we seem to be muddling through quite reasonably given all the obvious problems rdz you worry about a number of things including the united states will never, ever, or you don t expect it to ever go back to the level of economic growth and gdp annually that it did in previous years. right. and i worry that the powers believe that it will. so clearly bernanke seems to believe it will go back to 3%, the good old days. rose: you don t think that s possible. well, the population, which is a huge input into gdp, its population times productivity. and or population plus productivity. and the population which often hit 1.5% while i was in america, has dropped all the way down to maybe 0.2, 0.3. and these are kind of official numbers adjusted for the fact that he work a little bit less each year. and women, who hardly worked back in the 50s really created a billing boost in the number of people hours offered to the work force. rose: so that acceleration of women in the workforce has will seed down. no its completely finished. it peaked out in about 2,000. so now we don t have a very rapid growth in people, women are finished. we work a little less. and as far as we can work out, we shouldn t expect more than about 0.2% increase in hours offered to the workforce. and in the old days it was, you know, well over 1. so it s dropped by a point. and yet bernanke s estimate of 3% hasn t dropped by anything. so by inference, he s assuming that somehow the productivity will accelerate by an offsetting 1%. and that is there is no possibility of that. last 30 years, productivity has been 1.3% a year. and in the 40 years before that, after world war ii, it was 1.7, 1.8, 1.9. so it s actually decelebrated decelerated. and there s plenty of reasons to think it will modestly decelerate in the future so if you have 1.3% productivity, and let s say you hold that, which is fairly optimistic, and you add on your 0.2% for extra man hours, you re at 1.5. and not at 3 or not at 2.5 which is the imf and the world bank. and even at 1.5 doesn t make me happy because it treats resources incorrectly. it treats trades an increase in resource cost as a boost to gdp. so if you drill, a much more complicated well that takes more steel and more people, the gdp goes up. when i think it s obvious to anybody that providing resources is a cost of doing business for the rest of the economy. and if you spend $150 producing a barrel of offshore brazilian oil, and the same barrel, exactly the same utility as the $10 soundee barrel ri is to you gone, you are not going forward. and yet the gdp measurement clocks in everybody s employment, and so the more people you need to get a barrel of oil, they think the economy is stronger. and of course it s weaker. so we worked that out. and we say how fast is the rest of the economy growing. take out the resource component, and the answer is in the last ten years, about .5% a year, .4, .5% a year less than is measured by the gdp. so we have to knock that off which takes our 1.5 down to a point. now when the price of resources was declining as it did for a 100 years up until about 2000, it was underestimated. maybe underestimated by almost a quarter of a percent. when the price of resources are going down t makes getting wealthy much easier. and in total the typical commodity dropped by 70% over a hundred years. and then it turned on a dime and gave the whole 100 years back between 2000 and 2002 and 2008. in six years it gave back a hundred years of decline. it went up more steeply than it did in world war ii it is quite amazing no one talked about it, there was no fuss, there was no world war three. but suddenly we seem to be running out of cheap resources. and when we look for the reason, incidentally, it seems to be steady population growth, and perhaps more importantly, the enormous china, 1.3 billion trying to grow faster than the 20 million south koreans did 20 years ago, growing their demand for resources at least 10% a year. and pretty soon you end up with numbers that don t seem to compute very easily. china is 53% of all the cement used on the planet, not traded, just used. they use 47% of all the coal, 46% of all the iron. these are unimaginable numbers. and if they mean to even slow down to 7%, it means 10 years from now we ve got to find another 47% coal, just for china. rose: but let me just stay with the demand in china. china is fridaying to shift from an exporting economic model to a domestic demand economic model. will they be successful at that? and if they do, because of a rising middle class in china, and population growth, will that also serve as new markets for europe and the united states, and latin america? of course it will. rose: and therefore economic growth. yes, it s a gooden begin in the short term for economic growth. the problem is it s incredibly energy intensive. and if they mean to keep growing at these rates, they are chewing up coal and oil. rose: an polluting their environment. that has enormous environmental consequences which in the end could be quite deadly. but in the short term it pushes up the price of oil. and what has happened, the most pont thing, really, in resources is that the price of oil, which was 25 bucks a barrel in 2000, is approximately a hundred bucks today. it s four times. it s also half the cost structure of all the other resources. so when if goes up four times, if you are mining copper, you ve got to spend four times the amount on your energy. plus the quality of your copper ore is declining, so maybe su have to spend 8 times as much. and so the price keeps going up. so if china continues to grow at these rates, yes it will stimulate global business and b it will keep pushing up the resource prices. and resource prices have been rising faster than global growth rate so they are squeezing the rest of the system. rose: why were you opposed to the keystone pipeline, because a lot of people think we need all the it s very simple math. fossil fuel we can get. there s a short term, medium term, long term argument against them. but the long term is the carbon math is pretty simple. we have pushed up the temperature by 0.8 degrees centigrade. rose: global warming. global warmingment and you see the affect. everybody sees the affect in new york floods and burning up the midwest and burning up the whole of russian wheat crop last year too and so on around the planet, for three years in a row it is really getting quite obvious. and spring arrives a couple of weeks earlier than it used to. you can t really miss it. and we know what it took to push it up, 0.8 degrees centigrade. it took a certain amount of carbon dioxide which we can measure carefully and we can calculate how much it would take to push it up to 2 degrees. 2 degrees is scently agreed by clime at scientists and others to be a boundary. you go above that and you will certainly have really dire consequences which will get worse for a long time because these things flow very slowly through the system. stay below 2 degrees and we might limp our way through this. and so we can calculate how much in the way of carbon it would take. it s actually 565 gigatons. it s a lot of carbon but the bad news is that we already have in our prove own reserves five times that kment is so we have enough to completely cook our goose and guarantee that our grandchildren are near starvation and so on with floods and . rose: do you think we will? no, i think i m not optimistic about the common sense of our species. rose: of our species or our politicians. no, of our species, particularly the politicians. but i do think that in a real crisis when things really start to go wrong that we will belatedly have some determined . rose: haven t things already really gone wrong? enough for scientists to be frightened. but not enough to frighten the average guy in the street. rose: here s what is interesting about you. to listen to you talk about economics an listen to you talk about the environment, you are a numbers man. yes. this is entirely numbers-driven. that s how i got into this trouble. you just look at the numbers and they say watch out, we re going to fry. and if you mean to pump tar sands, we re going to pump all the good oil, all the good old-fashioned high quality, low cost oil, we re going to pump all that and we re going to pump all the traditional natural gas. but if we mean to dig all the coal and we mean to scrabble through the tar sands, extremely costly and utterly ruin us environmentally, not just carbon dioxide but just terrible things that they are doing, then we re toast. we have no chance. and by licensing that pipeline we re saying to the world, we re going into round three. we re going to start facilitating the flow of such utterly dangerous energy resources that we have no reasonable hope of surviving with the planet as we know it. it s a very nice planet and it has a lot of biodiversity still left. rose: right. and undiscovered, even. yes. and we humans probably taking care of maybe 10% in the last 10 or 12,000 years. but we are racing through in terms of getting rid of biodiversity. this is known in the trade as the 6th great die off since the beginning of time. and it s happening at lightning speed by previous . rose: you are sounding malfusian. he wasn t interested in the die off of the species. rose: but he was interested in food. well, he described the past very accurately. we had spent let s say 12,000 years living with our noses pushed up against the boundary of food supply. and sometimes there would be four or five bad years and they would die. and sometimes they would have a great run of 20 years and they would multiply. but that was the determining factor, like a rat population. we just move back and forth. and right up until his time. and the terrific irony is as he is signing his book which is 1798, they re digging the first coal. so that the coal and then oil & gas bought us a time-out, an amazing, but short time-out which will probably be about 250 years in which you have almost infinite energy, a gallon of gasoline is something like 200 man hours of labor, try pushing an suv uphill and you will realize how powerful oil is and gasoline. and so ode people became, in a sense, richer than the kings had been in the past. and it meant surplus, food, population growth, civilization, science, all these wonderful things. but we only had a limited supply. millions of years of stored energy from the sun. it s in your bank account. and we re draining down the bank account without any real regard for what we re doing. and what it leaves our children and our grandchildren. its our inheritance and we re running through it. rose: what are you doing about it? basically everything i possibly can. rose: protesting a pipeline. no, no, we have a foundation for the protection of the environment. and the money we get goes into it. and we spend it as effectively as we can to combat some of the nonsense out there in the airwaves. if you have most of your stock value in the value of your oil reserves our your coal reserves, you will be pretty reluctant to entertain the thought that it would be poisonous to our long-term well-being to pump it out. so they are. and they oppose it. and they ve opposed it very effectively and the propaganda has been superb. but as i ve often said it leaves me with the question have they no grandchildren these people. rose: let me move to agriculture because i ve gotten a little bit interested in agriculture because of bill gates. bill gates is really interested in agriculture now. he just went down to mexico and he and carlos slim launched some project down there. you re interested in agriculture. certainly. rose: how did you become interested in it and what have you learned about it. and why do we care? we got into resources via the numbers. we had always studied asset class bubbles. right. and looking through the bubbles we thought we had found a situation where every single bubble had always broken without exception. and then i began to realize the oil had spiked quite a long time ago and was never going to come down to the old price it was $16 a barrel for 100 years until opec in 1974. and then it jumped to 35, what i call a paradigm jump which was unique in any large asset class. and it traded for about 30 years with the usual great volatility, oil is very volatile, around 35. and then in the last few years it took another jump to about 80, 85. which is a whole lot different from 16. and you can wait as long as you like until you die of old age. it s not going back to 16. rose: is it going back 20-to-35. no, this is cost driven, you go to shell, to bp, ask them what does it take in your mind to find a decent amount of old-fashioned oil. and they will tell you, 80 bucks, 85 bucks. rose: this is again how you look at numbers. there is an impending shortage of fertilizer, according to you, yes? there is a guaranteed long-term shortage. and that s what separates most of our work from that of other people. we find that oil is a paradigm shift. we then say well why shouldn t it apply to all the other things that are in the ground. and we found it did. then we created our index showing that the price had declined for a 100 years and then exploded. and then within that subset i started to say, and which is the tightest, most problematical situation and that brought to us phosphate oil ors to forous. and the scary thing abouts to for os which really does give me goosebumps when i think about it, it s an element. you can t make it you can t substitute for it and no living thing, humans, animals, vegetables, everything needs phosphorous to grow. you can t grow anything without it, and we are mining it in what we call big ag, big agriculture, we re mining it, it is a finity resource, now that should make you pretty scared am you can calculate how long it will take to run out. if you were for a second to take out one country, morocco and say we will ignore their wonderful, cheap, high quality reserves, a dried up ocean, incidentally, how much have we got left. and the answer is at 2% a year growth to allow the chinese to eat a bit of meat now and then, we ve got maybe 50 years. rose: and then it s gone. and then, you know, you ve got to be optimistic. we have found ways to develop new things all along. but you can t substitute, very few things in this world. you can t substitute for water, not really for soil, not potassium and not phosphorus. rose: how do you know we are not going to develop a desal inization process that will provide us all the water we need. well, that s well respondedment because i am willing, i am willing to not fight a war over water. because water desperately tries to recycle. i mean it s the most amazingly helpful product on the planet. rose: right. you take a really dirty polluted body of water, it evaporates, pure water and then falls where you need it i mean this is really helpful. phosphorous doesn t do that. it stays underground needing lots of energy to mine it. and it s amazingly high quality. rose: but hasn t science for the most part, i mean are you a numbers man again. but hasn t science generally, you know, helped us i mean the reason for 250 years. rose: yeah. what a coincidence. rose: science has helped us. science is to the going to stop. from about the time we found coal and oil, science has helped us. rose: right. where was science before that? isaac newton and the guys, these were scientists rrz yeah. and yet we lived to the limit of our food supply. we never started to develop this kind of arrogance that we can do anything with the infinite capacities of the human brain until coal and oil gave us this supermann power. and now, now, of course, we . rose: without chern oibl we never had the confidence in the science. we would have continued to have grown the science like it was growing in the time of, you know, amsterdam and so on. in other words, doing nicely in these little pockets of wealth, making nice scientific advances, progressing slowly, building the odd canal and chopping all our trees down. we would have been in tree hell within 100 years. rose: how many have stepped forward to say, you know, and i know the distinction you make with yourself. how many have stepped forward to say doom, doom, doom and doom, whether it s the economy, whether it s the planet, whether it s and all of a sudden you realize that it wasn t quite quite that bad, that something came along to avoid the result. before the last 250 years, before coal, what came along was the collapse of the civilization. one after another. they seem as one author has said to be hard wired to self-destruct. rose: right. they develop a kind of hutzpah an arrogance in the belief of what they can do whether the roman empire, or mayan empire question, do this. our scientists, our workers, we can build via ducts, we can get the job done. they overreach, the weather turns against them, et cetera, et cetera, and they collapse. not one or two, every civilization collapsed. and now we have a global civilization with you we have this amazing gifts of 250 years of accumulated sunshine. enormous energy. and everything you say about the optimists hinges on this little window of 250 years. rose: so the story of civilization over the last 200 years is the development of oil & gas. yes. rose: to fuel our economy, to fuel our automobiles, our planes, our everything. everything. rose: everything, and every wave of technology has been hugely energy intensive, coal and steam engines. oil and cars and refrigerators and air conditioning. and ipads. we all run around wondering whether our ipad and iphone is charged. they re huge absorbers of energy. however, i am an optimist in two ways. rose: i m waiting. okay. we have two gifts that none of those hundreds of failed civilizations had, that might, it s quite undeserved, incidentally, it is pure luck, might get us off the hook. and one of them is the fertility rate. malfius never dreamt for a second that as people got richer they would volunteer to have fewer children. rose: right. back in those days if you were rich you had 20 children. rose: right. 15 children. and now you have 1.5. rose: right. and we have made enormous progress. my favorite being iran. muslim society, 1960, 7 children per well and now it s 1.5, 1.6. rose: but it s gotten, ah, but at the same time, in a lot of societies now, they are worried about that demographic. of course they re all worried about short term wealth. rose: russia is worried to death. china singapore, singapore. nevertheless, on my rnz china and singapore had such strict baby policies that they are now worried so they have taken all those restrictions away. not all of them away. rose: not all of them, but singapore they are looking to import malaysians to help their economy and do the jobs. yes, if you have short term political problems, you behave in the short term way. and in the short term growth appears to be good. it s certainly . rose: with would be the long-term way to behave. in the long-term you have got to get the global population down. we have more population than we can sustain without carbon-based fuel. rose: if you look at, i m asking, if you look at emerging nations, it seems to me that one of the things that has driven their economic growth has been their population. yes, of course, it drives growth. it also drives . rose: you said population and productivity. it also drives long-term problems. rose: yeah. it increases the pressure on finity resources until they run out and then you are stuck. it s like the tide going out, you know, the tide goes out and left you high and dry. and you have no fallback unless, like the norwegian government, building up a great sovereign fund. but i never got to the second reason. rose: okay, please do. the second good reason, i have so few good points you have to let me get my two good points in. and that is alternative energy. rose: yeah. every wave of technology has been has required a wave of energy. here we have a wave of technology that does exactly the reverse. it suppresses the demand on our finity resources of coal and oil. every time you have a brilliant new idea, an ipo, capitalism at its best, developing an energy-saving technique, solar, wind power, storage, a grid, a any state of the ard grid system, all of those suppress the need to use our finity resources. that is wonderful. and that is happening faster than people realize. someone from duke power said for them the cost of a solar pan hell dropped in two years to 25 cents on the dollar. i mean these are morse law type reductions, the kind of efficiency increases we only saw in semiconductors. they have been coming down from ludicrously expensive to moderately expensive. rose: help me understand. i m not sure i got the point. so therefore. therefore we can get off there terrible trap of expanding as long as the coal and oil is there and then being left high and dry. we have the wherewithal to move fairly seamlessly if we chose to make the effort, to a renewable source of energy. that will not run out. rose: because the price has come down. no, because the sun never quits. so if you can capture the sun s energy, you can keep you can keep society going. rose: an technology will get us there because it will produce the batteries and be able to store the sun which is my point all along. this is the one area, and the only area where i agree that technology suterly critical rses science will save us. no, science won t guarantee to save us. science will only give us a possible out if we keep the population falling, despite the fact that people who should no better complain about it as a problem, when it s our last best hope that we have the population continue to decline. we have to come back in 2 years and have a population of 4 billion, not 10 in 200 years. and we have to have complete self-sufficiency in renewable energy. rose: how do we do that. we need good policy. rose: how do we have 4 billion. 4 billion is nothing, over 200 200 years that is nothing. that is 1.8. every developed country now is at or close to 1.8. rose: 1.8 children per couple. yeah, 1.8 children per couple. america just dropped to 1.9 with lots of immigrants. and there are countries out there, japan as you know an china who are way below 1.8. even iran, bangladesh is down to 2.2, amazing. but we need that. we need to encourage it. we need to get the population down as fast as we can. now of course it s a short term shock to the system, older people have to work harder. you have to have 74-year-olds. rose: like you. working but it s no big deal. we re not the 70-year-olds that we used to be a hundred years ago. rose: there was just the thing in the financial times that said 70 71 is the new 30. yeah, well, having played soccer until i was 62, i can guarantee that s not true. rose: at 62 you didn t play like you were 30. no, every year you watched the kid who was relatively slow 28-year-old get a yard faster. you can kid yourself at tennis but not soccer. rose: so let me just stay with this, we have to go back to agriculture. and those two things. you have a larger view about natural resources, about food as well, in terms of when you look at the world and the production of these resources, it s an ugly picture. it s an ugly picture and the economists say you don t have to worry about that. it s just a matter of price, to which i say oh you mean when half the world starves, the other half has enough? and that s what is going on. the rich half of the world is pricing out the other half. when china, china has made the cut. china is in the rich half. they re in the haves, not the have nots. and as they get richer and eat more meat the price of wheat goes up and moroccans, libyans, ton esians who live on wheat can t afford to buy it. rose: it s just the demand equation. just the demand equation, yeah. rose: you have had this really amazing ability to see bubbles. where does that come from? just the numbers. there is an enormous pressure in the investment business to deliver good news. trust me. good news sells better, stockbrokers thrive on it. investment houses thrive on it. to go out there in a bubble and talk about badly overpriced markets and downside risks is an invitation to get fired. they simply don t want to hear it as we found, we lost half our book of business in 98 and 99 as the great tech bubble roiled up. you basically said your clients, it s a bubble. it s going to burst and everybody is going to lose. the pricing of the market in late 97 went above 1929. in 97. rose: been the great recession. before at the top of 1929 before the great crash and the great depression, the market was the highest price it had ever been it went above that in 97. and it soared. it was actually 21 dollars for every dollar of earnings and it soared upwards to 35. i mean it was 70% higher than 1929 by the end. rose: okay. but no one was screaming that. the spokespeople for the great investment firm were saying oh, jeremy, don t be hysterical. everything will work out fine. we said look at the numbers. every bubble of an asset class in the financial world has always broken back to the original trend. rose: right. back to the . rose: this is very important. back to 16 times earnings. or 15 times earnings. and here it is at 35, in march of 2000. that is a pretty painful drop. and we had a ten year forecast. our ten year forecast officially distributes to all our clients, so the ten year outlook adjusted for inflation was negative 2%. rose: you generally are early on these things. painfully early. if it decides to go to 35, we weren t that early at 21 which was the 1929 level so we, i think, reasonably with hindsight even reasonably said i hear higher than 29, higher than ever in history, you now want to be defensive if it means to go to 35 because greenspan is a congenital distribute ever of ease and money and subsidized . rose: first rate believer in markets. and markets left to their own devices, which will be honest and straightforward and will look after the subprime instruments. rose: so what s your rule about markets? markets can be from time to time crazily inefficient as we have seen over and over again in history. and any pretense to the contrary is really in defense of some elegant economic theory. economic theory doesn t work with human beings. we re far too messy. so economic theory assumes that we re incredibly well informed. that the buyers know just as well as the sellers which is complete nonsense as everyone knows. and we re rational and cool and keep a cool head. you don t believe that at all. no one believes that, i think, except a handful of professors who made their career promoting an elegant formula based on that assumption. how about fed chairmen, do they believe in that? greenspan, 90% believed from it. and then every now and then he would surprise you by saying the housing market is showing some speculative frenzy. wloops. rose: or irraise exuberance. or irrational exuberance, actually earlier. but still, and then bernanke has inherited a more completely academic view that the markets are pretty efficient. let me talk about you again. japan, you saw the bubble in japan. yes, the japan. rose: you call that the mother of all japan, you know the old story, the land underneath the peferp errors palace was worth more than the state of california. we spent a couple of days researching that. it really was worth more than the state of california. i mean how ridiculous can you get. rose: that was the price of land in tokyo. in tokyo, under the em errors palace. and that was the biggest bubble in the history of the world. that was much worse than the south sea bubble or chile bubble. and right behind it was the japanese stock market bubble. rose: right. that didn t go to 35 times for every dollar of earnings. that went to 65 times. and they had never sold above 25. they went through their old record, they climbed and climbed and then, of course, we were predicting the end of the world and happily. and we had no japanese holdings. it was 60% of the benchmark against which we get measured. and we had none, nothing. rose: right. for a total of almost 7 years we had 0. rose: so what happened toed amount of money you were managing. well, the good news is we underperformed by 10 points a year for three years. then we got it all back with a lot of interest. we lost nothing. we lost nothing for some tre very interesting, important reasons, really. and that is our clients were sitting here watching the crazy japanese. they have very much their own economy, their own culture. and they were able to say wow, that s crazy behavior. and they believed us that sooner or later thing was work out badly and they were not willing to fire us. but when it came here in the tech bubble, most of our committees had a majority of people who believed more or less that it was some sort of golden newera which is what greenspan was saying. the internet was drive away the dark clouds of ig norance and other such nonsense. and how did you know different? we didn t know different. we just looked at the numbers and said every bubble has broken. this is the biggest in history. it will break. japan even bigger t will break. and they all have. rose: dow have some magic formula to define a bubble before we see it. oh, yeah. a bubble we had to make a definition long ago and we decided to have a statistical definition of the kind that would occur every 44 years in a random world. it isn t a random world but it s closer than you think. the kind of event that would occur randomly every 44 year os kurs in the real world every 30 years. it s much closer than we expected. people are getting used to black swans but they aren t as common. rose: so then comes the subprime crisis, did you see that. yes, oh. rose: that was easy. that was absolutely easy. because we were lucky. rose: do you know what it did to the global economy? absolutely. and we said it would, by the way. rose: if it was so easy. we can t do more. i tell you what. rose: are you the only smart man. no, no, not the only one. rose: are you the only smart man in? we talked to about a couple of dozen people, newsletter writers, economyist economists, stock advisors, about a couple of dozen am. they all saw it coming. it was not at all difficult. we re lucky in that we focus on bubbles. the u.s. housing bubble done statistically was a much more impressive bubble than the tech bubble. because the u.s. housing market unlike the stock market had been very stable going back into the midst of time it would bubble in chicago or florida but it would bust in california. so it was perfect. until greenspan and then a great surge of debt pushes up the price of houses, and on our data, it was the kind that would occur randomly every 10,000 years. by the way, bernanke did not see this. he said oh, the u.s. housing market merely reflects a strong u.s. economy. rose: john paulson saw this and became a multibillionaire. did you see it in the same way? and did you act in the same way? my job, just to focus on what i do, ask to inform our clients and write a quarterly letter. rose: don t you have money under management? our team, of 550 people run a hundred different funds. rose: worth over a hundred billion dollars. and i don t hesitate to nag them but i don t have line responsibility. i delivered my . rose: are they listening to jeremy at the time? mostly they do. but you can t you can t run a big firm on imperial fiat am you have to allow a small group of people with self-confidence to make their own decision. but i can tell you what i said. i said i have a problem, dear reader, in that i have been bearish for a long time. the market in my opinion was basically overprice for 20 years. so how am i going to get to you take this seriously. because this is the real mccoy. and i have thought about it for a couple of weeks, and there is it. and this is july 07. i believe at least one major bank will fail. broadly defined, meaning the definition of bank. rose: hello bear stearns. hello bear stearns, leeman, aig, et cetera, et cetera, plus a couple that would have failed but were taken out. plus a couple more very, very big banks like citi that would have failed unless we the tax pay her come to their rescue. rose: was that the good thing to do, come to their rescue? you had to keep a few banks. morgan and wells maybe n business. rose: so you would have let citi. i would have left a couple. rose: would you have let citi go. i would. it would would have sent a shockwave. rose: look what happened when lehman went down t they let it g look what happened. i know, once you let lehman go, i would have let citi go as well in order to make the point that we were not going to stand behind every enterprise that made ludicrous bets and then got bailed out by the taxpayer. then i would have, of course, you have to draw the line. you can t afford a run on the bank. any solvent bank, that famous american christmastime movie shows, if everyone comes to withdrawal their money, they go bust temp orally because it s all tied up in long-term mortgages. and that applies to the banking system. it is universally agreed that the role of a central bank is to make sure that a run on the bank doesn t happen. but it is not agreed that they should support a bank that is insolvent. citi was insolvent. a lot of banks were insolvent. in other words, f you just marked their assets to market they were underwater, they no assets. they had made mistakes. they called the market wrong. they should pay the price. rose: there was this circumstances. standard & poor s, look, and dow jones are approaching record levels. merger activity way up. war en warren buffett and brazilian investors just bought heinz, okay. everybody thinks things are getting better. you seem to say yes, short term, long term no, no, no. correct me. our long-term argument has nothing to do with the market. rose: right. you can do perfectly well in a portfolio in an economies that s growing very little it has to do with profitability. i have no reason to think good companies will not be profitable so this is not about the stock market. that s about the long-term economy, which is going to grow more slowly. rose: so what is this about? so you can make, you can page good money in the long-term in cheap stocks. what it s about is value. if you have a market that becomes overpriced, you will make a return too little given the risk you take. the u.s. market is not too bad for the great franchise companies, the great coke coles. they re not, they re a little bit expense piv. but the balance of the market is very expensive. and it s very expensive because we assume profit margins will go back to normal and prices in every way will go back to normal. back to the trend line. and if we do that, we get miserable 0 returns from the rest of the market in the u.s. now you get better returns overseas. you get almost reasonable returns from emerging market equities. so it s not a terrible situation. 07 was overpriced across the kitchen sink. everything in the world this is merely. rose: it s amazing so few people saw it. well, that isn t true, by the way. i have a story up my sleeve here and that in the you ve been waiting to pull. in the great bubble of 2000, there weren t many people who were willing to debate the bulls. and so they dragged me out over and over again. and i thought if we re going to go down with the ship, we might as well go down with the so i went out and debated them. and my price for giving a talk amongst professionals, say the annual bash of the financial analyst 1200 people in los angeles, was to say how many of you are full-time stock professionals, and 300 people put their hands up. i say just two questions. if the price earnings, the measure of how expensive the market is currently if it goes down to 17, which is trend line, will it guarantee a major bar market? every single one of the 300 agrees. and by the eni had 1200 votes of full-time professionals. so they all agreed, every single one of the 1200 f it went down to 17 times earnings, it guaranteed a major bear market if it happens within a 10 year window. so the jackpot question is how many of you think it will. and it was so shocking to me i had to rephrase the question three times before i would actually . rose: did anybody raise their hand. only seven people thought it would not go down. rose: right. so 99% of the engine room at all the great firms knew very well that the market was vulnerable, would go down and would guarantee a major bear market. but the spokespeople who employed those guys, the spokespeople for the firms were on the podium with me saying oh, we ll muddle through quite nicely. i won t mention their names on the air. but they re very famous people and they said oh don t get hysterical, we ll muddle through. jeremy is always putting down the things. absolutesly. but the people doing the dirty work knew better. they agreed with me. and the reason is simple, being bullish sells. you will not easily hear honest advise when it is bearish. okay. so just in case somebody tuned in to this late, so you are, where are you today? to repeat what you said within we re slightly underweight global equities. heavily underweight in the u.s. outside the quarter of the market that are the great coca-cola franchise companies. and i m not touting coca-cola. i m just using them as a generic. yeah. so it s not a terrible outlier situation like japan that we described or so on. it s just be careful when you re buying ode american do you see a bubble out there? well, the nis thing about bubbles is you don t have to predict them, you just wait and see. and when you see one you jump. rose: are you seeing one. you want me to guess. rose: yes, i want to you guess. what bubble and when? i think bernanke is as i was writing, is whipping this donkey that can only grow at 1%, this economy, because he thinks it s a racehorse that should be growing at 3. so he s going to keep on wliping this donkey. this donkey can t run. until it either drops dead or turns into a racehorse. yeah, right. and you are betting on dead. and i m betting on dead so, it is a very unsafe situation to have the most powerful person in the economic world by far. rose: but he s trying to do something. he s trying to use the fed to create employment, how about that. they don t have the tools to generate employment. they shouldn t have that in their mandate. they should just have in their mandate. so it won t do it. absolutely not. you need fiscal means. if you have people unemployed, by all means do useful projects to employ them. go and install sensible solar panels, what i am trying to say is insulation. go and insurance late every northeast and every cold area, it will have a high societal return. you ll never regret it. redo the grid system. he ll never regret it. so in other words, you re saying if you want to create jobs, create jobs to build something we need. absolutely. and debt is vastly exaggerated which is a huge, huge debt is exaggerated. a huge topic. so you and paul krugman are right on. one of the same voice. let me tell you something about debt. in 1982, if you added all the debt up it was 1 and a quarter times the size of the gdp. and then, and it had been fairly flat for a long time, drifting slowly up. and then it kinked 45 degrees and it goes shooting up steadily without too much volatility. just goes straight up. when was that. 82, 1982. and it goes steadily upwards to 3.5 times. so we had this amazing. when ronald reagan was president, 82. yes, right. and so we had this amazing experiment. the biggest economy in the world. almost tripling its ratio of debt. over a block of time that really counts, 30 years. and what happened in terms of the growth rate of the system, it slowed way down. now there are other reasons. i grant you that. but there s no room in that equation to believe that increasing debt has anything to do with long-term growth. is there? that you triple it, what more can you do, and the growth rate of our system slowed materially? it s so contrary, isn t it. they are the facts. they are so contrary to the general belief. we have been conned into believing by the financial world that debt is everything. let a bank go, oh my god it would be the enof the world there are plenty of reasons why this economy coulds lad, by the way, quite sufficient. you don t even have to use anything to do with the collapse of the financial system. we had a housing bust. we had a housing one and 10,000 year event. if that was to go back to trend, you were going to lose 10, 11, 12 trillion dollars. everyone was going to feel poor. it was going to devastate consumer spending and consumer confidence. secondly you had the price of oil triple. look what happened in the oil crisis of 74 and 79. they a big recession each time. so you not only tripled the price of oil, you tripled the price of food, you tripled the price of k07er, of all the metals. why would that not have caused a major recession. they had three great reasons. the housing market collapsed and commodities just squeezed you to death. you don t need a third reason to explain why we had the most serious recession. and housing market alone explains why it has been very, very slow to recover. because there s nothing more dangerous than messing with houses. so you are, you are an unre you were just a pure keynesian. i am a a pure numbers guy. but are you causes me to shall did are you not? no, i wouldn t is a say thatness why would you not say that. because i m a great admirer of chapter 12 of the general they are general theory which is about the stock market. he was wonderful in the stock market. he was about 60 years ahead of the economic world. you don t know how many years ahead he was because they still haven t caught up. he basically said it s animal spirits, guys, that can mess up everything. and he pointed out the game we play in the stock market is managing your career. never make a bet on your own. would keynes have agreed with you about debt? i don t know. i really don t know. it s such a different world now. the levels of get are so much higher. we probably have some ingenuous new theory. okay am but most people believe that we do have, i mean they look at the percentage of gdp to debt or debt to gdp. i can prove that debt does not generate long-term growth. i have given you the numbers. it does not prevent. it doesn t cause long-term growth it doesn t create it. debt, we triple the debt and gdp growth rate went down. there is no evidence that increasing debt increases gdp. and yet that mandate has been given to bernanke who thinks apparently that it does. by keeping interest rates low, you re transferring money away from retirees who spend every penny and are really hurting. and by the way, there s far more of them every year now than there ever was when economic theories were being panned out. you take money from them, and who are the beneficiaries. the guys who run the hedge dpunds. and the banking system in general. and speculators. and corporations theoretically can use it to build. but they re building less now than practically in history. there is no major league capital spending boom going on. what should be the levels, for example of new revenues to spending cuts? let me say i am not an expert in this. and i don t want to represent myself as such. it is wickedly complicated. i have enough trouble in the stock market where life is simple. the economy is extremely difficult. the debt in the long run is not as significant as people think. how you manage debt is an art form. right. whether you do it this year, next year, how you spread these things out. how high is too high, i have not spent my career in those areas. i feel, i guess that it s substantially too high. i guess that you shouldn t try and make it low in a hurry but you should have a 20 year plan to chip away. that is what i was we ve gotten into a bit of a rat hole and we should be careful getting out of it. but it is not the overwhelming thing that will dominate our future. what it does is it distracts us from the real world. debt is an accounting world. it s paper. the real world is the quantity and quality of your people. and the quantity and quality of your capital spending. are you building new machines. are you building inventive. are you training your people. is your high school system delivering the same education that it used to relative to the south koreans, relative to the norwegians, no it s not. we should worry more about the real world and less about the paper world. and shower s in this death grip that only paper things matter. and so there is much too little attention spent on educate education, training, capital spending, finding a way to beef it up. and also i would rather stimulate the economy directly through government spending than i would like to play games with the monetary system. and games with the interest rate. inflicting great wounds on retirees and so on. and transferring wealth to people who won t spend it. transferring wealth from the poor to the rich by keeping interest rates low. i m not even sure the economy gains at all by a low-interest rate. and furthermore no one is established convincingly that it is a good idea. it s a tradition that is a good idea. that s not the same. we ve had lots of traditions like the market would look after itself. people wouldn t be crooks because economic theory assumes that they re not. but they often were crooks, and greedy and short-term oriented and willing to dance until the music stopped. although they said the music had actually stopped long before. rose: thank you. thank you. rose: it s been a great pleasure. yes, it was fun. rose: lots of things you have said that i think people will think about and talk about and we will continue the conversation at another time. i look forward to it. as we have more numbers. yes. rose: jeremy grantham, thank you for joins joining us. wilt s see you next time captioning sponsored by rose communications captioned by media access group at wgbh access.wgbh.org . funning for charlie rose has been provided by the coca-cola company, supporting this program since 2002. and american express. additional funding provided by these funders. and by bloomberg, a provider of multimedia news and information services provider of multimedia news and information services worldwide. announcer: explore new worlds and new ideas through programs like this, made available for everyone through contributions to your pbs station from viewers like you. thank you. dr. holden: to understand us better, i think we have to realize that we really do have two selves. one of these selves is the truth about you, and another one of these selves is a story about you, and you have to know the difference. announcer: allow dr. robert holden to introduce you to your two selves and understand your true self. dr. holden: so i m not asking you to change yourself, but i am inviting you to change your mind about yourself. announcer: make the shift to a more authentic, successful, joyful, and happy life, with six proven principles and practices, when shift happens! live an inspired life with dr. robert holden airs next. bestselling author and speaker robert holden is director of the happiness project and success intelligence. he travels the world coaching business, education and political leaders, and holds a phd in psychology. [applause] dr. holden: it was the best of times, and it was the worst of times. it was the age of wisdom, and it was the age of foolishness. it was the epoch of belief, and it was the epoch of incredulity. it was the season of light, and it was the season of darkness. it was the spring of hope, and it was the winter of despair. we had everything before us. we had nothing before us. an intro to a tale of two cities by charles dickens, written in 1859 but set in 1775. we could so easily be talking about today. it s an honor to be with you here on pbs, and i m very happy to be with a broadcaster
we go now to nbc s mike taibbi who is in kabul with the developing details. mike, what can you tell us? reporter: it happened at about 10:30 local time in the kabul suburb of wardock that s just east of this city. according to a coalition military source, a lone gunman dressed in an afghan army uniform was in the middle of a briefing with other soldiers, both coalition and afghan soldiers, turned his weapon on them and opened fire. the source said there were casualties but could not confirm that among those casualties were any fatalities. they re assessing the damage from that incident. now, wardak has become controversial in the past month because of unconfirmed reports of abuses and attacks by coalition special forces and afghan special forces working with them against civilians in that province. and because of that, afghan president hamid karzai had ordered that those special forces withdraw. he gave a two-week deadline. that s now passed. the withdrawal has not happened. wardak controversial for the past month and now controversial for a different reason, a new green-on-green attack, afghan against afghan, afghan against coalition forces. mike taibbi, nbc news, kabul. we ll stay in afghanistan. prior to a meeting with defense secretary chuck hagel, afghanistan president hamid karzai suggested the u.s. was in cahoots with the taliban. defense secretary chuck hagel on his first visit to afghanistan rejected the harsh accusations prior to their meeting in kabul. karzai said that the sworn enemies were actually working together to make afghans fearful of more violence if foreign troops withdraw which is supposed to start next year. the taliban quickly denied those claims. annual war games between the u.s. and south korea have triggered a fresh round of threats from the north. in response to the start of 11 days of military maneuvers, north korea saying it will launch a nuclear attack on the u.s. effectively scrapping the 1953 armistice that ended the korean war. so far pyongyang has reportedly cut off a red cross hotline with the south. the allies say the drills and joint exercises are defensive in nature, and they have no intention of attacking the north. it was the deadliest car accident in ohio in three years. six teens were killed in a tragic crash, investigators saying their suv was traveling at high speeds when it hit a guardrail and flipped over into a pond. two of the eight people in the vehicle survived and were treated for minor injuries and released. state troopers say the vehicle was taken without permission. more program cuts to tell you about this week. courtesy of the sequester budget cuts. members of the military looking to earn a college degree are some of the cuts casualties. tuition assistant for those in the army and marines has already sben suspended. military flight teams will most likely be no-shows at air shows this spring. dozens of host cities will have smaller crowds and smaller dollars. national parks visitors will soon find locked restrooms and fewer park rangers. officials at yellowstone have already stopped plowing snow from some of the roads saving an estimated $30,000 a thing. one thing that is not scaled back is the order of these, the f-35 fighter jets. the price tag for the fifth-generation fighter program is some $400 billion. all this as some republicans seem optimistic of president obama s recent proposal of a renewed call for bipartisanship. i hit it the president s tremendously sincere. i don t think this is just a political change in tactic. i think he would actually like to solve the problems of the country, and it would be to his benefit and certainly every american s benefit if he did that. the last time we went to the white house the president lectured us. i hope that he s genuine, but i don t think we ll do doing the harlem shake any time soon. there s already a move to avoid a springtime budget battle. the house passed a resolution to fund the government through the fall. now for a look at your monday weather, bill karins joins us. it s a monday. do we get to restart everything? it s going to be fresh weather? we d like that. yes. we had a decent weekend even in the northwest, but now the rain s moving in. it s going to be a wet week especially north of seattle. looks like we re going to get really a heavy dose of rain possibly around bellingham. that s about it for the rest. the rest of the forecast looks really nice. already you can see hints of the warm front trying to bring in the rain ahead of it. throughout the day and into the next 48 hours, it s light today and then very heavy amounts of rain especially the northern cascades. these are rough estimates. this gives you a general idea of where the heaviest rains will be focused. the warm is well off the coast. it drapes its way back to the east. and that will be moving up towards the north. now, the way the weather pattern is set up or the high pressure is set up over northern nevada and northern utah, we ll get downsloping winds in southern california, and it s going to be a warm week. we re talking upper 70s to low 80s through your friday. some of the warmest weather in the country is going to be found here from phoenix all the way through los angeles. as we go throughout the middle of march. enjoy that. that s a look tuesday morning in washington state. i guess that s going to be kind of one of those dreary weeks in the northwest. only one day and one night of heavy rain. the rest of the time just showers. good reason for those tech folks to fly south to south by southwest in austin. how low gas prices are heading and why businesses are keeping their profits offshore. plus, two years after one of the modern world s most devastating natural disasters. how japan marks the moment that quake and tsunami changed their world forever. early today is back in two. welcome back. stories making news this morning, a family member of seven people killed in a kentucky house fire says he attempted a rescue but was too late. two adults and five children under the age of 3 were killed when their house went up in flames. the cause is still being investigated. a main suspect in the gang rape of a woman in new delhi, india, has committed suicide in his jail cell. the suspect was accused of driving the bus where a 23-year-old student was raped and fatally assaulted by a group of six men last year. japan marks two years since the devastating earthquake and tsunami. memorial services are being held in tokyo and towns along the northeastern coast where the pacific ocean rushed ashore. nearly 19,000 people were killed in that disaster. and new york congressman peter king, the 68-year-old republican moved from the political arena there into the boxing ring. on saturday night, king fought in a two-round exhibition bout against kickboxing champion irish josh foley. the friendly sparring match that ended in a draw. new studies show stress can take its toll on the heart. researchers found higher rates of card yag problems in veterans with post dramatic stress disorder, in hurricane katrina victims and in greeks dealing with their country s financial crisis. doctors say prolonged stress raises hormones that affect blood pressure and influence other risk factors. meanwhile, the biggest-ever study of mummies found that even without modern-day vices like fast food or cigarettes, people still had heart problems and clogged arteries some 4,000 years ago. early today health is brought to you by vagisill wash. can the dow make it a fifth record day? it closed at 14,397 on friday putting the blue chips up nearly 10% for 2013. the s&p ended at 1551, just shy of a 9% gain for the year. and again, it s only march. while the nasdaq begins the week around 3,244, a rise of nearly 7.5% in just the past ten weeks. a number of national chain stores report this week including dick s sporting goods. urban outfitters and costco. meanwhile, the government will report how strong retail spending was last month. korean electronics giant samsung unveils its new galaxy s4 this week as it looks to take a bigger bite out of apple s market share. good news for drivers. the average price of a gallon of gas has dropped 6 cents over the past two weeks to an average $3.74. it may go lower. a new wall street journal tally finds a number of u.s. companies are keeping more of their profits offshore. and in the process, shielding more than 40% of annual profits from u.s. taxes. the top three stashing cash overseas, ge, pfizer and microsoft. wall street will be watching washington this week as well as budget talks to keep the government running. those resume. current government funding runs out on march 27th. elsewhere in the capital, the chamber of commerce hosts a hiring our heroes jobs fair. that program is aimed at matching military veterans and their spouses with more than 100 prospective employers. they have those fairs all across the country throughout the year. finally, nfl commissioner roger goodell and ge chief jeff immelt have put their heads together, and this afternoon the pair will kick off a new $50 million research and innovation program studying concussions and improving player safety. speaking of sports, we got that for you next. plus, the dramatic rescue of a sailing team moments before their sailboat was destroyed. and jennifer love hewitt is considering insuring her girls for $5 million. yeah, you heard me right. and now to other stories that caught our eye this morning. in california, dramatic video captures the rescue of a sailboat crew after their vessel broke apart during a race. that 30-foot sailboat drifted into a rocky shoreline and issued a may-day call before the crew swam ashore. one crew member died but remaining five were lifted to safety. also in california, a wildlife center has reopened days after a 24-year-old intern was attacked and killed by a lion. diana hanson was cleaning the enclosure when couscous attacked. her family says she was passionate about her work and would have wanted them to continue on with their duties. and in scottsdale, a local alligator dubbed mr. stubbs will have to find a new nickname. a prosthetic tail has been attached to the gator s stub to help the animal with swimming and balance. while this new tail is a big step up, it s still going to take time to get used to. in sports, a college basketball thriller decides the big ten title. cody zeller made a go-ahead layup for a 72-71 win over number seven michigan. it was the hoosiers first outright big ten title in 20 years. and number ten michigan state got 16 points from keith appling including a mega dunk with less than two minutes left in the game there to beat northwestern, 71-61. people on their feet. but the indiana win kept the spartans from sharing the league title. in the world baseball classic, team usa breaks open a game in the ninth inning as eric hasmer doubles to the wall. that scored three runs and the americans beat canada, 9-4, to advance to the second round. former red sox and dodgers slugger manny ramirez will play baseball this season in taiwan. ramirez who has 555 major league home runs hopes to do well enough for a last shot in the majors. it looks like he s fine-tuning his stroke just in time for the masters. tiger woods, his victory at the world golf classic is his second win of the year and 76th pga tour victory. woods sank some tough putts for a total of 27 for the tournament. only one fewer than his all-time best. finally, to switzerland. a ferretlike creature called a martin ran onto a soccer field halting the march. benito tries to take it down before being bitten, but it was a goalie that finally got the fluffy-tailed defender off the field. just ahead, jennifer love hewitt insuring parts of her body. and oz proves great and powerful at the box office. back after these messages. stick with us. welcome back on this monday. let me give you your forecast to get you out the door. we are watching sunglasses almost required in many areas from southern california all the way through southern nevada into arizona. we are watching rain showers in the northwest that will turn into a heavier rain especially washington state, seattle northwards, over the cascades as we go throughout your tuesday. unfortunately, sunglasses will not be needed in the northwest this week. i don t even have a pair right now. i think i threw it out. probably in some closet. i ll get you one of those $5 pairs. thanks, bill. audiences were off to see the wizard in droves. disney s oz the great and powerful raked in $80 million. sensing they had a hit on their hands, disney already commissioned a script for the sequel, something you ll take your kids to. justin bieber falling apart at the seams, maybe. the 19-year-old upon star seen here in london saying a photographer had assaulted him. this caused justin to spring from his car, expletives were exchanges, punches were not. a lot more headlines on the biebs. i took to twitter afterwards saying he s only human and that it s been a rough week, we would say. jennifer love hewitt recently told usa today that she would consider insuring her breasts. just waiting for the insurance invitation to which she d say do it, love it, why not? her words. finally, one direction s harry styles. he got a new tattoo in the form of a giant manly butterfly. though his face cannot be seen in that photo, the band s reps have confirmed it is him. is it real? do you think it s manly i m glad he didn t select a larger animal or sitting there and doing it. it s a lot of pain. i m richard lui, and this is early today, just your first stop of the day on your nbc station. stories leading the news this morning, in the l.a. times, alaska s $78 million ferry to nowhere could land in l.a. a state-of-the-art military vessel diverted to alaska as a ferry has not worked out, and officials are great to be rid of it. that s expensive. and in the washington post, research ties economic inequality to gap in life expectancy. that s about how the haves are living longer than the have-nots. this weekend justin timberlake hosted saturday night live for the fifth time and brought along some of the ledge end gends of snl. welcome. we ve been expecting you, mr. timberlake. i always thought an n sync member would make the five-time club, it would be joey fatoon. this is the hall of portraits, drew barrymore, inducted in 2007, john goodman hosted 11 consecutive years. and of course, chevy. alec baldwin and tom hanks. two wild and crazy guys! ladies and gentlemen once again justin timberlake! thank you to jay-z, dan aykroyd, alec baldwin, candice bergen, krchevy chase and paul l simon. what a show! i heard the first 15 minutes were jam packed. i feel bad for whoever is hosting next. i definitely want to watch that on demand. the first lady takes to twitter to chat about healthy living. mrs. obama is set to take questions on her initiative using her official twitter account @flotus. you re in luck, it s national napping day. okay, it s an unofficial holiday, but a brilliant one created back in 1999 by retired boston university professor and his wife to help people adjust to daylight savings time. i think every day is like that for me. justin timberlake will begin his week-long residency on late night with jimmy fallon to promote his new album. here s what s coming up later this morning on the today show. valerie harper opens up about facing terminal brain cancer. and famed illusionist david copperfield is live to showcase his skills and help search for the next great magician. now, keep it on this channel for continuing local news, weather, sports and more. i m richard lui. thanks for watching early today just your first stop on this nbc station. have a great start to the week. . an overnight disappearance. it is payday in the town. why thousands in san jose will now make almost $100 extra per week. that s the way to start the week and so is this. a look outside at the bay bridge in san francisco. keep it up until 6:00 a.m. this is today in the bay. from nbc bay area, this is today in the bay. good morning, it is 4:30, 4:31. did you change your clock? hi, everybody. i m jon kelley. it is a little bit rough. i think so. such a gorgeous weekend. i m laura garcia cannon. lots to get to. let s check the forecast with meteorologist, christina lauren. we are going to let the good times roll. good morning to you at home. a chilly start to the day. we are headed towards the upper 60s to mid-70s. another beautiful day shaping up. we are going to keep that warmup going for most of this week. . then, the rain arrives. a lot to talk about new week, new seven day. let s check the drive. same old construction. oakland, look over at the flashing lights off to our right. from 66 up, no major construction. the maps, north p
department in the fine arts museum of san francisco for an allowing me to speak today. valuable artwork rene, director of public programs and last on this list but certainly not least gregory stock who is a programming wizard. i m so grateful for their individual and collective support. i would also like to thank the production manager who is behind-the-scenes somewhere. he s waving. our production manager consistently provide patient and reliable technical support which is beyond value when lecturing to large audiences like those of you gathered today. without further a do, i m honored to share with you today paintings that comprise the exhibition here at the museum. girl with a pearl earring, from january 26-june 2nd the museum will be the first venue in the american tour of paintings from the royal picture gallery which is located in haik. how many have individual painting in the normal home? a good number of you. this unique museum is often called the jouleewelry box. it has the world s most prestigious paintings from the morris house which toured in 1982, it visited chicago, new york and los angeles. this has been several years in the making . there were approximately 48 paintings in tokyo and both of those about dutch an paintings. 30 paintings in this exhibition were in japan and 5 paintings that came to us specifically in san francisco. two of them fresh out of the conservation lab so they are being revealed in their full glory to our visitors in san francisco. an expansion in the mars house which is currently under way makes this opportunity possible. the girl with the pearl earring here in san francisco feet atures 35 paintings characteristic during the dutch golden age. after the exhibition closes in san francisco it will travel to the museum in atlanta and it will go to a collection in new york. perhaps the most famous of the works that has traveled to the united states is a celebrated masterpiece girl with the pearl earring. it is this painting. we set our scene in holland during the dutch golden age this span of the 17th century where trade, industry and science were among the world. the one small port of amsterdam were one of the commercial centers in the entire world. this concentration of capital enriched bankers and merchants but also created the society in europe. the arch of the dutch golden age. 17th century travelers visiting holland remarked on the number of artist. typically western european artist on the monarch and the nobility as well as the very wealthie catholic church. an open market to a wide clientele that arranged from variety of merchants. it displays a modern domestic rather than extravagant or royal setting which it was carried. emily who is the director of the morris house. the expansion which i will talk about in an a little bit will give it more space. for the collection there is a limited pictures they can acquire but too large for the building. so where do the paintings come from? how can they be there. this is an exceptional and remarkable museum. this splendid 17th century city palace was constructed between 1633-1634 next to the dutch government. i was told the prime ministers office was still there. it was named for the building s first occupant. the countel elevated to prince and appoint commander and chief in the states army in 1668. the dutch they purchased an outstanding example of this architecture in 1820 to have the royal cabinet of painting and curiosity. this collection rich history is the stockholders in 1822. it s official name, royal picture gallery morris house. today the morris house collection focuses on the best 17th century paintings from the northern and southern netherlands, the works of world renounced artist, all of which are in this exhibition. it also exhibits work of superb examples of this age. the collection makes the morris house a rare and precious place. truly the gem of dutch mucous. it s similar to our allegiance of honor in san francisco, they too like we have 850 paintings in their permanent collection and display about 250 at any time which is a recollect legs of any of our buildings which i like to think of the jew el in the city of san francisco. the historic 17th century palace has limited his ability to expand. so works from his permanent collection have moved to a common and incompetent competent missionary program. the vacant build across the street from the morris home is a building with an underground link. when the project is complete, the museum will be twice as large, modern and up to date visitor facilities will include new space for educational program. auditorium, a shop and cafe, and new exhibition galleries. the elegant design for this substantial expansion will be calibrated for the atmosphere of the morris house. this due to reopen in mid 2014. we were told they are definitely on schedule to reopen in 2014. if you plan to make the trip now, you can probably book your tickets safely, although don t hold me accountable for that. we have a special opportunity to enjoy a superb collection from the morris house here in san francisco. so my lecture is organized to correspond with the section headings for each gallery. the sequence in which i will discuss the paintings correspond with the layout. the first gallery exhibition is devoted to landscape paintings. dutch landscape and it s characteristic atmospheric conditions provided countless artist with rich subject matter. it s sprawling fields and ubiquitious canals with beautiful natural surroundings. the low lying horizons and cloidz at clouds that dominated the paintings. many dutch landscapes also feature the regions beautiful and prosperous cities which were sources of great pride in the 17th century artist painted close-ups. here we see his painting of the circus party 1690 which features the morris house. this looks quite similar to what you would see today although when he painted the picture, you wouldn t have this view, there were a row of buildings here, so this is a little bit of artistic license and interesting to think about because this is way the site looks today but wouldn t have looked like that in 1690 when he paint this picture. this is the gate that is still here today. this is the catholic church by manuel. this is the only type of it s exhibition. although it is an interior scene, the 17th century dutch painting which is the artist attention to the effect of life. here the artist subject is the atmosphere and play of light in an imagined catholic church. diffused light through the church. bathing interest rain shower interior with the glow and architectural space. here we see view of harlem with bleaching ground 1675. he was the leading painter of this golder age. view of harlem with bleaching ground not until the bash zone schools he painted on easels to look what was going to be translated. it s something to look at artist typically from going back to the studios and painting. another example master full approach to the landscape genre is evidenced here in landscape 1660-1670. he has captured the forest with ice, frost and snow covered ground. the virtually monochromatic scene. it s interesting to point out that 17th dutch paintings is related to the usual climactic conditions at the time. from 1850 all of western europe experienced an ice age. he painted 25 winter landscapes during the most severe period of relative cool summers and cold winters. most of europe is experience is a cold winter so she s dragging her suit case behind her to make sure she got here for the open exhibition. there are actually 2 famous dutch painters ruisdael whose paintings we just looked at. he s also represented in our exhibition of this gallery. health and safety here is his view of his painting from 1648 which is in our own collection. if we compare the two paintings, we see similarity in the cloud t low horizon line and the small scale in the figure of the boat and the small scale of the natural world and the beautiful reflection on the water. these two paintings demonstrate the very best paintings. another pioneer of this genre is january van joeg an from 1653 and this is thunderstorm from 1541 at the collection of the fine arts museum. this painting and van rios painting i showed you are in our other building in linkin park. here we see the two paintings side by side. the thunderstorm shows figure overcome by a powerful tempest where a van voin manipulates master full creations. in both compositions, the low lines emphasize the cloud which over power the skies. height ening the thunderstorms and the waves to white cap peaks. yet the distant horizon which suggest the two paintings can be a before and after pair. which they are not, but i m taking a bit of art historical period there. two superb examples wooded landscapes and cattle in the meadow in 1662. other artist went further in search of subject matter. some went to italy where the renaissance as well as the radiant southern landscape provided fruitful sources of inspiration. the mediterranean art that emanates from italian landscape circa 2045. the next version is the distinct to dutch still life paintings in the 17th century. these were painted with a light ed candle from 1627. compositions also became looser and sophisticated. and rachel s vase of flowers from the 1500s. the were in the conservation lab that were not included in the exhibition in japan and seeing for the first time here in san francisco. both of the house of lights are resemblance of the fine arts museum flowers in a silver vase by luna, which is on view. here we see all 3 flora still lights together. similarities between the 3 paintings include the watches, as well as the creepy crawlingie critters the significant number of floral still life s from this period spread the wide life. blossoms from multiple studies in different seasons. merchants and explorers brought plants from their travels including the tulip. tulip was first brought from can turkey. prompting people to spend large sums cultivating new species. today tulip is the next export. many still life paintings also contain morals references and creepy flowers and insects, time pieces and skulls. and which is seen here in the venice still life by peter from 1630. we also see very similar details between the still life with peter clay which was painted in 1629. the open pocket watches are references to the transient of life since they remind us of the passing of life. since they record perishable and paint as long as the canvas remains intact. the sublime light filters through the light and reflection on the inside of the glass as well as the optical effects of the objects that shine through the glass. while these still life paintings are filled with a variety of details, there are some still life s in the exhibition which are much more spare. such as adrian, from 1704. although much of this artist details are shrouded in history. notice how the branch and the beautifully rendered leaves catch the light on the right hand corner. it gives this piece a magical feeling as if these apricots are beyond just mere fruit. there are 67 paintings recognized by court s hand. an exhibition entirely devoted to the artist. there are about half of the known works in this exhibition and the director of the morris house remarked that she thought for herself that maybe this exhibition won t be popular because all of his tend to be the same, you have a stone slab and fruit and it was definitely popular and shows the demand of this artist skill and his paintings or so beautiful even though they are spare and he s so mysterious. an artist does not need to be a highlight of an exhibition. a competition, my favorite painting in the exhibition. this is particularly exciting since it is considered an icon of dutch 17th century paintings. created in 1654 this competition is 1 of 12 paintings which survived. he studied in rembrandt studio long with his brother. it s represent in his own collection this painting was off view and now has returned to our conservation studio. tragically, painter of the gold finch died in his early 30s. his studio was a gun powder magazine. an explosion occurred and it completely destroyed carl s studio. numerous works were lost. although his existing paintings are view, his impact on other artist cannot be overlooked. his quality for his compositions, and paired to hoek who are known for they are effects, elusionism and quite atmosphere and fluid control of paint. one interesting detail about the the condition of the painting is if you look very closely on the surface you might see that there are scattered very small dense and this painting is dated the same year as the gunpowder explosion. it s a story we can t prove but kind of a romantic story that this painting was once in a studio and perhaps they are caused by some debris during the explosion. it a story we can t prove but something to speculate about. the next section of the exhibition is devoted to portraits to figural paintings which we call chornie. i will talk about it later in my talk. the extensive production of paintings in the dutch golden age of the economic prosperity and enjoyed by the dutch republic. from all walks of life, these from their realism, diversity and exceptional quality. the examples that are on sflu view in this gallery demonstrate a wealthy information about their subject through their dress and environments. like many photographs taken today 17th century portraits were taken from weddings. from 1625 him and his wife are exceptional examples of large scale marriage portraits. other typical occasions for commissioning
been reporting new york city mayor michael bloomberg has been pushing a ban on high sugar beverages that exceed 16 ounces and a judge ruled last week that the mayor overreached. well, no matter how you feel about that, here is one instance from our friends at fox 5 new york where maybe the larger drink size is not necessarily a better choice. and that monster super big gulp is still commercially viable. (laughter) sorry, i apologize. oh! don t, don t i thought you were going to sorry! (laughter) oh, wow. we get new computers. first of all, i m sorry to you, i m sorry to you. i m sorry to you, are you okay? i m fine, a little wet, a little wet and an ice cube on my skirt. (laughter) dangerous business with those drinks. our friend greg kelly there in new york. thanks for inviting us into your home tonight. that s it for this special report, fair and balanced. this is a fox report, tonight, fox news confirms a person has been detained in libya in connection with the attack on our u.s. consulate in benghazi. we re at the very beginning stages of learning details and working the story. also at the beginning the new pope for the catholic church. day one on the job. he now leads a flock of more than 1.2 billion. i m excited. i think it s a blessing, for all of us. the catholic church s humble new leader began his first day by settling his own hotel bill and grabbing his own luggage. plus, another carnival cruise ship stranded, just one month after the now infamous fiasco aboard the triumph. new reports of power outages, overflowing toilets and broken elevator. tonight, just how bad is it aboard the carnival dream , and a whole new slew of celebrities roped into a hacking scandal that s already involved, some of the most powerful people in washington and hollywood. but the question remains, is this all just one big hoax? first tonight, a major milestone on wall street and uplifting news anybody fortunate enough to have a 401(k). i m harris falkner in tonight for shepard smith. the dow jones industrial average gaining nearly 84 points on the day. this has the not happened since 1996 and also the 8th day in a row finishing with a record close, putting this into perspective now for you, the dow has only had three longer winning streaks in its entire history of 120 years, it was also a good day for the s & p, which jumped nine points to close just two points below its record high and the nasdaq rose 14. fox business network anchor gerri willis live from her own studio, her show just wrapped up. what is behind today s rise and overall the streak in general? you know, harris, it s fascinating to watch the stock market take off. today the news was filing for unemployment benefits for the third week in a row. those filings actually fell and that s good news for what s going on in the markets, we like to see that because it means the economy is doing better. of course, we talk how the federal reserve is playing a role in the rallywell. standing behind the economy and keeping the interest rates low and making sure that we can keep this economy bubbling along. so, every day we re watching this and every day it s going higher, harris. so you re sitting at home and not a big time investor. watching your retirement funds, is now a good time to put money in stocks. the people we re talking to saying he we could have a retrenchment, 2, 5, maybe more on the big board, the dow stocks and that s an opportunity for people to get back in if we have a pullback, that s what i would wait for. if you ve got a long time horizon, be in stocks, you want to make sure you re going to fund your retirement with investments that last over a lifetime, not over 20 minutes or two seconds, like the pros sometimes do, harris. gerri willis, thank you very much. libyan authorities reportedly holding a person in custody tonight in connection with the terror attack on the u.s. outpost in benghazi. it left our u.s. ambassador and three other americans dead, as you know. that is what sources are telling fox news at this hour. we do know the person is a libyan citizen. and we know investigators are questioning this person to figure out whether or not he s a witness or actually took part in the killing. as you ll recall, terrorists raided the u.s. complex on september 11th of last year, killing u.s. be ambassador christopher stevens, state department official sean smith and two former navy seals, tyrone woods and glenn doherty. pope francis already living up to the title the people s pope on his very first full day as head of the catholic church. the pope shaking hands with the people at rome s main basilica earlier. the vatican reports he refused to take a limousine last night and rode the bus with the the other cardinals back to the guest house after he became pope. of course, he was known to ride the bus and cook his own meals back in argentina and also today, officials say pope francis went to his hotel, paid the bill himself and picked up his own bags. leland vittert mrlive from rome tonight, tell us about the first mass. the first mass continued the theme of humility and simplicity and many who watched say he sounded almost like a parish priest as he talked to the cardinals of his church now, more than a hundred gathered this in the sistene chapel, he spoke with no notes, but a powerful message. he says the church needs to return to the gospel, it needs to continue to tend its flock and also go back to its roots in terms of teaching what jesus did as well and much is being made about what pope francis wore in his very first time this in the sistene chapel. look at the pictures, pope benedict there, known for gold cross, ornate crosses and gemstones often times in the cross. pope francis, an old wooden cross he used back in his time back in argentina, harris. i know they re minor details, but they talk to the larger fabric of things, if you will, that are really changing that we can see before our eyes. what about the cardinals who like their fancy accoutrement? well, there s a lot of people here who say the old west saying might apply, there s a new sheriff in town. remember, pope francis has some serious issues to deal with, the sex abuse scandal, vatican leaks scandal, the vatican banking issues. from the very beginning he has set a tone here in rome they say really shows things are about to change. the cardinals and bishops who are used to the trappings of their office may be getting the hint here they should start asking what they can do for the church, what they can do for the poor and their flock, rather than asking what the church can do for them. read into this what you will, harris, we were told that pope francis was going to go meet with pope benedict today, he did not. and according to the vatican spokes people that should happen, quote, in the next couple of days, read into that what you will. it might say a lot about the new papacy. and we will continue to follow. lelan leland, thank you very much. house speaker john boehner turning down a chance to attend the to rome. and he says he s grateful for the invitation, but my duties in the house including hosting the president and prime minister in the capital and the debate on the budget makes that impossible, end quote. and also in washington, a senate committee passed a ban on assault weapons as lawmakers got into a fight over the u.s. constitution. ahead, the fireworks on capitol hill and what happens to that bill now. and the discovery that could help us understand so much more about our universe. what happened today and why it s important. and youngsters reportedly forced by their own teacher to take a lie detector test. is that okay? parents say it happened in one classroom and now they want that teacher fired. stay close. you want to make sure it goes up and stays up. 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reporter: the point he s making the second amendment allows people to keep and bear arms and should not be infringed including by senator feinstein s bill, harris. harris: in that clip or video, senator feinstein was doing all the listening. she s a veteran of the senate and how did she respond. reporter: she replied saying she s not a 6th grader and if a well-educated and on the committee for 20 years. and thanked ted cruz for the lecture and made this point. it exempts, 2,271 weapons. isn t that stuff for the people in the united states? do they need a bazooka? do they need other high-powered weapons that million people use to kill in close combat? i don t think so. reporter: the bill passed the committee on a partyline vote, 10-8 although when it gets to the senate floor there are a number of rural state democrats who are not looking forward to take this tough vote, harris. harris: it will get interesting from here, mike emanuel, thank you very much. scientists now say it s clear, they have discovered an ill lewis seive building block of the universe, one that could help explain what gives all particles their size and shape. it s called the higgs boson. others know it as the god particle. scientists are working on an enormous atom smasher found evidence of it last summer and say their analysis strongly indicates it s indeed the hig boson which caused a particle to exist back in 1954. a giant electronic samsung perhaps taking a page out of the apple handbook. samsung is expect toded to unve the fphone. it s a fancy party going on at radio city music hall, down from the fox headquarters. the follow-up to the popular s-3 which has taken a bite out of apple the not so much here, but around the world. and apple is feeling the heat and the marketing chief trying to take his korean rivals down a beg. we re hearing this week that samsung galaxy s-4 shipped with an operating system that s nearly a year old. no word whether that s actually true. blackberry getting a huge shot in the arm, announcing, an undisclosed buyer picked up one million of the devices. the canadian employer saying it s the single big s in its history. and blackberry has been struggling in the consumer marketplace, but still has tens of millions of subscribers out there. a mysterious website adding celebrities and politicians to the very long list it s claimed to have hacked. and cruising takes a bruising on the high seas again. another carnival ship breaks down. yeah, i know it s dinner hour for some of you, but it appears the toilets have overflowed again. and that s not all. l stationso mission a for a final go. this is for real this time. step seven point two one two. rify and lock. command is locked. five seconds. three, two, one. standing by for capture. the most innovative software on the planet. dragon is captured. is connecting today s leading companies to places beyond it. siemens. answers. you name it.i ve hooked it. but there s one. one that s always eluded me. thought i had it in the blizzard of 93. ha! never even came close. sometimes, i actually think it s mocking me. 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[ coyote howls ] how about no more surprises? now you can get all the online trading tools you need without any surprise fees. it s not rocket science. it s just common sense. from td ameritrade. a carnival cruise ends with toilets overflowing. sound familiar? well, just one month ago there was that huge carnival triumph mess. this time it s the carnival ship dream docked in st. maarten now on the last leg of a seven-day trip when it had some sort of technical issue. officials with carnival say it was not every toilet that overflowed and that things are now repaired and work a few hours later. the cruise liners are offering passengers home from st. maarten on charter flights. and last month triumph stranded passengers in filthy conditions in the gulf of mexico for five days. you may remember that and there were lots of pictures as you see to go along with it. the ordeal was a public relations nightmare for the entire cruise line industry. but according to the port authority, some 14 million americans take cruises every year. and an apparent hacking scandal that hit some of the most popular people in washington and hollywood, more big names nan music, sports, politics, a mysterious website has been posting what it claims is sensitive personal data of people, including first lady michelle obama, vice-president joe biden, fbi director robert mueller and attorney general eric holder. the site posted social security numbers, home addresses, phone numbers. so far some of the information appears to be bogus. now on the list, kanye west, tiger woods, mitt romney, bill gates among others. the fbi and secret service have been investigating, but so far revealed very few details, but the he credit reporting service equifax report that hackers did indeed gain access to four credit reports. fox report s chief correspondent jonathan hunt live with this. some of it is real and some is not. yeah, but the sheer number of the investigations underway, including the fbi and the los angeles police department would tend to indicate that they are concerned that a lot of this material, including the credit history, may well have been real. having said that, some of the phone numbers made public, we don t believe were real. we told you about a few of those the other day. for instance, the phone number published for vice-president biden was for the delaware seed and garden supply. again though, we called a number today that was published on this website for governor chris christie, our produce are first got a voice mail which said this is the christie s and we called the governor s press secretary and said this numbers appear to go to somebody saying this is the christies. the press secretary said we ll call you back in a few minutes and tried the same number a few minutes later, it was already disconnected. now, the website has also put up, frankly, errant nonsense such as this picture of president obama with the caption, hey, mitt, you mad bro so a lot of this just seems to be almost kids kind of hacking, harris, but when you get your credit report out there, if they indeed are true, that s obviously a he very serious issue, harris. harris: somebody mess was your credit, it s like your dna these days. this is obviously, from what we re seeing, a hassle for the individuals concerned, but jonathan there s a much larger cyber attack that officials are talking about. u.s. officials talking about it again and again and getting your credit history is published is annoyance, but when we re getting cyber attraction, millions if not billions of times every month now, according to officials, it s very serious. and a lot of these alleged attacks apparently coming, originating in china. now, the state department talked about this today and said they constantly raise this and other internet issues with the chinese. listen. we go into these conferences looking to create openness and fair level playing field and equal access to citizens across the country, across the world. we sometimes encounter in those for efforts to use international mechanisms to actually close the internet. so, this is one of the things that we ll talk to the chinese about, that as major economies, we have responsibility as leaders to ensure that international mechanisms are used to protect freedom of expression, and not to impinge on it. president obama spoke with the new chinese president by phone today. president obama s spokesman, jay carney, would not confirm whether cyber attacks were one of issues the two men discussed. harris. harris: jonathan hunt, thank you very much. the motor city s financial mess. today the governor of michigan took a major step to try to save detroit. plus, we re learning more about how the new pope, once a cardinal from argentina, came out on top in the voting. insight from one of the american cardinals at the vatican next. and a memorable at one school, where a 6th grader walked in with a backpack full of cash, a lot of cash. and 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ha ha ha! ha ha ha! no no no! not today! ha ha ha! ha ha ha! jimmy how happy are folks who save hundreds of dollars switching to geico? happier than dikembe mutumbo blocking a shot. get happy. get geico. fifteen minutes could save you fifteen percent or more. well, she certainly didn t have to worry about lunch money. a 6th grader showing up at school with $20,000 in her backpack. this happened in michigan about ten miles southwest of detroit. the police chief says another child who lives across the street gave the 12-year-old the money, all of it in $100 bills. word got around and kids actually started coming to her asking for the money and she then started giving it away. as much as $500 to one students. a couple hundred dollars to another student. she added, this is a real first for the police, do you think? it s not clear how the child s neighbor had the money or why she was intent giving it away. parents in lynchberg, virginia upset after they say a teacher forced their children to take a lie detector test. the teacher accused the kids of swiping some candy and used the lie detector app on her o own. how do you feel? scared. i thought it was supposed to be me. and a lot could have been done not a lie detector test. and the teacher said it was all in fun and the students idea in the first place. so far no comment from the school or the superintendent s office. i m harris falkner in tonight for shepard smith. this is the fox report. electing pope francis, a shot in the arm for south america and latino catholics. those words from timothy cardinal dolan from new york, he says he acknowledges the importance of electing the first pope from the western hemisphere, but that s not why they elected the argintin. cardinal. we spoke about him often because he was widely known and respected. he s a senior archbishop of one of the most complex, large largest archdiocese in the world. and when making the decision, they all smiled because they knew people would be surprised. amy kellogg live for us tonight live from rome. what did the other cardinals say? well, harris, there s just so much joy and enthusiasm about the new pontiff and, yes, he s the first latin american pope, he speaks lots of different languages, the first jesuit, but we spoke to cardinal dolan today about what really got the cardinals excited about jorge bergoglio and they said there were some pretty lofty criteria from radiant faith to good record of pastoral government to an interior sense of peace and those were the drivers when it came to making this man the pope. it s the other things enhance that, south america, being able to speak many languages, that s gravy on the meat, okay? but the meat is the human nature that he s bringing to the office upon which the grace of god builds. reporter: harris, he said that they all really reveled in the fact that they had kind of outsmarted the vaticanistas and the journalists and the named outside the conclave, not a household word. harris: vaticanistas and sources we ve talked to all along, what are they saying about pope francis? we re learning, harris, he was a strong contender the last time around. we re learning that he may have had an inkling himself that he was going to get the job because he ran into one of the vatican media people just before the conclave started, shook his hand and said, please pray for me. also, sean o malley a bit of a darling here among the romans, relieved that he was not elected pope and he said it s like being a prisoner in a museum and he s happy for pope francis and says he hopes he gets to sneak out from time to time and catch a tango show, harris and hopes the new pope will come visit him and all the latinos in boston soon. harris: and some inside stuff. amy kellogg, thank you very much. president obama back on capitol hill for the third straight day as house and senate leaders battle over rival budget plans. the president has now met with members from parties of both chambers. and mitch mcconnell said it was a quote, great meeting, but senator mcconnell added, we ll see where we go from here. the city that gave us the model t, supplied the allies during two world wars and reinvented soul music is now the biggest city in american history to lose control of its own finances. michigan today appointing an emergency manager to oversee the troubled city of detroit. we knew this could be coming, people had hoped it would get worked out, it hasn t. governor rick snyder tapped bankruptcy expert kevyn orr, he helps with chrysler, but the detroit is a different thing altogether. a budget deficit more than 320 million right now and what that s translating as is things like this. the fire department stretched so thin it s proposed just letting vacant buildings burn if they catch fire. the city cannot afford to keep all of its street lights on, some city streets are just dark at night. trace gallagher with the news. trace, how long do they think the restructuring will take? reporter: well, the new city manager says he signed a 12 to 16 month contract and hopes it can be done sooner than that. as the governor said today, the problem took more than a half century to create. in 1950 the population of detroit, 1.8 million and today 700,000 which means that tax revenues have plummeted. so if raising taxes is not the answer then of course you have to lower spending and today the mayor said that everyone is going to have to give a little. listen. bottom line here is that we must stop fighting each other. we must start to work together and so, i m happy that now i ve got teammates. i ve got partners that can help me do some of the things that need to be done in our city. reporter: of course, if they can t work it out, detroit would likely have to file for bankruptcy, which that would be the largest u.s. city ever to do so, harris. harris: you know, part of what we ve watched in that city is their own internal politics and workings keeping them from going forward, in some cases. the city council, i understand is not exactly embracing this plan to go forward. no, and the city council had threatened to sue and late today decided against that, but the city council president still called the mayor a quitter for agreeing to this plan. i mean, you think about it, the public unions certainly are not happy because a big part of this restructuring, that 14 billion dollar liability means renegotiating pensions and benefits, but the new emergency manager says, bankruptcy would be even more painful. listen. the one thing everybody needs to know if you go into bankruptcy, chapter 9 of the bankruptcy code is weighted towards municipality and i don t want to pull that cudgel out unless i have to. i prefer to per sue a consensual resolutioresolution. he says let s deal now unless a judge would mandate at a later time. harris: thank you very much. the fbi added another suspect to the ten most wanted list. and investigators say he s wanted for the brutal murder of a 69-year-old man in the colorado mountains and they say he tried to suffocate a man and then when that failed, he scabbed the man nine times. all i want is for justice to be served. it s hard for me to get over it. i m still suffering and it s he could be it would be so great and i would just want justice to be served because i would be able to sleep better at night knowing that everybody is paying for what they did. harris: all right. so it s important i get this name right, i didn t before. edwin ernesto rivera gracias, it s important because they re looking for him. likely hiding in the central american nation of el salvador where he apparently has ties to a notorious gang. today is the the first time in a long time jodi arias did not take the stand in her own murder trial. she s accused of shooting and stabbing her ex-boyfriend dead and she said she could not remember some of it. and we talked to an expert who gave possible reasons for gaps in her memory. plus, a car slams into a restaurant. you may not believe who was inside the vehicle, and who was not inside the vehicle. neil and buzz: for teaching us that you can t create the future. by clinging to the past. and with that: you re history. instead of looking behind. delta is looking beyond. 80 thousand of us investing billions. in everything from the best experiences below. to the finest comforts above. we re not simply saluting history. we re making it. if youthen this willbrids arbe a nice surprise. meet the 5-passenger ford c-max hybrid. c-max come. c-max go. c-max give a ride to everyone it knows. c max has more passenger volume than competitor prius v and we haven t even mentioned. c-max also gets better mpg. say hi to the super fuel efficient ford c-max hybrid. [ ship horn blows ] no, no, no! stop! humans. one day we re coming up with the theory of relativity, the next. not so much. but that s okay you re covered with great ideas like optional better car replacement from liberty mutual insurance. total your car and we give you the money to buy one a model year newer. learn about it at libertymutual.com. liberty mutual insurance. responsibility. what s your policy? today is gonna be an important day for us. you ready? we wanna be our brother s keeper. what s number two we wanna do? bring it up to 90 decatherms. how bout ya, joe? let s go ahead and bring it online. attention on site, attention on site. now starting unit nine. some of the world s cleanest gas turbines are now powering some of america s biggest cities. siemens. answers. the woman who shot, and stabbed and cut the throat of her ex-boyfriend has post traumatic stress disorder, that s what a expert witness for the defense testified to today. for the first time in weeks, jodi arias was not on the stand. as we reported and you ve seen on fox she talked for 18 days talking to lawyers, jurors and lawyers again. today the defense called a forensic psychologist to explain the woman s foggy memory. remember, prosecutors say she planned that brutal attack on her ex in a jealous rage. arias has changed her story a couple of times and now claimed he she shot him in self-defense and that she cannot remember stabbing or taking a knife to his throat. yesterday, a prosecutor called her testimony impossible. and at one point, he asked if she quote, owned a watch. adam housley with more live on the west coast news hub. the defense is taking another shot at convincing the jury that arias was not lying. reporter: yeah, and they need to. you mention the weeks on the stand. 18 court days she was there and she was hammered by the prosecutor and even the jury. arizona is one of the states allowed to ask questions and many of the questions questioned her events the way she says it played out. that didn t help of course her defense at all so today they tried to rebuild the case and you mentioned the first witness on the stand trying to say, yes, she could in effect have that foggy memory. take a listen. the brain is not interested in remembering what s going on. the brain is interested in survival. and so, all our energies, our focus on self-protection. by analyzing the data presented to me, it confirmed that my suspicion was likely, that suffered from post traumatic stress disorder. reporter: of course not prosecution has not had the opportunity to cross examine this expert witness. harris: so, adam, 18 days we saw her on the stand. what do experts say whether her marathon testimony either helped or hurt her case? well, first of all, people if you talk to anybody who is a court observer or a lawyer, they say that having a defendant on the stand is kind of unique in a lot of ways, anyway, but for that long 18 days, extremely unique and add in that arizona jurors are allowed to asker had questions. a lot of people do not believe it went well for her. a lot of the questions continually were suspect of her details, of her member rischi memory and what she can claimed. and when she said she climbed up shelves to get the gun he supposedly owned. and knows when you put 120 pounds on the end of the shelves things would move, but nothing was disturbed as she hastily climbed up the shelves. the jury is suspect of her story. harris? adam housley, thank you. a rather odd crash scene as a car speeds through oncoming traffic and slams into a restaurant. you ll see why it s odd. it s our top story as we go around the world in 80 seconds. china, here is the red electric car darting across the wrong side of the road, just missing two bicyclists before crashing into a building. witnesses rushed to the vehicle and found no one inside. its owner soon arrived and said she left keys in the ignition and police say circuit trouble caused it to start up and drive off on its own. nobody hurt. brazil, security cameras catching a doctorcking a biometric punch in clock at the hospital. using dozens of silicone fingertips and bore the fingerprints of 21 doctors and nurses and the woman confessed to fake how many overnight shifts she and the others worked. she could face up to six years in prison. chile, science is launching what they call the world s largest and most powerful radio telescope at an observatory high above the desert using more than 60 antennas to search for clues to the origin of the universe. japan, a dog circus entertaining youngsters in tokyo all from an animal shelter. and they say teach kids about owning pets and not rescue animals. and 100,000 animals are destroyed there each year. that s a trip around the world in 80 seconds. republicans who may want to run for president getting a chance to make their case at a large gathering of conservative voters. we ll hear from two rising stars who spoke today and we ll find out who won t be there. you cannot escape the rebel forces ! ahhh. got you ! got ya ! gotcha ! got . that s all you got, brother ? take that. never having to surrender the things that matter. gotcha. that s powerful. verizon. been waiting for the price then hurry, sleep train s beautyrest and posturepedic closeout sale is ending soon. save up to 40% on closeout sets from beautyrest and posturepedic. save hundreds on floor samples and closeout inventory. these prices are falling fast, but these deals won t last. sleep train s beautyrest and posturepedic closeout sale ends soon. superior service, best selection, lowest price, guaranteed. sleep train your ticket to a better night s sleep a fox urgent now. the pentagon apparently taking seriously north korea s threat of nuclear war. sources have just confirmed to fox news the military is beefing up the nation s missile defenses. congressional sources are telling us the pentagon is ready to deploy 14 new missile interceptors at silos in both alaska and california. those interceptors are designed to stop inter-continental missiles. president obama stopped deployment of additional reenforcements when he took office you may remember back in 2009. now administration officials are saying they ve reconsidered, in the wake of those escalating threats from north korea. last week north korea officials vowed to bring it to washington after the tough economic punishments. and now move to the persian gulf where an iranian fighter vet approached a u.s. drone in the skies above the gulf according to the pentagon. defense officials say it got within 16 miles of the unarmed drone while it was conducting a classified surveillance flight over international waters on tuesday, but what of the two u.s. military aircraft escorting that drone fired a warning flare and after that the iranian jet broke off pursuit. you may remember in november, the pentagon reported fighter aircraft from iran actually fired at one of our drones, but did not destroy it. u.s. officials maintain they have the right to protect our military assets. well, it could be a preview of the 2016 presidential race. some possible republican contenders speaking back-to-back at cpac, the political conservative action conference. this year, a couple of potential candidates did not get an invitation. and campaign carl cameron, i haven t said that in a while, is at the conference in maryland. good to see you, it sounds like two speakers had very different visions for the future of the party. there s an awful lot of debate what the republican party should do for the 2012 and how to prepare for 2014 mid terms and 2016 open white house seat and today, we have the opportunity to hear both marco rubio and rand paul, both u.s. senators, both tea party favorites, with divergent views and conservative as well. marco rubio did not talk about his comprehensive immigration reform and bipartisan proposal, with a total of six members, three republicans and three democrats. focused mostly on social conservativism and made the argument that in the wake of last year s defeat the republican party doesn t need new ideas, maybe just stick to principles, listen and the contrast with rand paul. i ll tell you what the criticism on left is going to be, that he did didn t opt for any new ideas and there is is the fallacy, we don t need a new idea. there is an idea, the idea is called america and it still works. . the g.o.p. of old has grown stale and moss-covered. the new g.o.p. will need to embrace liberty in both the economic and the personal sphere. reporter: rubio s obviously recognized as a hispanic american who can help the republican party grow appeal with minorities and women. rand paul, the kentucky senator who wowed the country with a filibuster a week ago was definitely pushing a strain of libertarian popularism. two members who weren t invited. chris christie and bob mcdonnell, and didn t align with what they wanted to talk about. maybe depending next year depending on their records. harris: and cpac is planning a straw poll and gosh, is it too early for all this? it may not mean much, but based on who is showing up and running? we have people like paul ryan, the vice-presidential running mate, rand paul, marco rubio and a host of others and in addition to the newcomers who were eyeing the white house for 2016, folks like mitt romney and sarah palin who have run in the past who aren t necessarily planning on any kinds of runs, in the case of romney said they won t, but definitely want to share lessons learned with those who might as the conservative in cpac learn how to hold on to principles and in the last election haven t been looking at the g.o.p. harris: the answer to my question, is it too early? no, never too early. reporter: no, they re in the planning. harris: and what i got to say tonight, campaign carl, you tell mark lee, and tim scott spoke at cpac and they will go on the record with greta van susteren tonight at 10 p.m. eastern right here on the fox news channel. well, senator john mccain is looking back at the day he and more than 100 servicemen went free from a prisoner of war camp. he talks with fox news about that very moment. stay with us. just one bite opens a world of delight. a flavor paradise of delicious fishes friskies seafood sensations. feed the senses. 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when a man tried to grab it and the victim would not let go and was dragged off the bus. two others are accused of blocking the path of anyone who tried to help. more officers will hit the streets in san jose after rising property trains. 43 recruits will graduate from the san jose police academy, the first academy graduation for the police department since 2009. there were 28,000 property crimes in the city last year, a 30 percent increase from 2011. today, the ceremony takes part in downtown san jose. san francisco city crews will try to repair the damage caused by a natural gas leak. it forced evacuation of five homes near 25th and alabama. we were over the leak minutes after a backhoe sliced into a 2 gas line. the work crews punched two holes in the pavement to get to the leak when they shut it out after an hour. in hayward the last part of the downtown traffic look loop begins tonight and through the weekend. this animation provided by the city shows how the loop works. it starts at the intersection of foothill boulevard, mission and jackson street. it is designed to ease congestion and make downtown access easier as part of the highway 238 corridor improvement project. construction wraps up in time for monday morning commute. tonight a $2 million repaving project begins at the ferry terminal making a tough parking situation worse. most of the work will be performed on the weekend to minimize the impact on the ferry riders but officials say it will take several months to complete. four to five rows of parking will close from 8:00 p.m. on friday and 5:30 a.m. on monday. lot of road and infrastructure work. the weather great for that. unfortunately we have not had a lot of rain. maybe there is some in the future. next week, on tuesday night into wednesday but the winter storm is still on the way. our temperatures show most of us cooler than yesterday other than san francisco and oakland and the airport is one degree warmer and half moon bay is two degrees warmer. the lack of clouds means the temperatures are going to run cooler but they are not that bad. the cool spot is napa at 4. novato and santa rosa at 41. legates at 44 and fremont is at 43 right now. concord is 49 and hayward is 47. 56 in antioch and mountain view at 50 and oakland at 53. throughout the day, we will see thinner clouds. we will see more sunshine. temperatures will be like yesterday. through the holiday weekend, we will have high clouds and sunshine tomorrow. we will have breezes on saturday and sunday with the temperatures tapering headed into monday. good morning, everyone, happy friday. the situation in livermore is improving at the big-rig fire but is in the reverse commute direction eastbound 580 at airway saying only one lane is blocked. that is an improvement. it was blocking three right lanes. they still issuing a sig-alert and westbound is not bad at this hour. we have a car in a ditch in san leandro area, northbound 880, possibly blocking when the tow truck gets this. approaching the bay bridge from san francisco side, eastbound 80 the skyway, the car hit the guardrail and blocking the left lane the. the pope gets down do business. the powerful message he is sending about change. relief for passengers on a stalled cruise ship and now passengers on another could be facing a voyage from.well. the t word. and galaxy has been unveiled by samsung. the tech editor says it is solid but the gimmicks may not be enough to switch iphone users. she likes the new app with the special camera. news agency social media editor is charged with helping to hack the los angeles times website, and the justice department says the man was fire add few days earlier by the television station owned by the same company as the los angeles times and he gave log in information to the cupertino, concord, wine country, and all the bay area, this is abc7 news. good morning, 4:39 on this friday. a live look at san francisco and the bay bridge. it looks like it is windy but it is not that much. there are just a few clouds. mike will tell you about a cool down for st. patrick s day and a bigger change next week. president obama is coming to the bay area to help raise money for fellow democrats. he will headline fundraisers in san francisco on april 3 and 4 with the money earmarked for next year s midterm congressional elections. he was last here on a fundraising trip in october for his re-election campaign. democrats are focused on retaining control of the senate and trying to regain control of the house of representatives. this could be the first quiet day of pope francis since becoming the leader of the catholic church immediating meeting with the cardinals today. they include the cardinal whose took part in the conclave that elected him and those over 80 who were not eligible to take part. we are learning more of the new leader, a simple man. he plans to stay that way. marci gonzalez is in rome with more. after the holy tradition of first mass celebrated in the sistine chapel pope francis will take some of the messages discussed in year s simple mass about building a solid foundation for the church and lay the first brick, the first official meeting with the cardinals. he will be a simple person. he will not speak in grand terms but will try to say things and do things simply. a simple nature we are starting to hear so much about and see put in practice. from his renical to wear a gold cross, going for a modest wooden bitch cross as he met the faithful to the decision to spend part of the first full day stopping by the hotel where he lived for weeks before the conclave, not sending someone else to run errands but paying the bill himself. he was concerned about giving a good example of what priests and bishops should do. we are learning about his beliefs. he has called abortion a death sentence, gay marriage, destructive of god s plan and suggested contraception which the church opposed could be permissible to stop the spread of disease. the pope is making first impressions, a quiet, modest man, going the business of ling the church. marci gonzalez for abc7 news in rome. baseball fans can check out a true world series at at&t park starting out this weekend. workers are putting the finishing touches on the home ballpark for the finals of the world baseball classic, semi final action begins sunday evening when japan plays a yet to be determined opponent and the championship game is tuesday. local hotels and restaurants expect extra business thanks to visiters coming from around the globe. the city projects the fans will spend over $850,000 enjoying three days of baseball. the oakland athletic league has the first hall of fame class celebrating the public high school legends that are local. that includes baseball ham of famers henderson and joe dorgan and jackie problem robinson and the only american man to of win the grand slam. v.i.p. reception will be held at the court side club of oracle arena. now a look at the forecast from mike. not a bad drive in this morning. not so much fog. more clear. here is what is going on with live doppler 7 hd, you can see it is quiet outside this morning and our next best chance of rain is going to be tuesday into wednesday so if you are thinking of watering the lawn or washing the cars, you have a couple of days. here is a look at downtown san francisco, it is 49 in the financial district, and redwood city and half moon bay are the same. 46 in san mateo. palo alto is 44. the east bay, from the hills to the east bay shore, that is not so cloudy as yesterday at 48 in oakland and walnut creek and 47 in pleasanton and antioch is at 56. 87, down in san jose, you can see it is 48 degrees and 49 in morgan hill. cupertino is 44, and milpitas is 45 and mountain view is the warm spot at 50. from the north bay, we can see sausalito and san francisco and down to the san mateo bridge, 41 in santa rosa and petaluma and novato is 44. napa is at 45. today, it will be brighter and mild with high clouds and sunshine, not so thick as yesterday. breezy through the weekend and the rain returns tuesday and wednesday. from sunnyvale to cupertino, it is 70. on the peninsula we will have mid-to-upper 60 s and menlo park is 71. clouds along the coast and upper 50 s to near 60 and mid-60 s in downtown and south san francisco, and sausalito 57 but low-to-mid 70 s through the north bay valley and 60 at your beeps and around 67 to 70 s on the east bay shore with oakland at 70. we will head inland, san ramon, 69, and low-to-mid 70 s and as you head to brentwood, 77 degrees. tonight, it will be mostly clear with more fog along the coast and that could spill into the bay and mid-to-upper 40 s inland and near 50 along the coast. tuesday morning, you can see by the evening hours rain is moving in the north bay and we will get rain overnight when and through the day wednesday that means sierra snow, also. the seven-day outlook shows temperatures remaining above average until tuesday, where we will be average then and then below average with rain on wednesday. sue? normally, friday afternoon is the get away eastbound 580 and we have an issue if you are trying to get away early, eastbound in livermore, right at the airway exit, a big rig, the brakes caught on fire and the right lane is blocked with a sig-alert issued. the westbound commute is looking good over the altamont pass and through livermore. we have an accident with a car in a ditch north 880 with the tow truck coming on the scene and possibly blocking a lane when it is pulled out. c.h.p. is updating this issue with solo spin out left lane, not the bay bridge, they saying, no, it was the carquinez bridge, so, eastbound 80 before the carquinez bridge there is a car blocking the left lane. big different for instance, sue. thank you for clearing that up. happening now, more trouble for carnival cruise line, a ship is stuck in port and a second ship is having trouble getting home. the charge value charges are that there is a mechanical problem that is slowing the speed of the legend and the captain is headed to florida right now. passengers on the stranded dream in st. martin will be flown home today after reporting problems with an emergency generator. everyone gave me a hard time when i was booking this cruise saying i cannot believe you are going on carnival after what happened. last month, a fire tripleed a carnival ship and passengers were stranded for five days. 4,200 passengers told stories such as sleeping on the decks. bad weather delaying the return of three astronauts from the international space station. they were scheduled to land in a capsule in central kazakhstan but fog is preventing helicopters from flying to the touchdown site. the astronauts will now return tomorrow. they have been at the space station to five months now. in imitation is the sincerest form of flattery than facebook may have a crush on twitter the. the unintended consequence of furloughing state workers and the billions of tax dollars save good morning, everyone, 4:50 on abc7 news. a live look from our high definition roof tom camera top camera in san francisco, you can see the buildings and not the fog. mike will tell us about the weather including a chance of rain next week. you will soon have another option to get around a bay area because of a bicycle sharing program. there is an agreement with a pilot program for bicycle share. you can pick up and drop off bicycles at 70 locations between san francisco and san jose. the cost is still up in the air. a similar program in washington, dc, charges $75 for an annual pass. the spring break is leading san francisco s muni system to reduce service while students are out of school part of a strategy they first tried over the holiday season in december when fewer people were using the city buses and trolls and streetcars. this will we reduce the frequency on a dozen routes from march 25 to march 29. they saved $275,000 by reducing routes during the holiday season. there is word that twitter is ready to launch a music service acquiring the music service last year we are hunted. they will launch a app by the end of the month and will suggest artists and songs based on which twitter accounts users follow. another big change to facebook with wall street journal saying they are working on incorporating hash tags to let index conversations making it easier for users to take part in conversations on specific topics. facebook hopes this gives users more reason to stay on the site and click on ads. i will mention our own hash tag, so if you want the conversation index, go ahead. we are talking about twitter, not facebook, but eventually. not so much fog? not at all. a nice start. here is the live doppler 7 hd across the state, again, it is dry. our best chance of seeing clouds is in the south where it will be warm again, at 78 in los angeles to 68 in san diego and 61 in tahoe and upper 70 s for low 80 s through the central valley, and 62 in monterey. here is a look from heavenly and you can see it is quiet on the mountains right now. it will be warm again but not our third record high in a row. 67 yesterday set a record high again. 69 the day before was the record. we will see temperatures cool back closer to the average by sunday at 51. no snow is in the forecast. that comes tuesday and wednesday. sue? we have wood debris in lanes and the bay bridge toll please and the crews are out there trying to clear. i am not seeing in i delays whatever but be aware that some of the cars could be running over the wood that will splinter there. we go back and still have a sig-alert issued in livermore for a big-rig fire that now is out. the big rig is blocking the right lane county however, c.h.p. and crews are there rapping wrapping that up. westbound is looking good from the a the altamont pass, and a tow trouble will be on the way to get that vehicle out of the road. we will follow that for you. the furlough days designed to save the state of california money are proving very costly. a report by the independent legislative analyst office says california paid more than $270 million to cash out state employee leave last year. that is an all-time high. furlough employees use the furloughs rather than vacation, and, in fact, they still have banked furlough days. the liability of the banked days is so heavy the report encourages lawmakers to consider a leave buy back program to wipe the time off the books and it suggests that the state impose a use it or lose it policy on future leave accrual and clamp down on enforcing the leave cap which some departments routinely ignore. the strong holiday season wasn t strong enough if the second harvest food bank despite what officials describe as overwhelming generosity they missed their goal by $300,000. unless they can raise the funds they will be unable to serve 600,000 meals this year, 2 1/2 months worth of meals. if you can help go to abc7news.com and click on see it on tv. boeing is confident the grounded jets will be back in the air in a matter of weeks. the again says they are finished testing redesigned batteries on a third of the boeing 787 dreamliner which still needs f.a.a. approval but bowing is confident that will happen. they say the new design includes several extra layers of safety to prevent battery fires. the issue forced regulators to ground the planes worldwide in january just days after all nippon launched nonstop service between san jose and tokyo. it is almost 4:56. despite the success of courtroom reality shows some proceedings you cannot see on tv, the supreme court. two justices from the highest court tell a house committee that televiseing court proceedings would be disruptive. they say the court is conservative and is not ready for tv during a hearing on proposed cuts to the court budget. despite laws aimed at curbing distracted driving up to two-thirds of americans use their cell phones while driving. the survey by the centers for disease control shows that 69 percent of americans talk on their phone while driving. 31 percent read or send text messages. that rate is much higher than in seven european countries. portugal was closest in the pentagon of people using their phones while behind the wheel. million taxpayers are missing out on federal tax refunds and time is running out to claim the money. the i.r.s. is holding $917 million in unclaimed tax refunds from 2009. if you forgot do file a return you could be entitled to part of the money. half the refunds are worth over $500 but you have to file by april 15 or the money goes back to the treasury for good l there is no easy way to find out if you have money. many low onincome taxpayers and are not required to file a tax return. the nation s largest community college fights for its survival. the major deadline looming today for san francisco city college. live from the kgo-tv broadcast center this is abc7 news. hope there is an extra people in your step because it is friday. thanks for joining us. we will find out if the weather is contributing to the pep in your step. i hope so. there is no rain on live doppler 7 hd showing dry conditions. check out our visibility, nine miles at half moon bay and santa rosa and everyone else is unlimited with mostly clear conditions and we will have high clouds and sunshine this afternoon. clouds will not be so thick as yesterday with democrats in the same ballpark and mid-60 s to 70 s an the bay. we will have upper 50 s to near 60 on the coast. c.h.p. is updating the wood debris on the bay bridge on the incline section with a car that hit the wood so that is a stall. watch out. bridge crews are on the way but it is looking good. we still have status quo in live more with the right lane blocked eastbound, the reverse commute and 580 with an early big rig that caught on fire. the rig is still there and the investigation is underway. we have road work coming from antioch or going into antioch eastbound for the reverse commute direction in the lanes for a few more minutes and westbound as you can see, it is looking good from antioch to pittsburg. we are following developing news in the east bay. police are investigating the shooting death of a man during rush hour at the richmond bart station. we were over the scene as the officers searched the area forest. it happened outside on the top of the stare case that commuters use to go in and out of the station. investigators say two men are behind the shooting. witnesses told officers the pair took off running after the shooting, and bart service is running normally and the station is open. abc7 news