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Former GE Chairman & CEO Jack Welch Speaks to Larry Kudlow Today, Tuesday, September 11 at 5:00 PM ET on "Kudlow & Company" (Transcript Included)

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WHEN: September 11th at 5:00PM ET
WHERE: CNBC's "Kudlow & Company"

The following is the unofficial transcript of a CNBC interview with Former GE Chairman & CEO Jack Welch on CNBC's "Kudlow & Company" today at 5:00 PM ET. All references must be sourced to CNBC.

In the interview with CNBC's Larry Kudlow, Welch discusses the health of the American economy, global markets, the stock market, the anniversary of September 11th, corporate earnings and profits and trade and protectionism, among other topics.

KUDLOW: LET'S GO TO MR. JACK WELCH FIRST OF ALL THANK YOU FOR COMING ON PARTICULARLY ON THIS IMPORTANT DAY.

WELCH: HI LARRY HOW ARE YOU?

LARRY: I AM GREAT. SIX YEARS AFTER 9/11, SIX EARS AFTER 9/11 WHAT IS THE HEALTH OF THE AMERICAN THIS IS WHAT IS THE STATE OF AMERICAN BUSINESS? WHAT IS OUR FUTURE LOOK LIKE JACK?

WELCH: THE WHOLE WORLD ECONOMY HAS IMPROVED SINCE THE 9/11. LET'S DON'T LOOK AT OURSELVES AS ELIZABETH POINTED OUT A WONDERFUL STATISTICS WITH THE U.S., LET'S THINK OF THE RISE OF CHINA, THINK OF THE RISE OF INDIA, THINK OF THE RISE OF EASTERN EUROPE, NOT THINK OF HOW MANY PEOPLE HAVE BEEN RAISED OUT OF POVERTY. THINK OF THE INDEPENDENCE THAT NOW EXISTS BETWEEN ALL OF THESE COUNTRIES THAT COULD ONLY LEAD TO BETTER THINGS AMONG THESE DOLLARS.

LARRY: IT IS INTERESTING IF YOU LOOK AT THE BROADEST GLOBAL STOCK-MARKET I WILL QUOTE BE AT MORGAN STANLEY ROLLED INDEX, SAYS THAT 11 IT IS UP 63%. SINCE LATE 2002 IT IS UP 119%. THIS INCLUDES EVERYBODY EMERGING COUNTRIES, DEVELOPED COUNTRIES, UNITED STATES, YOU NAME IT. TO ME, THIS ALONG WITH THE STRONGEST WORLD ECONOMY ANY OF US HAVE EVER SEEN IN OUR LIFETIME IS ACTUALLY PROOF PUTTING THAT THE JIHADIST ARE DEAD WRONG AND HAVE THE STORY WRONG.

WELCH: WELL THEY CERTAIN HAVE UNTIL NOW AND I SEE NOTHING IN THE SIGHTS TO CHANGE THAT BASER MAY ARE WE ARE HAVING A BUMP RIGHT NOW LET'S FACE IT. WE GOT A LITTLE EXUBERANT IN MORTGAGES. WE WILL HAVE ADJUSTABLE RATE MORTGAGES OVER THE NEXT YEAR SINK ABOUT $400 BILLION OUT OF A 13 TRILLION-DOLLAR ECONOMY. IT WILL SLOW US DOWN A BIT YEAR BUT DON'T FORGET GLOBAL GROWTH STILL LOOKS GREAT. 40 +% OF THE S&P EARNINGS COMES FROM OVERSEAS AND IN THE DOLLAR IS WEAK AND THAT WILL JUST FUEL THAT FURTHER.

LARRY: THERE IS A LOT OF TALK ABOUT RECESSION IN THE HEADLINES IS THE MAINSTREAM MEDIA OVERPLAYING THE CREDIT CRUNCH AND OVERPLAYING THE DEMISE OF THE AMERICAN ECONOMY? OF THE OVER PLAYING THE LIKELIHOOD OF RECESSION?

WELCH: IN THIS PERSON'S VIEW, ABSOLUTELY. WE ARE LIABLE TO HAVE A SLOWDOWN WE'RE ONLY RUNNING AT 2% FOR THE LAST FOUR QUARTERS THE WE HAVE BEEN RUNNING SUB-PAR AS IT IS AND WE JUST DROPPED DOWN TO ONE OR SOMETHING LIKE THAT IF YOU TAKE THIS MUCH OF THE CONSUMER IT YOU WILL HAVE WITH THE ECONOMY AND CONSUMERS, SOME IMPACT. BUT IT IS NOT BY ANY MEANS THE GLOBAL ECONOMY 13 + BILLION-DOLLAR ECONOMY WILL STOP THE GAME.

LARRY: WOULD YOU MAKE OF THE ARGUMENT OF PART OF THE COMMERCIAL PAPER MARKET DON LUSKIN NOTED HIGH CREDIT COMMERCIAL PAPER IS DOING VERY WELL WE SAW AMERICAN EXPRESS WAS ABLE TO REFINANCE EASILY IN THE COMMERCIAL PAPER MARKET BUT ASSET-BACKED COMMERCIAL PAPER MORTGAGE-BACKED CREDIT-CARD BACKED, AUTOMOBILE LOAN HAS REALLY BEEN IMPLODING IT DOWN $300 BILLION, THE RATES ARE OUT OF LINE. IS THIS A THREAT TO THE FINANCIAL'S? THIS IS A THREAT TO THE BANK'S? THE BANKS HAVE SPONSORED A LOT OF THE ASSET-BACKED COMMERCIAL PAPER. WHAT KIND OF SHAPE ARE THE BANKS AND AS YOU GO AROUND AND TALK TO PEOPLE?

WELCH: LET'S TAKE PRIVATE EQUITY. EVERYONE IS TALKING ABOUT THE BANK CHOKING ON $35O TO 400 BILLION BUT WE HAD JUST DONE THE HOME DEPOT DEAL. IT LOOKS LIKE FIRST DATA IS BEING DONE. WE ADJUST TO THESE THINGS. HOME DEPOT DEAL WHICH I HAD A SMALL PART 10, EVERYBODY TOOK A SMALL HEAD AND THINGS GOT ADJUSTED THAT IS THE FLEXIBILITY OF THIS ECONOMY. THE BANKS GAVE THE SPONSORS AND THE COMPANY GAVE THE FIRST THING IS GOING ON WITH FIRST DATA. AND TXU TWU AND WE KNOW HOW TO DEAL WITH THESE CHANGES.

LARRY: SO WE CAN WORK OUR WAY THROUGH THE TERMS WILL CHANGE A LITTLE BIT THE PRICING MIGHT COME DOWN, INTEREST RATES MIGHT GO UP SOME, BUT THIS IS A WORKABLE DOABLE MANAGEABLE PROPOSITION?

WELCH: ABSOLUTELY.

LARRY: IT IS FROM DIFFERENT SIZE OF THE POLITICAL SPECTRUM. WE'VE HAD FORMER FEDERAL RESERVE GOVERNOR HARD AT MONEY MANAGER WAYNE ANGELL.

WELCH: I LOVE THAT GUY BUT BY THE WAY KEEP HIM ON.

LARRY: WE ARE KEEPING HIM OUT ON HE HAS GOOD GUIDANCE. INTERESTINGLY FROM THE LIBERAL SIDE OF THE SPECTRUM HOUSE FINANCIAL-SERVICES BARNEY FRANK CHAIRMAN IT SAYS IT IS TIME FOR THE FED TO EASE UP ON THE INTEREST-RATE POLICY WHAT IS YOUR THOUGHT?

WELCH: ABSOLUTELY. MR. BERNANKE IS A A LITTLE SUCESESSOR PROBLEM. THEY DON'T LIKE TO DO WITH THE PREDECESSOR DID THEY WANT TO ESTABLISH THEIR OWN NAME. HE DOESN'T WANT TO HAVE A BERNANKE BUT LIKE A GREENSPAN PUT. SO HE WILL HOLD OFF, GREENSPAN WOULD HAVE ACTED BY NOW. THIS GUY ISN'T BECAUSE HE DOESN'T WANT TO LOOK LIKE A CLONE.

LARRY: SOME PEOPLE ARE CONCERNED THAT HE IS A BRILLIANT MAN AND I HAVE SAID MANY TIMES. HE WAS ONLY ONE OF THREE NON SOCIALIST ON THE PRINCETON ECONOMIC FACULTY WHEN HE WAS TEACHING SCHOOL. BUT SOME PEOPLE ARE SAYING THAT HE IS A LITTLE TOO ACADEMIC AND DOESN'T REALLY HAVE A GOOD FEEL OR A GOOD PULSE OF THE MONEY AND CREDIT MARKET AND THAT IS WHY THEY ARE SO SLOW IN EASING. DO THINK THAT IS A PROBLEM WILL BE HAVE TO LEARN OF THE JOB?

WELCH: NO. I THINK IT IS LESS THAN THAT AND MORE OF A SUCCESSOR ISSUE.

LARRY: WHAT DO MAKE OF THE WASHINGTON STORY? THIS IS AN ELECTION YEAR PRE-ELECTION YEAR BUT OF COURSE IT BECOMES AN ELECTION YEAR. IS WASHINGTON HELPING OR HARMING THE U.S. ECONOMY RIGHT NOW IN YOUR VIEW?

WELCH: THERE IS NOTHING COMING OUT OF WASHINGTON THAT IS HELPING RIGHT NOW FOR TO HAVE ALL THE CRAZY TAX STOCK. EVERYBODY ELSE IS GOING THE OTHER WAY GERMANY IS CUTTING RATES, SARKOZY IS TALKING ABOUT CUTTING RATES, AT EASTERN EUROPE IS SHOWN THE WAY WITH LOW RATES AND WE'RE TALKING ABOUT TAX INCREASES. YOU HAVE GOT THE FED NOT RESPONDING AS QUICKLY AS WE WANT AND THEN WE HAVE THE THE DISGUSTING BEHAVIOR OF THE MEDIA ON THE LEFT ON GENERAL PETRAEUS. I HAVE NEVER SEEN ANYTHING LIKE THE NEW YORK TIMES AD THIS WEEK ANYTHING MORE DISGUSTING TO TAKE ON A GENERAL LIKE THIS AND TO HAVE THIS, WE CANNOT HAVE A COUNTRY OF THIS DIVIDED.

LARRY: LET ME GO BACK TO YOUR FIRST POINT ON CORPORATE TAXATION. TREASURY MAN AT HENRY PAULSON HAS BEEN TALKING ABOUT THIS. MR. PAULSON IS RATED FACT THAT AMERICA MAY LOSE ITS COMPETITIVE IN THIS LEAGUE HE CITES HIGH CORPORATE TAXES AS YOU JUST DID HE ALSO CITES POSSIBLE TRADE PROTECTIONIST THREAT WITH CHINA AND ELSEWHERE AND HE ALSO CITES OVER REGULATION WHETHER IT IS OUR BANS OXLEY OR EVEN THE THREAT OF A NEW SARBOX REGARDING THE MORTGAGE CREDIT PROBLEM. IS PAULSON BRIGHT? WHAT WILL IT TAKE TO MAKE WASHINGTON UNDERSTAND IT FREE-MARKET HELPS BUSINESS?

WELCH: WE ARE NOT ABLE TO TELL THE STORY SOMEHOW OUT OF WHAT THIS TAX CUTS HAVE DONE TO THIS ECONOMY. WE HAVE RAISED REVENUES EVERYWHERE, WE HAVE TAKEN THE STATE OUT OF POCKET, EDUCATION BUDGETS ALL OVER THE COUNTRY HAVE BEEN INCREASED STATE-BY-STATE. DEFICIT REDUCED, IT TAX CUTS GO TO EASTERN EUROPE OR SLOVAKIA GO SEE WHAT THEY DO AND FOR US TO BE DOING IT THE OTHER WAY IS CRAZY. AS FAR AS REGULATIONS, THESE GUYS WILL DO SOMETHING STUPID LIKE -- BUT WE WORK THROUGH THAT. THE COMPANY IS ADJUSTING TO IT, WORK THROUGH IT WE PROSECUTED A WHOLE MESS OF PEOPLE ON THE OLD LAWS WE DID NOT NEED THESE NEW LAWS. AS FAR AS GOING FORWARD, IF THEY TINKER AROUND THE EDGES WITH MAKING IT MORE MORTGAGES MORE DIFFICULT WITH MORE REGULATION, WE ARE FLEXIBLE ENOUGH AND FAST ENOUGH AND SMART ENOUGH AS A COUNTRY TO GET AROUND AND MAKE THESE THINGS WORK.

LARRY: WHAT IS YOUR BIGGEST WORRY OUT THERE?

WELCH: RIGHT NOW OF COURSE TERRORISM REMAINS ON MY MIND. WE TALK ABOUT GENERAL POWELL'S COMMENTS. THE DISRUPTIVE NATURE OF TERRORISM DISRUPTS THE SOCIETY IS A GLOBALLY WHETHER IT IS THE U.K., AT AND SPAIN, THESE ARE TERRIBLY DISRUPTIVE THINGS TO E ECONOMIES IF THE YEAR GRIPS US. SO THE GREAT WORK THAT HAS BEEN DONE BY SO MANY PEOPLE IN THE U.S. AND AROUND THE WORLD, AT THESE PEOPLE IN GERMANY, STOPPING THEM IN LONDON AND THEN BE HAVING AT POOH-POOHED BY THAT MEDIA AS IF IT WASN'T A REAL THREAT THAT IS A RAGE.

LARRY: IS THERE ANY LEADERSHIP ON THIS OR TAXES OR ANYTHING YOU SEE ON THE CAMPAIGN TRAIL WITH THE DEMOCRATS OR REPUBLICANS THAT YOU LIKE?

WELCH: I THINK THE IDEA OF NOT KILLING THE BUSH TAX CUTS OF NOT LETTING THEM EXPIRE. THE IDEA OF SOMEBODY WHO CAN MADE IT BY TAKING A STRONG POSITION. THE IDEA OF TALKING TO THESE PEOPLE SOFTLY AND HOPING THEY WILL COME WITH US IS THE SILLIEST NOTION KNOWN TO MAN.

LARRY: YOU HAVE TWO GUYS WITH EXECUTIVE EXPERIENCE RUDY GIULIANI WITH EXECUTIVE OF NEW YORK CITY FOR EIGHT YEARS AND MIT ROMNEY WAS THE EXECUTIVE OF MASSACHUSETTS FOR FOUR YEARS BEFORE THAT HE RAN A LARGE INVESTMENT BANK. DO WANT TO SEEK EXECUTIVE EXPERIENCE OR DO THINK THAT IS NOT NECESSARY?

WELCH: I WANT LEADERSHIP SOMEBODY WHO WILL MAKE AMERICA FEEL GOOD ABOUT AMERICA WILL RECOGNIZE IT IS THE GREATEST COUNTRY IN THE WORLD WHERE PEOPLE HAVE AN OPPORTUNITY TO DO ANYTHING. I WANT LEADERSHIP.

LARRY: THANK YOU FOR COMING ON IT WAS GREAT TO SEE YOU.



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