make sure to check out my new book with christine romans "how to speak money." a guide to understanding the