able to get the russians to help out in ousting assad. and what the heck is a higgs bozon and why should you care that astronauts found it? america's favorite astro physicist, neil degrasse tyson will explain it all. first, here's my take -- america has had one more bad month for jobs. 80,000 created last month. this seems a depressing piece of a pattern. over the last two decades, u.s. economic recoveries have tended to be slow and jobless. in every recession from 1948 to 1990, jobs came back to pre-recession levels six months after the economy returned to its pre-recession level. after the recession of the early 1990s, jobs came back 15 months later. after the slowdown of the early 2000s, jobs took 39 months to come back. this time, it may take about 60 months, five years, for employment to return to pre-recession levels, according to an analysis by mckinsey. what happened? well, over the past quarter century, two large forces have swept the world. globalization and the information revolution. they've lifted tens of million of people out of poverty, helped make american businesses more productive, given us amazing goods and services at cheap prices. but these forces make it much easier to produce economic growth by using machines and technology or workers in lower wage countries. hiring high-wage workers, that is workers in western countries, becomes a last resort. while one can disagree with the data, there is furious disagreement over everything else. on one side are those, mostly liberals, who say the economy is suffering from insufficient demand. that is, people in businesses are not buying things. the only cure is for the government to step in, spend money, and create demand. on the other side, conservatives argue the problem is not weak demand but obstacles on the supply side. businesses and people will spend if they're in an environment that requires them to do so, reducing taxes, increasing regulation. in general i accept that a country needs a structure of taxes and incentives that reward growth. but beyond this rhetoric, what specifically would help right now? one of america's best businessmen has an answer. fred smith, the founder of federal express, argues that the key to job growth is stimulating private spending on capital goods and services. there is only one statistic that is almost 100% correlated to job creation, he says, private investment in equipment and software. but what makes companies spend on equipment and software? is it more orders from their customers, or a better climate for business investment? smith argues the latter. he argues that businesses should be given more incentives to invest and create products. he wants to lower u.s. corporate tax rates which are the second highest in the industrialized world, and the corporate tax only brings in 8% of federal tax revenues anyway, he points out. he supports more incentives for business to spend on equipment and software. these are all good ideas. the obama administration has actually acted on many of them already. but if investment produces jobs, why not also increase government investment? government investment in infrastructure is currently half of what it was a generation ago. president obama should announce a growth agenda that combines incentives for businesses to spend with policies that also get the government back in the business of investing in bridges, highways, airports, other aspects of america's aging infrastructure. we need more investment in science, research, and technology to create the industries of the future. if the goal is growth and jobs, it can't hurt to try all the best ideas, no matter where they come from. for more on this, you can read my column in this week's "time" magazine and on time.com. let's get started. let's get right to money matters with our all-star panel. larry kudlow is the founder and ceo of kid low and company and the host of cnbc's "the kidler report." sammy bedows is the editor of "the economist." krista freeland is the editor of thompson reuters digital. and the president of reuters right research. a couple of the economists is about the resurgence of the american economy and all it talks about all this, you know, that the shale gas, return of manufacturing, all good stuff. but is it going to happen in time to help obama? >> no. no. our cover story is about the profound secular changes and improvement that are happening. the rebalancing of the u.s. economy which is real and is very important. but it's not a story about the next three months or even the next six months. and the cyclical recovery has weakened and is looking weak now. unemployment hovering above 8%. none of this looks good in the short term. we're not projecting morning in america in the next few months. we are saying that the cyclical outlook isn't great. it's a very slow deleveraging recovery. but a lot of that deleveraging is occurring and underneath it there are profound changes toward a more export oriented and open economy. one that is -- used to be based on consumer spending in housing. people buying houses with too much debt. now this is changing to an economy that's much more focused on exporting to the rest of the world. this is a secular change. it's not that we see sort of enormous short-term improvement. >> larry, this is what obama talked about in the state of the union. an economy built to last. changing it away from consumption and housing toward exports. is obama economics working? >> right. the trouble is that he doesn't share zanny's vision about the energy sector. which i think is a very important point. i think the shale revolution is nothing short of phenomenal. and is redoing whole chunks of >> it's happening on his watch. giving all the permits that are making it happen. >> giving none of the permits. this is happening in private lands. in fact, public lands, federal lands, and offshore lands are down as much as 10% and 15% from a couple of years ago. no, he doesn't share that. he's a green energy guy, a solyndra guy. and he missed the boat on all of that stuff. i think -- >> what about the cyclical recovery? >> i think the cyclical recovery, i think i agree there, too. except i'm getting more worried about that. the numbers are coming in on a downward scale almost across the board. we're not seeing the kind of investment -- i interviewed alan greenspan yesterday, who is particularly pessimistic about the longer run investment prospects. he said because of the burgeoning budget deficit, obama care, medicare, all of our entitlement problems which put us nearer to bankruptcy, he said people are now unwilling to make long-term commitments into durable assets like business investment or homes. they just won't do that. and unless you have that kind of longer-term investment attitude, you're not going to create the jobs and incomes to ep the economy going. >> krista? >> i would like to start by agreeing with larry on the shale gas point. and i think that this is actually a big issue for american progressives. for the democrats, that they haven't dealt with yet. i think american democrats are still very much in this end to fossil fuels era. there was this notion that the world was running out of fossil fuel, that america was running out of fossil fuel, and you could make a case for renewable energy -- >> they were -- >> they weren't unhappy -- >> in that narrative which proved to be so wrong, they were thrilled. is that wrong? >> they weren't unhappy about it. you could make a case that dovetailed with national security. that era is over. it turns out there's a huge amount of fossil fuel in the united states, and in the north american continent, if you want to talk about the canadian oil sands. that is the new reality. i don't think the democratic party overall and, in particular, environmentalists have dealt with it. fossil fuel is here to stay. and i think that if you see real opposition from environmentalists to any sort of fossil fuel, as you saw with the pipeline from canada, that was purely about saying you know what, we just don't want more oil. it's not going to play because people say, you know what, actually oil and natural gas are pretty great sources of energy. if we have them here, they're a lot cheaper than the other stuff. >> i think the bigger, mother interesting question for the u.s., vis-a-vis the rest of the world is if you put the energy together with the focus on experts more broadly to the emerng economies together with the fact that the u.s. unlike every other big developed country has gone far further to undo the excesses of before. the housing market has hit bottom, i think. we could probably all agree that that recovery is for real. house prices are extremely cheap here compared to what they used to be. those -- household debt is coming down. those imbalances are being unwound. the u.s. is doing what the u.s. traditionally was good at, which is reinventing itself. getting rid of the imbalances. it takes a long time. we've kind of learned that. >> we still have serious financial policy issues. >> we have very big problems. i would say in the public sector. a lot of problems. >> i think that's exactly right. and i think that the direction of solving those problems is going to be key to the entrepreneurial growth of the usa. the mix of tax rates and spending and entitlement reform is huge. >> this is what i want to get zack in on. the piece we've left on the table is the whole uncertainty and taxes and regulation, you know, the supply side argument that that's what's inhibiting the cyclical recovery. businesses aren't investing. what do you say? >> i was enjoying the debate too much as a spectator. one factor in all of this that gets missed is that right now americans and our debate is incredibly obsessed with government policy. if you're a republican, you're obsessed with government policy because you said that the democrats have messed everything up and the government is a terrible factor holding back the recovery. if you're a democrat, you're trying to talk about the constructive effect of government as an investor, hence the solyndra. we should invest in infrastructure. that was infrastructure. i think in a lot of ways people are missing the degree to which 70%-plus of the american economic system is still the private sector. which is quite large by global standards, as i'm sure you've pointed out. and that the relentless focus, especially in an election year, on government as either the purveyor of common good that's going to get us moving forward or as a destructor of the common good really misses the point that there's not a lot preventing businesses from investing. i don't buy the uncertainty argument, oh, if government would specify its policy we would put -- >> right. there are tax -- >> i think the reality is that americans suffered a crisis of confidence in 2008, haven't adjusted to the world as it is. it's convenient to blame government. but this remains an incredibly mobile capital system. if anything, the issue is as much a myriad of cultural decisions about are we going to deploy capital or not, are we going to spend or not, because of the shift in the u.s. economy. not because of the deleterious effects of the u.s. government. >> aren't we forgetting the rest of the world? there are good reasons for business to be uncertain about investment now that have nothing to do with anything happening in the united states. and you know, a lot of those reasons are about europe. it's still unclear what's going to happen in europe. >> right. >> and if europe blows up, then that is going to explode a lot of business plans of a lot of companies. it's not a bad idea -- to keep money on your balance sheet. >> we have to take a break. when we come back we will discuss whether europe will blow up. whether there will be another oil hike. stay tuned. [ male announcer ] citi turns 200 this year. in that time there've been some good days. and some difficult ones. but, through it all, we've persevered, supporting some of the biggest ideas in modern history. so why should our anniversary matter to you? because for 200 years, we've been helping ideas move from ambition to achievement. and the next great idea could be yours. ♪ we are back with zanny minton beddoes of "the economist,"" zachary karabell, chrystia freeland, and larry kudlow. zanny, the thing about europe that surprises me is everybody says it's going to blow up. and somehow it doesn't. i mean, things are a mess, bond yields go up, it's harder for them to borrow, and there has v to be some emergency -- at the end of the day -- >> every one of those 19 summit that's been there to pull us back from the precipice has indeed pulled us back from the precipice. you're rht. it's true that over time maybe you get a sense of, oh, well, it's another summit, another crisis, we're going to go to the edge and we'll put it off. the situation has been getting unremittingly worse. the european economy, as many of them, in free fall. the recession is deepening. the policy view is, in my view, is completely mad. the sense of the lack of confidence in the future of the eurozone is deepening. there's a complete investor strike of people no longer willing to invest in italy, spain, or peripheral economies because they have no sense of whether the euro will hold together and how it will hold together. i agree with you that it hasn't blown up, if you will. we haven't had the kind of lehman moment yet. we haven't had the cataclysm, although it's a possibility. i think the europeans will pull back from the precipice. there was another summit two weeks ago. i call it the "save our summer holiday summit." they're just about doing it -- >> getting through. >> i think it's a dangerous strategy. >> i basically am sympathetic to the view that it's not going to blow up. i'm dying to take this contrary position -- i can't quite take it yet. but i'm watching spain. now, i thought this business about raising the spanish vet from 18% to 21% was the typical austerity mistake that the europeans make. imagine anything dumber than that. >> explain, a national sales tax >> these people have so much unemployment now, we're cutting into their income by jacking up the sales tax which applies to everybody. by the way, a regressive tax. they ought to have a flat tax like the eastern europeans. but having said that, i am interested to see if they're going to let the spanish savings and loan banks, i call them, if they're going to let them blow up. just let them blow up. let the preferred shareholders get slammed, let the common equity shareholders get slammed. just let it happen. because if that bubble can get finally burst, i think you've got the beginning of some kind of comeback here. i think -- >> i'm going to -- i'm going to be more pessimistic. especially -- >> blow up the spanish savings and loans. that's what i'm asking for. >> i'm worried about the spanish households. and actually this ties in with our conversation about the u.s. and how the u.s. has been pretty good at working its way through the overleverage and the bubble. what's really interesting about europe, and i think unsufficiently noted is people can't walk away from their mortgages. so especially in the countries where you had a housing bubble like spain, you have all of these people who don't have their house anymore but still have to pay their mortgage. >> you know -- >> i've just got to pick up on that for a second. when the housing bubble burst in america, one of the things that lots of people said, the terrible thing about the american system was that people could walk away from their mortgages. >> right. >> the non-recourse loan. and that this was what caused people to make fooli bets. you're saying strangely, that's what allowed the american housing to recovery? >> right. it allows the stock clear. >> right. not all that much happened. i mean, the system did clear. the markets did clear. and most people did not walk away from their mortgages. >> no, but i think it has a tremendous impact at the margins. one of the things that i think in some ways the scenario for europe that worries me most of all -- obviously a lehman scenario would be terrible for all of us. but i think you have this kind of deep freeze scenario where the european middle classes essentially never recover. their kids never get jobs. the parents are going to spend the next 30 years paying off these mortgages. and that's really depressing. >> never is an exceedingly long time. it's clear that european policy, while it may be a mess, has decided that the savings and loan collapse is not in the cards. and policymakers are going to do everything they can for there to be an acceptable level of constant pain for a long time rather than unacceptable level of really sharp pain in the short time. >> it's -- >> we're not going to save little piggy banks. it's not worth it. you're saving the large banks. >> if the european central bank behaved like the federal reserve >> right. >> basically the -- the short-term crisis gets solved. why -- >> absolutely. you can trace what happened in europe and what happened in the u.s. since 2006, 2007. at the beginning there's sort of reasonable parallel. the banks provide lots of liquidity. there's talk of fiscal stimulus. there is fiscal stimulus in 2008. as things go together. then the europeans go in the direction of saying we're going to have a lot of fiscal austerity. there's -- we're going to do loads of stupid things which mean that people lose confidence in the future of the euro. we're not going to deal with our banking problem. we're not doing any of that stuff. in the u.s., you recapitalize the banks, you do have a lot of structure. you don't have as much as you could have done, but a lot more than you had in europe. and you have, as we said earlier, you have the beginnings of these imbalances being worked off. whereas in europe they're not. the reason is -- briefly. the real reason is that i think that this whole crisis in europe has been characterized largely thanks to the germans as a crisis of government profligacy. because it started in greece where it was a crisis of government prove legsy. and that's where they thought it would never where out. >> and that's why you can't have central banks printing. there's a culturally ingrained belief that if you do so you're going to create inflation like the 1930s -- >> but it's about the political structure. you can't have a central bank if you don't have a country. and the germans aren't wrong. >> the ecb is quietly one of the great money printers of all time. >> do you approve or disapprove? >> by the way, i happen to approve. and i approve of something the ecb did -- >> you're against austerity programs, for the central banks printing money? you don't sound like a conservative -- >> a european socialist. larry kudlow -- >> at this point the ecb has a nice monetary safety net and has taken the 25 basis point deposit rate off. so a lot of the liquidity they're going to have now will be put to work inside europe. and banks won't keep it on deposit. and the fed will do the same thing. the second point i want to make is northern europe has shown the way with labor market reforms that are very important. you can hire because you can fire. now what's left is real growth policies. this is my supply side angle. europe has got to have growth policies on tax reform. they cannot simply live with these high pensions and finance them by raising the value-added tax. they've got to change that. and europe has got to privatize everything. everything that is owned. every government asset that is owned should be privatized. that's something that margaret thatcher showed us 35 years ago, and it is a model for all of europe. spain is talking about it. whether they'll do it or not. greece -- >> you private everything. >> glad to see that we've on th