john king, chief national correspondent and host of "jk usa" and sheila behr, former children of -- chairman of the fdic. before we talk about this i want to bring in christine romans to explain why this has been such an important deal in the united states. while i've been out here in cannes, the u.s. has been watching very closely what's going on here and what's been going on in athens, christine. >> there's a growing understanding that u.s. and europe are in it together. anything that is negative for greece and the eu, is not good for america. europe is america's number one trading partner. there's this feeling that we don't quite understand how the domino effect would be. if greece goes down, the first domino in interconnected trade, banking, financial system. you know, $400 billion of u.s. exports go to europe every year. that makes it a huge destination for our goods. if there were a severe recession in europe because of a financial crisis, it would definitely hurt the u.s. there's also over a trillion dollars of direct investment in the eu from the u.s. and another $2.7 trillion in loans and other commitments. everything from banks, companies, municipal governments, retirement funds all wrapped up and tied up in business with europe. it's two very close allies, two regions that depend on each other financially. it shows we're in it together. what's good for europe, good for the u.s. not good if this doesn't get solved quickly, ali. >> which is why all eyes have been here all week and in athens. i'll check with you later in the show. john i'll bring you in. you've covered things like this, international summit. typically, when you're here with the president of the united states, most eyes are on the president of the united states. interesting things are happening at this g-20. first of all the president of the united states is here, the treasure secretary. premier of china, hu jintao is how. here. all eyes are not on these people. is this a sign of shifting global sands that the u.s. is just not the primary player in a week like this? >> i think that is certainly a sense. you see it there when you're in the summit and hear it back in the states when you watch whether it's people in washington. i'm in des moines iowa covering the election. when you talk politically about the future, there is a question, is the united states still the preeminent economic leader in the world. can president obama go there and make a case about european debt when washington is concerned and disfunk functional about u.s. debt. when you travel the country, this is not a business term, but you sense there's constipation in the economy. corporations won't spend the millions they have because they have anxiety, uncertainty about europe and the u.s. tax structure and debt structure. last night i met a woman who got laid off from a job at a hotel because the owner can't get financing to do the big renovation. there is a sense of uncertainty. you see the president on the world stage, feel it on the local level here and it's going to impact the next presidential election in a big way. sheila, let me ask you, you spent years trying to keep the banking system safe. at the heart of this is the banking system, the risk. explain to us what's going on and what they're doing right or wrong to keep the banking system afloat and why that's so important? >> european banks are thinly capitalized. there's differences among institutions. as a group they are much more thinly capitalized than u.s. banks. one of the reasons is because the rules that european regulators follow are much more permissive in terms of letting bank management decide their minimum capital levels. so i think what we need to do now is have a rigorous stress testing of the european banking authority with realistic loss rates, true distressed economic scenarios and capital level minimum ratios based on hard and fast minimums what we call leverage ratios in the u.s., other than the much softer risk weighted ratios that the eba has been using in european banking, and other european regulators have used. i think, you know, confidence in the european banking system is important. they need to be building for tress balance sheets right now. this is not the time to be fudging numbers or be less than completely forthright about the levels of capital and what additional capital needs to go in to stabilize that system. >> what's your sense of their understanding of that? we've heard from the french president nicolas sarkozy, from angela merkel. these are countries whose banks are most concerned. they're the stronger countries. is there a sense that all the players at the table understand what you said and are generally prepared to move in the right direction? >> no, i don't think so. there's been a lot of focus on the problems of the sovereigns. ultimately the impact it's going to have, the banking system is what's going to cause a severe credit contraction that could cause broader problems for the european and global economies. i don't think enough focus has been put on this. they need to get those levels up with real capital. it may require dilution of shareholders, might require temporary nationalizations. much more aggressive action needs to be taken on this issue. >> that shared pain or aggressive action is exactly what is causing countries like greece to be concerned. it's disallowing people from doing what might be necessary because they are fearful of the impact on this. john, i have to tell you. you're on that campaign trail. this is not the kind of discussion, this fear of contagion of this debt, the idea of what christine described a slowdown in europe affecting the united states, this is not making it into the campaign trail at this point? >> they are not talking as much in the fine detail as you were talking about with sheila. they are talking about the idea in the view of the republicans campaigning, i sat down with texas governor rick perry, he says president of the united states can't go to the meeting with big leverages because he doesn't have anything positive to say. the united states has not dealt with very similar problems. that's an issue you'll hear, criticism of the president's leadership. more importantly, ali, 9% unemployment still, the u.s. economy creating jobs, 80,000, not near enough to bring the rates down or put confidence into people. are people here discussing the european debt crisis in the fine detail the leaders in europe are, the conversation you just had with sheila? no. are they aware it's a huge drag on the economy and not just the factory up the street? or the factory in the state next door? they are about that. when you travel the country and talk to people about their economic anxiety they talk about global pressures, more about china than europe but they're aware this is a big global problem. >> that's a very good point. china tends to be the focus but europe is, in fact, as a group the largest trading partner. what the implications may be the realization while everybody is mad at washington for what they did or didn't do right legitimately, the fact is the rest of the world may have a bigger impact on jobs back at home than congress can even. let's continue this conversation in a minute. john king, sheila bear, stay where you are. you're watching a special edition of "your $$$$$" from cannes, france. steak burger soup. 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[ male announcer ] just like you, business pro. just like you. go national. go like a pro. welcome back to your money. ali velshi in cannes france. covering the g-20. we've got a blue ribbon package to discuss global politics and economics and the affects on you. john king, national correspondent at cnn and host of john king usa and sheila bair, former chair of fdic, a body important to americans arthritis the worst of the financial crisis. john, sheila bair has a broad role she and the fdic she played during the financial crisis. i want to ask you, sheila, people watching the show, called "your $$$$$." if you're not interested in your money you're probably not watching the show unless the batteries are gone on your remote. we don't all know the details about banking. most people would be surprised banks keep less money in core capital or safe capital than we think they do. when you look at this crisis in europe, with the hindsight of what we went through in the united states, is this problem in europe imminently solvable or should we in the united states or the rest of the world be fearful this is not solvable and could send us into another financial crisis. >> i think it's solvable if people face up to reality. one of the harder pieces of reality is that the low capital levels in european banks. they really need to get the capital levels up. if you get into a period of economic distress and banks have too low capital levels, that will threaten solvency, threaten whether they remain viable, whether they can keep lending. building what we call fortress balance sheets, getting capital up, it matters. it's a job of regulators, a good example of why regulation matters to our broader economic health. >> christine romans will take it from here, i'll go back to covering g-20. christine? >> thanks. >> i want to bring in ian, president of euro asia group. ian, nice to see you. the focus on the crisis in greece. in time we could face scenarios with other european countries like italy, spain, portugal. when will this constant threat of financial crises recession in europe, and what it could mean for america, when does that subside? >> it can't subside for quite a while, and in part, that's part of the plan. if you're germany, france, core european states or european institutions, you know that the only way you end up fixing european institutions is by continuing to use market pressure to ensure austerity continues. so you can't write a check. talking to angela merkel last year at davos, she was basically saying the only day she really has leverage is right before she cuts the check. everyone understands that. and so it's not going to be a german marshall plan. this isn't the post-war environment. you have to change european institutions. this is not just a matter of weeks or months. we'll be talking about this european crisis frankly for more than a year. >> john king, what does that mean for the president and re-election. every minute we're talking about greece is a minute we're not talking about the fact that the jobs market in this country is still pretty what. does it have any bearing on a president who is going to be soon, if not already, in campaign mode? >> it has dramatic bearing. he is in campaign mode. he's trying to do two jobs at once, be president and campaign for election. look what happened in recent days. greece has a plan, markets in the united states rally. the prime minister says wait, i'm going to have a referendum, the market in the united states go down. europe appears to get a deal, up, down. what you went through with ian, italy, spain, portugal, if we're going to have this roller coaster into a presidential election year you'll have volatility in the markets. we know ben bernanke said this week, persistently high unemployment by the time the president seeks re-election. this is the number one issue in the country, it is for him as a leader and voters. the voters after being promised things would get better after promised the stimulus plan would help you can't blame all of it on the president. when you're the president of the united states running for re-election in a tough economy you take a hit. this is a steep hill for him right now. >> are there any steps that administration, the president should be taking to best position our economy for possible fallout from europe? i mean on the one hand the u.s. can't go there and say you should do this because we're still blamed for the financial crisis in 2008. we don't have the moral authority we once had. >> the u.s. doesn't have a lot of moral authority on social disillusionment. i thought sarkozy's speech talking about tfact that any pln comes from the imf is going to take into the fact that people are hurting on the ground reflects occupy wall street in the united states. there's not much obama can do quite frankly. he's very much frustrated because he lost -- his party lost the midterm elections. he doesn't have the ability to actually get anything through, through 2013. that's romney's best opportunity to beat him. obama can talk about the fact that unemployment numbers are starting to go down very, very slowly, he can talk about the fact american growth looks a lot more resilient than european growth, those are all true facts but this election is going to be about the economy. the economy is going to be fundamentally weak. really, 2012 is about the power of american incumbency, which is very strong, against an economy that looks weaker than at any point since the great depression. even president obama is going to be very vulnerable in that environment. >> sheila, i want to bring -- you are an expert on banks and banking. the risk for u.s. banks, what is the risk there? it's such a global interconnected financial system. i'm still trying to get my head around, i don't know if any of us will know, what the exposure is for credit did he fault -- default swaps, some of the complicated derivatives that banks and investors put on just in the very case of something happening in some of these countries. what is the risk? >> there is significant risk. a lot of inner relationships. not much direct exposure to the peripheral sovereign debt either through direct ownership or cds coverage. certainly there is a lot of exposure to the european system generally in european banks generally. which is why i hate to sound like a johnny one note but there needs to be a laser like focus on building the balance sheets and resiliencies of the european banking system to absorb what's going to be a prolonged tumultuous time period as ian indicated. as you indicated earlier, europe is a huge export market, certainly an economic drag if their economy falters and in experts to -- exports to europe reduce. it could have a knock on impact on our banking system which could lead to further credit contractions here, which would not be good. >> it wouldn't be good. the uncertainty is not something that anybody needs right now. >> yes. >> exactly. sheila bare, ian bremer, john king, thanks to all of you for fascinating analysis. does the latest jobs report often evidence that we may have averted a double dip recession? 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[ ben harper's "amen omen" playing ] we believe doing the right thing never goes unnoticed. liberty mutual insurance. responsibility. what's your policy? fortunately... there's senokot-s® tablets. senokot-s®. for occasional constipation associated with certain medications. now you can save big on senokot-s® tablets! go to senokot-s.com. aspercreme breaks the grip, with maximum-strength medicine and no embarrassing odor. break the grip of pain with aspercreme. . 80,000 jobs added in october, better than nothing, but it's not enough. you need 150,000 to keep up with population growth. this is what it looks like, over the past year, 80,000 jobs created in october. the unemployment rate slipped a little bit to 9%. private sector created 104,000 jobs. there were revisions if you look at august and september, you can see those months were better than we thought. there was more job creation end of the summer early fall we had thought. i guess you could take that as good news. you've got a full year of job creation. diane swonk chief economist with mesereau financial, it does not feel like a recovery. is it that so many ceos and companies are just so afraid that things are going to turn south again and don't want to have to fire, you know, they don't want to have to hire people to turn around next year to fire them? >> that's right. >> most people forget they are people, too. they don't like firing people after they hired them up. the issue is uncertainty. look at icebergs we have floating around out there. europe on the front page every day and going to be for some time to come as the earlier segment pointed out. we've got our own impetus in washington and what's going to happen with the super committee, will they get the $1.2 trillion, deal with our own fiscal situation in the u.s. there's so many uncertainties out there, it really is hard to get vision. we don't have vision without cash on the balance sheet. it's hard to make the commitment to hire because you don't know what the economy is going to look like going forward. looks like they may not extend the payroll tax cut, a de facto tax increase at the start of the year. even if we make it through the fourth quarter you're looking at the beginning of 2012 and not a good environment to be hiring up in. >> peter a professor at the university of maryland, friend to the show like diane is. this is a trend, these people out of work six months or longer, a real problem, a real problem when you start to talk about structural unemployment, is that reversible at this point? can we reverse that? >> not until we get demand growing a lot quicker. with the dead overhang, the heavy level of imports we have and so forth, demand is growing not adequately. it isn't that people aren't buying, demand for domestic products isn't strong enough. in that environment people that are unemployed more than six months are the last ones to be hired back, or at least further down the ladder. people who have recently worked are more attractive. >> that's why you're seeing the job -- there's a big controversy about job ads, all these job ads that say you must be currently employed to be considered for this job. that just doesn't -- that means it's impossible -- >> that's terrible. >> that adds insult to injury. >> absolutely. >> employers will lose good people, too. because there are some people who are victims of all this, perfectly good employees, this is the whole problem of the labor market. ted is a ceo of a place that places people in jobs throughout the world. he knows firsthand to know what it's like to hire, who is hiring and what it's like to hire now. you point out, ted, temporary workers are not being let go in large numbers right now, a sign corporations are going to the temporary worker and they need those workers? >> absolutely. where companies absolutely need capacity, they are going first to a flexible solution. that means they are coming to temporary and contract workers as a first step. we saw that in a jobs report with 15,000 temporary jobs. that's more than what we expect with a seasonal increase in the fourth quarter. that's a good sign and more and more people are getting their permanent job opportunities having completed a successful temporary contract assignment with clients. >> that