moderator i not supposed to get involved i suppose but thank you for connecting this wonderful past. thank you. [applause] >> lynne olson is the author of numerous books including troublesome young men and freedoms daughters. she's a former white house correspondent for the "baltimore sun" and moscow correspondent for the associated press. the virginia festival of the book is the host of this program and to find out more, visit tucsonfestivalofbooks.org.

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i read every single book literally with the words either panic or meltdown, and i do most

of my reading at night. i had to stop. it is like watching the abscesses before you go to bed except the exercise has a happier ending. it is a more cheerful ending than reading this book. i kept on asking myself, i wanted to really find out the answer because the answers i were getting were so superficial. then i bought hank paulson's book on the brink and paulson was the secretary of treasury the last few years of the bush administration and his daily routine had to be much like the one dorothy parker describes when she says opening up a newspaper each morning, what is this? i don't agree with everything paulson says. but i think history will judge him well because he was probably the right person for the job at that time. it was a hellacious job. he and he had a lot of tough decisions to make her go he did them very systematically. each morning he would be, let's see, lehman brothers, sorry.

[laughter] it wasn't quite that way but people think you did it that way. in 2008, hank paulson in the middle of 2008 in the middle of the meltdown meltdown he convenes all the big shots on wall street to a meeting in washington and he asked what went wrong? and this is the heads of morgan stanley, the heads of goldman sachs, the heads of jpmorgan chase etc. and here is what they tell him. they tell him things that, you can find in the editorial page. they are just not interesting. excess leverage, lacks investments, investment standards, lack of transparency, unmanageable risk, uncontrolled hedge funds in this is the one i like best, coming from wall street ceos, greed. i will buy that. none of these are wrong. it is just that none of them asked the most preliminary question, and that is not, why did the trinko off the tracks

but why was the train on the tracks in the first place? not only that, but why was our trained, the biggest brightest, shiny is most comfortable train in the world? next question, why was our trained, the biggest, best, brightest, shiny is trained in the world for the last 1000 years? these are questions they don't ask. than the next question is, who is the hour, who is the week? what is the group that created this economic civilization unparalleled in world history. not only for its strength but its sustainability. it was brilliant, unparalleled. the answer is, that culture is judeo-christian culture. it is the only one and it is the answer to that question. and then to find out why and how judeo-christian culture built its economic civilization i had to go back and to call on answers in the way back.

i stopped and checked with a friend of mine, mr. peabody, mr. peabody, not kidder peabody. this is sherman and peabody in the way back machine. remember that? you rocky and bullwinkle fans out there. anyhow, we went on the way back machine and i found myself eventually began to answer this question in 1250 bc but i'm going to give you some milestones along the way. i'm going to supplements in the way back in those who are the smarter menu are going to answer the questions before i get to them why i am giving you this. before we get to 1250, working backwards we will start with 1993, 1969, 1933, a pretty easy one, 1907, a little trickier, 1834, at little more difficult, 1454, challenging, 1105, the only people who get this were

the ones in my last presentation , 35 a.d.. and then we go back to 1250. i am going to trace the history of what i do in the book of our economic civilization through credit and debit because that is basically what built the civilization and finally what took the civilization down. it didn't take it all the way down but it but it took it down a notch, that is for sure. curiously, in 1250 bc, the first prohibition ever in the civilized world against usery, which is really interested and what thanks do today. none of us think it is wrong. but in 1250, it was the first culture to ban usery was the jewish culture. this shows up in exodus 22:25 and in the book of moses it says it thou lend money to any by

people that is poor, thou shalt not be to him as a user or, neither shalt thou lay upon him usery. and all the other civilizations, babylonians, they all were violent-- so secular economist look back and say this was crazy. how can you have liquidity in the culture? how can you have an investment oriented culture if you ban lending an interest but they are not asking the questions they should be asking. why is this culture drive and all the other cultures fall by the wayside? he read the cold of hammurabi, it is like reading the irs regulations. that is how inspired they are. tedious pickling details and what happens if you violate some law in babylon you may lose your license. you violate a law in israel, you lose your soul and that is a big difference because what that means is that going forward you are going to be self disciplined. you are going to try to do the

right thing because god wants you to do the right thing. if you don't do the right thing, there are consequences, eternal consequences, far worse than getting a 1000-dollar fine from the irs. there are some really bad things that can happen. beer water. sort of like dean martin. i forgot i needed something to drink and it was there. there is an ironic question that comes out of this of course and how was it that the one culture in the world that bans usery would within 1000 years, 1500 years become the poster children for that very act? the shylock figure who is jewish. how was it that the band finally lets them become the symbol and this is a question that has to be asked. and it comes down to a second book in the bible. this is deuteronomy. all throughout the bible, all throughout the old testament, david, solomon, nehemiah, isaiah

they all say he usery is a sin, usery is wrong, usery is bad but in deuteronomy they allow a loophole and it is a louisville that is fatal in a way. unto a stranger thou may land upon usery. so, in jewish culture you cannot lend to your mother-in-law and charge interest because you would be a bad guy. you would be a real cad or go you would be today. if you said to your brother-in-law here is 1000 but then i want 1100 bucks back in six month your sister would never talk to you. at that time they were part of the tribe and a ban usery amongst themselves but a stranger-- then something happened. the next day they give you is 35 a.d.. what happened in 35 a.d.? anyone here old enough to remember? i am sorry, just kidding. 35 a.d., saul was on the road to

damascus. he gets knocked off his horse and gets blinded by the light work of the lord said to anna nye, couple days later, he says go. this man is my chosen instrument to carry my name before the gentiles and their kings and before the people of israel. what this means is that there are no more strangers. now everyone is part. the phrase unto a stranger would become probably the most politically historical consequential word through the whole of the old testament and it would set them on the road of division between them and the christians for the next 1500 years although it would be a synergistic antagonism. they would need each other and use each other along the way. something else happened. a few years earlier, jesus said the same thing of course. he said we are all the same family. he must have said at a dozen

times but he also introduced a new concept into ancient culture and that is certainly in the middle east if you want, before jesus if he wanted to get rid of your wife even in jewish culture, men could just disown her. say i am no longer part, but jesus says of course in matthew 19:6 and that no man put there for us under which god has joined together. marriage would become the great single building block of economic civilization. is the ultimate in socialization and why the family is so essential to everything i write about in this book. i am jumping ahead now to 1105. everyone knows what happened in 1105, right? toledo, ohio. the spanish retake-- they are taking spain back bit by bit from the invaders, from the islamic culture that had taken over the iberian peninsula.

and richard rubenstein as he-- calls the outcome of the gathering that took place after the fall. this was the gathering of arabic scholars, jewish scholars and christian scholars. and acute source of embarrassment from any modernist, and what happened is this. the muslims had been, in their conquest of the whole mediterranean sea, they had been taking bits of culture from all over it and preserving it, saving it, translating into arabic. they saved a lot of greek civilization. they picked up indian numerals and brought them back to the mediterranean. and the letters and the number oh, which is critical. these properties to toledo and joined with christian scholars and jewish scholars and they translated them into latin. what happens after this is that islamic culture turns its back on the whole civilization. they retrenched.

and they stop growing. they lost interest. the imam said this is wrong, this is pagan, don't pay any attention to it. jewish callers did not have enough influence one way or another other than to be a bridge between one culture of the next but the christian scholars took it and ran with it amongst the treasure trove was aristotle who became the central figure in medieval culture. the modernists are embarrassed by this because they don't like you to think that anything could happen between 500 a.d. and 1500 a.d.. they think they invented the world about 1600 a.d. and then the renaissance and enlightenment and everything else that is beautiful in that 1000 years of christian history, forget about it. but that is not what was going on. what happened was the christians of that era were beginning to build that later foundation for the greatest economic civilization the world would ever see. the money flowed through rome and what happened is that the

cultures that the institutions who were near rome began to create a banking empire. i talked about the knights templar. i can't write a about today without-- i just look at it pairs out my free and there is a chapter on that. they are everywhere. but of course the family that really invented essentially international finance was the meta-cheese and they were there because they were there. they were in florence on the money was flowing for all the outlying regions into rome room for holy offices and domenici were taking care of the money. they were doing this without the use of interest that they had all sorts of various things that were considered okay, much like sharia banking is today. there are ways around it. the muslims still banned interests, but the world is changing and it was this intellectual explosion like the world had never seen before. that is why richard rubin calls it an acute source of embarrassment and i don't think

based on the name said richard rubenstein is a christian-- my guess is not that he is being honest and objection. muslims would turn their backs on this and farsighted hopes took the fateful step islamic leaders objective. italians were the first great banking instigators. they did to other things. they invented double entry bookkeeping, which was critical. they also entered the arabic numerals into the world. beer is of course to taken them from the indians. they had the number oh, numbers and doing credit and debit calculating in roman numerals, did you ever try it? don't, it is impossible. but that is what happened. one of the key people they took, the central person of this whole intellectual revival was aristotle. they rediscovered aristotle and what they did instead of

rejecting aristotle as a pagan, they liked his notion of reason and integrated that into their own worldview. they began to see that faith and reason were not enemies. faith and reason or friends, they were compatible, do you can find your way to god for a reason as well as faith and especially through the combination of both and they censorship their world via making it a god central berkeley-based world where people were responsible for their own behavior. there was nothing else like it anyplace else in the universe and they began to prosper. folks look back on it today like it was some united age but it wasn't. in the renaissance start, this was a thriving brilliant civilization. all of the great centers were catholic, antwerp, venice, they all were, they were all part of christians. this is what rule the world. they were beginning to master the world. they created other things, and maritime devices, all kinds of

mechanical technical things that allow them to go out and go forward. one of the things they created by the way before we get their-- dante called aristotle the master of those who know. that is how much of the importance they put on aristotle. when dante goes into the inferno and he writes the book, and goes down to nine levels of hell it is interesting who he finds there. in the seventh circle, there are only nine possible places and none of them are good work of the first circle is not good. that is where people like aristotle hang out. the seventh circle, when they get to the seventh circle, he finds there the users. and dante is being led there by the roman poet nes virtual, why your users in the seventh circle of hell? virgil doesn't really have a

good answer but he refers them to aristotle. aristotle didn't like it either. had it not been for aristotle the christians probably would not have gotten deeply into the ban on usery and the relations between and christians would have been better but aristotle hated usery, so when dante us to virgil, virtual refers to marathon and thus the whole code is being settled. in the fourth circle of hell, we find someone else do we do not even consider sinners today. this is part of our problem. in the fourth circle of hell are the particles. particles, aristotle defined as, because he didn't like them either when he was writing about them. he describes them exactly as we would describe and today, people who are shamelessly and spin recklessly without cause of worrying whether they can pay the money back. that is what a particle is. and aristotle with the help of dante puts him in the fourth

circle of hell. it is a bad place to be. in other words if you are borrowing recklessly and spending shamelessly and you are not paying your money back and you don't care about it, you were going to go to hell. which cause people who lived in those times to behave better. that want to end up in the fourth circle or the seventh circle. everybody is behaving wonderfully, because they are not that enough people are behaving, regulating themselves that they don't need external constraint. as edmund burke once said a society can exist unless people have a controlling force upon their will and appetite and there's less there is within, the more they will be without. that is where we are today, in lieu of moral code. we are having external regulations and they don't work, as we have seen. let me jump ahead a little bit here. 1454. and what happens? jim knows. jim, tell us about it.

guttenberg, yes. in 1454 he gets a huge commission from the pope to prince indulgence. this is money as well, part of the economy. he takes this money that he has gotten in the sand in 1455, he publishes the first printed bible, the gutenberg bible. this could only have happened in the christian world, because you hear about china and you hear about civilizations. china invented gunpowder, invented the printing press and invented spaghetti but nothing happens. the mayor's invented calendars and nothing happens. their cultures die. what is the difference? in christian culture, from these other ancient cultures. it is not that they weren't smarter inventive or brilliant but only in christian europe to do have the infrastructure to commercialize an invention. so, what you needed to do is to do several things. you need an environment that

encourages risk. the christian churches never discouraged for enterprise. you also needed an environment in which people behave themselves in the worldly and which they could pay their bills and pay their debt and you would expect a level of enforcement. you needed a legal system that treated people as individuals and people under the law which comes back again to ancient history. and finally, you needed investors. in christian theology, and a 15th century you could invest in a project and as long as you took a risk in the project. you just couldn't invest in money and get it back and in fact gutenberg borrowed money but he parted from his brother-in-law. that is how it started. he could commercialize the problem with-- products. he could create an empire that is what happened to matt. now, there is a lot of notion that what happened after that was that certain calvinist strain was such that, you have

read this probably someplace along the way, the whole notion that calvinists, protestants in general and calvinist in particular were so guilt to-- burdened by guilt, that they became economically driven to prove that they were among the elect and it is probably not that complicated. there is a simpler explanation. only in that world, only and calvinist churches was interest okay. calvin was the first serious theologian to say interest is good. and he makes such a lucid explanation for it that the churches church is under his control began to flourish. no more so than the netherlands in the 17th century where they invent virtually everything we know of, the stock are get, the market, central banks, all the central basic institutions that have gone forward from there. the phrase bear, do you know

where it comes from? the opposite of a bowl. in england, here is the quote, when you are shorting the market, it is the same process and it is difficult to explain that those who know about it can tell you. you sell the bearskin before catching the bear. they would sell the bearskin before catching the bear. in 17th century netherlands they would sell the-- but that is essentially selling a futures market. does they were called bearskin and there was bear baiting going on in london and bull baiting going on in bulls were steadier but all these terms materialize. i go into a lot of these etymologies because they are kind of fun. let me jump ahead now from 1454 21834. this is into america. i'm jumping ahead 400 years.

it is fascinating what happens in 1834 and it is interesting when you are talking about lincoln days, coming up tomorrow. this revolves around andrew jackson and andrew jackson is the founding father from the democratic party essentially and here is what we know about andrew jackson. he married an american woman and people complained about it literally. did you know that? some of the other nice things he had done of course, he had killed a whole lot opinions and he took florida over because he wanted florida without anyone's permission. he owned a whole lot of slaves. these are all in the down side. on the upside, he believed in small, limited central government and states rights. he believed in hard currency. he believed in-- the lack of the central bank. stopping the central bank. he believed in individual responsibility. so here are all these virtues

and all the spices and you ask yourself, when democrats get together on jackson's day, what do they celebrate? we get together i'm lincoln day and say, lincoln, he freed the slaves. what do democrats say? andrew jackson, he killed a lot of people and he held slaves and by the way he believed in small limited central government. what is the message there? i don't know. now they have expanded the jackson jefferson day or jefferson-jackson day, whatever. jackson has some of the same vices and virtues as andrew jackson but i don't know. what he did by the way was he bought the whole centerpiece of his second term, this fight against the second bank of the united states, which was the first great central bank in america. actually the second bank because they had 120 years earlier that collapsed and they renewed it for 20 more years.

jackson bought it with everything he had and he prevailed. it was a great triumph for him. it was a triumph of one man over a system that was already becoming corrupt because nicholas biddle who was the head of the bank was using the bank essentially to feather his own nest and to elect its own friends and and to work against andrew jackson. so the central banking has had-- for people who want to misuse it. andrew jackson stopped it. now we jump ahead to 1907. and we have a period between 1834 in 1907 of extraordinary growth. this is a period map without central banking, with long stretches of hard currency that were gold and silver or gold alone or the only real basis of the currency, where there is no wild printing except during the civil where-- civil civil war where of course it goes crazy. we are creating serious new

jobs, new economies, new industries. we are doubling, tripling the population of the united states and we are creating be world's greatest civilization, the most powerful point in that civilization and this is all being done without a central bank, without a federal reserve, without anything like that, without controlled by the government of virtually anything. it is our great laissez-faire. map. some portions of it were truly laissez-faire and oddly the democrats were more laissez-faire republicans at the time. grover cleveland, one of the great free marketers would be president. 1907, there is a panic on wall street. it happened periodically. it is a period of growth, it. every trenching and at that time the most powerful banker in the whole entire world, probably the most powerful banker ever in the entire world was in america, jpmorgan who was seven years old in 1907. the panic hits.

he walks down the street, wall street itself. people talk about this and describe him like he is 30 feet tall. he was a little taller than average but he wasn't that big. he made such a presence. he goes into the firm samples these guys on the street, the head ceos of companies. they must have called an president or chairman. pulls them together for a huge meaning and he says, we have got to fix this. we have got to solve this problem. is there was no one to bail us out. if we don't stop the panic, we are going to bleed ourselves dry. we have to get together and we have to raise the capital. we have to stop the flow right here. and they did. they did it so successfully that people looked around and they said, what happened when jpmorgan goes away? what happens when jpmorgan dies? lab-- that led to the next stage and a subsidiary day here.

that is 1910. this meeting, and a primordial swamps of jekyll island georgia, as probably produce more conspiracy. send any meeting that ever took place before. six people involved. in fact half the conspiracy theories are true which makes them even more interesting. jekyll island is the most exclusive hunting reserve in the world. six people go to the meeting. two rockefeller men, two more men, one representing the jewish interest on wall street and one floating academic. they go in a private train. they sit in separate cars. the only help is on the island don't speak english. they meet for a whole week over thanksgiving. and what they do during that week is they concoct the planned that would become the federal reserve bank of the united states. this is a 1910. jpmorgan and 73 years old and

he is failing, and they said this is what we are going to do. we are going to replace jay b. morgan with the federal bank of the united states and then they do something that has become familiar to us especially in the past six months. they set up astroturf headquarters where they go out and a fake that they are a grassroots organization and then they hire people to represent the organization and the people who are hiring the people to represent don't know they just hired two of the six guys who wrote the plan. they know that the people won't accept the central bank, so they say we have to give it at least the illusion of decentralization for which we have the bank, the federal bank reserve which is part of evolution. ..

>> is to head to the guide onjed or not, until a few years ago people would have said how can you possibly be against the federal reserve. today people are beginning to rethink that. especially the whole edition of responsibility. not just at the top it's being alleviated at the bottom. we are inventing installment

plans in various ways to postpone debt. just beginning to seep into the culture. by 1928, installment buying has become all the rage in the united states. i talk about in the book at both levels. at the top and the bottom. they will meet pretty soon. 1933, pretty obvious what happened. you have the stock market crash in 1929. the stock marked crashed don't necessarily lead to depression. we had a tremendous stock market crash in 1987 and it righted. but in 1929, herbert hoover was president. calvin coolidge called herbert hoover mr. wonderful. and calvin coolidge, my model president, he believed according to amity slays, coolidge had long ago determined the world would be better if he involves himself less. and that to me was what a president should do. hoover was mr. acted. he called, coolidge called him

wonder boy. he said he never stopped giving me advice, and all that was bad bad. he was the first president, he was the first government official to insist that the government had the responsibility for people in homes and to make programs better. this all started under hoover. he was a total activist, just all the activity he did starting with the depression, starting with the crash, was wrong. disastrous. he browbeat banks into keeping interest rates low. he browbeat employers into keeping people on the job. he tried to rally wall street, all this was running contrary to what he said have led to, is what coolidge and harding had been earlier in the decade when there was a recession in 1921. just let it play itself out. there was a sharp work at crash in 20 and by 21 it was over. hoover just aggravated it. and now we hear this locally on the radio and everyplace else,

hoover was a total activist, progressive this. 1933, as you know, fdr takes over. fdr makes, someone described to me, fdr was hoover what a bomb is to bush. okay, both of them were somewhat interventionist. he was succeeded by people who are usually interventions us who wanted to re-create government. fdr takes over in 1933. and the first thing he does is, does this have the money, he nationalized banks. he just takes them over. then he bands the private ownership of gold. 10 years in prison if you own gold in 1934. and one had to give up their goal. by the way, if you guys have goal, you better keep it hidden. and then you see history repeating itself here. fdr, although he had a good temperament for the job, and in

some sense provided some level of soul is to the people, he was utterly capricious. he would just do things whimsically that would affect the entire world economy. for instance, the secretary-treasurer talks not going into set the price of gold one day. and fdr system i think it should be 21 cents. announced. and he says why 21 cents? and fdr says, well, three is a lucky number and seven is a lucky number, and three times seven is 21. 21 cents, right? this is literally how they did this. now, this by the way, the market crash followed a whole decade of real economic growth. this was not just a bubble. it was you introduce automobiles to pursue every other home in america. radios come it was solid.

what happened is the federal reserve turn a route into a run by jacking with interest rates. and no one saw this. they didn't have any cash back had no experience. we don't have that excuse now. i didn't have expect with a crisis of this gravity. so they just jacked around with it until in 1939, morgantown, seven years into the new deal is talking to congress and he is singing seven years later we have accomplished nothing. this is morgantown before congress and he gave the comment, an unlucky number. of lucky number that number under year was 17. 17 was what? the unemployment rate in 1939. seven years into the depression. it would not go below 10% until 1941 and that was because of one or two. and this was so but as the new deal? we put obama's picture on the cover of "time" magazine as new fdr? we will ourselves into a historical ignorance on the subject that i got a sense of how this worked, and also i get

a sense of the reality that conflicts with it. in the '80s i was a professor in france. part of my job, this is run by the state department, go run to individual cities and talk about the american studies. it the theme in the '80s, the assistant the reagan administration were the state se department had the will of its own. it didn't care who was in office because it had an agenda and is going to push it. the thing that he was the new do. i showed this movie on the new deal, and i talked to the french audience about how wonderful fdr and the new deal were. that was my task. so i go to this one town near the french-german border. it's a tragic city. it's been marched through more often than your advertised above the. this is places you don't want to grow. older people of been there for a while had seen a law. not all that good. so i give the talk. i share the movie. at the end of the movie, the most poignant scene of the movie, all these okies, you

know, filled out their model a's in maltese and a low them up and drive off to california and in the new deal saved everyone, both. so i'm taking questions at the end. i'm doing it in english because my french isn't all that good. this one old guy raised his hand. he must've been 80 years old. and i said, yes? i call on them. he said, during the depression, i said yes, because you're poor people, yes, sir. , yes. they had cars? [laughter] >> they had cars yes because we built this great civilization. and what we were celebrating was not the solution we have built with a government intervention that cap to suppress for 10 years. that's what we're still sobering 40, 50 years later. we are still suffering today. it's crazy but that's the way happen. and that's part of our legacy, once we understand ourselves

better we can shut this, i think, i hope. ,-comcome up to 1969. richard nixon is elected president in january and inaugurated in 1969, january 20. homeownership rate in 1969 is 65%. it's been steadily increasing from 1945 when it was about 45%. up, up, up. everyone believes, and i believe, we probably all believed that homeownership is a good thing and the president has been pushing it ever since, ever since hoover but it started as the secretary of congress. fdr did, we did, i somehow did, dea loans, fha loans, et cetera. 65% in 1969. something else happens in 1969. california passes, and some of you were there probably, for the first time no fault divorce. and california celebrate that by going out and getting divorced in record numbers.

in 1970 there were more divorces in california than there were marriages in 1960. now in the middle of the country if you get divorced, you will limited. in california you celebrated. it becomes part of the culture. hollywood have been doing this forever. they had long since lost the moral capability of telling people that marriage is good. they had long forgotten what jesus had told them, 2000 years before, no man care apart what god has joined together. in 1980, the divorce rate in california, for some reason they thought no fault divorce would decline but it didn't. in 1980, do you know how many people got divorced in california and one year? 276,000 people in 1980, record you. as wreckage as far as we know because they solve the problem of divorce record by stop keeping records. they stopped keeping divorce rate. they were so embarrassed by. and virtually every state in america had also had adopted the

california law. for no fault divorce became a nationwide craze. and in the '70s and '80s people rushed out and indulge your a lot of people i know, there's a lot of people who have tragedies and sometimes it's inevitable or the consequence of life, but in california it became a ritual, a right of passage. marriage became something you sort of energy into for a while and then moved on. there were so many other distractions there that became like a national phenomenon. now, this is happening and no one is paying attention to the consequences on the economy. i mean, it's shocking how little attention people paid to the effect of divorce, not only divorce but single parents. because when the culture loses its faith in marriage it no longer has the will or the ability to tell the underclass that marriage is good. and we begin to see this incredible spikes, single

parenthood, especially among minority cultures, especially black culture where it went from something like 15% in 1950, to 75% by the 1980s. astonishing. so it happens, 1983, which updated bill clinton is inaugurated president. the homeownership rate in 1993, after 24, pretty prosperous years, especially the reagan years and the bush years, i mean, there was a good steady growth of economy. more jobs, more money, standard of living was much i. in 1993, bill clinton is inaugurated and the homeownership rate is lower than it was when richard nixon was inaugurated four years earlier. and the clinton administration looks around, like all presidents they want to put people in homes. clinton is a number crunching. he wants to see the numbers. he wants to put people in homes. he wants to create jobs.

those were the days, or today? -- were today? but when they look at the numbers they say why has the homeownership rate gone down? and they refuse to look at the real reason. and that is that the family had crumbled underneath the homeownership rate. we didn't have, you know, ozzie and harriet living in houses. you know, we had, you know, the cribs living in his house. i don't know who's living in these houses. people were buying homes, only homes who had no right. they were one broken fridge raider away from defaulting. these were the people moving into the homeownership market. when you look at the numbers, it's inevitable. a single parent makes 20% of the income of a married couple. a divorced mother makes 40% of the income of a married couple. the homeownership rate in 1993 for married couples was 85%. there was no problem then.

this is just maxed out. if we had been a nation of married couples, moving forward there would have been no economic crisis. there would have been no subprime crisis. none of that would have happened. but instead the homeownership rate for single parents was less than 50%. that was pulling the whole number down. and instead of saying gosh, what could cause this? why don't we work on fortifying marriages? why do we work on keeping couples together? what it would work and keeping who have worked hard, opportunity to buy a home and say we just want to push the numbers of? they look around and see who can blame? the federal reserve to study in 1991 that provide all the ammunition the clinton administration did. what they did is they studied rates. this is i believe for fha loans. the rate of approval come if your looking for a government assisted loan. and for white families that came in were getting loads at 77%. for black, the cayman were getting phone that 61%.

so they be emea look at the numbers and said, the only reason the homeownership rate is a growing is because racism. what else could it possibly be? they didn't look at the credit histories. they didn't look at the family structure that was underlying the differences because that's what the difference was. it wasn't raise. it was the family structure. and you see the headlines in places like "usa today." not all homeowners are created equal, or even "wall street journal." it matters more what you look like when you apply for a loan than your credit. nonsense. because banks have no interest in turning down for going to repay the loan. and when you look at what happened after that, every arm, every organ of government, media, even industry after a while were telling would be homeowners get a house, get a

house can't get a quick, get it no matter how you can get it. i've done this in 1992 article from the "new york times," in which talking about acorn which at the time struck them as a wonderful new rejuvenating organization, bring equity to the housing market. in 1991, they had a two-day takeover of the house banking committee and the newspapers celebrated it. isn't that cool? isn't that neat? protest. remember when does it was patriotic? like a year ago, wasn't it? now does it is racist today. but again i have to go it was patriotic. in 1991 it was wonderful. you and your buddies come in and take over the house banking, you do everything around and you get on the front page of the "new york times" as good guys. because you're liberating the housing market from the entrenched race of classes. now, the "new york times" is writing about this and here's what they say. this is 1992.

no one who gets a mortgage ever has to go beyond the philadelphia a court office. like this is a good thing. the times than highlight acorn is just a borrower who do not speaking is, have no credit is due or this one like this, had to sign ask for the name. they are celebrated. this is 1992. these are the same people who 10, 15 years later would be criticizing wall street for getting involved in this business. and during the course, this is what subprime means that this is misunderstood a lot. subprime is not a kind of loan. it is a kind of borrower. there's a thing called fica score. that is your credit score. comes from acronym for fair isaac corporation. it is based on your history. if your credit score is above 650, you are a prime borrower. and people want to lend you money because you paid your loans back and they make money on the interest. if you're below six and 50 you a subprime borrower and no one wanted to lend you money because

you didn't pay your money back and if they let you money, they charge higher interest rates to compensate for the fact that whole bunch of you were going to pay the money back. starting in the late 1990s, subprime borrowers became rock stars. everyone wanted to subprime borrowers to probably because the government was forcing banks and lending industry to lend loans to subprime borrowers. the government was forcing fannie mae and freddie mac to approve these loans. and the media were celebrating all this, all the time it was going on. in the meantime no one was watching what was happening. and it was a good. and it was a major cultural change that gone on at the same time. and that if you remember back in 1300, you were a center. in the year 2000 if you are prodigal and you defaulted on home loans to bar recklessly, you moved into a $400,000 house on a $2000 a month's our

anti-default, wall street was shocked when they realize people were missing their first payment, right, they missed the first payment. this is a bad sign. this is not a good move, major first payment. in 2000, prodigals were no longer seen as. they were victims. now they were victims. it was a whole new victim plastic you watch any show on tv, they are victims. bottom line, i met going to go into here in the whole history of the meltdown. it's to evolve into turkey, but the one final note i believe you with is, is the biblically literate among you, the home building many that occurred an echo building projects bad. and some of you will know where i am reciting this from. they said one to another, go, let us make bricks and burn them thoroughly. and they had brick for stone, and they said go, too, let us build a city and a tower whose top may reach into heaven.

in the first years of the 21st century, this babble like effort would promise affordable housing for everyone record is of income our character, that debt obligations, should he choose to on of them, would be packaged and sold without risk, but i was being built under the guise there would be no risk. all would prosper and everyone would be like a god. unfortunately, like the folks at apple, to my which had been confounded and they did not understand one another's speech. at this point let me thank my financial advisor for helping me understand this because the language stuff is impenetrable. but in even the ceos did not understand what the workers were doing. they didn't know what a collateralized debt obligation was or a credit defaults while. let alone a 2/28 on that all these financial estimates were being treated. they were being created to minimize risk. that was the weird thing that they're building a tower with

the financial equivalent of chinese wallboard and in 2008, it finally got it from underneath and it collapsed. it was underneath. it wasn't the economy. if i could paraphrase james and to include here, it's the culture, stupid. thank you. i would take some questions if you like. [applause] >> a who wants to be a star? [laughter] >> would you comment on the unfunded obligations of social security and medicare? >> i had lunch yesterday with a guy who works with social security. it's over as they. he says we can guarantee until the year 2030 you'll be able to lease the 76 back on your dollar. i said i don't think that was part of my contracted 70 cents back on the dollar. that's what we're heading. they have already figured that

out. that's the first time i'd heard that and it intrigues me because we thought all along this was another roosevelt idea, social security, that we would have whatever we put in. but we are not. so don't count on. count on three quarters bill. any of the questions? yes, sir. >> i didn't imagine anything about the artificially low interest rates. >> that was also -- you know, greenspan when he retired, and greenspan retired in 2006. he was hailed ever as the world great security. by the 2008 he was the goat of the financial world. and the reason was, he kept interest rates artificially low for probably two or three years -- there was a reason for it and a lot of it had to come out of september 11, and the fact that bush inherited a recession. people don't want to talk about but that's a state of affairs in 2001 was a recession aggravated by september 11 which led to this, which led to the low

interest rates, which encourage people to come into these adjustable-rate mortgages. were you get maybe 4% interest and it would adjust when interest went back up to a regular levels. when it goes up three or 4% people suddenly find themselves unable to afford their homes. and then of course there all victims. they didn't know. how are they to know? they should have known. they're buying a house big if you are not wise enough to figure you can afford it or not afford it you should be in that house. i hate to be judgmental but it's true. yes, sir. spirit one of the questions that comes to my mind is like an alcoholic, you never get on the road to recovery until he recognized he's a now called and what he did wrong. are recognizing the things we've done? we don't see any real taking of blame by guys like barney frank who are really the primary instigators. i we going to change until we

define what the problem is? i'm wondering, is this not getting out there so we can then turn it around? >> when i win the nobel prize for economics next year they will be more obvious. but excellent question. the unfortunate answer is that is as far as i can see absolutely no recognition of the cultural problems that underlay this whole mess. i see no recognition at all. and it's unfortunate because the president isn't a good position, as a very good family man, and he should be a real role model in that regard. he is not using the model he could possibly be to tell people, get married, stay married, build a nest egg and then buy a home. we're not hearing that at all. let alone and in the pictures we are hearing are so superficial and so wrong. i'm yet to be -- i'm optimistic about the fate of america. i'm not optimistic about the next two or three years. >> you miss this debt.

unique tony, then you buy a home. [laughter] >> i forgot that. to double the size of your lot, you know. they are short steps, shortcuts are some of us but not for all of us. other questions, comments? longings for mother. now that you're missing your mother. anyone? yes, in the back year. >> did the lenders see the housing crash coming, and their business is to make money, do they see it coming and because of the government involvement, did that make it difficult for them to do anything or to react properly? >> that's a good question. and is often misunderstood, that the blame often comes down to let us. that they are greedy. but if you read, there's a very good history on the book of countrywide which was the biggest of the mortgage brokers. and angela, the ceo deeply

believe, that he was realizing the dream for those people. and there was so myopic they refuse to see what was happy. when i was doing the research, for my california book in 2006, i mean, i did whole thing on the breakout of affordability index. and here's how bad it was. in kansas city in 2006, for instance, a family of medium income could afford a bike 87% of the homes in the marketplace. do you understand the? you could look at seven at every eight homes in the market think you had a shot at by the. in los angeles, 2006, do you know what the number was? 2%. just a decade earlier it had been 50%. so you went from being able to buy one out of every two houses in 2000 -- 19 and five to be able to buy one out of every 50. when i was looking at these numbers, where are they going to find new buyers? i didn't realize at the time i

was writing that's how they were of buyers. they were downgrading, downgraded, downgrading who was who could buy them. at the end of the day in california, you don't even have to be a citizen that you did have to show income. they had the self-reported loans, the and as he calls them lie about. you just walk as i wanted to hundred, $3000 home. so i could buy it, flip it, make $50,000 can pay off my credit card and walk away. and, no, you would think they saw that coming but they did not. and they didn't even see it in the industry, and wall street certainly didn't see it at all. to a certain degree wall street was the victim of this mess. although a trillion dollars a day, ignorance is no excuse to i want to thank you all for coming. i see our winters are getting ready in the background. appreciate you coming. all of you have a happy day today. it's a very memorable day in our annual history. thanyo all. [applause]

>> jack cashill, executive editor of "ingram's magazine" is the author of "hoodwinked," and "what's the matter with california." he writes regulate for worldnetdaily. for more information visit cashill.com. >> well, there is a new worldwide community gathering to read a book, and it's called one book and one twitter, and the organizer is just how. explained to us what one book, one twitter is. >> well, in this sense it is a global book club but the inspiration was really not bookclub. which twitter has a few of and our wonderful. as the big read that we've seen over the last 10 years. the first one being nancy pearl's what if everyone in seattle read the same book. , where in 1998 were all of seattle banks. the one that inspired me was i was reading about one