updated 4/3/2009 10:41:55 AM ET 2009-04-03T14:41:55

Guest: Steve McMahon, Todd Harris, Christopher Hitchens, Tina Brown, Michael Smerconish, Joan Walsh, Jim Cramer, Margaret Brennan

CHRIS MATTHEWS, HOST:  The face of change.

Let‘s play HARDBALL.

Good evening.  I‘m Chris Matthews in Washington.  Leading off tonight:

the new American.  What a difference a president makes.  No more towel snapping, no more French fry-smashing, no more “My way or the highway.”  If there was any doubt that Barack H. Obama is not George W. Bush, it was dashed in London this Tuesday, Wednesday and Thursday.  Let‘s look tonight at this new era of U.S. foreign policy with a provocative couple, Tina Brown and Christopher Hitchens.  And let‘s find out if President Obama is coming back from his big European trip with power to punch through his big agenda here at home.

Plus: The stock market zoomed close to 2,000 (SIC) points today.  Are there other signs that the economy has begun its bounce from the bottom?  Car sales not as bad as predicted, housing sales improving, retail sales up.  And here‘s another modest upward indicator.  CNBC‘s Jim Cramer today declared the recession is at its end—at least at its bottom.  Jim Cramer will be here in a moment.

Also, you don‘t want to miss the sweetest moment of this day.  It happened when Michelle Obama met with school children over in London and we‘ll show it to you later.  Can Michelle help make Barack Obama a more successful president?

And big show news.  Here tonight, we‘ll give the grandest HARDBALL award to date to someone at the very top who has proven that he clearly belongs there and with the whole world watching.

We begin with President Obama‘s undoing of the global image cultivated by President Bush.  Tina Brown is the editor-in-chief of “The Daily Beast,” and Christopher Hitchens is a contributor to “Vanity Fair” and the author of “God Is not Great,” which is now in paperback—appropriately so, sir.

Let me begin with Christopher Hitchens.  Sir, give me your track (ph) tout (ph) report on our president‘s first big grand tour of Europe.

CHRISTOPHER HITCHENS, “VANITY FAIR”:  I don‘t think it‘s as radically different as you were implying just now.  I mean, the deal with Russia, for example, was probably in the works before, the possibility of trading something for something on the missile defense.  The opening to Iran is different.  I‘m talking just about foreign policy.

MATTHEWS:  Right.  Go ahead.

HITCHENS:  The opening to Iran is slightly different but it was very tentative, and he let his hand be smacked away without doing very much by way of retaliation or seeming hurt.  What the North Koreans are...

MATTHEWS:  By whom?  Who smacked his hand?

HITCHENS:  Well, the Ayatollah Khamenei.

MATTHEWS:  They weren‘t at the trips.

HITCHENS:  No, no, no, no.  But I mean, the offer he just made last week to the Iranians to...

MATTHEWS:  But how did this happen in Europe?  Did this happen in Europe?

HITCHENS:  Well, it‘s curtain raising for the G-20.

MATTHEWS:  OK.

HITCHENS:  I would describe both the Russian and the Iranian initiatives as that, and also the way in which he‘s being—well, we‘re being, actually, pushed around and given a hard time by the North Koreans was something that Condoleezza Rice had already got very used to.  I think if you asked me what the biggest atmospheric change was this week (INAUDIBLE) part of the curtain-raiser, too...

MATTHEWS:  Right.

HITCHENS:  ... it‘s the decision to stop saying “global war on terror” as the mantra.

MATTHEWS:  Right.  So you‘re still...

(CROSSTALK)

MATTHEWS:  You are positioning yourself, Christopher Hitchens, as a tough critic of this administration right now, as you speak?

HITCHENS:  I‘m not positioning (INAUDIBLE)  Do I position?

MATTHEWS:  No, it seems like you‘re questioning it.  You know, you think it‘s too soft.

HITCHENS:  I don‘t think—I think a lot of it is what I‘m calling atmospherics, yes.

MATTHEWS:  Too soft

HITCHENS:  Yes.

MATTHEWS:  Because?

HITCHENS:  Because it‘s for—it‘s for effect.  It is positioning.  For example, they say, OK, now we‘ve got to make nice with the Europeans as we never did before.

MATTHEWS:  Right.

HITCHENS:  We want you on...

MATTHEWS:  Never did under what administration?

HITCHENS:  The previous one.

MATTHEWS:  Well, “never did” is a long time.

HITCHENS:  We‘ll never—we want to close Guantanamo...

MATTHEWS:  Right.

HITCHENS:  ... like you want us to—or I should say, as you want us to.  And will you take some of these harder cases, many of them your citizens?  Well, suddenly, you know, making nice with the Europeans doesn‘t turn out to be such a...

MATTHEWS:  But it sounds to me like you‘re saying that this president is much softer than Bush, therefore much different, and then you said a moment before there isn‘t a big change.

HITCHENS:  Well, I‘m saying the main change so far is an atmospheric one.

MATTHEWS:  OK.  Let‘s take a look at the president, his account...

HITCHENS:  An impressionistic one.

MATTHEWS:  Well, let‘s see.  Here‘s the president‘s account of how he may differ in his own words and mind from President George W. Bush.  Here he is at the G-20.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES:  I didn‘t accompany President Bush on his various summits, so I don‘t know how he was operating.  And I won‘t—you know, I won‘t warrant a guess on that.  America is a critical actor and leader on the world stage and that we shouldn‘t be embarrassed about that, but that we exercise our leadership best when we are listening, when we recognize that the world is a complicated place and that we are going to have to act in partnership with other countries, when we lead by example, when we show some element of humility and recognize that we may not always have the best answer, but we can always encourage the best answer and support the best answer.  So I think that‘s the approach that we‘ve tried to take in our foreign policy since my administration came in.

(END VIDEO CLIP)

MATTHEWS:  That‘s surprisingly a strong effort to be Uriah Heep there, Tina Brown.  Why is the president so humble and so unswagging (ph)?

TINA BROWN, THEDAILYBEAST.COM:  Well, look, he has to be humble right now, actually.  I mean, when you think of what he arrives in England on the waves of, it‘s unbelievable what he‘s carrying in terms of sort of toxic vibes towards America, you know, with this financial meltdown happening.

You know, it‘s interesting.  I mean, Bush used to call himself “the decider.”  But I have to say that in the case of Obama, you‘d have to call him the diffuser.  He is really brilliant at lowering the temperature.  And you know, the Brits are pretty upset about the financial situation, as is the whole of Europe.  And they just got over—in terms of Obama, he thought he was going to be the big sort of messiah who came in post the war on Iraq, et cetera...

MATTHEWS:  Right.

BROWN:  ... and fix the whole image that Bush had left behind.  And now he‘s having to carry this load of trouble around the world and kind of...

MATTHEWS:  Right.

BROWN:  ... not be too arrogant about things because America‘s gotten everybody else into a load of trouble.  So actually,I think that it was—the atmospherics—I understand what Chris says about atmospherics, but at the same time he does...

MATTHEWS:  But he‘s not Bernie Madoff‘s brother, Tina!

(LAUGHTER)

MATTHEWS:  I mean, he‘s acting like he‘s embarrassed by his brother there.  The guy—the guy walked into the White House and assumed responsibility for everything that Alan Greenspan had done, everything that the banks had done.

BROWN:  Well...

MATTHEWS:  It wasn‘t his tenure that caused the hell, was it?

BROWN:  No, it wasn‘t the tenure, but he knows perfectly well that it‘s—after a few months when you‘re in office, you know, you cannot keep on blaming the regime before.  Right now, he has to own his economic plan.

MATTHEWS:  OK.

BROWN:  He has to own his global stimulus.  He has to own everything...

MATTHEWS:  OK.

BROWN:  ... that‘s happening now.  And he knows he‘s got to be, you know, pretty apologetic about what went down before.  So I think he‘s been brilliant at that.  And of course, having Michelle with him means that she‘s a force multiplier in terms of public approbation.

MATTHEWS:  But we all know the way things are looked at in this country, the way we all look at things here.  You all know this.  Christopher, we all look at it like this.  Bush was a tough cowboy, My way or the highway sort of guy.  We‘re going to go get Iraq, and if you don‘t want to go get Iraq, there‘s something wrong with you, France.  There‘s something weird about France.  In fact, we‘re going to stop calling them French fries, you guys are so sick.

HITCHENS:  That wasn‘t Bush.

MATTHEWS:  Who was that?  Who was that?

HITCHENS:  Some complete...

MATTHEWS:  Some cowboy, OK.

HITCHENS:  Some total dolt in the Senate.

(LAUGHTER)

MATTHEWS:  Was it?

HITCHENS:  Yes.  Well, in the House, actually.  It was the House dining room.

MATTHEWS:  The House...

(CROSSTALK)

MATTHEWS:  ... you talked atmospherics...

HITCHENS:  I know that this is what people say, but it still doesn‘t make it true.  Bush went back to the U.N. on Iraq again and again and again and he sent Colin Powell, his most moderate (ph) person.  And finally, Chirac says, We would not have supported you on this no matter, whatever you‘d done.

MATTHEWS:  Right.

HITCHENS:  Whatever you‘d done.

MATTHEWS:  I never...

(CROSSTALK)

HITCHENS:  And he said to the French, Why didn‘t you tell us that in the first place?  Why did you just run out the clock on us?

MATTHEWS:  Right.

HITCHENS:  It‘s an injustice to remember it any other way, as it happens.

MATTHEWS:  Well, no, the argument was that we would—you know, that we had to keep lecturing the French until they got it straight.  That‘s the other notion here, that...

HITCHENS:  The French were in Saddam Hussein‘s pocket.  Chirac‘s government was...

(CROSSTALK)

MATTHEWS:  So was the rest of Europe, then.

HITCHENS:  Well, a good deal of it was, yes.  There were members...

MATTHEWS:  Well, that‘s an attitude...

HITCHENS:  There were open members of the British parliament who was on the payroll of Saddam Hussein.

MATTHEWS:  Who was right...

HITCHENS:  ... leaders of the anti-war movement.

MATTHEWS:  OK.  You know what the French—it seems to me you know you‘re right when the French are with you.

HITCHENS:  Well, the French were very helpful...

MATTHEWS:  Because they were right about the Vietnam war, which they lost...

(CROSSTALK)

MATTHEWS:  ... and they were right about colonialism in the Middle East.

HITCHENS:  Well, they were also very helpful in getting the Syrians out of Lebanon, which is an achievement of the Bush administration that...

MATTHEWS:  Right.  OK.

HITCHENS:  ... seems to be left out of the account, by the way.

MATTHEWS:  Let me get—let me get...

HITCHENS:  Obama is practicing...

(CROSSTALK)

HITCHENS:  ... Brown of “The Beast” has this bit right.  She says the meek answer turneth away wrath.  He arrives, he‘s going to be very tame and modest...

MATTHEWS:  Right.

HITCHENS:  ... because if he was any other way, people would blame it all on him (INAUDIBLE) isn‘t the Royal Bank of Scotland and Lloyds Bank and the other big bankruptcies (ph) in Britain that are to be laid at America‘s door at all, let alone Obama‘s.  This is a...

BROWN:  No, but I think...

HITCHENS:  ... Gordon Brown‘s responsibility.

BROWN:  I nonetheless feel that Obama is right to play it that way.  And certainly, you know, he‘s so incredibly popular.  Tony Blair was called Bush‘s poodle.  But right now, you know, Gordon Brown is running around, yapping after Obama like a kind of—he can‘t wait to just be in Obama‘s sunshine.  So I think—I‘ve got to say Obama is playing it really right in the way he‘s coming across.

MATTHEWS:  Why do you think Obama has been so kind to his new friend, Gordon, whose name he took, what, eight times the other day?  What is—is he just a fellow left—man of the left?  What is the commonality here?

BROWN:  Well, I think...

MATTHEWS:  Why is he so nice to the British PM, who‘s apparently on his way out of office?

BROWN:  Well, for a start, he does need British support.  And you know, it‘s not—he knows—he‘s smart enough to know anyway that you never know in politics what‘s really going to happen.  I mean, although the Brits are so thoroughly fed up with Gordon Brown that I think they‘d almost, at this point, vote a monkey instead of him, when it comes down to it, Brown is actually probably the only person right now who can really understand a huge amount of this economic stuff in political life.  I mean, I don‘t think...

MATTHEWS:  Yes.

BROWN:  ... that the shadow chancellor right now has the same kind of heft.  You know, and who knows what‘ll happen in politics.

(CROSSTALK)

BROWN:  There could be a terrorist attack and everybody unites behind that.

MATTHEWS:  OK.  Let me—before we go to Michelle, who will be a softer note for us all, you and I still disagree.  You think the Iraq war made sense.  You think Europe was wrong, Bush was right.  We disagree.

Let‘s go Michelle Obama right now.  Here she was with some school children.  I haven‘t seen this tape.  People say it was rather strong, a strong emotional moment between our first lady and some school kids over at Britain.

(BEGIN VIDEO CLIP)

MICHELLE OBAMA, FIRST LADY:  All of you are jewels.  You are precious and you touch my heart.  And it is important for the world to know that there are wonderful girls like you all over the world.  All over the world.  History proves that it doesn‘t matter whether you come from a council estate or a country estate, your success will be determined by your own fortitude, your own confidence, your own individual hard work.  That is true.  That is the reality of the world that we live in.

(END VIDEO CLIP)

MATTHEWS:  What‘s a council estate?

HITCHENS:  A council estate is a project.  It‘s a piece of public housing, usually segregated from the rest of the city, tending to be built in red brick, joined-up villas, a bit depressing.

MATTHEWS:  And these kids have grown up like that.

HITCHENS:  Yes.

MATTHEWS:  And she‘s simply...

HITCHENS:  It‘s like saying to the manor born and saying country estate and then council estate‘s a perfect counterpoint to that.

MATTHEWS:  Yes.  What do you think of that, Tina?  I didn‘t see a wider shot.  I assume the kids were all...

BROWN:  Well, I...

MATTHEWS:  ... black kids and poor kids.  Go ahead.

BROWN:  I think she‘s really coming off as an extraordinarily sort of warm and maternal woman.  You know, they‘re calling her “Mighty Michelle” in London because she‘s such a different kind of woman to the ones they‘re used to seeing, really, in sort of public life.  I mean, she‘s both sort of dynamic and glamorous, and yet at the same time, she‘s also very sort of warm and cozy and familial.  So I think that she‘s doing an immense job, frankly, in sort of humanizing the whole president‘s visit in an extraordinary way.  So I think she‘s doing really well.

There is something a bit Lady Di-like right now about this—all this hugging that‘s going on.  I mean, she‘s turning out to be the sort of hugger-in-chief, which is a very un-British...

HITCHENS:  Even gave her majesty a squeeze.

BROWN:  She gave her majesty a squeeze.

MATTHEWS:  Is that OK?

HITCHENS:  It‘s fine by me.

MATTHEWS:  Was it OK by her majesty?

(CROSSTALK)

MATTHEWS:  Can you touch the person of a monarch?

HITCHENS:  I have to say, I don‘t think her majesty‘s been given a squeeze...

(CROSSTALK)

MATTHEWS:  Oh, here we go!  Be careful!

(CROSSTALK)

MATTHEWS:  Be careful.  Except by the Duke of Edinburgh himself.

BROWN:  I did love the way...

MATTHEWS:  OK...

BROWN:  I did love the way she towered over the queen.  I mean, the queen has shrunk.  You know, the queen has become this little...

MATTHEWS:  Have you noticed?  I thought there was a total difference of dimension between our first family and the monarchy over there because I‘ve always seen the Duke of Edinburgh, in fact, most recently in the film, “The Queen,” portrayed by this big strapping American guy, Cromwell (ph) -- what‘s his name, Michael Cromwell, or whatever his name is—James Cromwell—and yet  I see—there he is in the picture.  I‘m, like, God, that‘s him?  What is this, a miniature?

(CROSSTALK)

MATTHEWS:  ... on the difference of size of our first family and the British royals.

HITCHENS:  And he still has to stand—you notice he sill has to stand two paces behind her at all times.

MATTHEWS:  Oh, really?

HITCHENS:  Walk and stand.

MATTHEWS:  He‘s good at that.  Let me ask you one question.  I‘m going to start with Tina because you‘re softer tonight than Christopher is, as often is the case.  What do you—what do the people in Europe—you come from Europe, you both do originally.  What is it that the Europeans want from us?  Do they want us to be the leader of the sort of Western world, the free world we used to call it, or do they want us to be one of the colleagues in that companionship?  Do they want us to lead or not, damn it?  What do they want?

BROWN:  They love America (INAUDIBLE) when America is the big-time,

glamorous superbox (ph), but at the same time, has a little bit of Fred

Astaire to it, which, of course, is what Obama brings.  They don‘t like

America when it‘s arrogant and bullying, but they do like America when it‘s

it‘s Hollywood and...

(CROSSTALK)

MATTHEWS:  I think Fred Astaire is wonderful.  I‘m a huge fan.  The man knew how to do everything right.  He had a touch.  Yes.

HITCHENS:  What most Europeans want is they want an American protector.  They want America to do the...

MATTHEWS:  They want the umbrella.

HITCHENS:  They want the umbrellas.

BROWN:  Yes, they want it.

HITCHENS:  (INAUDIBLE) but yes, umbrella, if you want to call it that.  They want the arsenal, financially as well as militarily, and they want the right to complain about it, as well.

BROWN:  That‘s key.  Of course...

(CROSSTALK)

MATTHEWS:  Are they the kids in the back seat, or do they want to drive?  They want us to drive and they want to sit in the back seat...

BROWN:  They do.  They want...

(CROSSTALK)

HITCHENS:  Whine, whine, whine, whine.

BROWN:  They want America to drive.

MATTHEWS:  They do.

HITCHENS:  Are we nearly there yet?  Yes, that‘s...

(CROSSTALK)

MATTHEWS:  Is that why you guys left?

HITCHENS:  Yes.

MATTHEWS:  Is this why you left, Tina?

BROWN:  It‘s absolutely true.  That‘s absolutely true.  You know, Christopher‘s completely right.  I mean, the national pastime of the Brits is grumbling.  You know, when I...

HITCHENS:  Whine, whine, whine.

BROWN:  There‘s something about that voice when you phone up, where they go, you know, Hello, and you just know, you know, the rain is in the voice.

MATTHEWS:  I love it.  I love it.  We‘ve found consensus. 

Christopher, thank you.  Thank you, Tina.  A very bright couple here. 

Thank you both.

Coming up: Is the economy showing some signs of life here in the States?  CNBC‘s Jim Cramer is coming up.  Let‘s listen to our guru here at CNBC.  He‘s looking to see the sunny side up, all of a sudden.  You‘re watching HARDBALL—at least we hit bottom.  I think that‘s his case.  We‘ll be here to talk about bouncing up from the bottom finally here on MSNBC.

(COMMERCIAL BREAK)

MATTHEWS:  Welcome back to HARDBALL.  Certain aspects of the American economy, like auto and retail sales, are surprisingly now showing some signs of improvement.  So does this mean the economy has hit bottom and is starting to bounce upward?  God, it‘s Jim Cramer, sir, my man, from Philadelphia, the host of CNBC‘s “Mad Money.”  You, sir, must now tell us, have we hit the bottom of this hell and are we bouncing upward, given the auto sales, given the retail sales, given the market?

JIM CRAMER, HOST, CNBC‘S “MAD MONEY”:  Yes!  The answer is a definitive yes.  We ended the depression at the beginning of March.  It started in September of last year.  We are done with the depression, Christ Matthews.

MATTHEWS:  So 6,384 on the Dow was the low point.

CRAMER:  That‘s it!  Yes.

MATTHEWS:  How‘d I know?  And so those investors out there who have lost, in some cases, lots of money, large percentages of their retirement hopes, are now somewhat confident that they won‘t lose more in the near term, in this cycle.

CRAMER:  We went up 1,300 points.  I‘d like a pullback before anybody gets involved with the stocks.  The good dividend stocks are doing very well, Chris.  We have come down a huge amount.  This was the second worst downturn after the Great Depression.  It‘s just over.

MATTHEWS:  OK.  What we‘re struck with once again is this fact that the market goes up as we watch CNBC throughout the day—and we do watch it, like everyone does during the day.  We check it at MSNBC.  At the same time it‘s going up—it almost hit 8,000 today -- 614,000 people lost their jobs in January, 706,000 in February and an estimated—we get the full number tomorrow -- 742,000 lost in March.  We‘re going to get the actual number from the Department of Labor Friday morning, tomorrow.  But how can joblessness be on the rise and the economy be on the rise?  How can that be the case?

CRAMER:  The economy has always bottomed, and the stock market has always bottomed ahead of job—jobs being lost.  So, I think tomorrow‘s number will be awful. 

What you get is, people cannot start rehiring right after they fired them.  You get inventories down.  Companies start realizing there‘s more demand than they thought.  Then they rehire people.  Give it a three-month lag before you see unemployment be improved. 

But we‘re doing better as a country.  The Geithner plan, the Bernanke plan—President Obama has got religion.  He talks positive about the stock market.  He did that today.  They are all in, just like the American people.

MATTHEWS:  In the American economic engine, what‘s working right now?  Are the banks able to lend money, despite the presence still of toxic assets?  Are people beginning to consume more?  Is business beginning to invest more?  Is government spending and tax cuts beginning to have an impact through the stimulus plan? 

What‘s the good indicators out there of policy?

CRAMER:  OK.

I think that retail sales are better than expected.  I would—I use

because you and I, we‘re—you know, I go to Red Lobster, OK?  The Red Lobster, Olive Garden, those are up. 

I—look, that‘s just a great indicator, because that is what people do.  Gasoline came down.  That was very important.  We are seeing the stimulus in the tax returns.  That definitely helped.  Auto production has definitely bottomed, off 40 percent.  It‘s done.  It‘s going to start going up, because there‘s new loans to lend for auto. 

The banks, some are beginning to lend.  Mortgage rates are so good. 

And if you put down 20 percent, you get a mortgage.  That‘s freeing up. 

These are positive signs of a thaw.

MATTHEWS:  Do you think that we can get an economic recovery over the next couple of years without dealing with these problems we have with these bad assets, these toxic assets, based upon bad mortgages?  Can we solve the problem around the problem? 

I talked to Larry Summers a few months ago.  It was at a party, but I said to him, how does cutting taxes, how does spending money on infrastructure get us past this problem that the banks are not spending—are not lending, rather?

And he said, well, it offsets that to some extent.  Money in your pocket because of a tax cut, money in your pocket because you have got a shovel job somewhere and you‘re working on a bridge is an alternative way to get money into the—into the spending pattern.  But he said it also increased the asset value of people with mortgages, because they have money to actually pay off their mortgage now. 

Can we beat this problem by going around it...

CRAMER:  Well...

MATTHEWS:  ... of this—this banking problem?

CRAMER:  I want to be clear.  I—I said we‘re out of a depression. 

We‘re not out of a recession. 

I think that house prices have to stabilize.  We have a rolling stabilization.  When house prices drop 40 percent from the peak, Chris, that‘s when people come in and buy.  But Larry Summers is right.  We can offset it. 

But, no, we‘re still in a recession.  I don‘t want to take that off the table. 

MATTHEWS:  OK. 

CRAMER:  It‘s just that we‘re no longer in a cash economy, where the economy simply ceases to work at all. 

MATTHEWS:  So, we‘re in a regular recession...

CRAMER:  Yes. 

MATTHEWS:  ... meaning we‘re in a regular business cycle at the bottom, and it‘s moving up, and we can count on the fact that we‘re going to get out of this in the reasonable near future, like a couple of years?

CRAMER:  I think that is right.

MATTHEWS:  We‘re not into something cyclical and scary, you‘re saying?

CRAMER:  Right.  Yes, we‘re no longer—no, the Western world, financial—the financial world...

MATTHEWS:  I mean secular and scary, something really trendy and bad? 

CRAMER:  Right. 

Now it‘s just the usual look.  We‘re going to take a little while to get the economy back.

MATTHEWS:  OK. 

CRAMER:  But we‘re no longer a 1929-‘32 scenario. 

And I have to hand it to—to Geithner and Bernanke.  They read “The Great Depression” by Galbraith.  They‘re doing exactly the opposite.

MATTHEWS:  OK. 

CRAMER:  And that‘s really smart.

MATTHEWS:  OK.  Inflating the economy was the smart move?

CRAMER:  You bet.  That‘s what they had to do.  They had to break away from the playbook of Hoover. 

MATTHEWS:  Well, who is going to tell the French and the Germans that? 

CRAMER:  You know, I wish—the Germans are still living in the Weimar Republic.  They keep thinking, if we flood the world with wheelbarrows of marks, you what happens, Chris. 

MATTHEWS:  Well, they had bad results the last time, as you know, Jim.

CRAMER:  Yes.  Yes. 

MATTHEWS:  President Obama acknowledged that the U.S. is partly responsible for the global economic meltdown. 

Here he is talking in a way that President Bush never talked on any subject. 

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES:  perhaps what helped was my willingness to acknowledge that—and it‘s hard to deny—that some of this contagion did start on Wall Street. 

And as I have said back home, as I have said in public, and as I would say in private, we had a number of firms that took wild and unjustified risks.  We had regulators that were asleep at the switch.  And it has taken an enormous toll on the U.S. economy and has spread to the world economy. 

(END VIDEO CLIP)

MATTHEWS:  Well, who—you know, he put some blame there on the central banker, on Greenspan.  He put the blame there on Wall Street. 

Does he get credit in—does he get credit from you right now for—well, let‘s ask you again, Jim Cramer, does he deserve credit for what he‘s been doing? 

CRAMER:  Now he does.  He‘s on board.  Initially, he was banging the banks, saying, listen, it‘s not the time for profits.  He said in that same talk today that the stock market is the great wealth creator. 

And he‘s very sophisticated.  The previous president wasn‘t sophisticated, so he didn‘t have a lot of respect.  It—Obama is a very, very great learner of the situation. 

MATTHEWS:  Yes. 

CRAMER:  See, I don‘t think he would have said these things three months ago, honestly.

MATTHEWS:  What did Bush do at Harvard Business School for two years? 

CRAMER:  I don‘t know.  I mean, I was over there.  Maybe he was at the the—the Kong taking down the pu-pu platter and a lot of—I have no idea what he was doing. 

(LAUGHTER)

MATTHEWS:  Well, I have no idea what that means, but it sounds right. 

Thank you, Jim.

CRAMER:  Well, it was a great restaurant after you had a—you know, when you needed a little.

MATTHEWS:  OK.  It makes sense.  It makes sense. 

CRAMER:  Yes. 

MATTHEWS:  Thank you.  You‘re always the best, Jim Cramer, my friend. 

(LAUGHTER)

(CROSSTALK)

MATTHEWS:  Thank you. 

You can see “Mad Money” on CNBC at 6:00 and 11:00 p.m. Eastern. 

Up next, we have got a special HARDBALL Award to give out.  And we will tell you what is going to get it.  It‘s at the highest possible level. 

You‘re watching HARDBALL, only on MSNBC.  

(COMMERCIAL BREAK)

MATTHEWS:  Back to HARDBALL. 

Tonight, we have something really is a main event.  I‘m giving the HARDBALL Award to the president of the United States. 

Since it‘s a big occasion for HARDBALL, I want to set it up with the proper pomp and circumstance. 

Leaders, as anyone who reads history learned so well, need to show their strength of will, and show it fairly early, before the really big tests of office come.  And you never know when they will.  The leader needs to show that he or she merits the office, the credibility to face what will come later, that he or she, to use an American term, has the right stuff.  Every great leader meets and survives this rite of passage. 

Right off the bat, there is my hero, Winston Churchill, who, upon taking the premiership in those horrendous months of 1940, saw its only ally, the French, surrender to the Nazis, leaving the British all alone in their fight.  What did Churchill do to convince the British people and the world that he meant business, that this was war, pure and simple, and there would be parlay, no backroom deal to settle with Hitler?

He bombed the French navy, rather than let it fall into Hitler‘s hands.  The message was clear.  Churchill was a fighting prime minister who set a single goal of victory. 

I think, in more recent years, of another leader, Ronald Reagan, and his decision, just after taking office, to break the PATCO strike, as air traffic controllers, who are public employees, went out on an illegal wildcat strike, shutting down the country‘s airways. 

The new president served notice who was running the federal government. 

Here he is.  

(BEGIN VIDEO CLIP, AUGUST 3, 1981)

RONALD REAGAN, PRESIDENT OF THE UNITED STATES:  I must tell those who fail to report for duty this morning, they are in violation of the law, and, if they do not report for work within 48 hours, they have forfeited their jobs and will be terminated. 

(END VIDEO CLIP)

MATTHEWS:  Well, I learned at that time that Reagan‘s steel-like decision, popular or not, caught the attention of his rival leaders over in Moscow. 

Here was a tough president, ready to prove he was tough, which brings us to tonight‘s awardee. 

This week, President Obama had a choice to make:  Put up with more foot-dragging, yesterday-thinking, and panhandling from the auto bosses, or stop the nonsense.  So, he fired General Motors boss Rick Wagoner. 

(BEGIN VIDEO CLIP)

OBAMA:  And we cannot continue to excuse poor decisions.  And we cannot make the survival of our auto industry dependent on an unending flow of taxpayer dollars. 

These companies and this industry must ultimately stand on their own, not as wards of the state. 

(END VIDEO CLIP)

MATTHEWS:  That, ladies and gentlemen, is playing hardball at its best, good clean, yes, Machiavellian politics, because, as the great Florentine himself taught us, it‘s better to be feared than to be loved. 

And, so, for dealing this week with a swiftness and force of will that demands attention and respect from everyone in hearing distance, I hereby bestow the HARDBALL Award to its highest honoree to date, President Barack Obama of the United States. 

Up next: two Senate stalwarts in trouble.  The common denominator? 

AIG. 

You‘re watching HARDBALL, only on MSNBC.  

(COMMERCIAL BREAK)

MARGARET BRENNAN, CNBC CORRESPONDENT:  I‘m Margaret Brennan with your CNBC “Market Wrap.”

Stocks rallying for a third straight day, with the Dow Jones industrial surging 216 points.  The Dow actually traded above 8000 for the first time since February 10, before fading back below that level just before the close.  The S&P 500 gained 23, and the Nasdaq was up by 51.  That index is now actually in positive territory for the year. 

Investors really getting a sense of optimism, cheering a new accounting rule that could boost bank profits, also measures taken by the G-20 leaders to fight the global economic crisis. 

Also lending some help, factory orders rose in February, after six straight monthly declines, manufacturing orders in China also jumping. 

But the job situation remains grim.  Initial jobless claims rose more than expected last week to 669,000.  The number of people continuing to receive unemployment benefits set a record for a 10th straight week, rising to 5.7 million.

That‘s it from CNBC, first in business worldwide—now back to Chris and HARDBALL. 

MATTHEWS:  Welcome back to HARDBALL. 

Two Senate fixtures, Arlen Specter of Pennsylvania and Chris Dodd of Connecticut, are both facing tough races, potentially, in 2010.  And the common thread in the issues being raised so far, AIG.

Joining me right now, the strategists, Democratic strategist Steve McMahon and Republican strategist Todd Harris.

Now, we know that Chris Dodd has got an AIG problem.  He‘s taken like $300,000 from that big insurance company.  And of course he had a hand in giving them a break in terms of those bonuses. 

So, let‘s take a look now at how it‘s being used in a Pennsylvania race.  Here‘s an Arlen Specter ad.  He‘s the incumbent.  What, he‘s been in since 1980. 

TODD HARRIS, REPUBLICAN STRATEGIST:  Yes.  

MATTHEWS:  Here he is with an ad bashing a guy named...

HARRIS:  Pat Toomey.

MATTHEWS:  ... Pat Toomey, who ran against him six years ago—five years ago, actually, almost beat him in the primary.  And everybody thinks he‘s going to run against him now. 

Preempting that, here‘s a Specter ad against Toomey. 

(BEGIN VIDEO CLIP, SPECTER CAMPAIGN AD)

SEN. ARLEN SPECTER (R-PA), JUDICIARY COMMITTEE RANKING MEMBER:  I‘m Arlen Specter, and I approve this message. 

NARRATOR:  Pat Toomey, as a Wall Street trader, he sold risky derivatives called credit default swaps, the same swaps that have now plunged us into this financial mess.  In Congress, Toomey fought for less oversight of Wall Street.  He even wants to gamble our Social Security accounts in the stock market. 

Now Toomey wants a bonus, a seat in the United States Senate.  Should we let him have it?

(END VIDEO CLIP)

MATTHEWS:  Well, obviously, that was good language loaded with the usual kind of red meat.  The guy is the bad guy now.  He wants a bonus.  There‘s a magic word, an AIG bonus.

(LAUGHTER)

MATTHEWS:  but here‘s Pat Toomey‘s response this afternoon.  We only have a written response.  It was an e-mail response by someone identified as his spokesman. 

So, even though he says he‘s not a candidate, he does have a spokesman. 

(LAUGHTER)

MATTHEWS:  Quote: “As is often the case, Specter doesn‘t have the facts right.  While I worked in banking 20 years ago, I have never sold a single credit default swap to anyone in my life.  They hadn‘t even been invented yet.  This is a desperate and silly attempt by Senator Specter to change the subject away from his support for Wall Street bailouts and massive new spending and debt in Washington.”

You start, Todd.  It seems like they are both whacking each other already. 

The issue is, who sold out more to the big shots? 

HARRIS:  Well, you know, on a separate issue, Senator Specter actually compared Pat Toomey to an AIG employee.  He said, he‘s just like those guys working at AIG, which, you know, I‘m sure outraged Toomey as well. 

Two things which...

(CROSSTALK)

MATTHEWS:  Well, what about the fact Toomey denied there was ever such a thing as a credit default swap when he was in the banking business?  Is that a pretty good defense? 

HARRIS:  Yes.  First of all, it‘s true.  They didn‘t exist back then. 

(LAUGHTER)

MATTHEWS:  Yes. 

HARRIS:  And, you know, depending on how much weight Specter puts behind this spot, it could be that the response is louder than the actual charge to begin with. 

But what this shows, two things—number one, the fact that Specter is already on the air, on the attack, as an incumbent senator against someone who hasn‘t even said whether he‘s going to run shows just how concerned and precarious Senator Specter‘s position is.

And then you look at his—Senator Specter‘s position on the Employee Free Choice Act, which everyone was speculating which way is he going to go, he came out against it in order to try to shore up his conservative credentials.  He‘s very concerned about his ability to win that Republican primary. 

You look at the numbers, and I think he‘s right to be concerned.  His only ray of sunshine is that the election is still a long way off. 

MATTHEWS:  Yes, that‘s the only ray of sunshine. 

Steve, look at these numbers, just to put it in perspective now.  We have got Specter in trouble.  He‘s down 41-27...

STEVE MCMAHON, DEMOCRATIC STRATEGIST:  Right. 

MATTHEWS:  ... in favorable, un—he‘s actually down in a matchup with this guy, Toomey, who almost beat him last time.  He‘s down at 27 percent, compared to Toomey‘s 41. 

However, as you point out, Todd, a hell of a lot of undecideds there, a lot of wiggle room for both of them.

Let me move on to the Dodd situation.  Chris Dodd has been in the Senate for many years.  He‘s chairman of the Banking Committee.  He‘s losing to a potential Republican now.  He‘s down something like 33, in terms of approval 33 to 49.  He‘s down 50 to 34 in a match up with a Republican.  What do you make of that situation right now, with Simmons ahead of him, 50-34, the former Congressman? 

MCMAHON:  Senator Dodd obviously has his work cut out for him.  It‘s actually the mirror of Senator Specter‘s situation, because Senator Specter is actually more vulnerable in a Republican primary than he is in a general election, since that fine candidate left the field in Pennsylvania. 

Senator Dodd, on the other hand, is much more vulnerable in a general election.  So far, the Democrats are holding firm; 59 percent of the Democrats in Connecticut say they will support Senator Dodd.  In a primary, he is still very difficult to beat.  He does look like he‘s going to be very hard pressed to win in a general election, which, of course, is an opportunity for the Republican. 

An incumbent has enormous advantages going into these things.  Pat Toomey is going to find that out in Pennsylvania.  And I suspect that Rob Simmons will find that out if Chris Dodd decides to go forward, run, gets the nomination and faces him in the fall.  Chris Dodd will have the full weight of the United States Senate, all of his colleagues and all of their money and fund raising prowess.  It will be a hard seat for Republicans to take. 

MATTHEWS:  It‘s hard to beat an incumbent.  Do you, in fact, if you look at history, both of you guys, see—the only reason an incumbent loses, especially in his own party or even outside of his party, is when the tide of history seems to be against them in that part of the country.  Like there‘s a real ground swell of opposition to the party they are in.  For example, good people like Jim Talent in Missouri or Gordon Smith out in Oregon, or Sununu out in New Hampshire, they lost because the tide was against them.  The war in Iraq was unpopular, the recession.

But in this case, does anybody ever lose an election because of one vote they cast or one thing they did, like I‘m accused of helping AIG?  Does anybody ever lose on an issue like that, one vote? 

HARRIS:  Not when that vote is this far out from election.  Remember, Chris Dodd had a front row seat watching his colleague Joe Lieberman lose a primary. 

MATTHEWS:  He won his seat.  He kept his seat.  He was a hawk on the war.  Isn‘t that my proof, Steve?  It‘s very hard to lose on an issue.  You lose because of trends of history, not one issue? 

(CROSS TALK)

MCMAHON:  You lose because of two things.  The first is an issue like the war, where the entire public goes the other way.  So you get caught up in the tsunami and you drown.  The other way you lose if you‘re an incumbent is by going Washington or losing touch with the people who sent you there.  That‘s actually more often and more likely to happen to a senator like Chris Dodd or Arlen Specter after 20 or 30 years.  People just think they lost touch with their district.  They don‘t represent us anymore.  And why not go to somebody who does. 

HARRIS:  To put these numbers for Dodd in perspective; in Connecticut, which is a very blue state, even after Joe Lieberman came out in support of the war and endorsed John McCain for president, he was still more popular among general election voters than Chris Dodd is today. 

MATTHEWS:  Why? 

HARRIS:  Obviously, people feel so strongly about this AIG issue, about—it‘s not just AIG, it‘s the Countrywide financial and Dodd‘s ties to them.  There‘s the Senate investigation now about the terms of a mortgage that Senator Dodd received.  And Steve is right. 

MATTHEWS:  Will the AIG issue, the bonuses for the guys in New York, the bands guys, in Connecticut, will that still be a stinging issue a year from now?

HARRIS:  If the economy don‘t have significant problems, absolutely. 

MATTHEWS:  Steve, still an issue, bonuses, the whole question of bonuses and unfair use of this economy? 

MCMAHON:  What happened on Wall Street is going to be an issue all the way through 2010.  I should say that I think Senator Dodd is not being treated fairly here.  He walked the plank at the administration‘s request and he‘s paying the price for it. 

MATTHEWS:  Do you want to say something nice about Arlen Specter, now that we got a bicentennial moment there from Chris? 

(CROSS TALK)

HARRIS:  I wish them both well. 

MATTHEWS:  Aren‘t you Mr. incumbent?  Thank you.  It was incumbent upon you to say that.  Thank you, Steve McMahon.  Thank you, Todd Harris.

Up next, the AIG issue is still a hot one.  Up next, the politics fix; will the president‘s London trip strengthen his hand when he gets home.  Is this guy going to have a lot of mojo when he comes back?  I think he‘s done well, my sense, on this trip at home.  We‘ll see if it‘s got more power to get the health care bill, the budget through, the whole thing through.  Education, energy and health; will he win the whole shebang when when he comes back after Easter?  This is HARDBALL, only on MSNBC. 

(COMMERCIAL BREAK)

MATTHEWS:  We‘re back.  Time for our politics fix.  Joan Walsh is with Salon.com.  And Michael Smerconish is an MSNBC political—talk show host as well.

Let me ask you both about the president‘s mojo coming back.  Will he be able to do what he wants to do when he comes back, with the wind at his back, having done big deals with the Russians, with the Chinese, with pushing—well, certainly the glamour front over there in London and in the days ahead in Strasbourg.  Joan? 

JOAN WALSH, SALON.COM:  I think it gives him—I think he has great mojo going on, Chris.  He was able to bring together President Sarkozy and Hu Jintau.  He was breaking up fights.  He was in the middle of photos.  He was a humble, calm and reassuring presence.  In a way, with all his glamour, he still has that humility to say yes, we were part of this global process and we will be part of the solution. 

I think the problem is, though, he can get together Sarkozy and Hu Jintao, but he can‘t really break the logjam with Republicans.  They are determined to resist him and to try to show him up.  And yet there‘s such a stature gap.  There‘s nobody.  Eric Cantor, Mitch McConnell, who can stand next to him and tarnish him in any way? 

I still don‘t know how it translate necessarily into his getting any kind of a Republican cooperation. 

MATTHEWS:  I have a theory.  Let‘s test it with Michael.  I have a theory.  I think it works with the Democrats.  I think with Evan Bayh and Baucus and Kent Conrad, I think people don‘t want to publicly stand up to this president in all his glory right now, Democrats. 

WALSH:  That‘s a good point. 

MICHAEL SMERCONISH, RADIO TALK SHOW HOST:  If you remember the words from the Bush 41 era, the big mo.  He had the big mo before he went to Europe.  And I think he has the big mo even more so when he comes home.  I don‘t know that Americans, respectfully, have Joan‘s level of attentiveness as to what‘s going on with the intricacies of the visit.  But the reality is he looks good in this role.  I think we all feel good in watching him on television as he‘s being so well received, because, for a long time, it just seemed a little nutty that our president was so reviled overseas and nobody wanted that. 

Chris, I remember when he went and spoke in Berlin during the campaign, and Republicans tarred and feathered him for that.  I had people call my radio show and say, well, the music and the beer was free.  That‘s why he drew the crowd.  I‘m thinking, this is insanity at this point.  It‘s a good thing to have our guy cheered.  That‘s all. 

MATTHEWS:  I personally would like to see the United States leading the world, not the world‘s bad boy.  And I think if we‘re going to lead the world against Islamic terrorism or zealotry, if you will, we have to be the leaders.  We can‘t be just out there on our own.  We‘ve tried that route.  Joan? 

WALSH:  Yes, and I heard Christopher Hitchins, my friend, on your show earlier, dismiss that. 

MATTHEWS:  He‘s not your friend on policy, Joan.  I can tell you that. 

WALSH:  I know he‘s not.  It was a joke.  You know, dismiss it as atmospherics, but it‘s more than atmospheric.  And atmospherics are terribly important.  We are in a global financial crisis.  And we also have a lot of global, you know, wars.  I‘m glad we‘re not using the terror term, but we have enemies and it helps to have friends. 

I think Obama‘s approach to the world is going to win back friends and allies.  I don‘t want to be naive and I know he‘s not.  It won‘t solve everything.  But I think that starting out with this approach at a time when the world really does need us again, and we need the world, is a wonderful thing for the country.  And I think Republicans are silly, and I know Michael doesn‘t, to diminish the importance of that. 

MATTHEWS:  Here‘s the president‘s proposition, Michael and Joan.  We know it well.  I‘ll recite it.  He says we can‘t just muddle through this recession or depression the usual way, by cutting taxes and perhaps spending some money we normally wouldn‘t spend.  We have to fix the problems that led us into it.  We need a health care plan that reduces the burden on American enterprise and competing in the world with our trading rivals.  We need to cut the costs of health care to those auto manufacturers that have to fight with Toyota and Hyundai and the rest of them. 

We have to deal with the energy crisis, because as long as we‘re spending money that goes to the East, to people that don‘t like us generally, we are going to lose in the long run.  Third, if we don‘t exploit our general advantage as the most educated population in the world, we don‘t deserve to win this fight.  So his argument is we got to get suited up, in shape for the big, long fight with the rest of the world economically.  There‘s no sense just trying to get through this current mess. 

That‘s the Obama argument.  Can he sell it now better than two weeks ago?  Michael? 

SMERCONISH:  Well, I think the mechanics, as you‘ve defined them, are all accurate.  And I think he probably was already in a good position to sell them, even more so now.  Chris, I think it was very significant what happened on your program tonight at the outset.  I was paying attention when Cramer came on, because I happen to believe that yes, the mechanics are broken, but there is a lot of psychological factors at play here.  If Americans will start going out to dinner, pulling the trigger on buying a new home or maybe a new automobile lease, when all of a sudden they get the green light from somebody like Jim on a program like yours.  I think finally now we‘re maybe on the cusp of that occurring. 

MATTHEWS:  You know why?  It‘s called the wealth effect.  If you believe you have more money or will have more money in the future, whatever your current income is, you will spend more money, because you have more confidence.  Joan, that‘s a bit monetarist.  It‘s not liberal.  It is not Keynesian.  It is the way I look at things.  I think you spend based on what you think you have, not just what you‘re getting in the paycheck. 

We‘ll be right back with Joan and Michael.  Let‘s talk about Michelle when we come back.  She is a dazzler and she dazzled people emotionally today with those poor kids over in London.  You‘re watching HARDBALL, only on MSNBC.

(COMMERCIAL BREAK)

MATTHEWS:  We‘re back with Joan and Michael for more of the politics fix.  We‘ve gotten word late today that former Governor Rod Blagojevich of Illinois has been indicted on 16 felony counts for racketeering, conspiracy, wire fraud, extortion conspiracy, all kinds of problems here, making false statements.  It‘s the whole stations of the cross, if you will, of corruption here.  This guy has done it all.  What‘s this going to mean, Joan? 

WALSH:  Well, you know, I think it‘s going to be a cloud hanging over Roland Burris.  This happened while we were on break, so I haven‘t gotten to read it at all, Chris.  I really think it was a mistake to seat him.  And there are going to be questions that continue to haunt Burris as we look at what is contained in these counts. 

MATTHEWS:  Michael, it seems to me that question raises the question of Roland Burris‘s appointment.  Whether it‘s true or not, everybody is going to believe now there‘s something tainted about the very fact that he‘s accepted this appointment.  And this is a Chicago story.  In that sense, I think it is a clout problem for everyone from Chicago, including the president.  That‘s going to be something we have to examine over the days ahead.  What do you make of it right now? 

SMERCONISH:  My gut reaction is we‘ll find out what this campaign that Blagojevich has been engaged in for the last several months is going to bear fruit.  I‘ve never seen anything like it, where a guy is drummed out of office and makes himself available to every media outlet in the world.  And with what intent?  I would say as a lawyer probably just hoping he can sway the mind of that one juror who ends up now sitting in judgment in Illinois. 

MATTHEWS:  What do you make of it, Joan, 16 felony counts.  It seems to me that Patrick Fitzgerald, the U.S. prosecutor out in Chicago, has really spent his time putting this case together before that grand jury and that we‘re going to see a really big-time trial out there, with lots of evidence against the governor. 

WALSH:  Sixteen counts, you don‘t bring them unless you have a lot of evidence.  And Fitzgerald is a very cautious prosecutor. 

MATTHEWS:  Yes. 

WALSH:  So he‘s got some goods. 

MATTHEWS:  OK.  Joan, thank you very much.  Big story tonight.  Joan Walsh, Michael Smerconish.  Join us again tomorrow night at 5:00 and 7:00 Eastern for more HARDBALL.  Right now it‘s time for “1600 PENNSYLVANIA AVENUE” with David Shuster.

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

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