Good evening, everyone. Im larry kudlow. This is the kudlow report. We are live here at 7 00 p. M. Eastern and 4 00 p. M. Pacific. We begin tonight with some breaking news. President obama has just finished the phone call with russian president Vladimir Putin. The white house says president obama reminded putin that his actions in ukraine are illegitimate. But there is a way to solve the conflict diplomatically. President obama also said secretary of state kerry would continue talks with Russian Foreign minister sergei lavrov. And dow jones reports the u. S. Has joined the europeans in putting out a warning to all banks to watch out for any transactions made by former ukrainian president viktor yanukovych. Lets get the latest in kiev from nbcs ian williams. Good evening. Reporter good day to you. Anger here in kiev as this latest escalation of tension in crimea. The government in kiev saying that it was illegal, it was unconstitutional, also a little bit earlier today, i spoke to the u. S. Ambassador here who described it as one more step in what he described as the creeping annexation of crimea by russia. Seen from here, russia does seem to be in a real hurry to grab crimea, perhaps thinking if they can create facts on the ground there, it will become much more difficult to unravel under international pressure. Youll recall that the parliament in crimea, which is very prorussian, had scheduled a referendum for the end of march. The question on that referendum was to bec greater autonomy, n independence. But today seemingly out of the blue, parliament passed a resolution calling for joining russia and leaving ukraine. Now, that, they say, will be put to a referendum on the 16th of march, just ten days from now with little doubt about the result. Other menacing developments down in crimea today, the storming by armed men of the local television station, which was still broadcasting ukrainian programs. Instead they put russian programs on the air. At the same time, the deputy head of the prorussian administration down there said that once an independence vote is made and hes in little doubt it will be then the ukrainian troops who are still down there will be what he calls occupiers if they dont surrender their weapons. Very worrying developments in this big escalation today down in crimea, larry. Many thanks to ian williams. So as crimea gets ready to take a vote on becoming part of russia, take a listen to what the leader of ukraines opposition parrot toty told cnb morning. Hes worried as head of the ukraine. Why . Because ukraine the people 1p ont want to live with rulesr live without rules, live with the corruption without human rights. And thats why the people want the changes, if we will be successful, im more than sure everybody in the ukraine wants to live in a european country with european standards of life. It will be a very bad example for russia. Joining us now is former White House National security adviser Steven Hadley and michael mcfall. Mr. Mcfall just days ago departed as u. S. Ambassador to russia. Gentlemen, thank you very much. Begin with you, steve hadley. S president obama correctly said the referendum to join russia would be a breach of international law, a breach of ukraines constitution. But i guess my question is, how can it be stopped . It probably cant be stopped in terms of the referendum Going Forward with the Russian Troops basically occupying the country with the accelerated schedule, its pretty clear and how its going to come out, pretty unlikely that the referendum would be defeated. So it looks like that this reallyc is a grab. There were announcements today that the Russian Parliament is taking steps to ease the m cooing of crimea into russia should that referendum pass. So in the short run, its probably going to be very difficult to block the referendum. The question is, what are the steps we should take to deter russia from trying this elsewhere . And then secondly, as klitschko said, we need to focus on building a prosperous, free and detective ukraine so at some point the people of crimea will realize the mistake they are making. I want to get back to that, back to your oped piece regarding steps that should be taken let me get to ambassador michael mcfall. It seems like people want deals. But this annexation of crimea, if i may call it that, is not part of a deal. Where does this put the putin obama relationship today . Well, this was a major escalation, a major move by president putin and his supporters in crimea. And i agree with steve. I dont see how you roll this back once they take this vote because president putin is going to say, look, im just respecting the will of the people of crimea. And how do you back down from that . Whats the dealc you can put i place to say, well, actually we didnt mean that referendum . So im quite pessimistic about what happens next. With respect to the relationship with putin and obama, this is a very difficult moment in u. S. russian relations. Its a major turning point. I think it will be with us if this holds, this will be with us for months and years to come. Steve hadley, the president has also been very firm, at least at the level of rhetoric, talking today about visa sanctions and oligarch sanctions, what i call them. Bank sanctions for people responsible for what happened in the ukraine, access to banks and so forth. How do you enforce those sanctions, steve hadley . I know weve talked about this before relative to the soviet, russian invasion into georgia. How do you enforce sanctions . Weve actually learned a lot about sanctions in the last five years, largely learned at how to sanction iran in connection with their nuclear program. We now know how to go after oil and gas sanctions. Weve done it in iran. We actually know how to exclude countries from the International Financial system, particularly from the u. S. Financial system. So the Treasury Department has been working on this andc wev got a lot of ways to do this. Weve also got the magnisky act, allows them to freeze the assets in the United States and deny visas to those individuals and organizations that were part of this aggression in the crimea. We talked about this last night, very important. I just was speculating, mr. Hadley. I dont know a thing. You know it, i dont know. Both you know it but if the oligarchs who are so tight with putin wanted to come and go to the u. S. , if they have assets deposited in u. S. Banks and we stop that, wouldnt that be an effective way, wouldnt they get pretty angry at putin . I think one of the things you want to do in your sanctions is target people who have influence with president putin. And the oligarchs are certainly one group. The other thing is whether you can constrain movements of peoples, whether you constrain movements of diplomats. But i would not focus only on the sanctions. There are other things that we have done. Weve increased the aircraft that are participating in the air defense flying over the baltics. Weve announced that were going to expand u. S. Participation in a military exercise in poland. I think its also important to reassure the countries of central and Eastern Europe that we stand with them, to recommit to nato, recommit to the defense of europe. And at the same time do things that will hopefully deter president putin from trying this thing elsewhere. Ambassador, what do you think of what mr. Hadley wrote in his oped piece, deploy force, particularly regarding poland, the baltics and romania. Dangling or moving forwards dangling is not the right word. Moving towards nato membership. Mr. Hadley talked about montenegro, georgia, ukraine and mall doe va. Would those steps be effective in your view . Theyre smart and have to be done. And i think this moment right now proves the wisdom of nato expansion. There are lots of russians living ethnic russians living in nato countries. Those countries are a lot safer today than ukraine is. But i dont think it will be it wont make putin reverse what hes doing in crimea. On the contrary, i think the discussion about sanctions economic sanctions, particularly looking at the financial system, if there comes a point in time where russian banks cant use american dollars to do transactions, thats goingc too a lot of damage to a lot of major not talking about multibilliondollar corporations in russia that have assets all over the world. Second, in the oil and gas sector, steve is absolutely right. I worked on sanctions for five years for three years when i was at the white house, with respect to iran. Weve learned how to do it much better. And if you look at the largest joint venture potential joint venture between a russian stateowned company and a western company, its rossneft and exxonmobil. I thought that was a good deal in terms of integrating the russian economy. But if were going to go towards a coercive way, thats going to be where youre going to hit the russian economy hard and the head of rossneft just happens to be a very close associate of Vladimir Putin. Steve hadley, why isnt the u. S. , particularly the administration, making a bigger push for liquid natural gas, something that could be exported . I know its not going to happen in a day or a week. But they would make a strong statement, get the Keystone Pipeline through, start the approval, lets say speed up, lightning fast approval of lng projects, which people in the industry believes they could get it out in a couple of years . Whats the am nistration waiting for . I think the administration actually will come around to that view. I know House Speaker boehner was calling for this just yesterday. I think this is a what we need to do is to reduce the strategic dependence of europe on oil and gas from russia. And its about diversification of supply lines, diversecation of source and using the availability of gas in the United States through lng to export to europe. All these things we need to do and they send a message that we need to send, which is over the long term, were going to reduce puntins leverage on europe and were going to have the means then to sanction him in a way that is not going to be such an adverse impact on europe and hopefully that will serve to deter this kind of action in the future. Last one, ambassador mcfaul, a lot of conservatives have been blaming president obama saying he wasnt prepared for this, he hasnt been a strong leader and so forth and so on. To me, right now, Vladimir Putin is the enemy, not president obama. So thats just my simple way of looking at life. But i know youve been an influential adviser on russia. Do you believe, sir,c that the socalled russian reset in retrospect was a good idea . Yes. And not because anybody was trying to make friends with Vladimir Putin or not. It was about pursuing American National interests. Were we better off to have sanctions against iran . My answer is yes. And that was done by passing a u. N. Security Council Resolution that brought that about. Were we right to open up a Northern Distribution Network to supply our troops through the north and not just through pakistan . My answer is yes. Were we better off to sign the new start treaty . My answer is yes. Are we better off with russia in the World Trade Organization . My answer is yes. That doesnt mean that somehow those things led to putin invading crimea. With all due respect, i do know my history of soviet interventions and russian interventions. Russia invaded georgia when National Security adviser steve hadley was there, they didnt stop him. Marshal law was declared in poland in 1981 when Ronald Reagan was in the white house. And despite all their efforts, they couldnt stop that. Eventually they did. Eventually reagan did with some help from ms. Thatcher and pope john paul. I just want to c it took eight years after marshal law. I understand. I want to get mr. Hadley in before we leave. I wanted you to rebut because this is a charge in my opinion, sir, and im a novice at this game Vladimir Putin is the enemy right now. President obama is not. Thats just my view. On that point, but mr. Hadley, was the russian reset a good or bad idea at the time . Do you think its helped or hurt our relationship . One, i think we ought to be rallying behind president obama. This is a difficult crisis. And i hope that on a bipartisan basis the congress will come around and support what hes trying to do. Secondly, michaels right. There were benefits from the reset. But i think we take some responsibility here. I think the Bush Administration, we did do some things in the wake of georgia. But we did not use economic sanctions against russia. I think in retrospect, that was a mistake. I think secondly that the Obama Administration moved too quickly to start the reset. We needed a reset, of course there would be. But it probably would have been better and i would feel better if we had used economic sanctions in the Bush Administration and the Obama Administration had then been able to continue them and to continue them longer before we did the respa. Would it have made a difference . I dont know. But id feel a little bit better. I think michael would probably feel better if wed done both of those. Very interesting idea. Gentlemen, we have to go. I appreciate your candor, both of you, Steven Hadley, ambassador michael mcfaul. Hope youll come back and help us again on this difficult subject. Were almost exactly five years removed from the market bottom back in 2009. The dow fell to as low as 6,600 then. What if we took a deep breath and started buying, just at that moment . Cnbcs dominic chu will join us with a look at some stocks you know are up a massive amount since that time. I mean massive amount. Thats next up on kudlow. Later on, the countdown on for the big february jobs report, coming out at 8 30 tomorrow morning. Many experts are predicting a very disappointing number. But you know what . Many experts are frequently wrong. Anyway, dont forget, free market capitalism is the best path to prosperity. Free market capitalism and freedom are huge issues in this whole ukraine putin argument. Im ked lo. Well be right lack. So our business can be on at ts network for 175 a month . Yup. All 5 of you for 175. Our clients need a lot of attention. Theres unlimited talk and text. Were working deals all day. You get 10 gigabytes of data to share. What about expansion potential . Add a line, anytime, for 15 a month. Low dues, great terms. Lets close new at t mobile share value plans our best value plans ever for business. You cant always see them. But its our job to find them. The answers. The solutions. The innovations. All waiting to help us build Something Better. Something more amazing. 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Absolutely. This time around, its always hindsight to go back and say, i should have bought back then. But a lot of these companies ended up looking like dollar penny stocks in the depth of the crisis back in march of 2009. Were going to highlight a few of them. Lets go back in the time machine and say, hey, heres a company that were going to put up a mystery chart for you. This stock, you could have bought it for 60 bucks back in march of 2009. It was founded in 1994. Its in seattle. It is a techish type company, a survivor of the first internet stock boom. Andc if i told you it was the Biggest Online retailer out there even i would know its amazon. By the way, jim cramer and i interviewed jeff bezos the night or the day after he reported his first quarterly profit. Jimmy and i actually talked to him. This stock has gone from 60 to a 372 stock. Massive return. This one is an industrial. You could have bought this bad boy for 4 per share back in march of 2009. Now, it started in 1923 as a textile company. It owns cessna aircraft, the small aircraft, bell helicopters and for all you golfers out there, theyre also the guys who make those ezgo golf carts. Im talking