GOP Heads to White House: Surveillance (10/10)

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Oct. 10 (Bloomberg) -- Full episode of "Bloomberg Surveillance." Guests include Maya Macguineas, president at Committee for a Responsible Federal Budget, Ethan Harris, co-head of global economics research at Bank of America, Axel Weber, chairman at UBS and Miss Universe Winner 2012 Olivia Culpo. (Source: Bloomberg)

The game of chicken changes.

House republicans will visit the white house late this afternoon.

Coppermine's is in the air.

We come to you this morning live from the shutdown washington, d c the world's economic heavyweights descend on the nation's capital.

They demand the tracks.

America must avoid default.

Janet yellen nominated by the president, her to do list includes convincing the world she is not the ultimate uberdog.

It is a special edition of "bloomberg surveillance." we are live from the international monetary fund and world bank annual meetings in washington.

I am tom keene here was sara eisen.

It is thursday, october 10. scarlet fu is that our world headquarters in new york.

Here we are seven years on in the crisis, and it will be most interesting.

The what is different this time as everyone is pointing a finger at the united states.

I have been to a number of these meetings and it has been the europeans in the timeout chair or the japanese or the chinese.

Now everybody is descending on washington, blaming the u.s. for what could be the first ever u.s. default of government debt.

What a magical moment yesterday during a panel with madame lagarde.

At the end she spoke of janet yellen.

Janet yellen is front and center at these meetings.

Another powerful woman in the global economy.

I am going to get you caught up with some overnight news moving markets.

Japan's machine orders jumped in august to the highest level since back in the collapse of lehman brothers in 2008. brazil central bank raised its main interest rate for the fifth straight time, try to counter some of the weakness.

In the united states, or at least in the morning hours, 7:00 a.m., bank of england interest rates decision comes out and mario draghi will be speaking a little bit later in new york.

Can we get back for that?

That is at 12:00 p.m. eastern time.

It is thursday in the labor department is releasing initial jobless claims this morning.

Also the bloomberg consumer comfort reading in the 9:00 a.m. hour.

Just a few earnings to keep an eye out for after the bell, safeway and an important event here in washington, 8:00 a.m. eastern time, treasury secretary jack lew will be testifying before the senate finance committee on the debt ceiling and this day there've put in place, october 17, were the treasury will only have $30 billion to pay its bills.

The secretary speech to the senate around the better market.

Let's look at equities, bonds, currencies, commodities.

It is a better town after two difficult days.

Futures up substantial.

The 10 year yield goes from 2.62 to tubing.

Where back up to 101 .88 for crude.

Currencies clearly show a positive tone in washington.

Credit default swaps, can you believe it?

We're watching the united states.

U.s. cbs yesterday -- seeing some tension there as well.

We scour the papers and the web this morning for the most important stories.

Scarlet fu, we miss you in new york.

We start off with what is going on in your neck of the woods.

A busy day at the white house because at 12:00 p.m., the president and vice president will be meeting with the treasury secretary in the oval office.

That 1:45 a meet with the senate democratic caucus in the state dining room.

At 4:30, they meet with the house republican leadership.

The last appointment is the gop leaders first meeting with the president since the shutdown began and it comes after the house budget committee chairman paul ryan wrote an op-ed yesterday where he outlined a couple of things, suggested changing the bar was -- borrowing limit and broader deficit reduction talks, rubbing a couple of other big issues.

-- wrapping up a couple of other big issues.

This idea of six weeks out we will be front and center in our discussion today.

There is decidedly a different tone from 24, 40 eight hours ago.

I think it is interesting that paul ryan really put himself front and center with that wall street journal op-ed because reports are the republicans in the house can get on board with some sort of deal that involves entitlement reform and taxes.

Interesting they're not talking about the affordable care act as much anymore, perhaps a glimmer of hope that we could see some sort of deal to get this government open.

He has finally made an appearance.

Our second front-page story is corporate.

Microsoft is speeding up the timetable for finding a new ceo.

The board is working toward having a successor in place by the end of this year.

We have heard microsoft has narrowed the list of candidates.

Some of the people who have been proposed, we know board members have already spoken with ford ceo alan mullaly, and the former head of nokia.

Also, paul maritz.

There are a couple of other names that have been floated.

We will wait to see how the subelements go.

A lot of anticipation over this one.

What is interesting with it is speeding up of finding a leader for microsoft is the backdrop is a softer economy, and that is clearly -- i have been surprised coming here to see the real focus.

We know about slowdown in brazil or mexico, but this overall world calm means executives have to move quicker.

Our final front-page story is janet yellen getting the official nod from the president yesterday to become the first female federal reserve chairman in the current chief ben bernanke's term expires next january.

Her nomination is of course based on senate confirmation.

All indications are it will be a pretty smooth process.

Her to do list is enormous.

She has to figure out when to start the tapering.

Tim bernanke's bond buying program needs to be wound down at some point.

It has been going on for six years.

I do this while attending a strong and stable financial process.

Those are the front-page stories.

Thank you so much.

This hour, my mcginnis, president of the committee for responsible federal budget joins us today.

Peter cook, you can find a parking spot on the hill.

One of my observations in washington is as bad as the shutdown is, the good news for those here is you can park.

That is little comfort given what is going on.

It is a terrible environment.

This is the worst of how you should govern and the point you made, we have leaders from around the world who are coming here, showing up and for the first time shaking her finger at the u.s. saying we should be doing better.

What are we supposed to say to them?

Japan and china who combined on to more than two dollars chilean words -- two dollars trillion worth of government debt.

They been so partisan for so long.

The problems are real.

One things that can unify this country saying, nobody wants outsiders telling us we are behaving badly, particularly when we know it is true.

I hope the warning helps.

They are exactly right.

It is the height of irresponsibility.

It is been house, house, house focus.

That has been the battle.

Is this the day were the senate it's to be part of the dialogue and go from an outsider to an insider?

I don't know if this is the day.

I think this week, does the past two days is a day we finally switched.

He switched from focusing on a strategy that was going nowhere.

In entire effort from lifting the debt ceiling, based on defending obamacare, which wasn't going to happen.

As you talked about, the op-ed by paul ryan and another by eric cantor, very important signals from the leaders in the house gop that they're focusing away from defunding obamacare and now onto what the real issue is, which is how do you lived the debt ceiling responsibly?

But -- but entitlements has been the real issue and has been nowhere for the last month.

There's a good morning must read that scarlet has that involves what of the nations corporate leaders.

Tony james from blackstone writes in the wall street journal that a federal default invites catastrophe saying -- it really speaks to how what is happening in washington since a certain signal to the rest of the world, the perception of the u.s. comes down a little bit.

It is a bit diminished.

No question about it we have seen a sea shift in the global economy with what we've got it the u.s. this is all still about united states politics.

How important is the next your election to the next 10 days for our united states capital?

It has be front and center.

The primaries that they face, house republicans face, those primaries happened in 100 days.

The primaries are coming up in the political chill, the fear of doing anything that will get you primaries has a lot of our leaders not doing much of anything.

It is sort of frustrating the election cycle is now really taking the place of the ability for people to govern in so many ways.

You have real concerns on both sides about primaries and it is that people not doing any of the hard things necessary.

When it comes to fiscal policy, we need to make some hard choices on what to do about spending, entitlement reforms, and tax reforms.

If we don't, each election, and leaves the harder choices right after that.

We're going to have to face up to that.

We're going to ask you some specific policy, prescriptions, and also where is the private sector gekko maya mcginnis for the hour.

Our twitter question of the day is a provocative 1 -- it is a serious question.

We do have the reserve currency and u.s. market, but with all of this fiscal shenanigans putting at risk the.

Does full faith and credit.

Treat us -- tweet us.

I know some company news.

We start with men's wearhouse, adopting a poison till after rejecting the takeover offer.

Men's wearhouse thing banks $2.3 billion offer in cash was insufficient.

The studio that gave you the "shrek" movies has netflix is its patron saint.

Telling bloomberg they want to reduce dreamworks dependence on films and plans to double revenue from television.

You could call this kkr made in usa acquisition.

The private equity firm agreed to by two american manufacturing businesses from a british company.

The price question mark about $1 billion.

Crosby group and material handling in pennsylvania.

Over to you.

Coming up, special edition from the imf headquarters here for the annual meetings in a shutdown washington.

There are talks that both sides are open to a short-term deal on the debt.

What will it take to get a realistic compromise?

We take that up next.

Maya mcginnis will be here as well as grover norquist.

? coming up later on bloomberg television, i will be sticking with the president of the world bank.

The global ramifications, particularly in emerging markets, what is happening in the u.s. and the potential barreling toward the october 17 deadline of not raising the debt ceiling.

This is "bloomberg surveillance." we are live in washington, d.c., sara eisen joined with tom keene . scarlet fu is in new york.

We are here for the imf meetings.

Who knew it would be so interesting?

Completely different meanings than i've ever been to before, either here in washington or around the world at their annual meetings.

It has completely overtaken by the u.s. deficit issue, default, the shutdown issue, and also 10 al and much more front and center.

-- janet yellen much more front and center.

Central bankers, economists from around the world get together and talk about the world's problems and that centers on the u.s. right now and on washington and on the politics, the government shutdown seven days until the united states hits its borrowing limit.

The question is, will anything get done at the meetings?

Will they produce solutions?

Our washington correspondent is behind closed doors at our newsroom here in washington, d.c. is there any framework for a deal they can talk about in these meetings?

There is.

The cameras are going to be out for the white house meeting with republicans this afternoon.

The crucial meeting today is this morning in the basement of the capitol building.

John boehner will bring his entire conference together and start pitching the idea of a short-term debt ceiling increase, one that both senate democrats and the white house can agree to.

If he gets support there, it looks like we might have the possibility of removing the debt ceiling threat from the table.

That would certainly be interesting.

Over the white house, president obama going to local television last night to talk about what is happening in the u.s. government and the debt limit.

Here is one of his soundbites.

I am listed as for myself -- less nervous for myself.

I'm concerned about the people who are watching this program who are having a tough time.

They spent the last four years digging their way out of the worst recession we have had since the great depression.

The last thing they need is another crisis in another recession that is self-inflicted by members of congress who are engaging in this kind of hostagetaking.

The president speaking with local television, which i found interesting, not so much about the politics for himself, but what is happening in this nation.

Is the president stepping up in a leadership role in taking control of the message and the negotiation?

There is an inherited advantage to his office.

Republicans deal with their districts or states.

The president has the bully pulpit.

He can call in local media can i do interviews, hold press conferences for an or if he wants to.

I think what the white house has been trying to do since the shutdown started is try and control the message, try make the republicans look like they are the ones who won't come to the table, what do anything rational in the situation.

That is the fight john boehner has been having with his own conference, trying to get them to appear reasonable so as not to cede background to the white house.

Maya mcginnis with this.

Paul ryan is front and center.

Does he have the respect of the conservative republicans and the moderate republicans?

I think so.

More portly, does he have the respect of the white house?

Yes, i think he ryan -- paul ryan is the single most effective person to help the gop change their strategy from one that wasn't working.

Defunding obamacare was not going to go through.

He has helped move them to focus on entitlement reform, the debt, deficit, the term or linked to the need to raise the debt ceiling.

He has the respect of the white house because he is incredibly smart on this.

The question is how we will be able to bring enough people around the table to negotiate a deal who want to get a deal.

We have tried this before.

We have been lurching from crisis to crisis.

It is great we are going to lift the debt ceiling for six weeks.

It is a huge relief.

At the heart negotiation is not how to get there but how to get a deal in place afterwards.

I'm going to steal that.

It is a lurching imf meeting.

It governing by crisis.

Maya mcginnis is with us for the hour.

One of the leading voices on the budget economics.

It will be good to get from her more specific ellis he prescriptions.

Thank you to our bloomberg washington correspondent phil mattingly.

Be sure to check out the new issue of "bloomberg businessweek" hitting the stands tomorrow.

You can download it tonight.

Jeff bezos is the cover story.

You can download the issue on your ipad today.

We will be right back on "bloomberg surveillance." ? this is "bloomberg surveillance." i am scarlet fu.

In top headlines, the prime minister of libya objected from a hotel in tripoli.

The revolutionary group says he was arrested for harming state security and corruption.

Militants have accused libya's government of big -- allowing u.s. special forces to capture an al qaeda suspect there.

The father of edward snowden has arrived in moscow, hoping to see his son.

Snowden was granted asylum in august after revealing details of how the agency tapped into phones and internet around the world.

Snowden's father says he doubts his son will return to the u.s. st.

Louis pounded pittsburgh 6-1 in the decisive game five bank of the national league series.

The cardinals go up against the l.a. dodgers, the winner of that one goes on to the world series.

Those are your top headlines.

Time now for a morning must read.

Sara eisen, i know you have a good when they're in washington.

I do.

Tom and i are here in washington at the imf world bank annual meetings.

We're all talking about washington, the shutdown, the debt limit.

Here is the quote that jumped out at me -- i like how she brought up the markets because we're finally starting to see some pressure.

If you look at the for the default swap market -- before-weak market, one-weak market, really has spiked up.

It is not inflammatory, but it is a signal they've got to get going.

This meeting late this afternoon with house republicans at the white house is critical.

You mentor -- wonder with the pressure, whether the members of congress are going to pay attention.

I don't think they're listening to china, but in particular, paul ryan.

Janet yellen is another big topic of conversation here in washington.

What the federal reserve will look like under janet yellen if she is confirmed as the next fed chairman, coming up on a special "bloomberg surveillance." ? this is "bloomberg surveillance." i am sara eisen with tom keene.

We are in washington for the imf world bank annual meetings in d.c. where u.s. financial leaders are expected to get a lot of pressure from their counterparts in finance ministers and central banks around the world.

They will be descending here on the imf headquarters a little bit later.

We have a lineup of terrific movies including axel weber.

We need a data check.

So much going on.

I will stick with christine lagarde later this morning.

You have markets improving.

We are completely data-driven.

Equity futures of 15. this idea of meetings today, maya mcginnis telling us earlier that 4:00 meeting come house republicans at the white house is critical.

Dollar gets a bit -- what is that about?

Stocks are resilient.

Stocks are resilient.

There's huge optimism they can get this done.

Let's look at gainers and the pessimism of losers.

Hewlett-packard a big mover yesterday, the biggest advance in four months after the ceo said she expects to stabilize revenue and return more cash to shareholders.

That overshadow the fact analyst protect a continued flip in sales next year.

Darden restaurants gaining seven percent.

Capital group took a stake in the restaurant owner in pressing for changes.

You see that activist investor shaking up and looking for some extra returns there.

Darden of thomas $50 a share yesterday.

We're going to talk about the potential new federal reserve chairman because president obama nominated janet yellen as the next fed chief and a news conference yesterday to replace in bernanke.

The question is, will should be able to scale back some of the quantitative easing or extraordinaire stimulus or even add more to the fort wayne dollar balance sheet?

-- four dollars chilean balance sheet?

Ben bernanke's fed after greenspan, we need a new edition , no doubt working on it this weekend, bank of america's coed of global economic research joins us by television -- telephone.

You look at all of this news flow and the number one thing i here and am hearing at the imf is janet yellen is anuberdove.

She has been a hawk before.

Wicks we need to remember she is been a -- she has been an uber dove.

She has focused on the going to plummet rate is the main goal.

You go back to the mid-90s when she was governor under alan greenspan she voted for a series of rate hikes.

At one point she even, according to larry myers, went to greenspan's office to ask for another hike.

That is not an uberdove, that is somewhat who fights inflation when inflation is the problem.

The backdrop is an ethan harris imf meeting.

You nailed slow economic growth.

When do we see growth pick up?

If you are to speak to christine lagarde, what would be your advice about the timeline to get the better economic growth?

I think like most people that we are kind of on the cusp of better growth.

The u.s. economy weathered a pretty nasty fiscal shock this year with slow growth, but no disaster.

The underlying private sector situation is improving.

It is really a question of whether washington is going to undercut this again.

That is the story of the day.

If they keep this up for a few more weeks, then they may actually not only undercut growth in the next few months, but also next year by creating this very deep uncertainty in the business community.

We are kind of, unfortunately, hostage to what goes on in washington right now.

We have maya mcginnis joining us, our guest host, the president of the committee for responsible budget on washington and the debt problems and on the federal reserve.

The fed has faced a little criticism that it is buying bonds, buying dead, and allowing congress to put this off, to put these decisions all.

D subscribe to that view?

I think what he said did it in a credibly challenging time for the country, so far seems to have helped immensely.

It did give, say but of the free pass.

I don't think you want to learn the lesson by not trying to save u.s. economy.

The problem is you have three things going on.

What the business sector can do to drive growth, which is a tremendous amount of they were not paralyzed.

Yet monetary policy, which had to compensate for broken policy.

And to get the equilibrium back, fiscal policy has to get back on track.

That will give one a terry policy a little more space.

-- that will give monetary policy a little more space.

You heard bernanke talk about this.

Ethan harris, is janet yellen and benjamin bernanke going to have to be bound and wait until something happens in washington before they can even dig about scaling this back?

My hope is this isn't that bad, that they reach an agreement around the time of hitting the debt ceiling.

I think getting an agreement and the next few days is going to be very difficult.

If they can get an agreement to extend the continuing resolution and the debt ceiling next week, then i think the damage is limited.

Then you -- it creates room for the private economy to do better.

We don't have to have a complete solution of washington, we just have to avoid the further escalation of the crisis.

Where is the nation's confidence right now?

The gallup poll indicator i saw was a plunge.

Where will we be in one month, three months, six months?

How do we get more confidence?

The tragedy in all of this is you can kind of see the economy digging his way out of the whole -- hole.

Confidence growing, that is still not back to normal.

That was before the crisis came up again.

Again, it is really a question of can we get the washington mess to be a small story instead of a big story?

If we do, we'll cover this come back?

The corporate sector has been way under investing, really not engaged.

What is really missing for them is confidence in the economy and in policy.

So if you can get them to feel better about the world, we are in a better place.

Ethan harris, get to work on the next book.

Ethan harris with bank of america.

Coming up in the next hour, this is going to be a treat.

Axel weber is here.

He is now the chairman of ubs.

His thoughts on the international market ramification of policy continuity under janet yellen.

? coming up this morning, tom will be interviewing christine lagarde from the imf at 10:00 a.m. live on "market makers." they will be discussing the international ramifications of the shutdown and bumping up against the debt ceiling.

I am scarlet fu, joined by tom keene and sara eisen.

They are at the imf meetings in washington, d.c. this morning.

Top headlines this morning, a possible breakthrough on capitol hill.

For the first time, both sides are signaling their open to a short-term deal to avoid default.

Are still plenty of sticking points.

A typhoon putting a u.s. naval exercise with south korea and japan on hold.

North korea had warned u.s. against be drills st.

Nick alito horrible disaster.

North korean troops were put on alert.

Passengers on a roller coaster in florida got a little bit more than what they paid for.

They were stuck for more than two hours 150 feet off the ground.

A glitch caused computers to stop the ride.

Eventually, the train was mutual corzine's opposition and the dozen passengers could disembark.

Those are your top headlines.

I'm here with michael mckee.

Those are the kinds of things that sell tickets.

If you really like thrill rides, you've got one right there.

It is time for single best chart.

I want you to weigh in on this one.

My chart shows how the u.s. is starting to resemble japan in its eternal lost decade.

But in less time.

The business insider highlighted as one of the most important charts of the world.

The first set compares economic growth between japan and the west.

The u.s. in the last five years, less than one percent.

On the job front, japan has increased employment at half percent where the u.s. has a jobs deficit over the past five years.

This is comparing like with like?

The call for recession in the u.s. is so far proved completely wrong.

He may be trying to make us a strange case here.

When you go through the 1990s, you had enormous growth, one of the longest periods of expansion in world history.

In the last five years you had the great recession.

Of course you're going to have differing outcomes.

The fact japan could not grow very much didn't -- during the long repression.

Is takeaway has been quantitative easing and that is not going to push the needle on any of this.

The japanese did not do that.

A little too late.

Thanks for weighing in on that.

Much coming up on "bloomberg surveillance." why might the different this time when the president meets with house republican leaders later this afternoon.

Potential breakthrough meeting.

This is "bloomberg surveillance." ? this is "bloomberg surveillance." i am sara eisen, joined with tom keene.

We are in washington at the imf world headquarters for the imf world bank annual meeting where world leaders will decide upon this building to blame the united states with quite it is different from year to year.

-- it is different from year to year.

The entire theme is the u.s. focus.

In the past it has been about europe and the european debt crisis.

We will talk about the physical sinan against but first we go to new york for some, the news -- shenanigans against u.s., but first we go to new york for some news.

Steve ballmer, wanting to have his replacement by the end of the year 42 people familiar with the situation.

Microsoft directors have women are introduce -- introductions.

Third-quarter sales of personal computers were the worst in five years.

According to market researcher, pc sales fell eight point six percent worldwide.

Growth in u.s. made up for weak volume in other areas.

Pc sales have fallen for six straight quarters.

Companies are spending a lot more on mobile advertising.

It is estimated at sales hit $3 billion in the first half of the year, more than double what it was a year ago.

Unilever tells a wall street journal its mobile ad spending will triple this year.

That is today's company news.

You know tensions are high in washington.

The president will be meeting again today with the house republicans.

Can they find a solution?

Our guest host is maya mcginnis.

From our washington bureau, the owner of crisis management firm who is also had plenty of experience.

He was the first person to have been lead spokesman for the house and senate.

Tell us how this works.

We know paul ryan and eric cantor come out with op-ed that change the conversation.

What exactly is going out behind the scenes for republicans as they try to the new strategy?

It is a two-front war.

Right now they're trying to convince president obama to negotiate.

House leadership is trying to prevent -- convince president obama to negotiate.

They have to talk to the conservative house republicans, especially the study committee, about their plan.

Paul ryan was in a closed-door meeting yesterday presenting an outline of a plan to get out of the situation to raise the debt ceiling based upon budgetary reforms and entitlement reforms.

Right now the struggle with a number of these conservatives is that it looks like the house gop leadership is starting to stop talking about obamacare.

What they're saying is this is a long-term play, defining obamacare is a long-term play.

It will be difficult to do in the situation.

I think this goes right up to the -- the two-front till they're trying to create, one with the president and one with her own conservatives.

What is the endgame?

You don't think we will go over the debt ceiling deadline?

I'm an optimist.

It is not very chic to be an optimist right now, but i do think we will go right up to the 17th.

It is not the voters in the districts that are going to matter to the house republicans.

I think it is going to be the marketplace, the stock market.

If that starts falling to the floor, i think it will be the leverage to push this through.

But will the president negotiate with house republican leaders?

I think what we'll end up happening is a short-term extension with some sort of small budgetary concession that will get us into a six-week frame to figure out the constructs of a potential deal.

Ron, i know you spent years working on your next book "saving face in washington." who has the most face to save right now?

Speaker boehner has a lot on the line.

I think a speakership rests upon whether or not he can navigate through this minefield, so to speak.

And those who want to be speaker.

Eric cantor, kevin mccarthy, and paul ryan all have a lot on the line here.

At the same time you have house republican conservatives who have drawn a line in the sand on obamacare.

So that will be interesting.

Maya mcginnis, you're very active in fix the debt campaign which involved a number of corporate executives.

I remember the last time we had the physical fight.

Where is the corporate leadership?

Where are bowls in simpson?

What fix the debt was it was built to be an effort that would work with political leaders when they were trying to do a debt deal.

Political leaders haven't been able to make any progress.

They kind of disappear.

You are starting to see the beginning of the discussion.

Can we make some progress on tax reform and entitlement reform?

Ceos are starting to say, you can't default.

And not just talk about how to punt this to the next crisis, but fix the problem.

They're putting pressure on them to come up with a deal after the temporary extension.

Day 10. guillen thing i know for certain as the cardinals won last night.

-- the only thing i know for certain is the cardinals won last night.

I think focusing on the affordable care act was a complete distraction from focusing on the need to deal with entitlement reform and tax reform.

Only now that we have shifted the discussion to the real fiscal issues to i think and hope there may be a path forward where you extend the debt ceiling for a while.

The real discussion is, what kind of a fiscal framework are they going to be able to agree to?

Ron, where are the conservative republicans this morning?

I thought they and their talk radio and a genuine constituencies were completely in every way focused on the affordable care act.

Are they part of this discussion at 4:00 this afternoon?

Right now the meeting with the president will be with house gop leaders and key committee chairmen.

I think those conservatives are still there and very much want a delay and defined obamacare, no question about it.

But there is a reality that shutting down the government didn't stop obamacare from the beginning.

Although it is limping along.

The key is now that we have the debt ceiling issue coming up on the 17th, how can they figure out a broader framework for budgetary and entitlement reform?

I don't think that will let up on the obamacare situation, but they are switching gears here, at least at the leadership level, and trying to make sure they have conservatives come along with them so they are able to get this passed.

At the same time, the president does not want to see this -- the debt defaulted on his watch.

He would be the first president in american is treated you so.

There's a lot of pressure on him as well.

I wonder how much urgency there really is around this debt ceiling.

The administration says it would be catastrophic.

A number of reputable economists say would be catastrophic.

Would you think the extreme right-wing house republicans buy by that idea?

There's another report from moody saying, we have a few weeks until we could be talking about not paying our bills.


That is the problem here, that the administration and jack lew's testimony will be important today, but there is the chicken little feelings from the administration that a world had come or will come to an end.

What really matters here i think is not the voters in these districts, but the world markets.

It will be the u.s. stock and bond markets that make a difference.

If they really start dropping, that is going to provide the leverage to get something through.

I think we will go right up to the 17th, hopefully, not the fault.

Thank you for joining us this morning.

Experience with both the house and the senate.

Scarlet, back to you in new york for some photos in the news today.

Works as world leaders gather in washington, over 2 million muslims arriving in mecca.

Mecca considered the holiest city in the islamist religion and home to the grand mosque of the largest in the world.

That just gives you a sense of some scale, michael mckee.

It doesn't officially begin until october 13. that looks like the concert cristina alesci went to.

You can meet 298 foot still horse head sculptures near completion.

Where are those?


They weigh 300 tons apiece and will dominate the skyline of the helix, 50 million pound urban -- urban parks project.

I would have thought in scotland they would've had 98 foot tall golf clubs or something.

Let's fit in a quick report.

The dollar is weakening for third day -- sorry, getting a boost first is the yen as people anticipate there'll be some sort of resolution browse with house republican leaders meet with the president this afternoon.

We will be back in a few minutes.

Tom and sara eisen are in washington.

We will have more with axel weber coming up on "bloomberg surveillance." ? . . the game of chicken changes.

House republicans will visit the white house later this afternoon.

Compromise is in the air.

We come to you this morning live from a shutdown washington, d c -- d.c. the world economic heavyweights dissemination capital.

They demand the u.s. locomotive get back on the track now.

America must avoid default.

Janet yellen, nominated by the president, heard to do list includes convincing the world she is not a new bird of.

-- an uber dove.

Good morning, everyone.

We're live from the international monetary fund.

I am tom keene here with sara eisen this thursday, october 10. scarlet fu is that our world headquarters in new york.

Good morning, i miss you guys.

Mike mckee has been kind enough to keep me company here though.

A lot going on back and forth between business, economics, finance, and investment.

Let's get started with constructive miss in japan.

You have a morning reef.

Rights japan's machine orders jumped in august to the highest level since the collapse of lehman brothers.

Some encouraging news out of japan.

The finance minister will be with us.

I will be speaking with him later in the week.

Brazil's central bank raising its main interest rate for the fifth straight time trying to fight a weaker currency there and higher in place and.

In terms of economic events, this hour, the bank of england interest-rate sensitive is just up, maintain their key interest rate, mark carney and team keeping interest rate on hold.

He stepped into forward guidance saying interest rates will stay low for a long time.

Mario draghi, president of the ecb, will be seeking in new york.

12:20 pm eastern time.

The always market moving mario draghi.

8:30 a.m. eastern time, initial jobless claims are out.

This is the labor department's weekly reports on jobless claims.

In the 9:00 a.m. hour, the bloomberg consumer comfort index is out.

As far as earnings of a calendar, after the bell, safeway the grocery store will be out and also 8:00 a.m. eastern time, keep an eye in washington on treasury secretary jack lew.

He will beat -- he will be testifying about the debt ceiling.

We will have it live for you here on lumber television and radio.

This is so different in washington.

I cannot convey to you worldwide and across america how different washington is this october.

I have never seen this before.

It really goes to the series of critical meetings today.

Today in washington on the shutdown and the debt ceiling and preventing a u.s. government default on its debt, here at the imf world bank annual meeting, you will have finance ministers, central bankers, top economist, all getting together to talk about some of the issues, post financial crisis.

It has been about europe, blaming europe -- austerity -- gone.

Worried about japan and its deflation.


abe has stepped up on this experiment.

The focus is on the u.s. desk in your house in order.

Axel weber will join us in this hour.

Scarlet have company news for us.

We start with men's wearhouse.

It has adopted a poison pill after rejecting that takeover offer by joseph a bank.

It will prevent new investors from taking control of the company.

The $2.3 billion cash offer was inadequate.

Meantime, these studio they give you "kung fu panda" and "shrek" says netflix is its patron saint.

They want to reduce dreamworks' dependence on films and he plans to double revenue from television.

Kkr has agreed to by two american manufacturing businesses from a british company.

The price -- about $1 billion.

The companies oklahoma's cause the group -- coskby group.

That is today's company news.

Here in washington, there is a lot of buzz ahead of president obama's big meetings today with house republicans leaders.

That happens later this afternoon.

Could we see a short-term deal?

Chief washington correspondent peter cook joins us from our d.c. bureau.

He has been so wrapped up in a minute shot of all of this.

-- the minutia of all of this.

Talk about a potential friend works for a deal.

At is a possibility.

I watched the body language from the house republicans leadership, and they leave the me with the president here they cannot even agree on a conference.

Republican said no.

We want to have a real conversation with our leadership.

What are they talking about?

A short-term debt ceiling increase.

That is the main id on the table.

Paul ryan will be talking to house republicans about that behind closed doors this morning as welker also president obama has been out and speaking in interviews with local television.

This was a strategy last night.

Here he is about the gridlock and whether it is going to cause damage for himself and his party.

Ims nervous for myself -- remember, i'm on my last election.

I'm concerned about all the people who are watching this program who are having a tough time.

They spent the last four years digging their way out of the worst recession with that since the great depression.

The last thing they need is another crisis and another recession that is self-inflicted by members of congress who are engaging in this kind of hostage taking.

Clearly, president obama is using his position, he is speaking to a local television market.

The white house strategy here goes into the debt ceiling and how serious this is going to be.

What he led a u.s. default happen under his watch?

You can't imagine that this president would allow that to happen, or even that john boehner would allow that to happen, but that is a very real possibility because we had process also stating away association.

The clock is ticking.

The big question i know in washington this morning is -- can they frame a short-term debt ceiling increase that satisfies not only the president but also democrats in the senate and the house, who don't want to see the president give up too much ground here.

They don't want to concede ground with entitlement programs.

They're worried about what the democrats might have to give up in return.

The president is under pressure from his fellow democrats to continue to hold the line.

That was part of the conversation that was had at the white house yesterday.

Peter cook, stay with us.

We love to talk to jim hines, democratic congress and from connecticut.

The fourth and -- fourth aggression all this repaired bridge for -- fourth congressional district.

The republicans at the table next to us and we were listening in, how angry with the conversation be from where you sit, how in disarray are the republicans across the aisle?

Look, i am not sure it would be angry.

I think it would be concerned by the fact that the shutdown itself has cause an immense amount of pain to the american people all over the place you're at rural, low earth -- urban, you name it.

The republican party is now held in less his theme by the american public than it has been pretty much at any time in the last 30 years.

These are the forces that are now beginning to shape the debate here, which may point to an exit.

It looks like something you talked about this morning.

Jim, you're one of the few people that understand the litmus paper of the short-term bond market in washington.

Very few people get that.

How focused are you on what we are observing in one month paper?

It is a big deal to your former goldman sachs or ubs or other banks, is it a big deal to washington?

One of the problems we have in this fight is leading most of my colleagues do not appreciate the fact that in a government shutdown, what has happened before, or in a fiscal cliff, the capital, the majority party controls the outcome, we can go to the floor of the house of representatives in five minutes and fix both of these problems.

The problem is of course whether it is the short-term paper market or the vix or you name it, we do not control global capital markets.

Once they decide that the u.s. government has finally and completely flipped his lid, there's no vote that we can take that will fix that quickly.

Copperas man, what would you be willing to put on the table to negotiate with republicans to prevent eight u.s. government default and openness government?

Let me point out that i was one of the 38 members of congress that voted for the simpson-bowles budgetary that was the one budget that drew 22 democrats and 16 republicans.

That is not a big number, but it is the one budget that drew bipartisan support.

I have always stood by a deal like that and will continue to do so.

What i will not countenance and what nobody should countenance is the idea that we are going to run this country for the rest of our country's history where the negotiations happen not the regular order, through negotiation and committee and provides inside the building, but our policy is made because whichever party, and it could be the democrats, the republicans this time, we're going to choose our policy goals by going to the president say we will tank the economy unless you do a, b, c, d. that has got to be off the table.

Jim himes, one more question, what do you need easy from the senate today?

What we really need to see today has nothing to do with the u.s. senate, it has everything to do with the one individual who could have ended this 10 days ago, which is john boehner.

I am glad that he and his lieutenants are going by themselves the white house.

I know that is not the white house line.

Having fewer people in the room are now is good because they need to ultimately agreed to a short term negotiating period after this thing.

Quite all right, jim himes, we have to leave it there, democratic congressman from connecticut.

"bloomberg surveillance" will be back.

This is "bloomberg surveillance." i am scarlet fu.

Comments there are at the imf meetings in washington.

I am with michael mckee, our economics editor.

I want to start with breaking news out of the generic drugmaker saying it is cutting 5000 jobs.

The restructuring charge of $1.1 billion.

5000 jobs will end in a global reduction of staff by the end of 2013. the big picture here has to do with washington on capitol hill today, lawmakers will basically have two questions for the treasury secretary, jack lew.

Will you make a deal?

And what will you do if you don't? michael mckee has been looking at the various options.

There are a couple of crazy proposals.

A rollout a number of the crazier rapunzel's. they're not going to do the platinum coin or the 14th amendment to declare the debt ceiling unconstitutional.

An id is not -- an idea that is not completely crazy is the super bond.

The u.s. takes and $77 billion a year -- takes in 277 billion dollars a month and spent about $452 billion.

Instead of rolling it over at 100 cents on the dollar, why not roll it over at a slightly higher price?

Matt levine has done some math and says if you sell them for 200 $.75 on the dollar but let people make their money back with an extremely high coupon, maybe 23%, you can use all that extra money to pay the bills.

The debt ceiling applies to the face value of bonds, not what they actually sell for.

It is something that is done in a commercial bond market.

People are saying maybe the u.s. and should write in the treasury market their that has ever been done in the treasury market before.

Is this even legal?

It is legal.

You could do it.

The treasury would have to change some rules, but no reason why you cannot do it.

Another strange idea out there is the nuclear option.

Social security payments, when you make your tax payments go into social security bonds, they could disinvest those, does not put the money and and spend it.

It would be sort of a semantical move, but it would keep us under the debt limit.

That would be hard to sell to grandma, though.

Semantics and rewriting the rules, that is what washington is up against.

Michael mckee, thank you for that proposal on the super bond, giving us an idea of some of the wacky options out there for washington lawmakers or twice you have got to figure something.

Out twitter question of the day has to do with what is going on in washington.

And how the u.s. is perceived by other countries.

Is the united states the greece of 2013? with all this debt ceiling debacle and talks the default, certainly one way of framing it.

Sweetest @bsurveillance.

-- tweet us @bsurveillance.

Is the united states the greece of 2013? coming up, we will be speaking with grover norquist on americans least favorite subject, and that is of course taxes.

We will discuss that coming up on "bloomberg surveillance." ? good morning, everyone.

From washington this morning on bloomberg television, i will be interviewing christine lagarde, managing director of the international monetary fund.

She has been scathing in her criticism of the united states.

Never more so than now.

Look for that at 10:00 a.m. eastern time this morning on "market makers." it is tom keene, i am in washington with sara eisen.

Fractious international monetary fund meetings.

Let's go to new york right now.

Here is scarlet fu with company news and headlines.

Pre-k's actually, we're going to do top headlines right up your we'll talk about the prime minister of libya it was released hours after being abducted from a hotel.

Later, the intern minister says he was holding the prime minister.

Militants have accused libya's government of allowing u.s. special government -- sparse -- u.s. special forces of abducting and al qaeda leader.

Edward snowden was granted asylum in august.

Snowden father says that he doubts his son will return to the u.s. in baseball, st.

Louis pounding pittsburgh 6-1 and a decisive game five of the national league division playoff series.

Adam wainwright pitching a complete game for the victory.

The cardinals will go up against the los angeles dodgers, and the winner of that contest goes to the world series.

Those are your top headlines.

Thomas era, back over to you.

-- tom and sara, back over to you.

They are not the red.

But the red sox, not too bad.

This is going to be a wonderful, wonderful -- here in washington, they are not talking about baseball.

We are on shutdown day 10. u.s. lawmakers are for the first time possibly embracing a path forward, a short-term deal to avoid a u.s. default.

The sticking point remains housing -- house republicans demand a cut to the budget deficit.

To many in washington are drawing lines in the sand and now they are redrawing lines in the sand.

Abner nor chris has been holding congress to their word -- grover norquist has been holding congress to their word on tax policy.

He is founder and president of americans for tax reform.

Grover, wonderful to have you here.

I was shocked how, collected you were when we spoke with you.

Give us your take on the washington of this date 10. is it a precipice, or are we getting to the weekend?

We're getting to the day.

Under jimmy carter, they were five shutdown, they totaled 58 days.

Some 18 days long.

There was no sense of hysteria there.

The president unfortunately has been putting up barriers at the world war ii memorial, which costs more money than not doing that.

It undermines the idea that this is serious.

It is just being vindictive.

Carter did not do that.

We had the same situation for a lot longer period during his crisis.

What will we watch for from the president as he meets with house leaders this afternoon?

We're going to have a month out, or 60 days out, to say no defaults, raise the debt ceiling for a month or so.

The republicans have done this in the past.

At the end of the day, pretty permanent long-term increase in the debt ceiling, they will do what they almost always do which is some effort to restrain overspending.

The idea that the president will not negotiate on his overspending during the debt ceiling would be credible.

If he ever negotiated outside of these crisis -- the only time he ever talks about the crisis is when there is a debt ceiling deadline.

The republicans are not going to say sure, we will give you the debt ceiling and we will talk about it later.

Later would never happen.

You expect a short-term deal to increase the debt ceiling and then what?

We are going to go through a month, and then the president keeps saying he is willing to do something about his overspending problem.

He has been five years and has not died.

We really need to address that.

What does that mean for the government shutdown?

-- he has been five years and has not done that.

We really need to address that.

The president's is deciding who to punish by what to shutdown and knocked her he really should row back the politicization of the shutdown.

I see stereotypes in the media already developing.

With your gop and your supporting republican parlance x, what is the backstory back story on the republican debate in washington?

Look, republicans have known this is the one time the president was going to have any incentive to talk about how to reform spending.

So people like paul ryan, the head of the budget committee, has said look, let's do some long-term reforms of entitlement.

The president has not had any interest in that for five years.

I do not know if he will now.

It is possible to have a conversation.

It seems like what is not happening -- what is not helping is the tone in washington whether it is from the democrats in the white house or the republicans.

Winning your ransom, that seems to be the president's favor were this time around, how serious can it be getting meaningful entitlement reform?

Almost all the ones under reagan have included something to rein in spending.

So for the president to get into this hyperbole and anarchist rhetoric, that is silly and not grown-up.

Grover, there is always chris is him every time you open your mouth.

-- there is always criticism every time you open your mouth.

What is your to do list for republicans and for democrats to get back the confidence of all americans?

Well, a lot of people are not happy with washington.

Republicans are not happy because the democratic senate in democratic president won't rein in spending.

Democrats are unhappy because of bulletins are not going to give them tax increases and allow them to spend more.

Some are unhappy because they will go one way, some are unhappy because they will go the other way.

And we do have a deadlock, which is a big and proven over the first two years when we were going headlong into greece is spending levels.

Grover, thank you so much.

Coming up, axel weber on the nomination of janet yellen to be fed chief.

"bloomberg surveillance." this is "bloomberg surveillance . -- this is "bloomberg surveillance." i am scarlet fu.

Tom keene and sara eisen are in washington.

We will get to them in a bit.

Time for company news.

Cooper tires has gotten a federal judge to fast-track the dispute with an indian company proposed takeover.

Apollo tires has agreed to pay 2.5 billion dollars for cooper but now says that once a lower price.

T-mobile is hoping to shake up the industry by offering unlimited international data service.

The package gives subscribers internet access and the ability to send texts in more than 100 countries at no extra cost.

Pop singer shakira will be the face of the marketing campaign.

Toyota is cutting prices to try to increase sales on its prius plug-in model.

It has been cut by $2000 to just under $30,000. you also get a $2500 federal tax credit.

Those are supposed to be popular.

Maybe people are buying more american cars, especially with those electric vehicles.

We know that we have been talking about nationally global issues like a new fed chairman, a potential u.s. default.

Let's think bigger for a moment ago universal.

The miss universe contest is coming up and will crown its 2013 winner in 30 days.

Joining us is the current miss universe.

Olivia culpo.

Thank you for joining us.

You are unusual because you begin competing last year, entering and winning miss rhode island, then miss usa then miss universe.

As a newcomer, you have seen a lot.

I am sure there are things that have surprised you about the beauty industry.

Tell us about what you have found.

A lot of surprising things.

As a people automatically think of the beauty aspect.

It's a lot more than that because you travel a lot, you have these -- you have more response will of the event being a pretty face.

You cannot connect to people if you are just supposed to be another pretty face.

I think that i have been lucky to find that it is more than just about what is on the surface and it is more about within, which i know sounds so corny.

But it is true.

How did you get involved in this so late?

I was studying acting at boston university and i wanted to increase my stage performance, which sounds kind of funny in a pageant, but i figured halle berry did it, so i would try it, too.

It worked out for her.

It did.

I thought it would be a fun, quick little thing, and i ended up winning miss rhode island and then miss universe and then miss universe did i don't know how that happened.

It was a complete suite.

What are your plans now after miss universe ends?

I you going back to be you, are you going to receive your musical career?

We know you have performed with yo-yo ma in the past.

We dug it up for you.

I think that -- i would love to finish school.

I don't know exactly where i will end up, but i think that is a priority for me.

Also continuing acting, which has opened a lot of doors for me.

Music will always be there with my family because my parents are both musicians.

That will always be a part of me.

I don't think i will continue to gradually, though.

I will give you a judge's question here.

Obviously you when this packet -- this pageant at a young age.

We decide you wanted, alice monroe, winning a nobel prize for literature, janet yellen becomes the first woman to run the federate what do you want to be known for at the end of your life you go i assume something more than being miss universe?

And definitely.

I think as miss universe, being a goodwill ambassador has been a priority of my year.

Hopefully i will be remembered for something along the lines of hiv aids, ovarian cancer, breast cancer, to continue those relationships even after this year and to expand on that would be great and get other women to join me -- and man.

Very quickly here, olivia, you are the first miss universe who is american and almost 20 years.

What is the perception of americans that you found surprising when he went to russia, india, indonesia?

It is buried.

To be honest, i don't know if it is just me, but i feel like the masses respect the country.

We are so lucky we live in such a free environment.

For a lot of these people, it is just not available.

I think everybody has aspirations, and there was asked me what is it like in new york city.

It has been very positive for me.

I've had great experiences.

Thank you so much for joining us this morning.

Olivia culpo, soon-to-be ex miss universe with a crown the next winter, but moving onto bigger and better things.

A lit

This text has been automatically generated. It may not be 100% accurate.


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