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THE MCLAUGHLIN GROUP HOST: JOHN MCLAUGHLIN PANEL: PATRICK BUCHANAN, MSNBC; ELEANOR CLIFT, NEWSWEEK; MONICA CROWLEY, WASHINGTON TIMES; MARTIN WALKER, UPI TAPED: FRIDAY, MAY 7, 2010 BROADCAST: WEEKEND OF MAY 8-9, 2010

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MR. MCLAUGHLIN: Issue One: See Something, Say Something.

LANCE ORTON (New York City street vendor): (From videotape.) See something, say something.

NEW YORK CITY MAYOR MICHAEL BLOOMBERG (I): (From videotape.) He did exactly what I keep saying every New Yorker should do. He saw something and he said something.

MR. MCLAUGHLIN: Lance Orton is a New York City T-shirt street vendor. Last weekend, Orton saw something and said something. He saw an SUV in Times Square with smoke coming out and reported it to a mounted police officer. The police evacuated the area, discovered a car-bomb assembly with fireworks in the back seat and three propane canisters in the trunk. A robot was sent in to remove the would-be bomb.

The police and FBI traced the car to Faisal Shahzad, a naturalized U.S. citizen of Pakistani origin, 30 years old. Authorities circulated a picture of Shahzad, which the press broadcast. Shahzad knew the jig was up and raced to JFK Airport, cleared a watch list and bought an airline ticket to Pakistan via Dubai on Emirates Airlines.

At that point, the FBI and police arrived. The plane returned to the gate and Shahzad was taken into custody. Later Ray Kelly, commissioner of the New York City police department, crowed about the extraordinary time line and management of events.

RAY KELLY (New York City police commissioner): (From videotape.) It was 53 hours and 20 minutes. Now, we know that Jack Bauer can do it in 24 minutes. But in the real world, 53 is a pretty good number.

MR. MCLAUGHLIN: Question: Instead of self-congratulations, should Commissioner Kelly be embarrassed by the fact that Shahzad could drive a car bomb into New York City and attempt to detonate it on a crowded sidewalk in Times Square with a T-shirt vendor saving the day? Pat Buchanan.

MR. BUCHANAN: No, I think the New York cops did a fine job, John, and I don't agree with you on that. There's no way you can stop somebody from putting together a bomb and then driving it into Times Square or driving it downtown.

MR. MCLAUGHLIN: Why didn't he stop him before the bombing attempt?

MR. BUCHANAN: The point is, John, that, look, you cannot stop every single car in the United States. There's over 100 million. Here's what's important about this. We lucked out because this guy failed. However, this guy is a very moderate guy, like Major Hasan was not a killer.

MR. MCLAUGHLIN: We're talking about Shahzad.

MR. BUCHANAN: We're talking about him. But Major Hasan, who killed all those people at Fort Hood, and the underwear bomber, these were not radicalized people originally. This fellow was a moderate guy. Pakistan and Afghanistan have completely radicalized the segment of the American-Arab-Pakistan-Muslim community, where the point -- these guys are turning themselves into mass killers.

I fear that that is the trend we ought to be worried about.

MR. MCLAUGHLIN: What Buchanan is saying is that Shahzad says that the reason why he took this action was because Predator drones are killing people at the rate of 50 a day versus one terrorist being captured.

MS. CLIFT: Well, first of all, I want to say it is a time to celebrate for the vigilant people, those two street vendors and a homeless man, and also the police work by the FBI and the NYPD. That is cause for celebration.

But we are learning about how al Qaeda is reconstituting itself. After 9/11, we thought we were facing a centrally controlled enemy located in Afghanistan. We now understand that we have degraded them to the extent that they may be having difficulty putting together these spectacular events like 9/11 or even the earlier World Trade Center bombings.

And what they're doing is they're recruiting American citizens who have ethnic origins or sympathies, and they are radicalizing these people or these people are becoming radicalized because they're frustrated for whatever reason or another. But it's vigilance. A society has to be vigilant. We cannot simply shut down all our bridges. This guy was a klutz. But one of these days, one of these klutzes is probably going to get through.

MR. MCLAUGHLIN: Do we know that Shahzad was involved with al Qaeda?

MS. CROWLEY: Well, we do have -- and again, the investigation is just starting, but we do have some evidence to show that he was in contact with the Pakistani Taliban.

MR. MCLAUGHLIN: He was in Yemen for a while, wasn't he?

MS. CROWLEY: He had been -- I'm not sure about Yemen, but he had certainly been in Pakistan, and now some evidence to suggest that he had either been in contact with or was inspired by the radical teachings of an American-born radical cleric who is now in Yemen named Anwar al-Awlaki. So this guy clearly had become radicalized. We don't know when. And we don't know when he was recruited.

Now, I think it's important to point out that, thanks to President Bush and his administration and the counterterrorism strategy and infrastructure that he was able to put in place, we have had enormous success over the last couple of years in preventing these kinds of things from going off.

The problem is we have had way too many near-misses recently, and luck is not a national-security strategy. So I think what needs to be really looked at here is how they can get so close, because, John, the enemy is not just in Afghanistan or Pakistan. It's in Western Europe, and it's certainly down the street from where we are today.

MR. MCLAUGHLIN: What about his involvement in Yemen? Wasn't that a red flag? And shouldn't the administration have seen that and picked him up? MR. WALKER: I think that's why he was on the watch list, which, at the end, is how he was caught, trying to board the plane to get out. And it does seem --

MR. MCLAUGHLIN: Well, he boarded the plane.

They had to bring the plane back to the gate.

MR. WALKER: And there is some evidence that he went to one of the Waziristan training camps, which are linked with the Taliban rather than with al Qaeda itself. But I think what Pat said at the beginning is absolutely right. It reminds me what the IRS said when they tried to blow up Margaret Thatcher at the Consularity Party conference. "Okay, we didn't get lucky, but we just have to get lucky once. You have to be lucky all the time." And that's the reality of terrorism, that they just have to get through once. And it's very, very hard to stop.

MS. CLIFT: Yes. But the president, I think, has really struck the right tone. I mean, he's not saying that we have to go to, you know, red alert here because this happened, that we have to continue living and continue being vigilant. And it was a great cops-and- robbers story, how they finally got him.

MR. MCLAUGHLIN: Mmm-hmm.

MS. CLIFT: The phone number from a disposable cell phone that he gave to the woman who he bought the Nissan from --

MR. BUCHANAN: Right.

MS. CLIFT: -- and then when he came back into the country in February of this year, you're now required to provide a phone number.

MR. BUCHANAN: John --

MR. MCLAUGHLIN: Okay. Hold on, Pat.

MS. CLIFT: And that's the number he gave. And that's how they put them together.

MR. MCLAUGHLIN: Let me squeeze this in. How come Shahzad eluded the no-fly list?

Shahzad's name was added to a no-fly list, which prohibits certain individuals from flying, at noon on Monday. But he was still able to purchase a plane ticket 10 hours later. Why? Because the new list was not yet governing the passenger manifest; i.e., the finalized list of passengers seated on the plane. So he was able to purchase a plane ticket 10 hours later. Did Emirates Airlines violate U.S. law? Answer: No. Federal regulations say airlines are allowed a 24-hour period from the time of list production to the time of list adoption. The agency responsible for policy implementation is the Transportation Safety Administration, the TSA.

How come the TSA didn't spot this, Pat?

MR. BUCHANAN: Well, they should close that gap, quite obviously, John. But let me say this. If that bomb had gone off, we would never have caught this guy. He would have been on that plane, out of this country, into the Emirates and into Pakistan. We got him because we could take apart the car and you could look at the motor and identify it and work back from that. If that bomb had gone off, that guy would have been gone.

MR. MCLAUGHLIN: What's the point?

MS. CLIFT: Well --

MR. BUCHANAN: The point is that we lucked out. I do agree it was good police work --

MS. CLIFT: Well, he --

MR. BUCHANAN: -- but we lucked out. And Eleanor is right. I would hate to say it, but I would look now to what we were worried about back in 2001, which is low-grade attacks like the Israelis have suffered with, single guys walking into malls and things like that.

MS. CROWLEY: A couple of things. First of all, on the no-fly list, they have actually since tightened it over the last couple of days to where every airline is now required to update the no-fly list every two hours rather than every 24 hours.

Also, the Transportation Security Administration is without a head. President Obama's last choice to head up the TSA withdrew his nomination or name from nomination a couple of months ago, and President Obama has yet to name a replacement. That's a huge gaping hole in all of this.

And also, for all of the police work that we know about, there were a couple of screw-ups. The FBI lost the guy. He was on his way to JFK before they tracked him again. And I do not think the American people and the world need to know this extent of operational detail, because you really are tipping off the enemy as to how we are tracking him.

MR. BUCHANAN: He also had to get through network screening; I mean, the standard screening. So, therefore, that presumably was something electronic; then the pat-down, then the wanding. He probably had those by reason of the fact that he was Muslim. MS. CLIFT: The reason he evaded all this --

MR. BUCHANAN: And he paid cash, John. You automatically ought to have a signal --

MR. MCLAUGHLIN: Right.

MR. BUCHANAN: -- a guy running to Dubai Airlines, putting cash down.

MR. MCLAUGHLIN: And such a short time before the flight.

MR. BUCHANAN: Sure.

MR. MCLAUGHLIN: Why didn't they get him at the point of clearance of security?

MS. CROWLEY: There were red flags with this guy all over the place. He bought a one-way ticket on his way to the airport and paid it in cash, boarding Emirates Airlines.

MR. MCLAUGHLIN: Exit question. On balance, is the botched Times Square attempted bombing a victory against terrorism or is it a failure? Pat Buchanan.

MR. BUCHANAN: Our guys did a good job, but we lucked out.

MR. MCLAUGHLIN: What does that mean?

MR. BUCHANAN: I mean, I think the cops did a good job overall running him down.

MR. MCLAUGHLIN: Give me a break. They didn't apprehend him before it.

MR. BUCHANAN: No. But, look, they did -- 53 hours is pretty good. Did they do something --

MR. MCLAUGHLIN: Do you remember the Colorado guy? They got him before he did anything, before he made any action. They knew he was there.

MS. CROWLEY: Not Zazi.

MR. BUCHANAN: Well, you've got some guys come across the border --

MR. MCLAUGHLIN: They say that because of public safety, they were able not to give him his Miranda rights. And they were looking to see whether there were some additional bombs. And they extended it as far as they could and they brought it right up to where they had to bring the Emirates plane back. MR. BUCHANAN: Right.

MR. MCLAUGHLIN: Pretty good. Pretty good on balance --

MR. BUCHANAN: It should never have --

MR. MCLAUGHLIN: -- if that's your reasoning.

MR. BUCHANAN: Should never have --

MR. MCLAUGHLIN: But he didn't have Miranda rights, and he wasn't declared -- he wasn't given -- he's a United States citizen.

MR. BUCHANAN: He should never have been Mirandized.

MS. CLIFT: You know --

MR. MCLAUGHLIN: Why?

MR. BUCHANAN: Because what we want --

MR. MCLAUGHLIN: Because you don't believe in Miranda.

MR. BUCHANAN: No, we don't want to prosecute him. I don't care what happens to him. I care about the information he's got.

MR. MCLAUGHLIN: Eleanor.

MS. CLIFT: Right. And he gave information. You know, I'm used to sitting on this set with lots of arm-chair generals. Now we've got arm-chair police officers who could have brought this guy in much quicker. (Laughter.)

MR. MCLAUGHLIN: (Inaudible) -- immigration agents.

MR. WALKER: Well, of course we should have --

MS. CLIFT: This was a job well done, but we are facing a threat here of this low-grade terrorism. This guy didn't even buy the right kind of fertilizer. It couldn't have exploded, for goodness' sakes.

MR. MCLAUGHLIN: Are you including Monica in that little burlesk of yours? (Laughter.)

MS. CROWLEY: It's okay.

MR. MCLAUGHLIN: What do you have to say about that? MS. CROWLEY: It's okay. I can take it.

MS. CLIFT: That's your choice.

MS. CROWLEY: You asked the question whether or not it was a success or a failure. Look we are still an open society, and terrorists know how to exploit all of the loopholes and all of the freedoms and openness that we have. I think it was more of a wakeup call for the American people, for law enforcement and for this administration that the enemy isn't just abroad; it is here.

MR. MCLAUGHLIN: Do you hear that evasion? She wants to --

MR. WALKER: Of course this guy should have been read his --

MR. MCLAUGHLIN: What?

MR. WALKER: Of course this guy should have been read his Miranda rights. Terrorism is about a battle between a society of civilization and barbarism, and we do not win that battle by betraying our own ideals of civilization and due process.

MS. CLIFT: Hear, hear. Yes.

MR. BUCHANAN: We were not a barbaric society before Miranda.

MR. WALKER: We have got to live by our values.

MR. MCLAUGHLIN: I want to know overall, do you regard this --

MR. BUCHANAN: We weren't barbaric in the '50s.

MR. MCLAUGHLIN: Do you regard this, where you depend upon a merchant on the street selling T-shirts to expose this -- do you think this is okay?

MR. WALKER: It's not okay, but I think it's a wonderful thing that one's got the kind of citizenry who are vigilant, who are concerned.

MR. BUCHANAN: If you --

MR. WALKER: This is what happened in Northern Ireland, what happened in Britain. It's a way that civilized societies respond to this kind of barbaric attack.

MS. CLIFT: Right. We're probably going to have to live with this kind of threat for a long time. And it's good that people are aware and are willing to speak up when they see something that's amiss.

MR. WALKER: Yeah. MS. CLIFT: When you see a car smoking --

MR. BUCHANAN: Smoking.

MS. CLIFT: -- on Times Square --

MR. BUCHANAN: I'd say, "Hey!"

MS. CLIFT: -- it's hard to ignore.

MR. BUCHANAN: (Laughs.)

MR. MCLAUGHLIN: In answer to my own question, I think it was a draw.

Issue Two: Slick Job.

PRESIDENT BARACK OBAMA: (From videotape.) We're dealing with a massive and potentially unprecedented environmental disaster. It could jeopardize the livelihoods of thousands of Americans who call this place home.

MR. MCLAUGHLIN: Oil is now hemorrhaging in the Gulf of Mexico. The rate is 5,000 barrels a day. Before the devastating effects leave the oil-soaked land area, 40 years could elapse. The economics are also devastating. This catastrophe could cost the Gulf's already fragile tourism industry billions of dollars in lost revenue.

Critics of oil drilling on seabeds see the BP spill as proof positive of why offshore drilling should be banned everywhere. And some are doing it. California Governor Arnold Schwarzenegger withdrew his support for a big offshore oil-drilling project along the coast of Santa Barbara, valued at $1.8 billion.

CALIFORNIA GOVERNOR ARNOLD SCHWARZENEGGER (R): (From videotape.) I see on TV the birds drenched in oil, the fishermen out of work, the massive oil spill -- oil slick destroying our precious ecosystem. That will not happen here in California.

MR. MCLAUGHLIN: Question: Should all seabed drilling now be banned indefinitely? Martin Walker.

MR. WALKER: Absolutely not. If that were to happen, then the U.S. would lose something like a third of the oil that it's currently getting. The difficulty is these people are now drilling so deep, it's at the very frontiers of science. I mean, this is real bottom- of-the-sea stuff, 5,000 feet deep. It's really so very much state of the art, so difficult to do, there's bound to be problems. The only way you're going to resolve this is better regulation, better inspection. And there's a real question --

MR. MCLAUGHLIN: You mean -- MR. WALKER: There's a real question now emerging, John, about the quality of the minerals inspectorate inside the Department of the Interior.

MR. MCLAUGHLIN: And also the fact that they were not given any guidance, any control about how deep they could go. I mean, in other words, the regulators do not come into play. And there are three regulators. NOAA is in there also, and -- (inaudible). And they don't come into play until after something goes wrong. They don't say, "This is the regulation.

" In other words, the companies come in. They can do what they want to do and they can put their spec sheet in, and they don't have to face any pre-set regulation.

MR. WALKER: They can get a blanket approval before anything happens --

MR. MCLAUGHLIN: Yes. Yes.

MR. WALKER: -- from the regulators. This is not regulation.

MR. MCLAUGHLIN: Is it just bad government?

MR. WALKER: It's terrible. It's not regulation. It's a fig leaf.

MS. CLIFT: Well, yeah, BP has literally bought a lot of good will in Washington, giving a lot of money to President Obama, among other people.

MR. MCLAUGHLIN: So they bought off the administration. Is that what you're saying?

MS. CLIFT: It's not that direct a connection, but they basically have been received in Washington with open arms, and they testified and gave assurances before the Senate last year that the potential of a catastrophic spill here was so remote that they really didn't have to investigate it or have a backup plan. So the practical effect of this will be to shut down offshore --

MR. BUCHANAN: John --

MS. CROWLEY: We --

MS. CLIFT: Let me finish -- shut down offshore drilling for a period of time. But -- and the investigation will be like the Challenger investigation, putting all the pieces together.

MR. MCLAUGHLIN: We want to get to the economy --

MS. CLIFT: It's going to take a good long while. MR. MCLAUGHLIN: -- so a quick exit question. Obama has been a little bit late to the scene on this issue.

MR. BUCHANAN: Right.

MR. MCLAUGHLIN: And the question is, is the oil slick Obama's 2012, presidential election year, with all of its ramifications, his Waterloo?

MR. BUCHANAN: No, it's not, John. But I do believe some people in the administration -- maybe Homeland Security, because they were slow in implementing the plan for oil spills; they didn't know how much was there -- I think there's going to be investigations. People are going to have problems. But it's ridiculous to think this is fatal to Barack Obama.

MS. CLIFT: Pat's exactly right on that. And they were slow in part because I think 11 people lost their lives, and they shut down everything searching for bodies. And again, they took the assurances from BP initially that it was not that big a spill, that they had it under control. And we learned, of course, to everybody's regret that BP didn't know what they were doing.

MS. CROWLEY: Look, accidents happen, and the truth is that offshore drilling -- we haven't had a catastrophic spill like this in over 40 years. The last one was off the coast of California, Santa Barbara, 40 years ago. We just had a major tragedy in West Virginia in a coal-mining accident. Nuclear, which is the safest, every once in a while, you know, God forbid, there are accidents there that happen as well.

But to use this as some sort of excuse to stop offshore drilling, I think, would be a huge mistake. And I think it will be a test for President Obama to see if he sticks to his original announcement about wanting to continue to explore offshore.

MR. MCLAUGHLIN: What do you think, Martin?

MR. WALKER: I think he's got no choice. I think such is the energy profile in this country. We're stuck with fossil fuels for the foreseeable future, and I think Obama realizes that. But Pat's right. This is not going to be his Katrina. There has not been a real failure after the crisis of the kind that we saw with Operation Katrina. The failure was failure of regulation beforehand.

MR. BUCHANAN: But I do think this, John. I think, for the near future, they're not going to drill any more holes out there.

MS. CLIFT: Right. Absolutely.

MR. MCLAUGHLIN: I think Martin is again the master of this issue, handily. Issue Three: Elections in Great Britain.

Give us the cast of characters and what's happening.

MR. WALKER: Well, it's Gordon Brown, the prime minister. It's David Cameron, the conservative, who's won the largest share of the vote, biggest number of seats. And there's Nick Clegg, the Liberal Democrat. And number four, there is her majesty the queen, who will now be the decider, because the British people have not spoken. They just mumbled. There was no real decision. It'll be up to the queen to decide whom she now calls and asks to form a government.

MR. MCLAUGHLIN: It's too close to call?

MR. BUCHANAN: It's --

MR. WALKER: No. I think it's almost certain that David Cameron, the conservative, will be the next prime minister.

MR. MCLAUGHLIN: Can he put together a government?

MR. WALKER: If he makes a deal on granting the liberals proportional representation, which will probably mean the liberals will thereafter be in power forever.

MR. MCLAUGHLIN: Now, what's the impact going to be in foreign policy and in anything that would affect the Atlantic alliance?

MR. WALKER: Well, I'm afraid the Lone Ranger is losing Tonto. Batman is losing Robin. The American government will not in the future be able to count upon the endlessly reliable and loyal support of the Brits. That's the mood of Nick Clegg. It's the mood of the British electorate.

MR. BUCHANAN: But didn't --

MR. WALKER: But on top of that, there's another problem. The political timetable is running very, very slowly. The market's timetable is running very, very fast. If they can't put a government together by Monday or Tuesday, the pound's going to go down, interest rates are going to go up, and this whole European --

MR. BUCHANAN: Didn't Cameron say --

MR. MCLAUGHLIN: Is Gordon Brown going to survive as one of the components of -- necessary components of --

MR. WALKER: No.

MR. BUCHANAN: No, he's gone.

MR. WALKER: No, Gordon Brown is finished. MR. MCLAUGHLIN: He's finished?

MR. WALKER: He's finished.

MS. CLIFT: Well --

MR. BUCHANAN: But didn't Cameron --

MR. MCLAUGHLIN: Let Pat in.

MR. BUCHANAN: Didn't the conservative, Cameron, say, "Look, our special relationship with the United States is the reason why we punch above our weight in Europe?" I think he told John Burns of the Times that. I cannot see the conservatives giving up what they get from the special relationship.

MR. WALKER: Obama has given up on the Brits. Remember, Cameron tried to get a meeting with Obama before the election. The White House said no. The Europeans --

MR. MCLAUGHLIN: Why? Why did the White House say no?

MR. WALKER: Because the White House is just not that interested in Europe anymore. It's more interested in Asia and in China. Obama stiffed the entire European Union when he refused to turn up at their summit.

MR. MCLAUGHLIN: But isn't the Euro important to Obama?

MR. WALKER: Obama is going to find out, in the course of the next three months, just how important the Euro is to the U.S. economy, because his entire hopes of doubling U.S. exports are going to depend upon a prosperous Europe --

MR. BUCHANAN: Right.

MR. WALKER: -- who can buy those exports.

MR. BUCHANAN: But the Brits --

MR. WALKER: We're going to have a falling Euro, a falling British pound.

MR. MCLAUGHLIN: Eleanor. MS. CLIFT: Well, I defer to Martin knowing more about the mindset about the Brits, but I feel quite certain to say that this administration is not blowing off Europe. That "old Europe," that was Mr. Rumsfeld. That was an administration ago. I think this administration is very respectful of the power of Europe.

MR. MCLAUGHLIN: Let Monica in. Let Monica in.

MS. CROWLEY: Well, it behooves the Brits, obviously, not to have a protracted power struggle over the next prime minister and to form a government very quickly, because all you have to do is look a little further south in Europe and see what's happening across the continent in Greece. You have this complete economic implosion in Greece. The contagion is spreading. The British have a lot of economic work to do. They don't want to get sucked into the contagion.

MR. WALKER: So do the Americans.

MS. CROWLEY: And to the extent that they can control it, form a government.

MR. MCLAUGHLIN: Is it safe to say we'll all miss Gordon?

MR. BUCHANAN: No.

MS. CROWLEY: No. (Laughs.)

MR. BUCHANAN: I don't think anybody's going to miss Gordon.

MR. MCLAUGHLIN: (Laughs.)

MS. CLIFT: No, but --

MR. BUCHANAN: Not even Mrs. Duffy. (Laughs.)

MR. MCLAUGHLIN: I will miss Gordon.

MR. WALKER: I will miss him too. I will miss him, because he was the first guy to take a real leadership role when the crisis first broke back in September-October of 2008.

MR. MCLAUGHLIN: Issue Four: Buffett Trumpet.

WARREN BUFFETT (Berkshire Hathaway CEO): (From videotape.) We've really come back pretty strong now. If you want to bet against America, you're going to lose a lot of money.

MR. MCLAUGHLIN: Keep betting on America, says billionaire Buffett. He appears to have a good case.

Item: Employment up. Jobless claims have fallen for the third straight week. Item: Home sales up. April sales were the highest in six months, an increase from 12 months ago of 21 percent.

Item: Wall Street up. The Dow is up 4,000 points from its low last year.

Item: Growth up 3.2 percent last quarter -- strong growth.

Item: Consumer confidence up six points, May over April.

What's the bad news?

Item: Foreclosures may be up. So far the foreclosure rate is tolerable. But the real-estate industry sees a new wave in the offing.

Item: Debt up. The U.S. national debt is now about $12 trillion, an all-time record. Interest payments on this debt are $20 billion -- get this -- monthly. Danger worries: Dollar weakens, taxes climb, interest rates climb.

Item: Greece, the nation, tanking. Greece's sovereign debt is $400 billion, exceeding Greece's GDP, $340 billion. The Dow this week lost 300 points in two days due to Greece's woes.

Question: Why is the turmoil in Greece causing a sell-off of stocks around the world? I ask you, Eleanor.

MS. CLIFT: Well, I think markets around the world are nervous that the contagion in Greece can spread throughout Europe and then throughout the world. In fact, though, it has -- at least for the moment has made the U.S. dollar stronger, and we are now a safe haven for people around the world.

Martin made the point earlier that our exports are going to cost more, and that could put a damper on job recovery. But right now I think you've got people just basically on a hair trigger, because they're worried that somehow this enormous debt, not only in Europe but in this country, is somehow going to squash whatever good times we're enjoying.

MR. BUCHANAN: John, the Greek debt is a real problem, because if the Greeks default or can't pay their debts, what happens is --

MR. MCLAUGHLIN: Pat, it's a small amount of the EU economy.

MR. BUCHANAN: Two percent only. But what they've got, John, is they will blow a gigantic hole in the banks of Europe. And the banks of Europe are tied to the banks of the United States. That's why the U.S. stock market went down 5 percent this week. That's why people are afraid of a Greece default. MR. MCLAUGHLIN: Will it chain off into Spain, which is the fourth-largest economy (in Europe ?)?

MR. WALKER: Well, that's the great fear. Pat's right. I mean, the European banks have got something like $120 billion at risk. A lot of those banks are Spanish and Portuguese and French. If they don't get their money back, they're going to be in real trouble.

The prediction that I would make here is that, no matter what happens with Greece, the problem is now going to migrate, first of all, to Portugal, whose total debt is bigger than that of Greece, and then it's going to migrate to Spain, where unemployment is already 20 percent.

The entire Euro project, the European currency, is either going to have to integrate and have a common economic policy, or it's going to disintegrate. That's why the world's markets are --

MR. BUCHANAN: Right.

MS. CROWLEY: We --

MR. MCLAUGHLIN: Is it clear what the impact will be on the U.S. economy if Europe falters?

MR. BUCHANAN: Yeah. Yeah. John --

MR. WALKER: A lot of American banks will go down.

MR. BUCHANAN: American banks will follow them, John.

MS. CROWLEY: It will --

MR. BUCHANAN: They're all tied together.

MS. CROWLEY: It will have --

MR. BUCHANAN: It's the same problem you had with the housing thing.

MS. CROWLEY: Yes. It will have a huge cascading effect through our financial sector. But one piece of really bad news that we got this week here at home is the unemployment number, which ticked back up to 9.9 percent. And it doesn't help the job picture in this country that we have an administration going down this road of pushing job-killing agenda items like cap and trade --

MS. CLIFT: Excuse me. (Laughs.) MS. CROWLEY: -- and like health-care reform.

MR. MCLAUGHLIN: Were there any --

MS. CLIFT: Excuse me.

MR. MCLAUGHLIN: Before we leave --

MS. CROWLEY: Eleanor, please. You can't -- look, if this administration really wanted to create jobs in this country, all they would have to do is go down a tax-cutting route. They have refused to do that. Instead they are going down this oppressive taxation route, which has gotten Western Europe into such a fix -- sluggish growth and so on.

MS. CLIFT: Okay. All right.

MS. CROWLEY: And with the out-of-control spending --

MS. CLIFT: We tried that --

MR. BUCHANAN: But we did add --

MS. CROWLEY: -- (inaudible) -- cautionary tale.

MR. MCLAUGHLIN: Eleanor.

MS. CLIFT: We tried that with the Reagan administration, the Bush administrations. This is now the 21st century. The job-growth numbers this month were fantastic.

MR. MCLAUGHLIN: Forced prediction: Will Greece default on its sovereign debt? Yes or no?

MR. BUCHANAN: It will have to.

MS. CLIFT: Afraid so.

MS. CROWLEY: Yes. Take that to the troubled bank.

MR. WALKER: Not quite, but it'll reschedule.

MR. MCLAUGHLIN: Unfortunately, yes.

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Bye-bye. Happy Mother's Day.

END.