came along and made some decisions to enact the mileage standards and various people that have studied this say that three to 4,000 more americans are dying every year because of the cafe standards. we downsized and plasticized the cars so these are all things we should be thinking about in the context of our human environment and the broad natural environment and i hope we will continue studying them for a long time to come and making some wise policy decisions right from the get go. >> host: lancaster p.a.. you are on the air. >> caller: we need more informative programs like this. anybody know anything that the cycle of plays -- of police in? is that still applicable? you can't find in the winter and the north grapes or berries or

fruits from other than chile or mexico. >> host: cycle of plays in. >> guest: everything we create has a half life and termination point. various levels of toxicity. it depends on the type of poison, the type of exposure. so all of those things get rolled into an analysis of what the cycle of plays and actively is and we have to of laid the speculation and extrapolation and actually deal with the scientific fact. .. the biggest impact on rachel carson and "silent spring"? >> that she allowed us to think about our future, about the world, and that we would question authority, that we would ask what is it that you are doing? why is it helpful? and who is it going to hurt? and who is it going to benefit?

>> host: linda lear and paul driessen. if you want to hear more, you can talk to her. you can also go to paul's web site. thank you for being on booktv and primetime. we have two more hours of programming coming up. :

i don't know how many of you have seen the new "chanel" movie about the designer, coca chanel. she wasn't just a designer, she was the desire that pointed out what was wrong with this intrigued by pointing out what was wrong with their skirts. and with another set of markers, chanel walked out the 20th century what it should be, women's suits come close you can wear and walking, ideas the change culture, politics, economics, not just the right to

trade due to the utter precision of the artists nickel is the chanel of financial governance. [laughter] in herschler book after book will agree to talk about this morning she marks the spots that took us to the current financial crisis that made it inevitably that we would come this way with equal mastery pencils for the reform you didn't know was right until you saw it. so we want to welcome you all to this. nicole is the freedom trust fellow at the manhattan institute, a contributing editor to the strong magazine city journal. nicholas also a chartered financial analyst of her craft. two or three things i want to mention before she comes up to talk to you. one is that this book, quote

kuhl after the fall and" is a history book. today we have assumptions. deposit insurance is could we just need more of it may be. another assumption we have the world will include if we don't save institutions that are too big to fail. unless you go back to the history you won't know these are new and controversial views. the irony, since of irony of work for you and there is irony. the viewer about deposit insurance until just a few decades ago was that it should be limited as recently as 1989 the head of citicorp's john reed was born and we had to cut back deposit insurance. have less or we would have financial crises including for his bank leader. people would if you cut back deposit insurance people would know what they were risking when they put their money in institutions. they would have to evaluate the

institution and the risk. there was a time we didn't believe it too big to fail. the united states as nicole talked about what an important bank failed in the 1980's, penn square of oklahoma to read this a good achievement of after the fall is its solutions. mccaul the sidley of absolute answers. she doesn't call for more bailouts either. she goes for the logical middle ground, the classical solution that suits many like making the rules of the market will year. apply the same rules to everyone, no special friends. no more today to feel special york category. no. it's wrong to have tsar's sitting in thrones to make the kingdom nervous. we will ladies out for you, dan howard of the manhattan institute will help nicole take questions.

welcome, maestro. [applause] >> thank you, amity for the generous introduction and and limiting deposit insurance to actually injured deposits is a radical concept. now, going with amity's "chanel" metaphor, coca chanel said in the 1920's that simplicity is the keynote of elegance and she was not talking about financial markets, but she may as well have been as hopefully if i do my job right you will see at the end of my talk. so a failure of free-market. that is what the last two years look like to many people. we've had the financial system destroy itself so thoroughly the

government had to come along and provided with essentially nationalization of all of its risks so that money and credit would dog disintegrate. now we have an unemployment and underemployment and 17.5% bigot goldman sachs says that it has to pay at least $16.5 billion worth of bonuses so that its own and please don't leave the firm. now goldman sachs seems to feel bad about this. it wants to donate $500 million to small businesses. what kind of three markets do we have been small businesses have to depend on a rich company's treating it as a hobby in order to get the capitol financing. but this in fact has not been a failure of three markets. the past 25 years are the stories of what happens when the government does not understand its proper role in the free

markets and that is to provide a level predictable consistent system of prudent regulation so that markets can discipline themselves without causing unacceptable harm and destruction to the broad economy. we know how to do this. we did this for 50 years more or less well from the 1930's until the 1980's. how did we learn how to do this? we learned lessons of the 1920's the twenties were wonderful innovative decades as amity noted in her own work. the problem with the twenties as it relates to financial markets is that innovation creates optimism. optimism creates excess optimism and when you have financial markets that don't have any meaningful regulation other than monetary policy, you have financial firms and regular

people against every last dollar of optimism projected decades into the future. you have got layer upon layer of debt upon layer of your assumption going out into the future and that means and you have the slightest the altar and profit expectations for some of the expectation of the future euskadi are pulling out one level assumptions will tower of assumptions and it collapses, and then you have so much the unpaid debt the banking system is effectively bankrupt. we saw this happen in the early 1930's, not just with bordering against the stock market of course but against all kind of asset markets and what did we learn from this? we learned markets have to discipline themselves but not at the price of an acceptable destruction and the economy. so, the first a look at solution to the puzzle of how to owned market discipline without economic destruction was the

fdic. this is acceptable moral hazard where fdr and his policy makers decided we can eliminate the panicked, reduce panic in the financial system by protecting small depositors but we are not going to protect bad banks against their mistakes. they can still feel it is just the small depositors will be protected so that we will not see the destruction of money and credit again. but the most important thing that fdr realized was that you don't want to eliminate risk in the financial markets. you just want to protect the economy against the natural inevitable excess of optimism and pessimism. how do you do that? you limit borrowing first of all and limit the borrowing predictably and consistently. fdr did not set up a systemic stock regulator to figured out which stocks are safe and which are not, which ones you can borrow against unlimited and which ones you cannot.

instead, they said that the fed and sec would say you can only borrow half the price of the stock. you can speculate all you want, pick your own risk print you are wrong you will lose but the economy will not be bankrupt and then they also said you got to consistently report market activities, corporate activity so that people have a little fighting chance of understanding what risk is out there if they choose to do so. the system worked well again until the 1980's and then the financial system started to east cape prudent regulations and a steep market discipline and we are going through the result of that right now. so, how did this happen? we go back to 1984, many of 1984 a bank called continental illinois. this was the eighth largest bank in the country at the time and continental illinois was a pioneer of sorts in the banking

industry. continental was a pioneer in that it did not follow a business model of solely keeping long-term loans on its books, booking the profits as people and companies repaid the loans and having a very slow business model inslee did for the most part from into the panics and fluctuations in prices and the securities markets. instead continental purchased loans that have been securitized. that meant that they were vulnerable to fluctuations in prices from day to day and continental booked the profits from the fluctuations in those prices. that's one way that they made themselves and they made multiplied over many financial institutions in the future. they made the system of credit more vulnerable to financial excesses'. the other was that they depended

on short-term financing, and ensured short-term lenders provided a good deal of their money so they made themselves vulnerable to short-term panic and a second wave because the short-term lenders could pull their money out overnight in a crisis. now the governments in 1984, the markets started to panic in the spring once they got the wind that some of these securities that continental had were going bad. the government decided that continental could not fail, but the price would be too high for the national and indeed the global financial and economic system. so the reagan administration did something that was unprecedented at the time. they came out, the fdic and treasury came out and said that none of continental illinois bondholders, an insured bond holders, they would not take any losses in the continental sillier and this engender quite

a debate within the reagan administration. don regan that the treasury secretary at the time, said that -- he wrote this in a memo to his colleagues. we believe it is bad public policy and would be seen to be on a fair and represents an unauthorized and on legislative expansion of federal guarantees and contravention of eckrbrbi@ u b

government subsidy. they are too big to fail and regardless of how mismanaged the may become the buckles stopped with the taxpayer. so, when the government wants more of something is subsidizes it. if you want for corn, subsidized corn, if you want a financial crisis built up over decades based on banks and other financial companies borrowing for the purpose of reckless speculation then subsidize banks and other financial companies borrowing for the purpose of reckless speculation and that is exactly what the government did with this new policy. banks and other financial institutions could borrow at rates they could not have otherwise borrow that because the lenders knew that this was

in effect lending to the government but at a higher interest rate. so, this was at first limited to commercial banks. but investment banks of course had to compete with these commercial banks so they created their own to big to fail. this was too complicated to fail. when we hear about exotic financial instruments, credit the fault swaps and everything else, these are not so complicated. these are many of them have good innovation and market signals and all kind of other things but one of the reasons for their creationists to a scheme for was to ease keep these reasonable consistent limits on borrowing. credit stifel swaps, sprick dewitt -- this is a way to speculate without having to put cash to single securitization creating complex financial structure is so the banks and

other investors could achieve these aaa ratings and investment securities without putting a consistent amount of money down to protect them and the economy from any mistakes in their assumptions with aaa securitized mortgage loans or mortgage bonds for sable banks could purchase these bonds with just one eighth of the cash normally set aside for any mistakes in their assumptions. so by doing this we made the entire financial system much more vulnerable to mistakes in these assumptions just as we had done in the 1920's. sometimes the federal officials recognized we were not applying the old rules to the new markets and they did just that. they applied the old rules to new markets and when a civil of this is in the 1980's when paul volcker the fed chairman of the

title recognized that the jump on markets were getting ahead of themselves, speculatively, and he simply got the fed to put the old rules regulating how much borrowing people could do for stock speculation on this new market which was effectively the same thing to say and take over companies could only borrow half of the price for a takeover. this provoked a tremendous outcry but it did mean when the jump on the markets went through its turbulence and a downturn in the late 80's and early 90's the economy didn't suffer the kind of catastrophe we suffered today. unfortunately most of the time the governments and financial institutions did the opposite. they confuse what kind of risk taking needed to clear consistent limits on borrowing and what kind of risk taking just needed discretionary surveillance. they thought the financial

industry have identified and courantyne all risk with no risk let you didn't need these limits and that is exactly what alan greenspan did in 2000 when he said you don't need the regulations for the unregulated derivatives markets including would later become the credit default swap market. this was how half of a decade later aig could make half a billion dollars worth of promises by putting negligible cash durham leaving itself again, no room for error if it made a mistake in these assumptions. now, enron to exit polls of these reasonable prudent regulations had eroded so thoroughly that the financial system just was left without any market discipline to government by the time we got into the

2000's before 31990 they went bankrupt through the normal bankruptcy process. greenspan was called before congress to testify about this. he said that it would be inconceivable that we would ever applied to big to fail to an investment bank. five years later, the bearings investment bank of britain went bankrupt through bad derivatives bets. it could go bankrupt through the normal bankruptcy process with its lenders taking their losses because they had made these bets on the regulated markets where it had put cash down and the markets understood where the risk light. just three years later a hedge fund long-term capital management could not go bankrupt through the normal bankruptcy process because it had made the same derivative bets on the unregulated markets without putting any cash down so its bankruptcy could have blown up the economy. that's what regulators worried about. the engineered a bank bailout

hedge fund protecting the lenders. the last milepost on the way to 2007 and 2008 was enron. enron was a very neat distillation of the entire financial industry in that its business model was barrault tremendous amounts of money, use that money to purchase its own assets from itself at ever higher prices. this allowed it to book tremendous profits which allowed it to borrow more money. why could borrow more money? because it said it had insured its own debt and made it risk free. now this was a strange and fascinating business model. but by definition enron was saying if we go bankrupt don't worry, we will pay for it. but the strangest -- [laughter] -- the strangest and most fascinating thing about enron was the banks and wrong did business with compaq bear stearns, lehman brothers, citigroup, did not think that

this business model was very strange at all. and when people say when could we have averted this crisis by doing something different with bear stearns in 2007 by bailing out lehman kaput the last time to do anything about this was enron. after that, these regulations had so eroded the market's financial markets were not subject to any reasonable discipline because they knew that market discipline meant economic catastrophe and that is how we get from there to 2007, 2008 when the markets finally did correct the excess just as they had in the late twenties. but they could produce so without creating another great depression and that is how we got the nationalization of all of the risk in the financial industry. the opposite of the prudent regulation and market discipline and finance is not free markets as we've seen. it is nationalization of one of the most important elements of

the economy, who decides which businesses and investment capital and on what terms. no, it's fashionable to say that the crisis has been a black swan, something that we could not have anticipated once in a 100 here evened. the real black swan would be if we had gotten rid of every prudent regulation and all market discipline finance and we haven't had a historic financial crisis. what does that mean? it is good news in a way. we know exactly what we have to do. we have to go back and apply buhle principles to the new markets. we don't need huge bureaucracies , micromanagement financed by the government consumer financial protection agency's, systemic risk regulators. we don't need any of that to do that if we had had a systemic risk regulator five years ago the regulator would have said

the tripoli mortgages are just fine. these are perfectly safe. there is no crisis, nothing to see here. a regulator cannot do any better than free-market at predicting and preventing financial crisis in fact it hurts the market's ability to do that because they do not operate under the threat of failure. all we need to do is go back to the lesson that we learned 50 years ago. consistent, predictable borrowing limits across financial instruments that are similar to one another regardless of what the financial industry thinks of their risk. the government should not be assessing risk from the top down which is effectively what they have been doing. the financial industry should be assessing risks from the bottom-up with the government setting consistent limits on borrowing so that when they are from the firms can go bankrupt and the economy does not

explode. if we had these limits in place five years ago, aig -- we can look at this from the supply side and the demand side. from the supply side of providing financing, aig could not have insured $500 billion worth of mortgage related securities and other securities putting very little cash down if they had to put ten, 20% down they would have thought twice. if they didn't think twice the could have gone under and the economy would have had some protection just as with bearings 15 years ago. from the demand side, if you have limits on borrowing to the new spec a lot of markets, the housing market became a speculative market. you have to put ten, 20% down payment down to read this market would not have gotten away from itself the way that it ended up doing because as the prices rose people would not have had the cash to keep up with the rising prices dampening demand across all price levels.

with these simple the rules in place, we can go back to a consistent predictable system where financial firms and global investors know that everyone is playing on the same level playing field with a fair chance and with the most important regulation of all, market discipline once again governing financial the industry. you can't just say your into big to fail. the markets will know if you haven't done it as long as failure means politically and socially unacceptable economic catastrophe. now, what if -- what does the failure protect that is important economically? two things. one, bad businesses and better ideas should not survive into the future with government money. you have a company like aig, very good divisions. the corporate structure failed and using these petitions to

make these tremendous debts that ended up going bad. sell the divisions to someone who can manage them better. don't have a government-backed insurance company competing against the rest of the insurance business. and it the second thing is fairness. the public can see that this is an unfair system. the public has been against bailouts every step of the way. even bailout's meant to help their own neighbors. this is not mindless, heartless populism. the public can see that this is not free markets and the public is angry at goldman sachs not because people don't like rich people. they don't want people to do well. it's because they can see this is on a fair and the public is right that goldman is operating with implicit government guarantee and it does not end the problem for these banks to pay back their t.a.r.p. money in some ways it makes it worse because of leased with t.a.r.p. people know there is government money there. now we have, again, an unseen

government presents distorting this economy. however, this is not something that the public can do by itself. we do need political leadership here. for washington to realize that reasonable regulation with the end being fair, consistent financial market discipline that this is not a barrier to free market capitalism, this is necessary prerequisite to the free-market capitalism. with that i'm very happy to take questions. thank you very much. [applause] >> i am howard, vice president for research at the manhattan institute and my job today is to point out questioners nicole. if i might start on your point

about extending simple rules to the new markets, do you have a feeling there's a lot of legislation now being consistent washington within the house and the senate. is any of eight consistent with the prescription you offered this morning? >> no. [laughter] but one thing that is consistent with the bill -- one of the first bills that came out@@@ roger mode.

i would like to ask three specific remedies to see if you are for any of them. bringing back glass-steagall act, bringing up the big banks and imposing leverage requirements. >> okay. i will do the first to first, roger because those two go together. imposing leverage requirements and breaking up the big banks. another part of one of these bills coming out of congress is an amendment to allow regulators to identify too big to fail financially institutions and force them to break up. but we can't tell which of these institutions are too big to fail and advanced. few people would have said bear

stearns was too big to fail seven years ago, which is how far in advance you need to do these things. if we credibly and too big to fail by protecting the economy from failure, leverage -- and if we put consistent borrowing limits across financial instruments and financial institutions matter what they call themselves, the lead rich will take care of itself through these reasonable regulations and through the market forces because lenders will know they no longer have an implicit government guarantee. they will care more what they are doing with their money. the same thing with too big to fail financial institutions. the lenders will do their own surveillance here if they know that these institutions can fail without taking the economy hostage. glass-steagall, we are used to living in a marked to market world. we are not going back to holding

loans on books for 30 years and booking the profit slowly. investors want to know what's going on. a better solution than going back to glass-steagall is to better protect the economy from fluctuating prices in securitization markets because that is what kills credit or makes credit to excessive. one way of doing that is very into the capitol requirements with liabilities. one of the most acute dangers is financial forms relying on short-term overnight lending. make them hold more capital proportionate to the amount of short-term lending that they have and you better protected the economy, and i can -- this idea comes from alan greenspan in 1984 before he was the fed chairman he was on an economist panel after the continental illinois rescue and he said the bank's schoeppel against losses

depending on the type of liabilities that they have. >> do any of the regulators currently have the power to implement the kind of solutions that you're advocating? >> in the 80's paul volcker had the power and the convincing clout to convince the fed to put the old borrowing limits on the junk market's. in the 90's alan greenspan had so much clout in congress that they took his word for what their unregulated derivatives needed to be regulated or not so in effect the fed has been a systemic risk regulator for two decades. where they had the discretion sometimes they used properly and sometimes they didn't. where they didn't they had plenty of gravitas to go to

congress and ask for it so it's not a matter of not enough power. it's a matter of failing to recognize that we need these consistent rules. >> i am kenneth silver with research magazine. what do you think about ron paul's effort to audit the fed and more importantly abolish the fed? >> welcome he sold more books than me so far. [laughter] i think this is an example of why it's reasonable politicians on both sides of the aisle don't come up with reasonable solutions people are going to gravitate toward these unreasonable solution so we don't need to get rid of the fed. what we can't depend on monetary policy is our only frigate to retool which is effectively what we have done for 20 years. the monetary policy is wrong.

it's the human condition for monetary policy to be wrong. but we need limits on borrowing so that mistakes in monetary policy don't create any asset bubble and one particular asset class that become so big that it can't fix itself without destroying the rest of the economy and of course we need to do better with monetary policy but focusing on the fed and what it's done right or wrong is a distraction in my view. thank you. >> ray miles. what about getting rid of some of the regulations i would view as the root cause of the problem and really and the 30 is the guarantee of mortgage loans, the creation athenaeum and freddie mac, securitization was created by the federal government and, you know, why not get rid of that? that i think led to over borrowing in nine carries on your thoughts on that.

>> i agree with you wholeheartedly. the government should create a consistent environment for fees' financial firms to do their business, not for certain classes of lending at the expense of free and fair and prudent markets, which is what they have done sometimes with worse affect the and other times you decide mortgages with no down payments, borrowing 120% of the value of the home. this -- there's a sort of miss that fannie and freddie made the banks do this but fannie and freddie certainly didn't help and they allowed this to look respectable. the government said it was okay therefore it must be okay. fannie and freddie were too big to fail. this is a whole other area that goes along with inappropriate government distortion.

>> [inaudible] >> janet norman triet how do you see citibank's future? [laughter] are used to work at citibank. citibank's future -- they cannot succeed without market discipline, and right now the operate without market discipline and just as importantly, they are distorting what other firms do because they have got to compete against effectively a government subsidized bank. so again this is just a place like aig you've got great business lines, people in some places but he's got to on the lock these people and put them in the hands of managers who know how to manage the company and you've got to do that at the

expense of bondholders who freely lent money to the company and should take a loss when their prospects turn out to be not with the lenders had fought. there is no justification for not having bondholders to the financial system take losses then you're just back to the problem of too much debt, no regulation in the world can overcome this subsidy. >> i am mark green. what do you think -- how do you think it too big to fail issue can be solved with a concentration of assets? the seven largest financial institutions in the country control over 70% of the total assets and have a very big competitive advantage over the other 10,000. >> the first thing is not to make the problem worse, which is exactly what we've been doing over the past two years with the

failed banks, largely being bought by these two big to fail financially institutions. and beyond that this is a place where it will be a very slow evolution. we did not build up too big to fail over night. we won't ended overnight but once the government puts in place a credible system for failure, lenders will provide market disciplinary and force the firms to pick themselves up otherwise they will have to pay much more for their financing commensurate with the prospects for the failure and for mismanagement as well. lenders will forgive mismanagement when they know that they are being subsidized by the government they lend to the government directly and put up with plenty of mismanagement there. [laughter] >> marshall with henry armstrong associates.

when one considered not only the debt holders of the larger investment banks about the equity holders were essentially made whole, one can surmise that it wasn't just the threat of systemic failure that induced the government to support those institutions. do you think that eliminating the risk of systemic failure throughout limits on leverage will eliminate the temptation to bail out those institutions for other perhaps or provoke your reasons? >> they wouldn't have the excuse -- not that it is an excuse. there was obviously risks and the reality of systemic failure but they could not go to the public or to the congress and credibly say we have got to pay every 100% on the dollar on aig's credit redefault swaps or

the system will collapse. so we've got a predictable system of bankruptcy or some other resolution as the fdic does, you eliminate the cover for doing anything for any other reasons or for the perception that you have done it for other reasons which is just as an important. and the to an geithner could learn a lesson from dubai saying why should we be allowed to buy which is effectively a bailout of sophisticated banks when we did the same thing with aig because or partly because we were under this system and pressure. >> iris, future of capitalism donner, three it would your limits on borrowing apply just to financial firms with insured

depositors or to the whole economy? and so what is the philosophical justification for the interference in the right of contract of a willing lender to loan as much money as he wants to to a borrower? >> thanks. the justification is that you are right to lend or borrow on and on a limited basis and where your ability to hold the entire economy hostage begins. but multiplied across the economy borrowing without any room for error just results in the nationalization. we saw this in the 30's. we saw it again over the past two years and we can't -- one of the lessons of the modern way of creating credit through securities is you can't protect credit from the excess of speculation just threw the

commensurate deposits. we have to have some consistent limits across these financial instruments because these are the instruments of credit. you still have fluctuation, optimism, pessimism and you should but you can't hold the economy hostage. and we've always had limits on borrowing even outside of the insured deposits. you can't margin requirements for stocks and regulated derivatives pulled to whether these are held by firms with insured deposits or not. >> robert george, new york post. forgive me if i didn't hear this -- if you answered this in the previous question, but you said that you didn't like the idea of, you know, getting rid of a fed. what about the idea of auditing it, which again somebody pointed out it started as a fringe from ron paul and now it's got a

majority of signatures in the house. >> one of the problems with all of the bailout's we've done over the past 18 months is we have a secrecy where you had the@@@@ @b pressure will go away.

as for the specific proposals of auditing the fed, i don't think it's helpful because it looks like congress has a -- the fit is always publicized the congress obviously votes on the fed chairman but we don't need more day-to-day political interference if they are auditing the monetary policy it confuses the market as to what the fed -- is it making its decisions based on the merits or its congressional audit. thank you. >> henry stern, new york civic. what you say seems eminently sensible to me and i think to a lot of people in this room. is their anyone in washington who believes the way you do? [laughter] and is their anyone advising president obama who thinks that

way? >> the problem with the president's advisers is they've lived for two big to fail for so long that some of them can't conceive of another system. they just think this is how things should be and you read this in the op-ed piece averitt for the ft and other papers the interest to figure out how to make it better, too big to fail, rather of an end it and they have lived in this system where you don't have any consistent limits to protect you from your inevitable mistakes. they think they are not going to make mistakes and when they do they think they are so smart they managed to extricate themselves from those mistakes and that there is no reason to protect themselves from the future mistakes. what is the lesson we are learning from this crisis. it's the same lesson unfortunately from washington's perspective we learned from the long-term capital management. we are so smart we figured out how to get out of this. now they are saying look at us we figured out how to prevent a

depression so they are not humbled by this. >> i agree with henry it sounds plausible what you're saying that i am wondering where do you actually set these reasonable limits to borrowing? i heard you say in the beginning 50% margin for stocks. later on you said 10% would have been fighting for aig to put on. most people think 80% is a reasonable margin for mortgages. 20% down. is there rules for cities and a sensible way besides too much protection? >> it should be consistent across any juan asset class or investment class or anything that mimics that investment

class so 50% margin requirement on stocks i don't think the number -- could they have done it 50 years ago, 40%, 60%? the consistency of matters so that you don't game the system and the lubber requirement on the future markets, these have been in place for a long time. they seem to have worked reasonably well for decades so i would submit that derivatives that act like these derivatives with lou will work margin requirements should have those requirements as long as they are consistent across the class and for houses anything that is above 20% you are just making the problems raymond mentioned where people want people to afford a house, there is pressure for other ways of thinking and able to afford it. we had 20% down payment requirement for the housing market for a long time, worked reasonably well and i feel we could go back to that as long as

this holds across the housing market and no one can say there is no risk here therefore we can lower debt and eliminate it. >> share reva siegel. it sounds to me like a lot of what you are suggesting on the two big to fail is actually application of classical antitrust analysis to some of our financial limitations. if that's the case, do we have a regulator or regulators who you would trust to apply that analysis in a relatively efficient way so that we could achieve the goal of breaking up the too big to fail? it actually lessens the need for

antitrust. we see more so in britain right now and here where the public is very concerned that these banks have so much consumer power or you've got two or three banks that set the whole market and looking at it from an antitrust remedy is another example of a government solution to a government problem where there's a much easier solution allowing for market discipline and with the market's force some of the firms to break out and if that doesn't work we have certainly got antitrust and everything else but let's try the optus market discipline solution before we go to the secondary command and control government solutions >> you have recently written about dubai and new york state. could you expand upon that a

little that? >> sure. this is not -- this is actually quite on her topic because we have to buy -- dubai and abu dhabi see we are not going to be allowed our investment arm, and of course this investment arm does not have a sovereign guarantee is and the government is effectively saying we've decided we want you to read the fine print after everyone has invested. why are people surprised at this? only in a world in which the financial industry considers a bailout to be an entitlement is this a surprising announcement. what dubai is saying is very reasonable. you lend us money based on a valuations that don't hold any more. we borrowed money on these valuations. this is mama recourse lending. we've got to adjust the price of the assets and of the debt. this happens or should happen all the time in the financial industry dealing with consequences of your actions as

part of doing business. as it relates to new york, we have these off balance sheets because i state entities not officially guaranteed by the government all of the place and people are depending on this too big to fail guarantee with state and local finances as well. nobody would invest in a lot of new york's boondoggle projects if they did not think that there is a bailout from the state in a crisis. and for that matter people would not invest in new york and california debt if they did not think that washington consider these to be too big to fail so we've got these government distortions preventing states and cities from getting their spending -- the same guarantee that comes from washington makes these -- distorts the market signals said they are unrecognizable. >> commentary magazine.

if your recommendations were implemented, don't you think it would affect the way monetary policy works? because the fed has to be able to effectively and quickly manipulate the credit availability across-the-board limits on the borrowing were imposed, then wouldn't that create a barrier to the fed change in liquidity in markets? >> it would mean that the economy is better protected from mistakes in monetary policy. but it should not change the way that the fed sets the monetary policy. in fact, it lessens the pressure on the fed to try to recognize asset bubbles and pop them before they happen. if you've got consistent limits on borrowing people will not be able to keep up with the rising

prices with the cash they have to put down and you will see less fraud as well. the mortgage markets filled with fraud. people would not have risked their own money on their own lives to the extent that they did if they had to put 20% down payment down. >> per book again is "after the fall" saving capitalism from wall street and washington. [applause] >> thank you. there are copies available and i know nicole would be glad to sign them. please join me and thanking mccaul. [applause]

this if you don't know already is the baltimore map. the original is on display in the jefferson building in the great hall. if you haven't been over there to see it already i strongly urge you to do that. there is nothing like face time with the real thing. there's only one copy that survives in the world and it's this one. it's probably about that big. 8 feet by four and a half feet so that is a reasonable thing. it might even be a little bigger. so, please, go over there at some point. as john suggested the i didn't know anything about this matter for the history of cartography when i started. in 2003 when i was an editor and writer of the atlantic and boston opening my mail i came across a press release from the library announcing for $10 million it bought with called america's birth certificate, the map that gave america its name. the $10 million was the most the library had ever spent on

anything. it was also almost $2 million more than had recently been paid for an original copy of the declaration of independence, and that kind of caught my attention. i never heard of the map or had seen the map but the library seemed to think it was the most valuable piece and the market even seemed to think that it was worth more than the original copy of the declaration of independence so i wanted to find out more and at this point i was thinking maybe i would do an article, short piece for the cleantech. so i did some research and got the basics of the story pretty quickly. early in the 1500's in the eastern part of france in the mountains there was a small group of scholars. among them the map maker, martin waldseemuller, taken across letters from at least one early sailors chart showing the coastlines of the new world, and they decided what they were reading it and seeing on the charts was not a part of asia as

most people had assumed it was but in fact it was a new continent. people traditionally had thought of the world as having three parts. europe, asia and africa. waldseemuller and his colleagues decided this would say fourth part of the world hence the title of the book. because they made the decision is seen to represent a fourth part of the world it needed a name just like the other continents had names and they came up with of the new america. it is a great story. there's a lot more to it than that and we will get into more of a bit later. but as i was looking to the map i learned quickly also was significant for other reasons not just for the naming of america. if you look on the left, that is the new world, south america with north america above it. this is the first map to show north and south america and in the u.s. we surrounded by water, not as some undefined part of asia or some undefined place

that isn't identified at all. because it shows north and south america surrounded by water it's really the first not to suggest the existence of the pacific ocean, and this is something of a mystery because europeans are not supposed to have known about the pacific ocean until 1313 guinn he caught sight of it from a mountaintop. so, that's something that brings a lot of people back to the map and something peter has written about extensively. it's not something i dwell on a lot in the book because i felt that the mystery is almost more fun to read as a mystery than to try to resolve. but it's a great part of the story. it's not the only part of the story the. there is more that is very significant about the map. if you look at africa flexible, this is one of the very first printed maps to show the full coastlines of africa. africa and, excuse me, had only been circumnavigated by the portuguese foley in 1497. and mapse