i was quite a radical, and i sang, we shall overcome, was not an effective way of gaping the right, and i thought that more compensation was needed. >> economics professor, walter williams, on being a radical. >> i believe that a radical is any person who believes in that personal liberty and individual freedom and limited government. that makes you a radical, and i've always been a person who believed that people should not interfere with me. i should be able to do my own thing without -- so long is a don't violate the right of other people. >> more sunday night at 8:00 eastern and pacific on q & a. >> next, c.l. bryant, a former

naacp chapter president from texas, talked about why the left the democratic party and became a conservative. he spoke at the rockies retreat this month. this event is just under an hour. >> has been with the organization previously known as citizens for a sound economy for over 15 years, an economist by tulane -- by training, he is called one of the masterminds of tea party politics. he has had a number of appearances on tv. dubbed, the scribe, by new york day his news, he is co-author of "give us liberty." a tea party manifesto.

>> anyone here believe in freedom? anyone here think that the government is spending too much money it doesn't have? here's the test. does anyone think sometimes as frustrating as it is that you have to beat the republicans before you can beat the democrats? [applause] >> just wanted to make sure we were in the right place. later on today, right after lunch, we are showing the colorado premiere of a movie that i am really proud of, called "runaway slave." and that will be showing right after lunch, and i got to tell you, money-back guarantee, it's worth your time. it's powerful. you might get choked up but you'll be inspired.

i fit met c.l. on september 12, 2009. we had both watched from freedom plaza 1.3 miles up to the capital for what turned out to be the largest fiscally conservative protest i believe in the history of the united states. and we didn't really know each other at the time but we were there with about a million of our best friends. and he got to the stage long before i got there, and i'd never met him but i heard this voice coming from the stage. anyone ever herd c.l. speak? you're in for a treat. he may melt your face off so be prepared. but i was waiting up -- wading up to the stage through a huge crowd, and c.l., i think as much as anybody, captured what i called the tea party ethes. there's something about the men and women who have risen up to take their country back.

they have a set of values and they're willing to put their personal lives, their families, their careers, on the line for the things they believe in. and c.l. represents all of those things. i couldn't be more proud that he is my friend. i couldn't be more proud for the work he has done, the work we've done together in the trenches in the last two years, fighting to take this country back. give a round of applause for c.l. bryant. [applause] >> thank you. hello, patriots. it's good to be here with you today, and it's still a great day in the u.s.a. and i want to have you join me, before we go any further, in thanking the finest men and women on the face of the earth, the american soldier.

let's give them a round of applause. [applause] >> i want to thank not only matt for that wonderful introduction, of course his friendship and freedom works and all they have meant to me and we have meant to each other over the last couple of years. i also want to thank chairman schaffer her, as well as sherri and kristina. i want to thank four friends i have met here in the last 48 hours, karen, lee, and sherri, and don. i want to thank you for your hospitality. and i am very happy to be here with patriots like yourself and people like you, who want to see a legacy continue in this country. i understand that it was 20

years ago that terry planted an idea that in fact has grown to what we are experiencing here today. 20 years ago, of course, we were coming to the end of the reagan-bush era. and our nation somehow in the time that has passed between there and 2009, have fallen asleep. and unfortunately an enemy crept in among us. and it planted seeds of discord. among the american people. in the last two and a half years, we as americans must have learned something. and i have a feeling that the

two things we have learned is, one, if you take for granted liberty and freedom, they can and they will leave you. and, two, is that we as americans must understand that we have enemies, all across this world. and they hate us. because we're free. they hate us because we have the right to pursue liberty, and freedom. there are those who actually covet what we have here in this country. they covet our success. they covet our lifestyle. they covet our wealth.

somehow, when they see us, and they look around at places like this, the broad moore, which is a fine, fine place, somehow they think that this just happens. they hear our message. they hear our message that america is a place where, if you're bold enough, brave enough, you can still secure what we all have known as the blessings of liberty. not only for us, but for our children. and i have come here tonight, or this afternoon, and i want to make very certain that you understand that the islamic threat is real, and the security

to our country is real. and it's time that we wake up. at it time we understand that we must defend our country against all enemies. foreign and domestic. we must make that stand right here and right now today. [applause] there are those who visit our land and they see what we have accomplished, and they go about their way to manipulate the system, to remain here, and i want you to understand that our nation is in fact a very unique country. a thought occurred to me a few days ago. that if we were to become russian citizens, we still would

not be able to become russians. if we were to go to denmark and become citizens of denmark, we'd still never be danes. argentina, if we were to go there, we'd never become argentinians. but the most important thing, and the most beautiful thing, about america, is that it does not matter where you came from. we all have come here and we all are now, regardless of if we're irish, english, african descent, we all now unite in this country as america, and that must not go away. we must hold on to who we are. [applause] to a dream, to achieve the

american dream. but while we slept, an enemy crept in. friends, i need you to understand something. there is an evil among us. an evil among americans. and our way of life. and that evil is called multity culturallism. that is something that will destroy the fiber of our country if we don't pay attention. you see, there are those who do in fact covet what we have. they want to come here to our country, and i need to tell you, they don't want americanism. they want our stuff. they want what we have. but they do not want to

assimilate. it's all immigrants have done. they do not want to become americans. you and i in this room tonight, we understand -- or this afternoon, we understand the american dream. and we understand what that means. the american dream. our movie, "runaway slave," goes deeply into and examines the root of the american dream. we examine the freedom that we have. and we examine the idea that america is not a land of guarantees. america is a land of opportunity. and you here in this room today,

graduates of ldr, know what is possible in this country, and you know what is necessary to preserve our nation and our freedom. but i bring you a warning. i bring a warning to all conservatives. and that is this. it is time that we take on a different type of posture. it is time that we take on a posture of offense. for too long we have been in a defensive posture. and the enemies of conservism, the enemies of the public have been assaulting us, abusing us, and they have been insulting us.

matt and i have been called all types of names from all quarters of our country. that's okay. but we must understand one thing. it is time for us to man up as a americans and go on the offensive as conservatives and defend who we are and who we stan for. you apologize far too much. we have the truth. the progressive liberals will always try and put you on the defensive. but i tell you this. stop being on the defensive. be who you are. stand on the principles that did

in fact cause this country to be the greatest country the world has ever known. there was a time in our nation when we were certain that we could defeat any enemy, any foe, and we could always identify our enemies. and we were certain that whatever enemy that attacked us from without, we would be able to repel that enemy. but i come to bring a startling revelation to us now. and that is that our enemies, as was said before i came, to the podium, are very unidentifiable,

and as a former president of naacp in texas, in a time when we were suing the school district in federal court, i have seen both sides of this argument. the reason i broke with them is because i came to the realization that the agenda for them was not to just control my agenda. but the agenda for them was to control me. and then to use me as a tool to control a block of people. that is the liberal progressive method, and that methodology has

in fact controlled a block of people for over 50 years. and if you continue to sleep, if you continue not to pay attention to what's going on, then the very method they have used to enslave that group of people -- believe me, they have the same designs on the entire country. and my friends, tonight, this afternoon, if in fact we are unsuccessful in our efforts to take back the white house and the senate here in 2012, then our country will be

fundamentally changed, and we cannot afford for her to go away. that's why we need a leader who can gain respect again of both our friends and our foes. that's why it is important that we choose the right candidate in this presidential election. americans are tired of apologizing for who we are. and i tell you right now, we are -- we do not need to bow down or apologize to anyone. we are the greatest nation on the face of this earth. [applause] >> we need a leader that our

friends and foes will respect. we need a leader that will put swagger back into the american stride, and we need a leader who is proud to be an american every day of his life. not just when it's convenient. [applause] we need a patriot. we need someone who will not bow down to anyone. now, that leads me to our children. if i may for a moment tell you that i'm very concerned about our children. i was talking to lee and karen and sherri and don the other night at dinner. and we had a very interesting

conversation about our children. and as i said earlier there are people who come here to this country and they want our stuff. i want to tell you something, while we slept, those who are in our classrooms, who we have entrusted to teach our children, have poisoned their minds. while we slept, our children have been taught by those who have been schooled in socialist doctrine. that america is not an exceptional country. our children have been poisoned,

not just by hollywood. but by the use of your tax dollars in public schools. and even in the litvinenko -- literature that you buy for them, that america is the problem in this world. and just as we try to expose in "runaway slave" that america's still a great lan of opportunity, your children, many of them, your grandchildren for sure, are under the impression that somehow you sitting in this room are wild-eyed hysterical people, whose thinking is antiquated.

your children, believe it or not, -- we came to the conclusion, they want our stuff. and even though we don't like to think about this, there are some who are waiting for the demise of the free market system. the demise of capitalism. so they can get our stuff. but this is a hard thought that i'm about to share with you. and that is unfortunately our children. we have been pursuing happiness. we have been pursuing life. we have been pursuing liberty. and we have been making them happy. but our children, their

happiness has depended upon us. and they unfortunately do not have the same drive, the same determination, to get for themselves what we were willing to sacrifice to get. the old saying in louisiana comes from an old song that says, momma may have. pop pa may have. but god bless the child who's got his own. simple idea. but it is one that is missing in our children. they don't want to get their own. they want to have yours. and they want to have it now.

my grandfather, a man who was a great man, but if he wrote his name on the back of his wall, he would not be able to read it. his father was a slave. my dad had a third-grade education. here i am, two degrees, standing before people all across this country, that i have never met, talking about the very same things that the man who could not read, taught us.

that was, by the sweat of your brow. the work of your hands. and the determination that god gives you the strength to accomplish. i stand here before you. [applause] as a free man. an american. the american spirit is built on such stories. but if we allow socialist tendencies to invade, i don't know about you, but i stand here saying with every fiber of my being, i will refuse to surrender our country to socialism and i will stand

against it with every ounce of my body. i refuse to watch and sit by as our constitution is trammell -- trampled upon, and we must be determined today we with defend the finest document our country has, and that is the american con constitution. we -- the american constitution. and we send this message to this administration. i stand firmly with cardinal dolan and n saying that americans will not yield and we will not comply to any legislation that is against our consciousness and that is against our moral values.

[applause] we stand together, catholics, pros -- protestants, jews, gentile, all over this country, and it is important that we understand that if they come for the catholics, they will come for the jews, and they will come for the protestants. even the agnostics. if we yield now we might as well prepare to continue to yield until there is nothing left to give up. ronald reagan said it best. our freedom is only one

generation from perishing. this is why, when matt and i met in 2009, this is why 2.9 million americans marched on washington. because we sensed something was terribly wrong in this land. we sensed that if we did not speak up, that there was something that we could lose, that we could never regain, and i stand here to tell you that i was proud to be a tea partyer then and i'm proud to be a tea

partyer now. [applause] "runaway slave" is a movie about a people trapped in a system. i grew up in louisiana. i'm very proud of it. my roots run deep. and decane river. i'm very familiar with creole culture. my father was one. great-grandfather,, were all of that culture. there was a system at one time in our country that in fact supported slavery. and these were people who were locked in a system with freedom all around them. the master was free.

... it would leave the plantation system, through the perils of reaching freedom. this is a dangerous and very difficult course to take.

but whatever it costs, it even if it cost them their lives, they would run away from that system and achieve redone. many of them, like harriet tubman, frederick douglass, once they achieved it, they would return and they would tell those who deadlocked in bondage, you can be free. but do you know have been? when they returned telling the others about their freedom? many times does one of the slave mentality and a plantation way

of thinking, they would tell the overseers that dead troublemakers in their midst. my friend, herman cain, was called a bad apple by cary telefon d. and i tell you today that that type of thinking is exactly what the progressive left wants to keep a certain group of people believing. the people like myself, people like her man -- curb and, if you place that at apple in the barrel with the rest of them, they are going to spoil it those who we hold already in this

barrel. and americans, i say to you that as one who was a part of that system, one who ran away from that system and found freedom for myself, as i now return to tell others that you can be free , the same thing happens to me as did to them 150 years ago. but except the dogs that are stacked on them now and the overseers that are sick onus now, the dogs are no longer four-legged homes. they are two that could cause in the shape of all sharp to jesse jackson. those are the ones who are captured. [applause]

but yet, freedom is all around us and they must in fact secure it. my friends, whether you came here on the mayflower or whether you came here on slave ships, america has never been a place that guarantees anything to anyone. whether you are escaping the tyranny of king george, to try to land unknown, a place untested and untried, whether you came here and found herself on the tyranny of the plantation , the same kerch still has to be mustered in anyone who

will enjoy the fruit of our great land. so my friends, i encourage all of you with the runaway slave movie, chiefly economic slavery and ran toward the blessings of liberty. now in closing, i want to say to you as i look out over at this crowd, lord knows he has given me an opportunity as a pastor or preacher 32 years, i have had to leave my fault that because of my personal convictions.

in a predominantly black church that i pastor, might deacons came to me and they told me just about a year and a half ago, two years almost, pastor, we don't like this tea party thing that you are involved in. and i don't know about you. i am southern baptists and the southern baptist church, preachers meeting is only one deacons meeting away from being unemployed. they came to me and i'd been there for nine years. we have just built a brand-new church. the old one was sort of off the beaten path of a bill a beautiful building. i don't know about here in this neck of the west, but down in my neck of the woods, $1.5 million helping is a pretty substantial

building in our neck of the woods and the lord had been gracious enough to let us do that. and then i called matt and i told about this idea that i had for runaway slave and man, i knew somehow. he got behind me on the project. and when they heard about "runaway slave" movie, if you think they did in my tea party, they lost their minds with this "runaway slave" thing. so we came to the parting of the ways and i guess sort of like moses i led them to the promised land, but i never went in with them. but it was time for me to lead. many of these six months ago, we are able to start the first tea

party in israel. we call it kosher tea. [laughter] [applause] started off with 70 people crowded into a cramped little space not much bigger than this platform. but now understand they've grown to over 700. freedom, and there's a thirst for it all across the world. msnbc tonight, this afternoon, i usually speak at my -- [laughter] as i leave you this afternoon, i want you americans to know from the words of christ that these words don't say it many other people in our world today, but it does fit you in this room

here today. you are the salt of the earth. if the salt loses its favor mass, savor its usefulness. and it is good for nothing. but to be thrown out, trampled under the foot of man. you are the light of the world, a city set up on a cannot be here, so let your light so shine before men. men will see a good works, america to glorify our creator who gave give estimates that we

have. and as i travel around this country, sometimes shaky nonfamily hands, sometimes finding myself in. this place is, it would be good to note that there are people right here in colorado were wishing me well and prayed before it's. and so i have just one more question for you. are there any p. treats in here today? is there anyone here who will stand up for american values? is there anyone here who will stand up for the republic? stand up for the americans? stand up, stand up, stand up. god bless you.

god bless america. [cheers and applause] [inaudible] >> i am also the chairman of the arapaho county's tea party. arapaho county search the city named aurora as part of arapaho county, a large black population. look around us human with the exception of you i don't see any black people. i don't have any black people -- >> i spotted a couple of adair. we're good at doing that. [applause]

>> i would say the population is 12%, that we are little sure here today. gentleman named derek wolpert started that rocky might like tea party. the people i talked to them to week and i hear a lot of who say we don't think i'll take the white house this year. they seem kind of resigned with the possibility. i am the other hand don't believe we can take the chance. so i would like to know, how do we accelerate the process of getting out the message? we have 10 months. we don't have 10 years for something powerful like your movie or a speaker that yourself to permeate our society. what do we do to step it up? >> i assume you're speaking of getting an influence on the black vote in our country? >> yes, sir. >> as i alluded to in his speech, conservatives must be who we are. we must not run away from who we are. the persuaded me to become a can or bidets. i saw that reality for myself.

however, i do believe that the pain that the obama administration is administering on the black community come with messages like we have. and i do encourage everyone of you to stay and see this film and then tell your young people in their tea. here's about it. but the unemployment rate being like it is in the black community would gas prices that will affect the black community as it has the runaway community sneezers, the black community gets to vote yet. and that means is if it's hard for you, but many times it is much harder for them. and if they are not able to see that gas was $1.89 when that man took office and nowadays approaching $4 in our area at this point in time, then there are none so blind those who will

not see. we must continue being who we are. let's take the senate. we don't take the white house. let's take the senate. and of course let's hold onto the house of representatives and then if we do take a white house, then let's hold whoever the candidate is. let's hope his speech to the fire. that may be a felony. i don't know. let's hold his feet to the fire. that's the best advice i can give you. >> i thought randy was going to ask my question. i'm looking out over the group here, they are not primitive people here with good chance. i don't really believe in giving them scholarships to come here because they are tan or not and or slanted eyes or whatever. but what if they come? and this is true in this state and many of our conservative political events. why are people of color coming to our offense? >> the liberal media has done an

excellent job in sandbagging the name conservative. they have done an excellent job in sandbagging deneen tea party. what you will find and i am sure those who are like me and at the same? as i am will attest to is that black folks to their core are very socially conservative, have always been. i often notice that in churches where he preached across the country now, i can be talking to the predominantly black congregation and i will talk about the evils of abortion and everyone will say hey, reverend -- i will talk about the evils of even same-sex marriage and amen, reverend. but they will leave that church on that sunday or sunday night and if election is tuesday, they will still go and vote for the liberal agenda. when you have 95% -- 96

actually% of people voting for one party over a 50 year period, we do with this in the movie and apparently amway, then herman was right. there has been a very thorough and total brainwashing. it is not that they don't want to be associated with you. it is just that they have been led to believe that abc, nbc and cbs did she write the enemy. and the strangest thing is the actually, in their core belief the same things that you believe, but they are afraid to run away from the system.

>> ross kaminsky, longtime friend of freedom works with report to your movie. a lot of the questions are similar and minus similar, too. on a bigger scale come it seems to me from at least the 1860s to the 1960s, most of the progress and black civil rights has been due to republicans, typically over democrat objections. and for the last 50 years -- i guess einstein is reported to have said that the definition of insanity is to in the same thing over and over and expecting different results. why is it that blacks are getting terrible resort for generations of supporting democrats at every level and they are not changing despite the results are so terrible? >> it is because we're the only group of people in this country who when you want to speak to us or for us, you have to go to what is called a black leader. there are no -- i'm sure they're either scum of their french

descendents,@dissent here come the scandinavian descent here. there are no irish leaders. there are no english theaters in this room. you don't look to al sharpton or jesse jackson, but the old saying was years ago that king had a dream, jesse had a scheme. and jesse has been very, very good at perpetrating his scheme of extortion on this country. she's on the cell. he's in the movies. al sharpton is in the film. i was told by gregory the comedian. postal black conservatives don't exist, so there i was, a figment of my own imagination. [laughter] and so, they have been thoroughly, thoroughly brainwashed. and the leaders, because of the government change, because of

the welfare, because of all those things and we do with this in the film. we will deal directly with your question in this movie, but because they have been led to a certain place in their thinking and because roosevelt and even truman was instrumental and solidifying this avalanche of democrat superiority or better than republican party, they have failed to see historically the fallacy in their beliefs. >> good morning, jeff smith centennial colorado lp or class of 2010. thank you very much for your inspirational speech and presentation today. i have one comment and then a challenge actually. the comment is, here's a quote.

america will not fall from a foreign aggressor, the thought will fall from within without a shot being fired. >> crew chef. >> absolutely. challenges from each one of this person in this audience. arrange for yourself for to see this film. if we can have an inconvenient truth shown in our schools, we should have this man's movie shown in there every day. [cheers and applause] >> thank you. thank you so much. yes, ma'am. hi, my name is sue johnson and i'm from denver, colorado, active in the republican party there. i'm also a former engineer and a current engineer and the school district. my comment of this is that being a teacher since 9/11, i am not afraid of the liberal left, but i do as i hit it head-on.

my, what he is by no people like you develop more programs for inner-city kids to understand your ideas because liberal leftist doing dances around you. and so i think you have a huge opportunity with leadership program at some thing or another and go straight and against them. i can recommend the kids to you. >> elements, thank you. we had it delivered here. we don't know what happened to it. but we will be taking orders for the -- al sharpton ticket. [laughter] joseph downs, the young man here will make arrangements to shari kristol will make arrangements for you to secure the book and my signature on it. amanda and i are working on that very and. whether we win or lose the white house in this coming election, it will be necessary for us to

spread our conservative message throughout all the land. listen, god bless you, god keep you. thank you so much. [cheers and applause]

>> our system is fundamentally undemocratic and a number of ways. one of the ways this close primary. so half the states in the country, 40% of all the voters can't participate in the primaries. instead they have no say in who gets nominated. and as a result we get more and more extreme candidates on those sons of the spectrums.

>> they would work permits made of honks fun cloth. and the honks fun cloth would be rough textured, the much less fine than the crimes they could import from grape written. but they weren't disclosed, women were visibly and physically displaying their political sentiments.

>> president obama spoke at a campaign fundraiser in the hometown of chicago friday afternoon. the group posted with the obama victory sign. was the first of five fundraisers the president attended friday. this is about 40 minutes. >> hello, chicago! [cheers and applause] thank you. thank you so much. thank you. [applause] it is good to be home. [cheers and applause] thank you very much. thank you. everybody, please have a seat. thank you so much. i have never seen the city look prettier. i have to say. and every time i come back, i am just overwhelmed with not only the beauty of this city, but i

was explaining to folks as we were flying over, and dick durbin flew in with me, and what makes this place so special is not just that this is where my daughters were born, not just whether i really started my political career, but i've got so many good friends, so many relationships as i looked out across the room, seen so many folks who put up with me before i was president and helped me get there, it is just extraordinary. so i miss you guys and i wish i could stay the weekend, especially this weekend because we all know there is no better place to be on st. patrick's day than in chicago. [applause] but they say, just thank you to

first of all one of the finest attorney generals in the country. she proved it again in helping us get the settlement on the housing issue. lisa madigan, you do outstanding work. [applause] the senior center of the great state of illinois and one of my dearest friends, and dick durbin is in the house. [applause] the governor of the great state of illinois, pat quinn. [applause] he's got a new mayor here. i don't know how he is doing, but he seems to have a little bit of energy, mr. rahm emanuel. [applause] he's got representative bobby

rush and jan czajkowski in the house. [applause] county board president of former alderwoman, it tony preston goal. [applause] detrusor always trend, the snow was shoveled when tony was in charge. and i want to thank axelrod and penny and daily for the preprogrammed. now, you might have noticed that we have some guests in illinois this week. apparently things haven't quite wrapped up on the other side. [laughter] said this action is an interest in the primary we have here on tuesday. and my message to all of the candidates is welcome to the --

"welcome to the land of lincoln" as i'm thinking maybe some link that will rub off on them while they are here. [laughter] [applause] we remember like an escalator he saved our union, but this is the president to in the midst of the civil war launched the transcontinental very good, understanding that in order for america to grow, we had to stitch ourselves together, to be a coast-to-coast. setup the first first land grant colleges in the midst of a war because this largely self-taught man understood that education could give people the chance to realize their potential and if we're able to give that kid on a

farm the opportunity to learn that would be good for all of us, not just for that kid. at the national cabinet sizes to promote the discovery and innovation that would lead to new jobs in the entire new industries. link in, the first republican president knew that if we as a nation through our federal government didn't act to facilitate these things, then they likely wouldn't have been. and as a result, we would all be worse off. he understood that we are a people that take great pride in our self-reliance and our independence, but that we are also one nation and one people and that we rise or fall together. so i hope that while my car parts on the other side enjoy the outstanding hospitality and the people of illinois and spent some money here to promote our

economy, i will also take a little bit of time to reflect on this great man, the first republican president. of course you may not feel confident that will happen. you may be watching some of this avalanche and the tax gap and think this is unappealing to the better angels of our nation. [laughter] but i hope springs eternal. [laughter] but lincoln is it not a big, bold, generous, dynamic, at dave, inclusive america. that is the vision that has driven this country for more than 200 years. that is the vision that helps create chicago. that is why we don't make little plans here.

and that is not a democratic vision or republican vision. that is a quintessentially american version. [applause] and that his position that drove our campaign in 2008 and that so many of you work your heart so to see realized. it wasn't because you are willing to settle for an america where people are left to fend for themselves. everybody is playing by their rules. what you believed in was an america where everyone who works hard has a chance to get ahead. everybody, doesn't matter which you look like, where you come from, but your name is. everybody has a chance. that is the vision we share. that is the change we believe

in. that is why you got involved. you didn't get involved because the odds were a guy and barack hussein obama was going to be president. >> yes we did! [laughter] >> and we do it wasn't going to be easy or that it would come quickly. we know it was going to be hard. but as you just saw in that video, just think about what happened over the last three years because of what you did in 2008. because of your efforts, your commitment not to me, but to the country into each other, we started to see which angel like. so change is the first bill i sign into law, a law that says women deserve an equal day's pay for an equal day's work because our daughter should have the same opportunities as our sons. [applause] changes the decision we made to

rescue the american out of industry from collapse, even when some were saying, let's let detroit go bankrupt. we had a million jobs on the line. the entire economy of the midwest and the country estate. so i wasn't about to let that happen. and because of your efforts, it didn't happen. today, gm is back on top of the world's number one automaker just reported the highest profits in 100 years. the factory here in chicago is going gangbusters. [applause] with more than 200,000 new jobs created in the last 2.5 years, the auto industry in america is that. that has changed. that happened because of you. a change in the decision we decided we need to stop waiting for congress to do something about our oil addiction and

finally raise fuel efficiency standards on our cars and on our tracks so that the next decade will be driving american-made cars that get 55 miles to the gallon, which will save the typical family $8000. that would be good for the environment in the market. that is what changes. changes is no longer handing out $60 billion in tax subsidies to banks for managing student loans instead, given their money directly to students who need it and families, who want to see a better life for the next generation comes to millions of kids can benefit and changes the fact that in the first time in history you don't have to hide who you love in order to serve the country allows because dawn asked out how is over. -- "don't ask, don't tell" is

over. [cheers and applause] changes health care reform he passed after a century of time, which means nobody will go bankruptcy in this country just because they get sick. [applause] we've got 2.5 million in evildoer to have health insurance today because they can stand their parents plan. millions of seniors are the same benefits in terms of more preventive care, literature prices. and not only is preventive care not covered, it also means that families with children with preexisting conditions are going to have to worry that somehow their child is going to be left on their own or that they are going to have to mortgage their business or lose their home because of that illness. that is what change is.

change is fulfilling the first promise i made in this camp can't do it end the in iraq. we do not have troops in iraq anymore because the extort network of free men and women in uniform. [applause] we've made sure that wall street is playing by the rules, stabilizing our economy. all of this happened because of your efforts. now, the question is, what happens next? none of this has been easy. we've got a lot more work to do. there is still too many americans out there who are struggling, whose homes are under water, were still looking for work. or too many families right here in chicago who can barely pay the bills. they're trying to figure out how they can scrap the next money together to let their kids go to

college. but over the past two years, we've created close to 4 million new jobs. we've got the biggest manufacturing since the 1990s. the economy is stronger. our exports are on track to double. businesses feel more confident. and so, we've got an opportunity to build on all the work we've done over the last three years. the question is, recalling to deal to stay on track and move in the right direction? because the other side has gotten entirely different idea. their basic theory is that we go back to doing things the same way redoing them before before the crisis ended. promoting the same policies that got us into this mess in the first place. and it's my belief that the last

thing we can afford to do is go back to the same policies that got us into this mess. that is the last thing we can afford to do, but that is what they are talking about. but, they're not making any secret of it. you can watch these ads on tv. they want to go back to the days of wall street paid by its own rules if they want to go back to the days of insurance companies can divide coverage or jack up premiums for that reason. they want to spend transit dollars more in tax breaks for the very wealthiest individuals, even if it means adding or education or medicare. we've got a simple philosophy. we are better off when everybody is left on their own. everybody writes their own rules. in the united states of america, we've always been greater together than we are on our own. we are better off when we keep

to that is that american promise that if you work hard, you can do well enough to raise a family and own a home, send a kid to college, put a little away for retirement. we are better off when the laws are applied fairly to everybody, not just some. and that is the choice in this election. this is not just another political debate. this is the fighting issue of our time because we make or break moment. not only for the middle-class in this country, but everyone fighting to get into the middle class. we can go back to an economy built on outsourcing in that dead and phony financial profits, or we can fight for an economy that is both to last. an economy built on american manufacturing and american energy and skills and education for american workers. and the values that need this

country great and made this city great and the state grape. hard work and fair play and shared responsibility. that is what is at stake. and so, over the coming months we will have a great debate about whose vision will deliver for the american people. i think we need to make sure that the next generation of manufacturing takes root.it a shot, not in europe, not in the factories that detroit and pittsburgh and cleveland and chicago. that is what i believe. [applause] i don't want this nation to be known just for buying and consuming things. i want us to be known are building and selling products all around the world. [applause] which is why is that most rewarding businesses that ship jobs overseas. let's start rewarding companies that are reading john's right here in the united states of

america. i think most americans agree with us. we should be making our school is the envy of the world. and by the way, there is a chicago export named arnie duncan, who is doing unbelievable work at a national level. and he and a sense as i understand, it starts at the man or woman at the front of the classroom. you know, good teacher can increase the lifetime earnings of a classroom by over $250,000. so i don't want to hear washington either defend the status quo or spend all their time bashing teachers when arun and i have been talking about giving schools the resources they need to hire good teachers and train the teachers and reward the best ones and provide schools the flexibility to teach with creativity and passion and start teaching to the attacks on replacing teachers who aren't helping our kids. that is what we ask that you

perform, resources, accountability. that is what i believe. [applause] when kids do graduate, the biggest challenges facing right now is not to afford college education. but that more tuition debt now the credit card that come which means that congress has to pay attention because in july, student interest rates on student loans are scheduled to double if we don't do anything about it. we've got to focus on howard making sure our kids can get good values, that they are making informed choices and that they are getting some help. and colleges and universities have to do their part. i've said to the university presidents and college presidents, we want to work with you and hope you, but we're not just going to keep on funding tuition rates that are skyrocketing. higher education cannot be a

luxury. it's an economic imperative that every family in america should be allowed to afford. an economy that is built to last is one where we support science is and researchers, trying to make sure the next breakthrough in clean energy and biotechnology happens right here in the united states of america. we've are stored science to its took place on things like stem cell research. we said let's follow the science. [applause] but we also have to make investments in science. we had to make investments. reagan understood that, you understand that. nowhere is that truer, by the way, then in the area of energy. but then subsidizing oil come to me is for years. now is the time to stop subsidizing an oil industry that's rarely been more profitable. double down on a clean energy

industry that has never been more promising. solar, wind and biofuels, homegrown american energy. [applause] that is what we believe the other side has a different view. we believe we need to give our businesses the best access to newer roads and airports, faster railroads and internet access. i'm biased. maybe it's because i'm a chicagoan. i believe in having the best stuff. i'm a chauvinist in this way. i don't want to go to china and see a better airport in china than i own here. i don't want to ride on the road in germany and see a better road than lake shore drive. [applause] it is time for us to take the money we are no longer spending of more and use half of that to pay down our debt and use domestic dissemination noting here at home. let's put people back to work.

[applause] and we need to make sure that we've got a tax system that looks like everybody is doing their fair share. i was with warren buffett a couple days ago and he is quite pleased that a named rule after him. [laughter] the bus to roll, which is common sense. it says that the make more than a million dollars a year, you shouldn't pay a lower tax rate than your secretary. [applause] if you make $250,000 a year or less, which is 90% of americans, your taxes shouldn't go with.

a lot of folks in that category are struggling. but for folks like me, we can do a little bit more. i know it. you know it. this is not class warfare. this isn't envy. his it is basic math. because of somebody like me and someone like you are getting tax rates without me, were asking for in the country can afford, and asking for the deficits come which the other side claims is the top priority for both take something from somebody else. tested and is trying to go to college and suddenly your interest rate is higher. the senior who is trying to afford their prescription drugs, their costs go up. the veteran who desperately needs help right now. they get shortchanged. the family that is trying to get by, they're forgotten. that's not ready.

that's not who we are. you hear a lot of politicians talk about values than election-year spirit. i'm sure some of the ads have been talking about that here in illinois. let me tell you about values. hard work is the value. looking out for one another. that is of value. the idea we are all in this together, but i'm a brother's keeper and sisters keeper, and that is of value. [applause] caring for our own, that is a value. [applause] making sure that seniors can retire with dignity and respect, that is a value. [applause] making sure veterans are careful and that costs money. that is a value. [applause] you understand that. one of the great things about this town as we come from everywhere. you know, he killed the

phonebook anymore. they don't have phone books these days. [laughter] but when you think about chicago, part of which he think about his father last names, right? the manuals, the obama's, the sanchez's, the pulaski's, we'll come from someplace else. and the only reason that we could be in this night is a ballroom is because somebody somewhere to respond ability. took responsibility for their families, first and foremost, generations of anagrams, making sure that they are they being something behind for the next generation. our grandparents, great grandparents striking out. sometimes falling down, it picking themselves back to.

but also, they took responsibility for our country's future. they understood the american story is never about just what we can do by ourselves. it is about what we can do together. we will not win the race for new jobs, new business with the same old you are on your own economics because it has never in the past. it will not work now. it did not work in the decade before the great depression and it did not work when he tried in the last decade. it is not like we haven't tried it. it does not work and we've got to strengthen each other's success and all understand that. so if we attract an outstanding teacher to the profession, giving her the day she deserves comes for she deserves and educates the next steve jobs, we all benefit. forget faster internet and rural illinois, rural america so that some store owner or entrepreneur there can suddenly have access

to a worldwide marketplace, that is good for the entire economy. we built a new burst of pace the shipping company time and money, workers, consumers, we all do better. this is not a democratic or republican idea. lincoln understood it. it was a republican president, teddy roosevelt to call for a progressive income taxed. republican dwight eisenhower built the highway system with the help of republicans in congress and fdr was able to get millions of returning heroes, including my grandfather the chance to go to college on the g.i. bill. [applause] and here's the thing, that same spirit of common purpose, and that desperate desire to pull the country together and focus on what needs to get done in a serious way, that spirit still

exists today. maybe not in washington, but it exists here in chicago. it exists out there in america. go to main street, town halls, vfw, the church or synagogue. it is there any talk to members of our armed as a new type of folks at a little league game were places of worship. our politics may be decided, though most of the time americans understand we are greater together and no matter who we are or where they come from, we rise and fall as one nation among people. that is what is at stake. that is what is at stake in this election. that is what we are fighting for. as much as 2008 was exciting and

as much as all of us they think saw this night at grant park is the culmination of something, it was actually just the beginning of what we're fighting for. that is what 2012 is about. and i know it has been a tough few years i know there's times where people have said, change just isn't coming fast enough. and i know that when you see what is going on in washington, sometimes it is 10 team to believe that what we believed in in 2008 was an illusion. maybe it's just not possible. it is easy to slip back into cynicism. but remember what we said in the last 10 games. the real change, big change would be hard. it takes time.

it may take more than a single term. it may take more than a single president. what it really takes us ordinary citizens who are committed to continuing to fight and to push, to keep inching this country closer to its highest ideals. and i said in 2008, i am not a perfect man and i will never be a perfect precedent, but i made a commitment then that i was always tell you what i believed and i would always say where he stood and i would wake up every single day, fighting as hard as i know how, for you. and i kept that promise. to the american people. [applause]

so, i am a little prayer now. it's not as trendy to be involved in the obama campaign as it was back then. last night some of you have rolled up those pope posters and they are in closet somewhere. [laughter] but i am more determined and more confident that what drove us into designated as eight is the right thing for america than i've ever been before. and if you're willing to keep pushing through the obstacles and reach for that vision of america that we all believe and, i promise you change will continue to come. if you work as hard as you did then now, i promise we will finish what we started in 2008 and we will outline the world

justified is that america is the greatest nation on earth. god bless you. god bless being in the states of america. [applause] [inaudible conversations]

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♪ >> our system is fundamentally undemocratic and the a number of ways. in half the states in the country for% of all the voters cannot participate in the primary and so they have no say in who is nominated, and as a result, we get more and more extreme candidates on both ends of the spectrum.

>> i was quite radical as a young person and i was the one that thought that you know, we should overcome was not a very effective way of gaining civil rights and i felt that more confrontation was needed. i believe that a radical is any

person who believes in personal liberty and individual freedom and limited government. that makes you a radical and i have always been a person who believe that believes that people should not interfere and i should be able to do my own thing. on thursday secretary timothy gardner -- geithner increases tax revenues and reduces spending while also including some manageable adjustments to the benefit of grants. secretary geithner was speaking at the economic club of new york. this is 45 minutes. [applause] >> good evening.

i want to welcome you to the 19th meeting of the economic club of new york now in its 105th year. the economic club of new york is the nations leading nonpartisan forum for economic policy. more than 1000 speakers have appeared before this club in more than a century, establishing a strong tradition of experts and importance. this tradition has been supported by the contributions from 158 members of the club centennial society. their names are listed in the program and i thank you. tonight, we are pleased to welcome back to the club said -- treasury secretary timothy geithner. secretary geithner last spoke to the club in june of 2008 when he was the trustee and more importantly he was president of the federal reserve inc. in new york. secretary geithner was sworn in as the 75th secretary of the

united states treasury on june 26, 2009. he previously had served in the treasury department under three administrations. before coming to the federal reserve he was at the imf. earlier in his career he worked for kissinger associates. secretary geithner graduated from dartmouth college and from the johns hopkins school of advanced international studies. we are pleased to have secretary geithner deliver his remarks which will be followed by a question and answer period with two designated club members. please welcome secretary timothy geithner. [applause] >> thank you enter. good evening. thanks for coming. it's a pleasure to be back here at the new york economic club, this great forum for national debate about economic policy and to be here at a time when we

face some fundamental but important choices about politics and economics. it's great to see so many former colleagues here. i can see some of you and i want to break regularly paid tributes to my colleagues from the new york fed who were here somewhere. they are as i hope you know exceptionally talented group of public servants, brave and creative and it was my great privilege to work with them. as you know i left new york for washington in november 2008 at a particularly dark moment in american history. my timing was not good. [laughter] the u.s. economy was contracting at an annual rate of 9%. growth around the world was collapsing. the actions taken by treasury secretary hank paulson the federal reserve in the fdic authorized by the congress earlier that fall were essential to stemming the worst of the

financial panic, but the economy was deteriorating at an alarming pace. you will remember that our banks and financial markets were still in a state of shock, more oxygen out of the economy, helping push the u.s. and the world into the worst crisis of the great depression. businesses were failing at an alarming rate. those able to survive were laying off hundreds of thousands of workers each month. house prices were falling rapidly and remember in early 2009, they were projected to fall another 30%. so as the president prepared to take office in january 2000 it was clear that the situation was very grave and the president understood that additional actions were urgently needed. he did not sit around hoping the crisis with her in itself out. he was not paralyzed by the complexity of the choices or the

terrible politics of the potential solutions. he decided to act early and forcefully and his strategy was to stabilize the financial system, combined with $800 billion of tax cuts and emergency spending in the recovery act, the restructuring of the u.s. automobile industry, the actions of the federal reserve and a coordinated global rescue he led in in the g20. we are very -- they were very effective in restoring economic growth. you may recall from the political storms of those early months in 2009 that, how should i put it, people were not fully confident than that our strategy would work. i remembered when i got my first letter of concern and sympathy from a friend in february or march and this friend quoted teddy roosevelt's famous line about the man in the arena. i don't know how many of you know these words but if you

summarized it goes it's not the critic who counts, credit belongs to the man whose face is marred by blood and i was touched and moved by that letter, but then i got five more of them. [laughter] and i thought, wow they seem to be worried about me. [laughter] but i believed at that time that we had a very good plan and that plan worked better than any of us hoped. within three months of taking office, the pace of declining growth began to slow. by the summer of 2009, the american economy was growing again, and just let me say, in about six months, the economy went from contracting at an annual rate of about 9% to expanding at an annual rate of about 2%, a swing of almost 11

percentage points in a remarkably short period of time. we were not just able to avert a second great depression but also began a long and fragile process of repairing the damage and laying a stronger foundation for economic growth. so, how has the economy performs and said early start? i believe that by any measure, the president's policies are making the economy stronger. since the summer of 2009, the economy has expanded at an average annual rate of 2.5%. over the last two years the economy has added 3.9 million private sector jobs. growth has been very broad-based but strength in agriculture and energy and manufacturing and services and high-tech. growth has been led by business investment in equipment and software driven by more than 30% over those 2.5 years. by exports which have grown

about 25% in real terms over that same period, productivity has risen, households have made significant progress in reducing excessive burdens of debt bringing the savings rate up, leveraging the final -- sector has declined in our fiscal deficits have started to decline as a share of the economy and our current deficit which measures how much we are borrowing on the rest of the world has fallen to about half its precrisis level as a share of gdp. overall, the total amount of income and output of this american economy is now above the pre-crisis peak. millions of americans have health care with better coverage because of the affordable care act and health care costs are rising less rapidly. we are becoming much more efficient in how we use energy, more reliant on clean energy sources and less dependent on foreign sources of energy and in communities across the country we are seeing promising reforms

in education to improve the quality of teaching of science and math and to improve access to higher education. their early shape of the expansion we should all find encouraging for the future trajectory of the economy as growth is led by private demand with a the strong gains in investment and exports. we have made real progress in eliminating the economic imbalances too much debt among individuals, too much leverage in the financial sector, too much construction and residential real estate and the problems the imbalances it created and the unsustainable growth that preceded the crisis. the balance sheet of the business sectors and exceptionally strong shape and the economy as a whole is more productive than before the crisis. these are promising developments but we still have it very tough economy and still face some very tough challenges ahead.

unemployment of course is still very high, improving more gradually than any of us would like. while we are seeing some welcome signs of stabilization in the housing market, we have a long way to go there. pension values ever covered much of the losses in the crisis but of course as you know house prices are still very low. these are the tragic legacies of that financial crisis. in addition to these legacies we still face a dangerous and uncertain world as the recent rise in oil prices demonstrates. americans fill the higher fat if gas prices and there's no quick and easy fix to that problem but reinforces the additional sources of energy on all fronts. now if you look at this expansion and historical comparison, this recovery is faster than the recovery that followed the last two recessions but it's somewhat slower than previous recoveries from erie deep recessions.

what explains this? what accounts for this? recovery that follows financial crises are slower and more protected -- protracted. they are slower and longer and harder because the causes of the financial crises typically a large rate in borrowing by households in the financial or come in too much investment in real estate, those active pulldown growth as they are unwound. as people bring down their debt durden and raise their savings and spend less and banks are forced to reduce risk and restore more prudent lending standards, they lend less. these forces work against the impact of low interest rates, dampening the otherwise potentially powerful effects of monetary policy. there is a paradox in this and the changes that are necessary to unwind the causes of the crisis and lay a more lasting foundation for growth in the future. those changes necessarily slow

the pace of expansion. the president as you know inherited very large fiscal deficits, swollen to levels well beyond any experience since world war ii and the dramatic erosion of our fiscal position between 2001 and 2008 and the size of those projected future deficits made the american people and made their elected representatives uneasy about the stimulus and this diminished our capacity to legislate significant additional fiscal actions beyond those in the recovery act. state and local governments as you know have had to made -- make severe cuts in employment and services and raise taxes offsetting part of the substantial stimulus for the economy provided at the federal level and of course in addition in 2010 and 2011 we were hit by a series of very substantial blows to growth, perhaps by the united states, the european debt crisis, the oil shock and japan's crisis and these three shocks, these are the external

shocks, took about a percentage point off gdp growth in the first half of 2011. and on top of this finally, and remember this, the fear of national default provoked by the debt limit crisis in july and august of last year did terrible damage to business and consumer confidence. the fall in confidence at that time was quick and brutal, as large as the declining confidence we typically see in recessions. these are the most important reasons why the pace of expansion slowed after those first few quarters of recovery, and without those challenges, without those forces, without those factors, the recovery would have been stronger. but looking forward, the question is what is the right economic strategy for the united states? what is the mix of investments in reforms and policies that will make growth stronger and economic opportunity brought her in the future?

the three most important imperatives we face today are to support economic growth now, to make the right investments in reforms, to make our economy more competitive over time and to restore fiscal sustainability. these imperatives will require that we resolve the fundamental political divide in in this country that exist today over the appropriate role of the government and the economy. first, and it's important to remain focused on this, we have to stay relentlessly focused on strengthening the economy in the short term. even though growth is gradually getting stronger, of course we have a long way to go to repair the damage caused by the crisis. we face the additional challenges of europe they sing a severe and very protracted crisis and the world engaged in a critical struggle with iran just adding to pressure on oil prices. for these reasons, we think

there is a compelling need for additional action by the congress to strengthen growth and help get more americans back to work more quickly. so we would like congress to act on the president's proposals to rebuild our nation's infrastructure, to help small businesses and to prevent more layoffs in the future and cops and firemen. we need to continue to repair the damage to homeowners in the housing market by helping americans refinance their marketers to put more vacant homes on rental market to help families who can afford to to stay in their homes or to transition to more affordable options. the president will continue to use his executive authority to help, for example by streamlining approvals for infrastructure projects, for streamlining regulations whose costs are large relative to their benefits, but these measures cannot substitute for action by the congress. now again, recovery that follow

a financial crises are in necessarily more tentative, more uneven and more protected and it will take time to fix the damage and that is why it's important still that policymakers work to get the economy growing faster in the short-term and not shift prematurely to excessive fiscal restraint or shift the focus of policy entirely to reforms with only long-term payoffs. now the second economic imperative we face is to build a foundation for a stronger future growth. this crisis as you know, came on top of a set of economic challenges that took a long time to build up-and-up in building up for years. among those challenges are a long-term erosion in the relative quality of education for many americans, and long period period of stagnation in real median incomes, diminish

confidence in the ability of americans to exceed the economic achievements of their parents, a substantial ongoing shift in the risk and cost of health care and pension security away from employers to employees. poverty rates much higher than those that prevailed in any economy with comparable wealth and a the deteriorating public infrastructure. these are relatively new and unfamiliar challenges for this country if you look back over history because we were remarkably successful as a country for a very long period of time and keeping much better economic outcomes than we saw in most countries around the world because we had leaders who put government policy to work in providing health health care and retirement security for retiring americans, universal primary and secondary public education, the g.i. bill, the great public infrastructure projects of eisenhower and others in the last century, large investments in scientific research and

sensible safe guards over the financial system. now these long-term challenges for us as a country are more difficult in part because other nations around the world like china or brazil are getting better at making their economies grow and develop and their success will bring huge opportunities for a country that has put a huge amount of pressure on large parts of the american workforce who are engaged in making things that other countries are getting better at making. now the president strategy, we think the best strategy sets challenges to focus on reforms in education, investments to support innovation, to encourage public and private investment and to expand exports. these challenges are not challenges of the private markets can solve on their own. in education, the president is working to make it more affordable for people who go to college, working to improve the

quality of teachers to improve training opportunities across industries where we are short of people with the necessary skills. these investments in education reform need to be matched by greater investments in innovation. the economic case for government support for scientific research rests on the reality that private innovators, private investors can't always capture the full benefits of research and development, so they tend to underinvest what would be optimal for the economy as a whole. these investments entail risk and they need to be very carefully designed to focus primarily on research and to maximize the role of the market in determining which took knowledge he ultimately prevails. and these programs support innovation should be combined with longer-term programs for promoting public and private investment. infrastructure investment is one of the most efficient means we

have to create employment, to improve the overall productivity of the economy over the long run. and alongside a strong multiyear program in public infrastructure, we need to improve the incentives for private investment, to modernize the framework of institutions and incentives that help allocate those research was more efficiently and this of course requires fundamental reform of our business tax system. that system as you know today is a complex and unfair mass of subsidies, temporary and permanent, with a very high tax rate and huge differences in the effective tax rates across companies in different industries. the president has proposed to reduce the overall rate to a more competitive level by reducing or eliminating the corporate subsidies in the tax code and to strengthen the incentives for creating and building things here in the united states. we want a system in which

businesses compete on the quality of the products and the services they provide, not on the creativity of their tax engineers or their lobbyists. and along with these tax reforms, we need to restore what were the great strengths of the american financial system, the highest standards for consumer and investor confidence in the world and the most creative and efficient model available for channeling savings to finance investment innovation. in our judgment as a result of the reforms the president has put in place, our financial system is in much stronger shape today, with much larger cushions of capital against risk, greater transparency over firms and markets and is now in a much stronger position to be a source of credit for an expanding economy. we need to work to expand trade and exports. we have been aggressive in using the safeguards within u.s. trade laws to protect companies from

unfair trade practices. we want to see the market share of u.s. companies expand overseas and we want to see a large part of the growing demand in the emerging market economies met by things that we create and build here in this country. now this economic strategy which is focused on education, on innovation, investment and exports, is in our judgment the most promising path available to us as americans to create broader economic opportunity and stronger future growth. but of course these reforms if they are going to be effective, have to be combined with long-term reforms to restore fiscal balance. without more substantial steps to bring down our fiscal -- future fiscal deficits, then over the long run, the incomes of americans will grow more slowly and future economic growth will be weaker.

these fiscal reforms are essential to ensure we have the room for the investments to improve growth and opportunity in education. in this era of more limited resources, we have to be able to target those limited resources to investments with the highest returns. ..

and that is because the case for balance, for a balanced mix of tax reformss' spending savings should be obvious. to reduce our deficit to a sustainable level we need roughly $4 trillion in savings over the next decade, over 3 trillion above the cuts agreed to last summer, and to do this we propose an overall mix, a balance of roughly 2-1/2 dollars of spending cuts for every dollar of revenue increases. the president's plan, like any credible plan, will force savings across the government and programs we can't afford so we have room for investments in things we need. it will force savings in military spending, reallocating funding to meet future threats and reduce the rate of growth in

healthcare spending while preserving and protecting our commitments to retirement and healthcare security, and it proposed, as does every bipartisan plan, and even as endorsed by the business roundtable two weeks ago, the president's plan proposees a modest increase in revenues from the most fortunate americans. if you don't raise revenues, as part of the plan to restore fiscal balance, then you have to find another 1% of gdp or 1.$5 trillion over ten years. from defense or social security or medicare benefits or education or low-income programs. so as each of the bipartisan commissions have looked at this question have concluded, this is very hard to do without sacrificing things that are fundamentally important to very large majorities of americans in both parties. now, the republican budget

proposals introduced last year show quite vividly what it takes to restore fiscal sustainability if you decide not to raise any revenue. in their budget, in order to preserve what are at present historically low effective tax rates for the top 2% of americans, in order to sustain higher levels of defense spending, then the secretary of defense and the joint chiefs believe we need in order to achieve those two objectives, those budgets proposed by republicans, proposed cuts that would dramatically reduce the level of future medicare benefits, cut even more deeply into the safety net for low income americans and cause further damage to programs that fund education and infrastructure and other investments. reducing the total size of what we call discretionary spending

programs, to 1.6% of gdp. within ten years, which is a level more characteristic of pakistan or sub saharan africa. remember this, if you try to do that with 25 million americans becoming eligible for medicare and social security over the next 15 years, to achieve that cap, live within that, would require you to effectively end the decades long bipartisan commitment to maintain a guaranteed health care and pension benefit for retiring americans, or would leave us unprepared to defend the nation, much less offer americans a better education. so, remember these realities

when you consider the competing proposals for restoring fiscal balance, and if the politics of this moment and this election year prevent us from addressing these challenges before the election, both parties are going to have to work together very quickly after the election to start to make some tough decisions, because as you know, at the end of 2012, at the end of this year, we face the simultaneous expiration of large tax cuts and a large across the board cut in spending, together which amount to about 5% of gdp, and that should provide washington with a very strong incentive to agree on a balanced package of fiscal reforms. so, we, of course, have a very tough set of challenges ahead as a nation, and yet as tough as they are, they are manageable for the united states. and i would prefer these challenges to those of any economy anywhere in the world.

we can afford the investments that are going to be important for future growth. we can adjust to the changes that will be compelled by the need to bring down our future deficits, and thanks to the actions of the president, alongside the fed, we are in a much stronger position today to meet those challenges than we were three years ago. now, i gave my wife some unwelcome attention a couple weeks ago when i was writing to express concern about amnesia, about the financial crisis. and as we faced the great political and economic choices ahead, remember, how terrible that crisis was. remember that so many americans are still living with the scars and the damage of the crisis, and remember, when you listen to the debate about taxes, and medicare and medicaid, remember that even before this crisis, almost 20% of children in the united states were living in

poverty, and 40% of children born, were born to parents covered by medicaid. and remember that the fortune of children born in america today, the quality of the public schools they attend, the quality of healthcare they get, the chance they have to go to college, depends still in this country today, still depends significantly on the wealth of their parents or on the color of their skin. and remember, too, that we're a country of great strengths and resilience. we have successfully navigated the worst days of the worst economic crisis in generations and we need to bring that same sense of creativity and sense of national purpose to the challenges we face ahead, and that's going to require better results from our political system.

no economy can be stronger over time than the ability of it political leaders to come together and make tough decisions. thank you very much. [applause] >> thank you very much, mr. secretary. and as you know, you don't get off that easily. we're going to have a couple of our members join you and serve as questioners. the first is alan blinder, the professor of economics and public affairs at princeton, and has served as vice-chairman of the federal reserve board. and second is john lipsky, the distinguished visiting scholar in the international economics program of the school of the

advanced international studies at johns hopkins university. and recently left the imf as the act managing director, and if you have any questions that you might want to lob in here, you can e-mail them to jan hopkins@questions. gentlemen? [laughter] >> mr. secretary, thank you very much for being here tonight. one of my favorite geithner quotes, we saved the economy but lost the public in doing it. you spoke to the first half of that at the beginning of your remarks tonight but not the second. i'm not looking to draw you back then but, rather to get your

thoughts on whether it's possible and if so, how, to get the public back. >> well, remembering that people saw their lives upended by a set of choices mostly they did not make. and they saw the world burning around them. a broad run on the financial system. the first time in memory that people face the risk of losing their savings or this depth of loss in wealth and employment, and then they saw the government forced to act to rescue the people they thought were responsible. fairly or unfairly. and they were angry. understandably angry, and scared and frustrated. and i don't think there was any path through this that would have made it easy to do the things we needed to do to solve

the crisis, and at the same time win at that time broad public support. i say this because if you look back at the history of financial crisis, the reasons why government normally screw it up, they normally wait too long to act, they're so tentative at the beginning, is because they are-sit there and stair at the deep -- and they wait and hope they don't have to act and that is why they let things burn too far, and it's that fear of polite:consequences that normally causes governments to be too tentative at the beginning, and we were lucky as a country because we had people who were willing to do those tough things early. in the early stages of the crisis, and to do it with really overwhelming force, and it was necessary to do, and it worked much more than we thought. you have a few -- if you wonder

about that, you just need to look at the history of the path of financial crises from the great depression on. or look at europe today and the scone wednesdays of trying -- consequences of trying to adopt a slow approach. if you're president, you want somebody who is president who is willing to say, i'm going to put the politics aside and i'm going to do what i think is necessary to fix it because ultimately i should be judged by our ability to make it better. so i think the only thing that he said what brings people back, is for people to see the evidence of sustained gradual progress, and to have a chance to assess the alternative choices offered by competing politics for where to take the country in the future.

i think that -- i always like to say that life is about alternatives, and what's got about the debate we're having in the country today, we have two very stark choices, about what makes sense for the country in the future, and that, i think, helps, because when people are confronted by alternatives, it's easier for them to assess relative merits. so time will help, studies will help, and having people think more clearly through the alternatives, that should help, too. >> thank you. if i may, this is going to sound like a three-part question but it's really only one question and comes back to what you were talking about the long-run budget deficit problem, and in particular you mentioned both simpson. part one. can we realistically expect to solve the long-run deficit problem without significantly higher taxes?

i think you answered that. >> no. >> can we realess particularly expect to solve it without huge reductions in the future costs of health care, and then, can we realistically get republicans to accept the first and democrats to accept the second? [laughter] >> you need, -- as i said, you need the combination of modest revenues tied to reforms, and if you look at the underlying drivers of those costs, you can achieve huge benefits in sustainability and making them more affordable and pushing out solvency with what are modest changes in the trajectory of healthcare spending. a lot of people look at the numbers today and they say, that looks beyond our capacity to contemplate. seems too hard leslie.

-- too hard politically. for the next ten years we're talking about finding agreement on 2% of gdp, half in taxes and having savings, and those are very manageable adjustments for a country like the united states, much easier than countries around the world in a very short period of time. so, it's absolutely as possible. it's necessary to do it. the sooner the better, easier to adjust to it the sooner you do it. and it's understandable why they have to happen together because most americans who know they're going to bear a greater burden on the tax front, want to be confident that those increased revenues go to a plan that is reducing deficit, not sustaining the unsustainable, and most people are going to be confronted with accepting lower growth in benefits, want to believe that there's a bit of burden-sharing across the american economy in that

context. so there's a compelling political reality and a fairness reality that those two things go together, and it's hard to imagine either happening without them happening together. again. one more step. why people will be reluctant to see their taxes rise? always reluctant. understandably, unless the think they're buying meaningful improvements. unless the think the benefit cuts are not going to sustain tax rates we can't afford. so they go together. there's no alternative. it's going to have to happen, and it should happen -- better if it happened sooner and with design in it, than to happen too late without the opportunity to give people time to adjust. >> john? >> mr. secretary, i'd like to turn to the international side of events for a moment. as you're probably aware -- i'm sure you are -- the

international monitor fund cut back it's forecast for global growth this year and next year by between a half and three-quarters of a percent, reflecting mainly the expectation of much slower growth, in fact a modest recession, this year in europe. how do you assess the efforts that european authorities have put in place and their chances of success and, along with that, what views do you have about experts to expand the global financial safety net to protect in case of an adverse outcome? >> i think if you look back to where the world was in october, the europeans are making progress. the combined effect of new government and sustainability are pretty creative ecb, broad strategy to get the financials stronger, their fiscal compact. the combined effects of those

actions have substantially calmed the really acute financial tensions of the last 18 months and that's very important. what they have done is make more convincing that they want to take the risk of a catastrophic outcome of the market and that moderation of financials as you see in lower interest rates in the weaker countries in europe, is very important and very promising, even though you can have a long period of weak economic growth in parts of europe. that means that, again, relative to last fall, although, again, it's a tough and uncertain world, i think the downside risks of growth around the world are significantly less than they were. again, for that to be sustained, you have to keep a close eye on oil and iran and gas prices. but you got make sure europe keeps moving to sustain this

progress, and that's going to require. the building a stronger financial follow, which i believe they recognize and are on a path to doing. our view of economic -- if europe demonstrates to the world it's willing to put more financial muscle behind this, then we're -- we think it will be easy and appropriate for the imf to go raise some resources so they can demonstrate, too, they will have resources, and you'll see the ifm try to reinforce that. >> taking a broader look, it's obvious from growth figures that the relative balance and the global economy continues to shift towards the dynamic emerging market economies and that is the case for some time to come in that context, looking to the medium term, what do you

see is the role of the u.s. economy, the u.s. dollar, and the u.s. financial system? >> well, i think the u.s. is going to be an enormous beneficiary and a huge participant in that long boom of growth ahead for those countries. those countries on average seem to be growing five, six, seven percent for pretty long periods of time. europe and japan much lower growth potential. much worse demographics than we have and will lie somewhere between those two, as an economy, we are should much more broad-based and resilient and productive, we're in a good position to benefit enormously from the growth ahead. but you have seen an important change in the strategies of china in particular because they recognize as they grow to be so large, they can't rely on exports on the gross strategy as much as they had in the past and

have to shift to domestic strategy and they have to let their exchange rate move to a more market oriented system and shift the set of incentives to encourage the shift. that's a necessary part of making the transition sustainable. mostly prom missing for this country -- promising for this country, and if you look at any major american company, any industry today, you see them pretty -- well positioned, better positioned then their peers in many countries to take advantage of the huge wave of growth. >> i'm going to cut you off here. my apologies. but dinner is about to be served. i just want to thank you again -- >> no regrets. [laughter] not even any twists. >> thank you very much again, and just for those who were interested, on april 11th, the

club is hosting a dinner for the first chief executive of hong kong, on april 23rd the club is hosting a lunch for the president of deutsche bank, and invitations will be going out shortly. again, mr. secretary, thank you for your insight and we appreciate your being here. [applause] enjoy your dinner. [applause] [inaudible conversations]

>> our system is fundamentally undemocratic, one way is closed primaries. so in half the states in the country 4 ,% of all the voters can't participate in the primary, and so they have no say in who gets nominated. and as a result, we get more and more extreme candidates on both ends of the spectrum.

>> next, larry summers, former director of the economic council, and treasure secretary

under president clinton. he stressed the most serious threat to the nation's fiscal health is stagnant economic growth. [applause] >> thank you very much. on behalf of steve clemens and the atlantic, i want to thank all of you for your participation in this extraordinary conference. it's frankly a privilege to be here. in this conference, we have very specifically tried to include voices from across the spectrum. in some respects you might say that's the purpose of this conference. and we have asked them to very straightforward question, what should we do now? through the day we're hoping to hear different ideas and hopefully some provocative proposals. for my part, i would ask a few

questions to keep in mind. has the u.s. private sector already started to relever? taking impetus away from the need for more stimulus? shouldn't we be making more differentiation anyway between fiscal stimulus that is productive and that which is unproductive? have we properly framed the population question? the most important phenomenon on the last couple of centuries has been the unprecedented population growth. in many respects the world is built in expectation of high population growth. defined benefits, social security programs, yet population is decelerating, making market changes in thousands of things. lastly in any discussion of job creation, shouldn't we be focusing more on innovation and

monetary fiscal and trade policy? won't nano technology, genetics, robotics and the cures for major des have far more to do with job creation in the future than these types of policies? in any event, here's hoping for a great exchange of ideas. and now, it is my distinct privilege to introduce james bennett. since 2006, james, a graduate of really, has been editor in chief of the atlantic. prior to that he was the jerusalem bureau chief for "the new york times," where his coverage was widely acclaimed for its balance and sensitivity. before jerusalem he was the "times" white house correspondent and was preparing to go to the beijing bureau when he was snatch bid "the atlantic

"to be thedder to. so please join me in welcoming to the podium, james bennett. [applause] >> thank you very much, richard. i'd like to tell you all a quick story about the "atlantic" to explain why the conversation we're going to have together today means so much to us. "the atlantic" was founded a very long time ago in the 1850s, to advance big ideas and cultural, and to try to promote the abolition of slavery. when the magazine actually launched in november of 1857, the country was very preoccupied with a different issue, which was the economic crash of that year, and so the big public policy offering in the first issue of "the atlantic" that november was not about slavery. it was about the state of the economy. and our writer surveyed the landscape and he identified four

different diagnoses of what had gone wrong, and if you'll bear with me, the prose if off that era but the critique will sound somewhat familiar. he identified four different viewpoints, and personified them. one, he said, one critic cries that we americans are an unconnally greedy people, ever haaseening to get rich, never satisfied with the gain, and in the fan tick eagerness of accumulation, disregarding justice, truth, and moderation. the second qualifies this view and shouts that our vice is not so much greed, which is the vice of the miser, as stafford grans, the vice of the spend-thrift, and as soon as we get one dollar we run in debt for ten. we must have fine house, fine horses, or dwellings most be

greater then the mightiess monarch, and when it comes time to pay for this, we sink into the sand. a third voice complains the problem is absence of a protectionist trade policy. there's no high tariff, and a fourth says the problem is very existence of a credit system which is inflationary. our writer went ton say that all of these views have some merit. but that the real problem was the ease with which our currency was inflated then by the american banking system, which he said varies from state-to-state and which, outside of new england and new york, where it is by no means perfect, is as bungling contrive that an inflicted on the patient of man kind. you would actually be another 50 year more than 50 years, i think 1913, before the federal reserve was created to teal with at

least some of the problems that he identified in that first story, which actually brings us to the issue of the -- new issue of "the atlantic" which appears today, and our cover piece is on ben bernanke's efforts to use the federal reserve to address the economic crisis we find ourselves in. it is a wonderful piece by roger low ensteen, on the cover he is the here. on the inside he is the villain because he planninged to enrage the right and the left, with what roger argues are a daring and fairly effective efforts to get things moving again. i'm hoping that there will be some disagreement as well as some agreement with our conclusions over the course of today. this issue is out today. there's some other wonderful stuff in it, if i may say, including a nice piece on how our spending habits have changed over the last few years, a terrific piece by the political

philosophyer about how market logic has seeped into our consciousness, and for those looking for something more fun, terrific profile of the man who broke atlantic city, a gambler who successfully took three different casinos for $15 million and how he did it, and at the same time our special money report on the web site goes live later this afternoon. now falls to me to bring steve clemens up here. i generally feel silly introducing steve clemens because it always turns out everybody already knows him. steve is -- if you know him, man who believes deeply in servicing the next provocative idea, hearing from as many different points of view as possible, which makes him a perfect for "the atlantic." the editor in chief and the guy who brought us all together today.

steve? >> thank you. [applause] >> thank you, james. and thank you all of our underwriters. we're being covered today by cnbc, bloomberg, live all day on c-span and many blogs streaming live as well so we have big community outside this room. so those of you tweeting, if you like something, you can tweet it. if you hate something, you can tweet it. the notion -- we had a dinner last night preceding this, and one friend who was there, an msnbc commentator, and kind of a good progressive radical writer, and i'm sure david would like that depiction -- texted me after he heft the dinner and said, steve, fantastic cerebral intellectual discussion, really varied but boy does that did he ever from the politics on the street. i said that's exactly what way don't try to achieve today. demonstrate you cannot only

bring together people who have very different views on what is wrong with the economy and how -- what their prescription is to fix it and we can do so in a way that raises and uplifts the discussion and doesn't tear it down. so the notion of being provocative and constructive is important today. now i have the pleasure of introducing and bringing to the panel our next panel. come on up, guys. we won't delay. we haved -- we have ed luce, and craig alexander, senior vice president and chief economist of bank, and hooper, and cohead of deutsche bank, paul mccully, chairman of the global society of fellows, former manager directorror pemco. and the senior adviser for the afl/cio, and steve smith, publisher of naked capital him.

i want to mention about ed luce, he is a great friend, and we have copies of "the atlantic" and thanks to the final -- financial times. ed is the author of a forth coming book which you can order online on amazon called "time to start thinking: merge in the age of descent" going down. that shows you where ed's thinking is no matter where the nasdaq it so, ed, the floor is yours. we have got about an hour and a

quarter to and the what caused this crisis in capitalism and how to fix it, and that's too long. it's all very straightforward. but i will get straight to the question. and start with these. books that came out quickly after the crisis, and ask you -- from the perspective of today, looking back on 2008, looking back on the buildup to 2008, you can almost indulge in a kind of murder on the orient express in trying to identify who is responsible and what is responsible for the meltdown, and find that everybody has a different theory and eventually there are so many fingerprints on the dagger there's no one real culprit. from a slightly different

perspectivetive, what would happen or not happen in 2008 had dodd-frank been in place? >> obviously i'm not sure the outcomes would have been materially different. the big profile of what happened is that we had wrong levels of consumer debt in the united states. the biggest culprit was the housing bubble. the housing bubble, some people are caulking it as early as 2002 but probably would have died an early death in 2005. countrywide was predicting in 2004 its origination levels would fall in 2005. what it turns out kept the party going was the introduction of credit default protocols, developed the international swaps, derivatives association, developed a protocol on swaps and allowed people to take short bets and ironically the other side of the short bets wound up

being triple-a -- banks could gain -- traders could gain the bonus systems. so, they're complicated mechanisms that led those cdos to drive demand to the worst sub prime and extend the market so it was financial innovation gone ban. dodd-frank doesn't address the credit defaults market. there are provisions regarding repos, which-under how bank balance sheets -- those look to be able to be gutted. we don't really know yet. a lot of the dodd-frank is still in place. then the other hope for dodd-frank is that banks, when they get sick in theory, the feds and thefy dic can take them

down in a more orderly manner. no one has shut down a major bank trading operation cleanly. at some point you have to stop the music, shut down the trading positions and value them. and no one wants to be exposed to that. if you're a big hedge fund or a big trader, you don't want to have your positions frozen. so the notion you can have a bank that people think is in trouble and say, we're going to have dodd frank resolution, it's -- i am very concerned it's -- we're not there. >> the short answer is, no. >> is not. [laughter] >> i want being facetious. you have a book coming out which might v-very quickly advertise it, "the destruction of shared

prosperity and the --" --" that might set the stage of what you're going to say. do you agree with eve that dodd-frank wouldn't prevent it? do you agree with "the atlantic" that the hero is ben bernanke? >> that's two questions. question number one. dodd-frank would have had some effect, and i'm using dodd-frank in the broad sense of tougher regulation, awareness by the federal what was going on, not allowing a lot of the excesses that developed, not so much the wall street piece but the lehning piece, the very originating piece. but what would happen haven't -- we're trapped in stagnation now. that's what my book is about. unless we do the right things to get out. we would have tumbled into stagnation earlier. when economic historians look at this period, they will see the trouble having begun with the bursting of the stock market bubble in 2001, and the fed kept

the thing rolling along by allowing this housing bubble, by facilitating it, and i think it was the right thing to do given the trouble we were in, but at the time the decisions they were making, i would have been make something of the same decisions, though perhaps i had an eye on the regulations back then already. but as a result of this, the bubble went on, and we accumulated massive amounts of extra debt that we're now burdened by. we have a tremendous destruction of credit worthies in, which is essentially to the capitalist system and we're trapped in stagnation. so would have made a difference. the stagnation would have been milder, and i hope we'll have time to develop that. >> we'll come back on whether the recover is a bona fide recovery. paul, you used to work at pemco. which is obviously the biggest

player in the debt market. you're now -- at the center, and a think tank is looking at these questions. who is responsible for the minski moment? >> we the people are responsible for the moment. minski's thought is capitalism is not self-stabilizes but self-destabilizing, yet be pathology move from boom to bust, and so the central contribution of hardland was that we should assume boom and bust tendencies to the economy, as opposed to self-correcting tendencies. and, therefore, we are

responsible for collectively what happened with the minski moment. i think we could have done things well before 2008 that would have dampened this, so i do believe in the power of be the people through the regulatory structure to dampen our own pathology but we clearly didn't. if i had to point one ping kerr -- and i actually have opportunity, but given one, it would be the federal reserve, not with the monetary policy at all but with regulatory policy. notably starting in 1994, when the fed was explicitly given the right to declare what was and wasn't an acceptable mortgage to be originated in our country. and, mr. greenspan chose not to use that legislative authority to define, if i may use the term, what is an acceptable

mortgage. and capitalism run amok, finding out just how long it could go in creation of mortgages and put them in cdos. so one thing could have been done different that would have changed history, is if the fed defined what constituted an acceptable mortgage in our society, and no money down, teaser rates, no documentation? doesn't strike me as an acceptable mortgage. >> your "atlantic" cover would be the antihero. >> actually, i am a huge fan of mr. bernanke. i think he learned from experience but was a very, very smart man for a very long time. a very smart man. so, actually, i take my hat off to mr. bernanke, both as governor and as chairman of the

board of governors. in fact he is a hero of the piece i'm presenting in a couple weeks time for the gic. >> we'll get back to that. peter, you're an ex-ofishow before you joined deutsche bank. and could you give the case for the fed? nobody has mentioned what some of is described as the ultimate cause as opposed to the proximate cause, the imbalance and overconsumption. is that a factor? >> let's go back maybe a little further and look at a slightly larger picture. go back maybe to the early 1980s where the fed was fighting a major inflation. the last time we had a near great recession, with unemployment getting up well into the double digits, the recession to bring down inflation. that started off a two and a

half decade bull market for bonds and stocks. inflation came down over time. the fed was successful with volcker and then greenspan taking the helm and bringing inflation down and engineering the agreed mott racing, -- the grate moderation, lasted for 25 years, a period in which inflation came down but risk general live came down as well, and at this time, we also had a bull run in the housing market. we had policies put in place to encourage home ownership and there was a belief that home prices never cash -- would never drop. this was a factor that fed into the financial engineering you were talking about, and i think feds also some complacency at the fed. i'm not going to disagree on the

regulatory breakdown. there was a philosophy at the feds at the top that said that markets do a better job of policing themselves than government regulators. and unfortunately, that was a major factor, i think -- one is a contributing factor. so, certainly the success of the fed taking risk out of the system, bringing inflation down, a louing home prices to go up, et cetera, was a fundamental -- greenspan was proclaimed the hero himself for the success. >> talking of the great moderation, you're from canada, craig, and bank, formerly toronto dominion, chief economist, which i was surprised to find it otherwise the eight inch largest bank in the u.s. and second in canada. how is that vantage point to observe what is going on in the states and what is not been

going on in canada. could you share some insight? there is more to learn from canada? >> well, let me start off with the comment about the agreed moderation and then work on the differences and experiences. because i think it's a really good point. in actual fact your example of the murder of the orient express works well because i can't find anyone who is not to blame for what happened. people took mortgages they never should have. lenders made mortgages they never should have loaned. get to away with it because they could parcel them up and sell them to investors that didn't appreciate the risk and shouldn't have been buying them. it was facilitated by incentives like mortgage interest deductible, which is something we didn't have in canada which encourages people to take out bigger mortgages and a host of other policies that encouraged the behavior. the regulatory oversight was not

robust and financial innovation was so quick, people couldn't keep pace with what was happening. so regulators fell behind the curve. banks weren't holding enough capital, were too leveraged so in actual fact everybody was to blame and part of the reason interest rates remained so low for so long was the imbalance in the foreign exchange reserve and the greenspan conundrum of not getting interest rates, and it was complete fallacy. economics tell us you go through business cycles and during expansion imbalances will build up and a shock will happen and cause inwinding of the imbaseballs. the problem was as we head lower and stable inflation and interest rates there was a greater willingness to extend credit. a push for yield and a low yield

environment that meant people are going up the risk curve, and ultimately what was happening was everytime imbalance is built up, everyone they we've have been unwound, the fed lowered the interest rate, which increased the credit bubble. it was actually a credit bubble in the entire advanced world. >> in terms of canadaor, had stronger regulation. >> so when the housing knuckle ball the u.s. collapsed, it was the catalyst for the inwinding of the excesses, and in one of the core reasons why the canadian financial system weather the storm so well was, first of all, the number of regulators is much smaller and they can coordinate with each other. there's only really five institutions in total that are really overseeing the canadian financial system. so when there was a financial problem you could get all five people in the room and say, immediately, that would we do?

how do we keep -- deal with the problem? canadian financial institutions also carried a lot more capital and much lower leverage than many other large banks. this was partly because of regulation and also partly because of culture. >> canadian banks were more boring? >> and criticized for it. in 2005 and 2006, you can find lots of examples of stock analysts that were actually highly critical of canadian banks for not having a strong enough risk appetite, which turned out to be a positive, a positive thing. and to be honest, you know, the canadian financial system doesn't do a lot of innovation first. what it tens to do it what watch goes on in the united states and say, that seems to work pretty well. so, then canada will start doing things. so, you know, as the risk appetite in the routes went up, as we saw increased numbers of

subprime loans being done, canada had far, far fewer subprime loans. so at one point, 40% of origination in the u.s. was subprime, and in canada it got up to, i think, 4-1/2 to 5% was subprime. so when the financial systems ran into difficulty really for canadian financial institutions, it was a liquidity prices. banks were not willing to lend to other banks so the central bank stepped in and said, okay, here's liquidity to get you through the crisis, and once the system settled down, the canadian banks came back to life and operated well. >> okay. before we go on to the next question, the dodd-frank question wasn't posed to your end. yes, no, qualified yes, no, from -- see if you -- >> i think the dodd-frank bill provided greater oversight of the financial system.

it have completely stopped what happened? absolutely not too. many other factors in play. >> i agree. many crucial elements of dodd-frank could have helped to ease some parts, but at the same time perhaps you would be looking at the higher cost of capital, which may or may not have been desirable. >> i'll pose the question to you. >> i agree. dodd-frank would not have stopped it. >> so we haven't even won the last war. >> dodd-frank happened after we lost the last war. >> no more generals. okay. >> i think the more important -- from a global perspective, 2003 important because they're saying banks should carry adequate capital to ensure that if you have something go wrong, they remain solvent. and you need to reduce the leverage you have in your system to ensure that when a shock hits, it's not too big. so, while we tend to look at what has been going on with

dodd-frank, i think the 3 accord is a more usualful device. >> now, everybody knows what happened between t.a.r.p. one and t.a.r.p. two, and eventually it was passed, thankfully, and the system was saved. and banks are now back to where they were before the crisis. in terms of looking at the recovery today, and assessing whether this recovery is durable, clearly the role of the housing market is absolutely critical, and the health of the housing market and the degree to which it has -- was it a mistake in 2008 and 2009 not to have a equivalent, some kind of massive bazooka that was there for wall street for the u.s. housing market? want to sort of go, one, two,

three, just pitch in and whoever wants to pitch in. what is a mistake not to have a big policy to address the housing market in '08 and '09? >> yes. i don't think -- we've been edging towards its for three years now, and unfortunately facts get created that can't be reversed. once you start to go into foreclosure, the mortgage defaults, yes, huge mistake, and we're paying for it. >> see if the economies and liquidity trap where you have zero interest rates and it's not creating robust economic growth because money is not circulating the way it should be, and part of the core reason it's not circulating is because of the impediments coming from a housing market that is continuing to decline. >> and there are even other elements to this, which is that we have a good resolution -- in the u.s. we hold as a point of pride we have resolution process for corporations. we have chapter 11.

there's a process with the company is viable to write down its debts debts so its goes for. some companies can't be saved and have to be liquidated. we're having the reverse happen in housing. if a borrower got in trouble, the first thing that would go to the banks mod, and the banks would own the mortgage. is his worth more dead or alive. and the vast majority of the cases the bank would restructure the loan and wouldn't have in the social jealousy. so now we have servicers in the middle for a significant amount of housing debt. servicers have no incentive. they get paid to foreclosure, even with other -- they make money by attenuating foreclosures which is what is happening now. because they charge more servicing fees, more late fees, and -- you tillly need to build

new truck in these services to have them do mods, so we have a huge number of forks foreclosures in the pipeline. the banks have three million houses that are somewhere in the foreclosure process or that is real estate owned. they haven't put on the market, and there's another five million houses that are in default or in serious delinquency. we have a big overhang here. and again, the servicers having bad incentive, this program, the new federal-state settlement is not going to make any difference. it's too small. it's badly structured. didn't solve the problem which is inability to restructure debt. >> to our hero on "the atlantic"

cover. why did we wait until the summer of 2011 to really go after the mortgage-backed security market and drive down mortgage rates? the fed should have targeted that market in 2009. we could have gotten a huge windfall of refinancings that is not possible now because those people, once your credit is gone, you can't get a refinancing, and this thing snowballs. so this is a black market hero. let's be balance fled our assessment of him, too. >> presumably i'm assuming -- because i have asked each of you the same question --...