formerly a writer and editor. for more information on it justin fox and to read his blog visit time dot com / curious capitalist. >> ..

>> we have a small group your. feel free to fill in if you want, but i asked how many of you watched cnbc. so many of you are cnbc viewers. we usually have a pretty educated viewership so i'm curious. i can do like to do this in small groups, large groups. how many of you think the economy has seen its worst days? it's going to improve. okay. how many of you think that we will see economic growth in

2010? not just gdp being flat, but actual growth. rip are so not too optimistic. we are in new york. i just read how many of you think we're in for a very tough time here in new york or also we have seen the worst of it. who thinks we've seen the worst of it? okay. finally, how many of you think joe kernan's hair is israel? [laughter] >> nobody? nobody? i'll tell you at the end. you have to stay. i wrote the book, many of you may have seen, i don't know if you haven't. if it is still airing or documenting. we spent a year over on the document appeared it was late 2007 and a lot of people who i've been speaking to. i began as a bking reporter, in 1987 you're one of the advantages of doing something for a very long time, getting

old is so the resources, in institutions where they are working. and many of them are senior executives at many of our nation's banks. beginning in august of 2007, almost two years ago right now when the credit crisis began, many of them were telling u this was going to be very, very bad. and yet if you recall, t stock market did not reflect that at all. through the fall of 2007, right through october, november. things were quite good. i think we were heading our all time highs in the stock market. but i had this course of people who said the stock market doesn't get it the credit markets are not functioning. we are going thave a serious significant recession. we started to see a lot of different elements of that in the equity markets. as i said things were not being reflected. i decided at the time it might be appropriate to begin work on a documentary. and so we did.

and that process took 13 of 14 months. and a documentary aired. it is house of cards. it aired in february of this year, 2009. documentaries are great. they are a lot better than being able to report on something for two minutes. and even they have their limitations as generous as cnbc has been to me to give us the time to tell an important story. house of cards was two hours, two hours 20 minutes. of course you have advertising. but there still so many things i think we're left to say about this crisis and so many more dots to connect for people. obviously not nearly as many people unfortunately read books as watch television. and so while millions of people have seen a documentary, far fewer will read the book are nonetheless i felt it was going to be an interest and thought and understanding of what

happened, how it happened. and building in a little bit more detail in some of those somewhat complex topics such as collateralized, debt obligations, which i devoted a chapter two in the book. and hefully it's not too tough for people to understand. funny, a lowball figure but read the book and come back to me that i thought i got it, but i only really understood how they were constructed, the wrist that was inherent in actually how it all worked until i read your book or something else i thought was important to do was try to explain to people how the banks ultimately suffered the losses that they did. i think we did that to a certain extent in the book without hopefully boring the reader. and i used merrill lynch as an example. i might've used bear stearns, lehman brothers or citigroup, merrill lynch means a great firm

that it was of course being on its knees as well last september 14, openly sold to bank of america i felt would be a good example. so that's what i tried to do in the book. there are any number of different things i think that our significant in terms of the focus, but other things that i was trying to do more to combat some of the i think myths that are out there that have been promulgated. for example, that fannie mae and freddie mac caused the economic crisis or caused the credit crisis. visited something that is been bandied about certainly in political circles. and it is really not a big fannie mae and freddie mac at many wrong things but ultimately, if you read the book, i think i try and explain that it was in fact their absence from the market for mortgages that allow wall street to move in and overlake ao

many of the problems that we currently are still suffering from. rather than their irresponsibility in terms of offering subprime mortgages and the like. what fannie and freddie did was try to gain back market share that they ultimately had lost to wall street. as you can judge from the title, of course, i dewpoint the finger squarely at wall street in a lot of ways. i do think wall street, there are many culprits. mini mini culprit, but wall street is i think chief amongst them. a lack of leadship amongst so many of the firms and their leaders. a lack of understanding of the risk that was being taken on by so many of these firms. again, as i said, i focus on merrill lynch, very tough but very smart man who ran a firm with a knife is for a number of years but ultimately was forced

to resign in october of 2007. he is an interesting story, is all new, but what i uncovered in my report on merrill lynch, he really did not fully understand, not even close frankly the risk that was being undertaken by the firm that he ran. it may have been capped from him in part by people who ran fixed income, mortgages, mortgage related products became by far the largest engine of growth at merrill lynch. it was as i said the largest mortgage broker investing as an investment bank in our country. and yet o'neill didn't fully come to grips with that fact until the summer of 2007. august of 2007 when he embarked on what has been a much remarked on solo golfing excursion essentially, taking days in late august and september of 2007 alone playing golf. many people wondering why in the

world would stand o'neill be doing that while it seems the world was starting to melt down. i believe it was because he finally understood that his firm was in serious serious trouble and he was trying to collect his thoughts and figure out what to do. ultimately a year later merrill lynch would be sold to bank of america for about $40 billion in a deal that is still being loed at very carefully by regulators, if any of you have watched television in saint ben bernanke get up and have to testify in front of congress. why they spent so much time on this is not quite clear to me. but nonetheless bank of america did pay a high price to receive that it may have collapsed on september 15 or 16th, at last year, if it not been for bank of america. coming in. seems thing a lot better these days. i wrote the epilogue to this book in the spring of this year, and it's funny how quickly

ings seem to change. we're still going to be suffering from 10% from the plummet for some time to compare we have seen a complete retrenchment of the consumer in our country at this point. and there are so many questions about whether this recovery that seems to be reflted in the dow jones industrial average is real. goldman sachs of course is back to making a lot of money. perhaps taking on a lot of risk. but wall street has change. whether it has changed for ever of course is a larger question, even change significantly as a question. i find myself with far too many questions these days and not many answers in terms of those larger issues as to whether wall street is truly going to find himself or will be as result of the regulatory actions that are being undertaken by the obama administration, or they hope to undertake. really don't have much more to add. i look forward to your

questions. i encourage them. if you have any, please feel free and again, i very much appreciate to you all being your yes, sir. [inaudible] >> we're going to bring over microphone so that everybody can hear. >> assuming that we pull out of this recession without things like the irs disallowing tax deductions for warehouse department were to bring much bigger than real estate isom how long do you think it'll be before the next recession or the final depression? >> final depression? is that what we are all aiming for? you know, i don't know. i try in my reporting everyday to at least understand wt i think is happening and provide some context for our viewers

every day. and so whenever i talk to as many people as i can and get as many opinions as i can from people who i've come to respect years and years of winnowing might soar space down. you see the stock market going up it we are up almost 50% from the march lows. an incredible move in a very short amount of time. thankfully in a lot of ways certainly. but i'm not sure what that is reflective of at this point. so i don't know to answer your question as to whether or when this recession is ultimately going to end. i look at the consumer as a key barometer, and people really have retrenched. of course, we go way over our skis in so many ways. many of you may have seen the chart of household debt. it is square footage of homes. they all just go like this for a very long period of time, and we do seem to be in a period where that is changing. and where savings rate that was the nail actually is becoming

somewhat significant. something we all want ,-comto come arlie's many people said we needed. but now of course people say it can wait little while longer until people start saving money again? but that being said, 70% of our economy is led by the consumer. and its recent earnings period from cporate america which has sparked this very large rally, or part of it, i talked to a lot of ceos and executives at companies. and there's no doubt they have been able to cut costs and shed jobs to get ready for what they saw coming. d so their earnings are better than might have been anticipated, but they don't have a great deal of revenue growth. and when i talk to them now, they aren't the best judge, believe me, they get very negative at the bottom and they get euphoric at the topic it's typical. that happens oftentimes, it may be the case here, but many of them are still very negative. they say they have not seen any real turn in their business. what i continue to hear is the rate of deterioration has slowed

or stopped, so we perhaps have hit a bottom. but the larger question, given what a huge role the consumer place in the economy, in my mind, is whether ultimately we're going to see any real growth. the stock market now does seem to be expecting in a six-month time companies are going to start having higher revenues. and i don't know the answer. so i haven't answered your question because i just don't know who can say when this recession will end. my sense is at we could be in for another tough time before we truly see the end. in the back. >> hi, david. i'm just wondering how do you see the national debt, very much growing national debt, playing into our economy over the next few days -- years. sing at how is it working, are we putting a lot of money, what are we doing right now? yeah, we're increasing the

deficit enormously and increasing the national debt. and ultimately could be inflationary, all that money that we are printed and there will also be the politicians like to state a burden for our children. it's not a good thing. gets a bad thing. but some of the structural -- some of the things that have taken place that caused this crisis are things that became structural. overspending here in the united states. lack of course of exported goods that resulted in huge imports, huge dollars surpluses around the world. certainly in asia and in mideast, that's where all recyclers and the like, they need to bite dollar-denominated products and we had a wall street that was happy to kind of come up with any opportuity they could to sell it. , that's a 20 year in the making trend. china has a trillion dollars.

all of this going to this larger point, i mean, how are we ultimately going to get back to where we're exporting more than we are importing. the president talks about it, but it's hard to imagine when we'll actually get there, or if we'll ever get to pick and ultimately i think it does lead to what might be a diminution in our lifestyle, you know, it's not good. but it's been a long time in coming and continues to. i don't know. these larger trends are still there. they don't go away in a year or in two years. and we are dealing with some of them now. and again, the fact that we built up huge deficits, huge trade deficit, did come home to roost in a sense in the fact that all we rely on until many foreign governments or i should say foreign institutions to fund our debt.

and we still do. of course, thankfully the chinese are still big buyers of our treasuries. are there any other questions? at gentleman standing in the back there. >> thank you. at what point does it become more of the chinese interested maybe not by somuch of our dollars, and what consequences will it have for us? >> you know, i've asked that question myself a time that i've been lucky enough to secretary geithner sitting across from a. he is come to cnbc a number of times in the last six months, off the record, to chat with some of his. and i think there is a belief that they will not. and the reason they won't is because if they were they would get hurt very badly as well. in other words, they will start selling certainly. will they buy less? yes, i think that's a possibility, and ultimately result in interest rates having to go a. we haven't seen it yet. all this money we are printing,

that we are selling, we have yet to see any significant inability, some of the auctions lately have been a little soft. but really inability to sell a lot of what we've got to the self chinese are huge buyers of treasures and also the obligations of fannie mae and freddie mac. but if they were too absolutely so, the impact would be so large on what they had that it's hard to imagine they would go about doing that. and they think very long-term. you know, i think it's the threat of it that does give them more power. rather than the fact that they will ever actually do that. as to whether they will buy less of our debt, and i think that is more likely, it would ultimately result if we can't find someone to replace the chinese, and interest rates going up there which by the way a lot of people

i think expect will happen. not this year, buthen they actually exit this period, all this money would have been, inflation conceivably will come back and we will all be looking at much higher interest rates which of course will be something we will also be dealing with. and again another legacy of this period and this crisis. are there any other questions? good. lots. >> i can hear you, but maybe other people can't. >> you said you are pointing fingers ward wall street. i believe. [inaudible] >> i personally believe it's the peoples fault and i think if people learn about what they're doing they will probably make better decisions? >> what do you mean? >> like purchasing a home. when you look at mortgages, lower interest rate, if they knew about it within a click educated choices and not being

in this kind of position? >> the question is art homeowners to blame for making poor decisions? >> there is no doubt in a number of whom i've spoken to who took on mortgages that absolutely could not afford and should never have been given. wall street was happy to fund those mortgages, and the way it worked was wall street has a pool of money which you can actually gives or buys the mortgages from the originators. who are on the ground making the mortgage sang to you what a mortgage? and though standards slipped over a period of time, particularly in the 2004, 2005, 2006 period. there were virtually no standards. you all probably heard and read about it. i go into it in some detail her and did all the different popular mortgage products, and it really is amazing how many products were created. the key one being of course the

stated income loan. you didn't actually have to tell them the person who is lending you money how much money you made. there's nothing back can allow people the more irresponsible than that. should people have been more responsible? of course. did they fully understand what they're getting themselves into? i think some did and some didn't but i think it's also important to remember that it's another, one of those -- i think it's more of a misunderstanding that a myth. most subprime was for refinancing. it wasn't for the purchase of a new home. it was for somebody who owned a home to put in a new pool, go buy a new car, to buy a new coat. that is what more than half of all of subprime, and then you move on to a recall all day during this period is action for cash out refinancing, take the equity in home has gone up your people saw an opportunity frankl, more than once, over and over again to avail themselves of the equity in their homes, take it out and take on what

were called the subprime mortgages. or also another category, although a. and so i think many of them did note to a certain extent what they were doing. i think he always assumed as everybody did that housing prices would never actually go down. ill i sat with alan greenspan for quite a paradigm for this book and for documentary, and he said why would you question whether this asset class would really decline in value. it hadn't been 50 years. it was simply a denial. no, i think based on history that housing prices would ever truly decline. and i think that is at the heart of so many of the decisions that were made. we can get these mortgages and we know these people may not be able to pay them back, but really wants its clear of us and some guy in china has bought his mortgage-backed security or cdo, or went to norway and they

bought it there. it's not rlly that important and frankly, housing prices are never going to go down to what is the word. they can just keep playing this game over and over and over again. you get to a point where you need to refinance because your mortgages going to adjust, because you've had it for two years you can go ahead and do that. because housing prices will go up so we will be hpy to give you more money on the house. i think that is also at the root of this. misunderstanding on the part of some, absolutely. not understand what they were doing, no doubt. believe that housing prices would never go down, which was naïve, we now know. and of course the willingness and the part in particularly wall street to allow mortgage brokers to extend any kind of product they liked to more or less in the winter coming, we were at a point where anybody could get a mortgage. .com a high profile a gentleman and above-named arturo who w an from mexico. nice family, three gets. he worked in an embroidery

factory. he made -- he wanted to start his own company vicki wanted to start an embroidery factory but he also worked in various jobs. you know, his take-home pay in a given month i believe was, of course, memory is escaping me, was about 3000 dickey said he earned even less than a. it was $900 a week. batch records of $3600 trickey said he earned a lot more. he got a $580,000 mortgage to buy a house. that's what we're dealing with at that point. you know, unfortunately for him is no longer longer living in that house as you might imagine. so was he a responsible? sure you want to reach for the american dream so to speak? every time people are going to do that. you want, somebody is willing to give it to come you're probably going to take her to take a lot on the part of those people who are unsophisticated to seno with only a saint just sign right here and i will give you to

mortgages. not one, two. one for your down payment and one for your house. that will allow you to borrow $588,000 live in this beautiful place in california. yes? yes, sir. >> so certainly had an impact on in america, it also had a tremendous impact on other countries. and i have two questions. do you think what happens as reached its peak for other countries? so the wave of problems to come? and the second part when you are discussing this with other people, did it have any impact that's what was going wrong and ultimately has an impt on other countries, that banks are going now that companies are going down, other countries, was it because america -- i am from germany myself. americans take the leadership

here and ultimately when there are problems they're having tremendous impact on other countries. so what can impact does it have on discussion when there are problems like on wall street? >> first of all, this is global phenomenon. and the fact is that europe participated quite boldly as well. the swiss bank ubs has taken 60 billion or more in losses, and need me. it has been more or less bailed out by the swiss government at deutsche bank reported a loss the day, talking about german banks, or had to take significant right now. and europe and the western european banks are actually i believe in worse shape in some ways than r own banks. in part because there is not the willingness or as much transparency in a lot of european markets in the banking system in terms of taking the

write-downs that we have seen taken here by our own banks. there is also another problem that western european bas are facing. and that is what is essentially a widespread defaults going on in eastern europe. and enormous amount of lending to countries like latvia, estonia, czech republic, poland, was from western european banks. the big western european banks. don't even get me started with the u.k. the fact is that there is an incredible amount of irresponsibility on the part of many european banks. that was equal to and not necessarily result of the u.s. banks forcing them to do it. it was a global phenomena, this glut of liquidity that we had, money rolling arou on the willingness of people to lend enormous sums to whomever it might have been, both on the part of mortgages and also corporations and to people who

wanted to take companies private. and to do so on very, very lacks terms. so europe is suffering and will continue to suffer. you know, again when i talked to some of the u.s. regulators, they are more concerned about europe. in part because they look of the european banks have been as honest as the u.s. banks and taking their hits. and then you have his eastern european component that our own banks don't have. where it's very questionable as to whether any of these western european banks have lent tens of billions of dollars to european countries have ultimately going to be paid back. so i think we look at the global, and you know it's interestin europe right now not coming back at all. i mean sometimesou will hear in the economy i'm talking about, when i talked to a ceo, i cover media very close to. it's a little bit of hoping advertising market in what is going on here in the state, but in europe, viacom this week,

time warner, nothing. as bad as it has been. so i think we forget sometimes, europe's economy has been hit hard to stay and had an incredible housing bubble of its own to spend unemployment rate is what, 16%? if some incredible number. that being said, there's the other side of the story, which is we relied on a lot of european investors to buy all of these securitize products that are wall street firms, lehman brothers, merrill lynch, bear stearns, citigroup were creating. there i think we have i think we exported mortgages. one of the leading exports of our country. it's very odd. and there i think when it comes to europe we should take some of the blame. and then of course, yes, we lead the world into recession because we consume so much and when we stop consuming all kf the countries that provide to us are

suddenly find their own economies hurt badly as a result it china being chief amongst them, and now who has been incredible, enormous stimulus to try to stay with its own consumer demand. which it's a real interesting story in its own right. guesser, in the back. [inaudible] >> how long do you think that monetization can last before the u.s. hits a wall at. >> what you mean by that monetization? what are you talking about? >> turning bonds -- wl, the interplay between bonds and cash, the federal reserve turning pretty much cash into bonds, bonds and cash depending on -- >> evening creating money? >> yes. >> i don't know. don't know when that day in spirit i mn, it ends, right? >> timeframe? >> i can give you one.

it's not something that i'm familiar enough with the having of opinions about to share one. i think it's an important question. i think it's one that is being asked a lot, but i don't know when that day comes. we will know when it comes. yes, ma'am. >> sock to make you walk all around. i should pick one area. >> what are your thoughts on the ability to balance cig? >> cit, that the lender that i was reporting a lot on a couple of weeks ago, a lender to small and medium sized businesses here. it got to $.3 billion in hard money and government assistance, but it was in a position a few weeks ago where it ultimately was very close to having to file r bankruptcy because the fdic wouldn't allow it to do certain things that i thought it was going to be allowed to do that would have preserved to a

certain extent it's ability to be liquid, to have money on hand to pay. what do i think about that? i get it. i do kind of get it i understand who didn't show up in our documentary interestingly because it's unfortunate he sometimes the way things go, but who is featured in the book and she is very impressive lady. and i understand what her thinking is there in refusing to help cit. t has a banker who was in the midst of this transition because a company that part in the capital market and let that money and had lisa's. you could lease a plane and they would give you the money. or provide you the least. but their business top when it could borrow money in the capital markets as a result of the credit crisis so their transition to basically becoming a bank where they would take deposits and then they would do the business that would. but they didn't make it and they had no plan b.

in other words, it never occurred to jeff, the man who ran the company phalloidin plant probably won't happen if the feds don't actually play along. issue data that could be guaranteed by the fdic. another program with a knowing and issues, but plg pee. will happen if that doesn't happen it will happen if they don't let us transfer assets from our holding company to our bank. if we can do that we can get them off our balance sheet and have been funded by deposits and would include things off and free up some capital. but i understand that she didn't want him to be transferring those assets for the bank beuse she didn't feel like they were assets being valued properly. she was protecting the fdic, and the fund because of the fact that she thought that i'm going to end up having to bail out this bank, pay back the depositors. why do i want to do that? it wasn't a systemic risk the cit is not a systemic risk.

it is a big letter to a lot of people andt would've been -- and/or so maybe. if you haven't paid attention, i don't blame you but it managed to get it deal with its bondholders that is given it some window here. but its still very possible it will file for bankruptcy, chapter 11. and a bad day comes, you will be a very bad day for a lot of small businesses who rely on it to take the receivables. they wrote all this money, we'll give it to you, we will give you money for the receivables and we pay in interest rate on that. but you know what, this period is like some of those businesses to transition, to prepare, we will see what happens. but i get it. i understand why and i was glad to see if i figured it's enough already. .com is we will lose to $.3 billion of our u.s. taxpayer money because if they go bankrupt. it was sort of refreshing to ask you to the government say no for a change. guesser?

-- yes, sir. >> i just wondered if you had any thoughts on public service if you want to get into public service it seems a prerequisite to be a goldman sachs. i wond if you have any thoughts about any chance of reregulate in this industry under those conditions? >> goldman is really interesting. you know, if i could do a documentary, another documentary i might want to choose goldman sachs, if they would let me actually get into. i doubt it. millicom of course that would mean any pictures. you have to think about those things. what he going to show people desk at all but one. not very exciting to goldman is a fascinating for. i know many people from the. i followed it closely throughout the district it is strong culture golden went public and i think 1998 and many of its competitors at the obedient. oncell the partners cash out anybody takes their money, the culture will seize.

and they have been dead wrong. they really inculcate this key believe there that i haven't seen it other perfect they are always gng out with each other constantly. they're all golden people. they are altogether it really do allow them to indicate and they do have i think in many ways they give more power to the risc controllers than do other firms. golden did not screw up your in terms of making bad decisions and taking on risks. i mean, they are at the brink of goldman sachs needed to u.s. taxpayers money as much as anybody. september 18 of last year, goldman sachs was going to go out of business as with morgan stanley, as was everything, was going to go. so it's not like they didn't need us, they did it but i think it is a somewhat unique firm. that being said i also think

it's somewhat of a devious firm. there is no doubt. i mean, i do think -- and there is this path to power there, and mini people qstion it and wonder how much intelligent goldman sachs as as result a result of so many people going to serve. and i ask those questions to you and i don't know the answer to have a lot of very smart people that will tell you i do think they have a unique culture at that firm. i do think they have some huge institutional strengths that are not shared by many other firms on wall street that allow them to succeed in the way that others don't. and in particular in this period. and i think as i say go to their ability to community acrs business lines. how is it possible that citigroup -- citigroup exuma, sandy started wita commercial credit when he created citigroup to develop commercial credit was? it was a sprime lender. that's what their heritage was. how did that happen? how did citigroup go on to lose

60 billion, $70 billion become a ward of the state something as the old bias or 4% when they -- their roots were subprime. tough business. commercial credit pickiness something about subprime but he completely didn't understand and i think ceos. the reason i mention it is because clearly at citibank -- city, wait a second, these guys, then we got these other guys who keep buying all of the stuff and we keep packaging up these ceos but we keep keeping them. super senior tranche. there's no one to say stop. long winded answer to your question, which i haven't even answered about golden. go, they are very powerful. they are very talented. it's interesting right now what's going on with golden. there is a lot of criticism. i wonder, they made a lot of

money, they're going to pay out about money, they always have. it's back to business to a certain extent. i love that business for them is proprietary training -- trading. not even investing capital as to what they used to do. just waiting for the own book and currency and commodity. we will see what happens. i hope you watch if i ever get to do a documentary on the. let me reiterate. essar. >> i was with the city in 97 when they did the merger with travelers. i should say i was with travelers. and the going back to 1989 with the barbarian with shearson pics of the investment banking community has always been, i was a retail stockbroker so it's always said some blue haze over

it just for lack of a better phrase but my question would be, leapfrogging into 2004 with the investment bankers, why were they allowed by sec to go to a 40 to one leverage? and then going back to the derivatives market anyour conversation with greenspan, with rubin, and with warren summers, why didn't they attempt to put some controls on derivatives market when they had a chance to the cftc? >> great questions, and what you're getting at is a complete failure of a regulatory agency. i mean, that's sort of implicit in your question, and i agree. i said earlier sort of wall street is to blame but there is no shortage of culprits. the fcc didn't do anything. i don't even think they were regulate the investment banks in the way they should have.

i really don't. i talked to a lot of these guys but i remember sitting with john thank you ran merrill lynch not long ago. last spring probably. and he was lghing about you never heard from the sec. never heard from them. guyton recalled even though merrill was an investment bank geithner anda new york fed at the time would callees once a week. but not chrisox at the sec, not even at the sec. he said no one even came to. and i just think that goes to the point. seemed to be no holdsarred you want to be leveraged to 30 times under balanchine, 40 times on your ballot she, go right ahead. goldman sachs was only leveraged about 14 times. that may have changed for quite a while. we will see. but that's what crushed everybody. i try and explain that in the book. again, the book i try to, for

anybody, you know, who wants to try to understand is because leverage can be somewhat complicated concept metimes. in the case of merrill lynch they have a trillion dollar balance sheet so they were leveraged at least 30 times of those assets that you can be leveraged 30 times the assets to u.s. treasuries, but when they are subprime mortgages, or cdl is made up of subprime mortgages, it's not so good if you are leveraged 30 times and you have a loss of just 3%, 3.5-inch, you wipe out your equity. anthat's of course what happened. merrill lynch kept replacing it with remember all those capital raises that went on in late 2007, 2008, all the sovereign funds? amazing that so much money came in and it was all wiped out yet again. so yes, total failure on the part of the sec which we have seen in so many other ways. and i hate to tell you, made o

off. its criminal almost in a way. and as for the cftc and the failure to regulate credit default swaps in particular which really helped in some way to allow for the creation of an enormous marketplace and call our eyes that obligation that i notice is all getting propagated and it gets even more competent in the sense that ceos which were made in credit default swaps on mortgage-backed security to. in 2000, it could have been regulated. it was not. phil gramm, a writer on the omnibus budget bill for that year, the election was over. it was after bush had one already, but what sort of duck congress. nobody knew what was in the bill. he completely deregulated everybody. in terms of credit default swaps

pic he claims no, i didn't. i dissent that they should be considered an inrance product. there's debate about it. but the fact is that dcf tc, especially under, iorget her name, want to regulate credit default swaps. it never happened. and look, the figures go way back. in 1996 we repealed last eagle. under the clinton administration. part of the urging of sand sandy weill so he could get his deal done and combined with travelers. we will see whether the obama administration gets it right here in terms of the regulatory reforms they are trying to institute. i don't know the answer, it will be interesting to see what happens, what is allowed to happen and whether or not it works. but the sec really was very shoddy. other questions? >> this lady in the front has

another. let's take that gentleman there, and then after him she will be the last question. >> there is intense dispute between republicans and democrats within the democts, but blue dog democrats including the economic consequences of the health reform legislation. apart from human aspects of that reform, how do you come down on the economic consequences of what's happening currently? >> you know, a lot of questions about the. this is one of those questions i can give you a great antidote i spena lot of time on phone talking to hedge fund managers who are trying to understand the investment implications of this. or any other number of investment professionals were trying to understand what is really going to mean and where are we headed here, will this bill ultimately do any good or just cost us a lot of money. i don't know the answer.

i know there's been a lot of focus especially in the small-business provisions, taxes that would be applied there. kind of ratcheting up, depends on your revenue as a small business when you're not offering health care to employees, and wther that will be significant and impediment to job growth in part because of those small businesses will be saddled with this tax. i don't know the answer. and i will be very curious to see what develops from your. and ere we end up. i mean, ultimately if something does get past that it'll be a long time until we know what the economic consequences of it are. i think the whole idea of additional taxes, it is interesting also. are there i mention the consumer. we are all so dealing with the crisis and the states that are increasing taxes that we thank residents of new york city when i get better with selling of the taxes that we're all going to be suffering from.

so one does have to wonder where the economic growth is going to come. if you're relying on a consumer saving more money and getting taxed more, what's going to happen. that being said, i mean, i meant upper we sider so i will leave that to what you will draw from the. i'm not against taxes. i am happy to me plenty of them. [inaudible] >> say again? >> how will beuying your book helps a recession? [laughter] spirit do your part to you know it's expensive, i admit. doctor wily. there are people around your. but thank you for buying my book. i appreciate it. andid you have a question? wheel in with this young lady. >> okay. added bernie madoff ruined the economy and some way quick howdy have a deep affecting economy with what he did speak with the question about bernie madoff and his effect on the economy.

i economy to coyote cat a significant impact on economic. any significant significant impact on trust. and he had an incredibly significant, terrible impact on many, many people. but you know, on the overall economy i don't really think there was y real impact from him. he was big but he wasn't that g. that being said, i think he just -- he did take another shot right at the heart of any trust in the financial system, which canave a long lasting impact. time will tell about that. well, thank you all for coming, for being here, for asking such great questions. i appreciated. i am happy to sign your books. [applause]

>> next a portion of the tvs monthly three-hour lunch program, in depth. on the first sunday of each month, we invite one another to discuss their entire body of work and take your calls here in depth also includes a visit with th author to see where and how they right there books. that's what you are about to see. stack can i ask you if there is a young person watching who wants to write her first book? what advice do you people like that? >> don't make the mistake i made a spinning three years in paris thinking that becae i have studied writing, good creative writing courses at harvard, and

i had wonderful teachers, you know. don't make the mistake of thinking you could just go and write a book. if you have never lived through anything, it's worth writing about. there are an awful lot of novels in which i am sure most of them never get published, which are basically aged what are they going write about? they will write about what it's like to be in a creative writing class. i mean, i essentially decided to give up writing when i left paris and came back to boston. and the following year i was in the classroom. it's interesting the year i gave up writing his ear that i wrote death in early age. because suddenly i was doing

something that actually tore at my heart and worth writing about. i mean, i took myself so seriously. young writers always do that. you know, there i had been in paris and i thought, well, here i am and i'm being given mentorship by older writers, bill styron was there at the time. to me and set me on numerous occasions. that's the only time i only got to go to come into, a nice restaurant. richard wright was in paris at the time, literally bumped into him. physically bumped into them in a bookstore. and others. so i came back and i thought, well, you know, i must be a

writer, but i knew the craft of writing but i had lived through anythinghat mattered enough. so i was very pompous. young riders are pompous, and i remember i came back to cambridge. i was going to go back to grad school and do what my folks would have liked at that time in my life, which would become a harvard english professor. it was only the voice of doctor king and the death of those young volunteers that ball to that and changed my life. and i remember there was a party and gamers at harvard square which are formally announced to all of my friends. i am giving up writing. i'm going to stop writing. i'm not going to be a writer. papas young peoplend in that

year jt gradually as i saw a nightmare of what racism had done, was doing to these children. kid i had that you have 12 different subs before they put me into that classroom to be their permanent teacher. i just started keeping a journal. this is what i had kids do, you know, keep a journal. and every night i would write down what happened that day. and suddenly around me micro- printed in a commune, i hate to break the bad news to you but i think you've written a book. and i said it doesn't really have any need, you know. i don't see it.

anthen they fired me. and they were very loyal and shut down my school and helped to spark the civil rights movement in boston. so i said thank you to the boston school system for giving me an ending to my book. and then i took rewriting. it took three years. so i say to young writers, don't -- don't -- i mean, you have to learn the craft. i am still learning it all the time. but you also have to get into the messiness of the real world,

open up your heart, let yourself be ripped apart by anger or unbearabl sorrow, or incredible exhilaration, some wonderful, beautiful child in the midst of it all. you have to go through that. its -- i tell you, writing, i am addicted to writg every single day. but when i amriting a painful blow, it is painful. i get upset. i actually cry sometimes that seems like unbearable.

sometimes i feel like i am, new, speaking the unspeakable. once oprah winfrey told me that she couldn't read my books at bedtime because they would upset her so much. and i think she was referring to amazing grace, which was the first book i wrote about the bronx. and i said to her, well, if it's so painful for you to read, let me assure you it's equally painful to write. if you don't put it in, the reader won't take it out. there's a lot of expressions that i love, it means nothing comes out of nothing.

and you just don't get it cheap. >> in depth airs live eastern on e first sunday of each month on book tv on c-span2. >> i would like to thank, barbara, for the introduction and arranging all the spirit and the friends of the public

library for the hospitality. and thanks to c-span for being here, the c-span2 book tv is -- if you haven't sampled it, you have really missed something every weekend. and just keep in mind that when this airs, but millions of people will be watching it, so be careful where you scratch. [laughter] >> the book is eagles a mint empire united states mexico and the struggle for conficker can i use that word struggle because i take kind of an expanded view of what is a war? usually you think of a shooting war from 18461848, missed the most in store and will say that it. these things don't come out of nowhere. the origins of that war go back

before either country existed. and we still feel the effects today. there is still a struggle. it's not now with armies and guns. at there is still an inherent sense of struggle between these two should be sisters of republics. i have done my level best to cover both sides equally, using original materials from both sides. this is also part of mexican historians talk about the mexican side, usually the army. and the united states historians talk about the u.s. side. so i think both are major actors in this thing who had a major role to play and how the war got started and how it worked out in