DYLAN: BUT WHEN YOU MEET WITH CHINESE OFFICIALS DO THEY REFLECT THE STATEMENT THAT YOU OFFER?

HUBBARD: THEY REFLECT THAT STATEMENT AND WE'RE WAITING FOR THEM TO EXECUTE. THEY RECOGNIZE THAT. WE'RE WAITING. CHINA IS A HUGE COUNTRY AND THERE ARE LOTS OF PRESSURES.BUT THEY ARE CONCERNED ABOUT THE ECONOMY BECAUSE THEY NEED TO CREATE 25 MILLIONJOBS A YEAR TO KEEP THEIR PEOPLE EMPLOYED. THAT IS A BIG CONCERN. THE WEEK MOVE MAKE BACK WE BELIEVE THEY CAN MOVE TOWARDS A CONSUMPTION BASED ECONOMY THAT IS MARKET BASED IN THEIRECONOMY WILL CONTINUE TO GROW AND CREATE JOBS THAT WE'LL ELIMINATE DISEQUILIBRIUM THAT CURRENTLY EXISTS IN THE WORLD'S MARKETS.

DYLAN: THE HEADLINE THIS MORNING FROM MERRILL LYNCH A 8 BILLION DOLLAR WRITEDOWN WE HAVE WATCHED ALL OF THE WRITE-DOWNS COME THROUGH. RESPECTING 4 BILLION THEN ASK WHY IT GOT BIGGER IT THEY SAID WE DECIDED TO TAKE A MORE CONSERVATIVE APPROACH. WHAT IS A CONFIDENCE GLOBAL THAT YOU HAVE A WASHINGTON, THE FOUR OF YOU AND YOUR COLLEAGUES AS TO THE STABILITY AND INTEGRITY AND OUR ABILITY TO CONTINUE TO LEND ON A LARGE LEVEL AS A RESULT OF THE LOCKUP IN THAT ONE PIECE OF THE CREDIT MARKET?

LAZEAR: WE CERTAINLY KNOW THAT THE CREDIT MARKET HAS BEEN A BIG NEGATIVE FACTOR OVER THE SUMMER. I MUST SAY THAT WE ARE PLEASANTLY SURPRISED BY THE FACT THAT IT HAS NOT TRANSLATED INTO THE REAL ECONOMY TO A GREATER EXTENT THAT IT HAS. THINGS SEEM TO BE GETTING BETTER. THAT DOES NOT MEAN WE'RE OUT OF THE WOODS THERE IS A LONG WAY TO GO BUT IT SEEMS TO BE GETTING BETTER. I VIEW THE ANNOUNCEMENT BY COMPANIES LIKE MERRILL LYNCH AS POSITIVE BECAUSE YOU WANT THIS STUFF TO BE RECOGNIZED. IT IS NOT A GOOD THING FOR COMPANIES TO DECLARE LOSSES BUT THEY ARE THERE IT IS BETTER TO KNOW ABOUT THEM THEN SWEEP THEM UNDER THE RUG. THE EARLIER WE GET THE INFORMATION OUT, THE MORE TRANSPARENT SWEET DAYS TRANSPARENCY WE HAVE A THAT WILL BE HELPFUL TO THE ECONOMY.

GUTIERREZ: RISK IS BEING REPRICED. AUGUST WAS A TOUGH MONTH. AT THIS POINT IT IS IMPORTANT THAT WE ARE GETTING SOME OF THE STUFF BEHIND US. GETTING THESE WRITE-DOWNS BEHIND US. THAT IS ALL PART OF THE TRANSITION AND I THINK IT IS POSITIVE THAT WE'RE MOVING FORWARD.

DYLAN: DO HAVE AN INDICATION THAT THE LIQUIDITY IS BACK? THAT THE SUPERFUND WILL SOLVE THE PROBLEM?

HUBBARD: THIS WILL TAKE SEVERAL MONTHS BUT IT WILL GET BETTER. FOR EXAMPLE, A JUMBO MORTGAGES ARE NOW BEING MADE. IN A LARGE MEASURE ARE BEING SECURITIZE BUT THE DISPARITY BETWEEN THE JUMBO MORTGAGE INTEREST RATE AND WHATS CALLED THE COMFORMING INTEREST RATE OR THOSE THAT ARE GUARANTEED BY FREDDIE MAC OR FANNIE MAE THE DISPARITY IS DECLINING SO THAT INDICATES THAT THE MARKET IS ADJUSTING AND NORMALIZING. BUT IT STILL HAS A WAYS TO GO.