.. on "fox news" just around the corner there and we got to know each other then and have been pretty close ever since. so this is great for me to do. meredith way back then was also a star analyst. people know her for her major

call, her first major call that went around the world in 2007 when she came out and said that citigroup would look a lot different in 18 months then it did in 2007. the stock sank 7%? do you remember? the ceo was fired a few days later. she became instantly renowned around the world as i said but actually meredith has been seeing around corners for a lot longer. a lot of people don't know this but in 2005 she put out a report about the housing market and said we were headed for sub-prime doom and basically we loaded up as on so much dead in the sub-prime area that we were headed for unprecedented credit losses and this was in 2005 well before anyone even uttered the word bubble related to the housing market. after her call in 2007 she went on to make other calls about lehman brothers and e. of a..

that also proved sure you and that also landed narrative, i just have to do this on our cover of "fortune" magazine in 2008. so meredith, things really haven't been the same for her since i would say but after that, soon after that she turned her focus to another area of the economy another troubled zone which was state municipal finances. she spent a few years working on a report that came out in 2010 called tragedy of the commons. it's all about how this was the next big danger area and our economy and a lot of state and municipal finances had overleveraged and gone down the same path in many ways that the bank said on down. she turned the 600 page report over the next year or two into a book which is called "fate of the states" the new geography of american prosperity which is actually a more optimistic look at the future of prosperity in

this country and it has a lot of really novel and interesting premises and it. so i would love to welcome meredith here and why don't we start by -- why don't you just talk about the thesis here? the country as you say in the book is reorients thing along different axes along who will do well and who will not do well. tell us what that may look like and why. >> while it may not see obvious to some people why got into research on the states in fact it was a natural progression for me because the financial institutions driven by mortgage for really the last 15, 20 years had so much of their exposure in specific regions of the country and that meant also that consumers in specific regions of the country were being targeted by these lenders and had disproportionately more leverage than other -- others in the

country. in addition just like certain banks and certain individuals thought the housing bubble would never and/or the home crisis would never go down and of course it had been since the great depression. state governments and governments also were betting on the same thing so you almost saw a double leverage in the system. an individual leverage and then also the leverage that estate was sunny through the current and future tax bill. what leverage does combat makes it very difficult to grow and it makes it very difficult for an economy to move and be flexible so i guess it was in mid-2008 when i was being referred to as the doom and gloom or which is not my natural personality. >> it's sure. >> i thought if i'm so smart i should really focus on how the u.s. economy looks on the other side in how it's going to grow. what was clear to me it wasn't

going to grow the way it had grown in the past. it wasn't going to grow in the areas that were so beholden to real estate or consumer leverage. you have to appreciate for 25 or 30 years the greatest export in the united states was leverage and housing. that is what replaced manufacturing so this was a profound change. what i wanted to do was find a resource that i could compare different states by states to see where the different growth opportunities that come from and it didn't exist. i looked through all the rating agencies reports. i looked through everything i could possibly find and i couldn't find it so i started to assemble at myself in that is why the reporter did in 2010 was so voluminous. what i looked at were things like demographic trends. how did the consumer look? what businesses were in certain states in certain regions and how they were growing and not growing.

how consumers spend was growing because it was influenced by employmenemploymen t. a couple of statistics that i continue to find fascinating. consumers spend growth which is 70% of the u.s. economy is going 30% faster in the center of the country than it is on the coast. why? because people have jobs and they are not overleveraged. that continues into procyclical style upward momentum for those areas creating more jobs and more consumers spend, creating more investment and the subject is so loaded so it starts on an economic aces but it goes to very basic social services and education and poverty. it's the most interesting thing i've ever worked on. what happens when certain new areas are strong they are investing in education. so not by coincidence there are more job opportunities, the more corporations wanting to move to those areas. the states that are having to

cut back so much have cut into an area that is constitutionally discretionary spend which never should be which which is education. so you see structural unemployment, high unemployment in certain areas of the country that are cutting back on education and social programs at the exact wrong time. these procyclical factors are going to influence our economy for 25 plus years and really profound ways. >> you talked about a place in the book called my nods nd. i'm not sure if i'm saying it right but we excerpted it in "fortune" magazine. i thought it was really interesting to show how uneven things are around the country whether it's the unemployment rate but tell us about my not in what you thought was interesting. >> in this particular case a company had to move out of this town because they couldn't find enough employees to fill the jobs. you see actually not enough

available employees in certain areas of the country and then you see other areas with still double-digit unemployment levels. that is not counting the end are employed for the people out looking for jobs. so it's a bifurcated economy and one that is growing in terms of haves and have-nots. again it says if the united states has been as successful as it has been from an emerging and expanding middle class and that is happening in certain parts of the united states and it is contracting and other parts of united states. another factoid is in 2006 the 17 states that i focus on were 23% of u.s. gdp. today they are 26% of u.s. gdp so it is extraordinary how quickly things are actually changing and how economic

strength is going from one area, certain areas into the country and to others and it's changing almost every level of how we operate as a country. >> to some degree part of the reason why nd is doing well is because it has shale which is part of a high area for our economy so to what degree is it the organic raw materials that each region has versus actual policies or fiscal management? >> that's a great question. without a doubt there's an enormous economic tailwind of the united states from the natural gas revolution that we have in this country but there are other things that are happening too which are you have this derivative effect that you see in production costs for manufacturers finally becoming more competitive in the u.s. than it is in other parts of the world so chemical companies in

germany will say it causes 20% of the production cost to operate in the u.s. as it does in europe so you have not only american companies moving back into the u.s. but you have european countries moving into the u.s. so you start with an energy tailwind and then you layer on as this past week manufacturing jobs are coming back to the u.s. almost as powerfully as they left and that is an incredibly bullish sign for the u.s. economy. the other fact is historically these regions that are emerging spin strong regions were agrarian-based economy so they think about the natural cyclicality of those economies boom and bust because they have operated with a very conservative fiscal discipline so they didn't have the access baked into entitlement programs for just general government spend programs that areas like california had.

if you think about the difference between california and oklahoma as an example, a california up until three years ago now had 150 years of uninterrupted population growth so they did spend and do whatever they want. i can think of any other state that has had that kind of incredible economic support. oklahoma clearly has had massive booms and massive bust so it just operates with much lower debt levels and much tighter fiscal discipline. >> talk to us about new york. what should the people in his audience know about where things stand for new york state new york city and for new yorkers? what are the pros and cons of where we live right now? >> i think you have new york city and the rest of new york state so the bulk of economic disparity in new york state comes from new york city which still remains financial services depended. you see population declines not

as extreme but pretty close to as extreme as you do into trite. so you know i believe it's buffalo has lost half of its population since 1950 and when you have that great sound of jobs taxpayers leave there is not money left over for social services that people rely on and want to have and expect to have in order to live there. it's again this very negative cycle. new york has attracted incredible tourism and incredible foreign investment from a real estate perspective in bloomberg has done a great job at trying to diversify the economy as much as he can. it's still financial services dependent but you can't compare what's going on in new york city to what's going on in places like albany and buffalo syracuse

upstate new york that used to be bastions of american capitalism and are sadly pale shadows of themselves. >> the real estate prices in new york alone tell a quite different story. tell us a little bit about detroit. what about detroit filing for bankruptcy that surprised you and you think this is something we will see in other municipalities either locally centered around outside the detroit area or outside of the country? >> so, how i look at the states is how i look at companies and i think i get better every year but the way i approach a problem hasn't changed. during the financial crisis towards the end of 2008 i wouldn't talk about it. i waited until the end of the week to talk about bear stearns. i didn't think was constructive for me to go out and shoot a

company effectively. wachovia similarly and a myriad of examples. specific to detroit and the fall of 2010 when i release my report detroit and several other large cities were absolutely on my radar screen. it would not have been constructive in any way. was i surprised by it? you now, when you involve the government things sometimes take longer than you expect but the math was very straightforward with detroit. they did not have enough revenue to cover their expenses and so what mass a lot of this and a lot of this has been a decade in the making. what mass a lot of this was the

american reinvestment recovery act which gave states nearly $500 million basically to plug their budget holes, and you know that out of time but that doesn't change the structural problems in so many cities. so you have an issue whereby there is a 24226% unemployment rate in detroit. there are not enough taxpayers to support the social services and when i said that was so radically different in 2010 that had so many people angry with me was that the whole notion that history would not be a good indicator of the future to the extent that legally states you know, states give constitutional backing to their pensioners and

their general obligation bonds but they don't give constitutional backing to anything else so discretionary spending like education or public safety are any of those things that as a taxpayer you feel like you pay money and you should get those services. something would give and taxpayers who were taking the first days of the default if you will but finally say enough is enough. the tax revenues don't support the expenses were they say why is pensionerpensioner s getting 100 cents on the ballot when i'm getting 50 cents on the dollar in terms of services or why would a bondholder get 100 cents on the dollar and i'm getting itchy cents worth of services? something would have to give and something gave in detroit's case. i think it sets a very important precedent for other cities across the country. one investor describes it as the

fuse that lights the system because it creates important presidents. >> my book is about suburbs. my book is called the end of the suburbs and there is a source in my book who has this theory that suburban development specifically the suburban tax structure is a ponzi scheme. in other words to pick up on what you were saying the cost to wire inputs who are sent put all this infrastructure in at low densities is then covered by the tax revenue. it falls way short so the only way to cover it is more growth. this person who is in minnesota is a huge fan of yours. he couldn't believe when he said i knew you. you are his personal hero so my question is, are these issues exactly the same in city says they aren't suburbs? obviously some municipality some have pension obligations but many of them do. are these consistent or are they

slightly different? >> here's where it gets so dangerous for the suburbs and localities. the states are effectively the casino. they control everything. 35 plus% of local money comes from state distribution and what has been so effective in the states to balance their budgets over the last year plus particularly this past fiscal year close was cutting off money to localities in the localities don't have the money to meet the social services that are required. so what they have to do, they have to collapse social services so close library's, close schools, change the busing routes, close parks and that has happened throughout the country. so you know the localities rely on property taxes where the housing market just lasted so

many parts of the u.s. economy. home prices were crippled and he couldn't generate the same type of tax revenues. so localities did what was a natural reaction. they raise property taxes but it was a one-time fix so now they are all going back to the same issue whereby social services are worse so property values have suffered. you are going to pay for it more for a house that has better social service and again it's a dangerous negative feedback loop >> speaking of housing now that we are eking out this housing recovery now are we going to get it right this time? are we going to end up in a situation like we did before? what do you see as the path out of the housing crisis or do you think that we need some policy changes to prevent the rushing into mortgages and really homeownership as the end-all

be-all for everyone and policies that push people into owning homes. >> one thing that you and i have discussed at length as is this whole idea of the american dream being distorted. really in the beginning of the 20th century as a way to promote homeownership and the american dream when my immigrant relatives came here was opportunity's, to try to have a better life and to get a job, of religious freedom and that was really distorted throughout the 20th century. as i say everybody was in on the so politicians were in on it. obviously the financial system was in on it. a lot of corporate america was in on it as 70% by consumer spends so i think it was probably the u.s. and i say this about your book one of the greatest promotions of the u.s. government and that entire

environment. post-2008 housing policy has been an unmitigated disaster. there are real structural problems within the mortgage market that have not been addressed. >> what do you think is the biggest problem? >> the government crowding out of the mortgage market so the perpetuation of fannie freddie and government agencies that are not creating a healthy mortgage market. so the housing market has rebounded from extremely low levels based on a couple of things. we have had strong refi wave because of government policies for zero interest rates and asset purchase programs from the fed that have motivated more people to go out and buy homes but these are rich people going out of buying homes and it has done nothing for households formation and for young people

going out and buying homes. the lynchpin is to get young people new households to go out and buy homes. that has not been addressed at also in the last week there was a startling statistic, startling to me anyway that 31% of people between the ages of 18 and 31 are living at their homes. the highest on record. if you feed that into an look at the real and bolts of the housing industry in the u.s. the math does not work. it explains moderate and surprising discretionary spend. it also explains the low savings rates. it goes so much in the system and i think there are so many structural problems that have not dealt with it's been basically papering over a really bad situation. the silver lining here is that down 26% of u.s. economy is housing dependent and 26% of the

economy is growing flooding the emerging market type growth that you see and the rest of the world hedged with the u.s. low rate -- low interest-rate policy so if you look at the last two and a half months while the fed is talked about pulling back its purchase programs or raising rates or whatnot it hasn't been the u.s. economy that has been crushed but it's been merging marks for that have been crushed. you have the same growth, the same nominal growth in certain parts of united states with an inflation hedge that i have never seen before in my career. there's enough good stuff going on in the country to be really excited about the u.s. economy but you have to know what to expect and where to expect it. parts of the country that are acting like nothing has changed and oh there is a rally in the home market homebuilders have -- 40% in the last four months so it's another gimmick.

i'm a fundamental gal so i want to fix structural problems first which hopefully -- you know i've had more political support from this book and i thought that i would be really in trouble with this book. i have had actually the opposite response from elected officials. now it's illuminatilluminating political will and that happened in 2010 as well. >> i will say meredith you are a fundamental skill. i have to be honest when meredith starts talking about this it's hard for me to understand because she talks about so many numbers and facts and details. getting back to homeownership, is interesting the stats about the young people is fascinating and i talk about in my book about young people not leaving their parents homes which is impacting the whole housing market. literally the homes builders are

starting to build homes with extra suites so young children can live at home and have their own entrance and what you see being called an in law suite is being billed for these children. this is a problem that's going to be with us for quite some time for quite sometime and has many causes. the homeownership rate in your 2005 report and i remember when i first started at fortune, this was in 2006, 2007. look at the homeownership rate it's gone from 64% to 69%. that was crazy and no one said it was crazy at the time. now here we are in 2013 and it has floated back down to 64. >> 65. >> wordy think it's going and he think it will hit a permanent new normal that is lower than 64 or do you think it will bounce around to where it used to be? >> just one point on that. what was so uncontroversial about my housing call back in

2007 was if he you looked at the correlation between home prices and any other variable it was with the homeownership rate. just a simple supply demand dynamic. it was close to 70% at one point in 2006. it's hovering around 65%. you always think it's going to overshoot to the downside and it's just taking time. foreclosuforeclosu res are down but you still have a high foreclosure inventory. a mortgage market that is not working and you have basically a 360 legal risk for lenders outside of government agencies that want to make love mortgage loans. how can it possibly go up? i things directionally it can only go down and you are seeing more retro's. a false indicator i've always believed as affordability and deaths which got people excited about the housing market way too

early and i don't think it really tells you much. >> i want to talk a little bit about process. meredith and i were riding our books around the same time. meredith was a couple of months ahead of me so every few months we would get on the phone together and she would then do that one part of processing give me advice and safe when you get there you will notice this and sure enough and i got i noticed it. it's really great to have you as a sounding board and it's great just to hear -- meredith is an analyst a researcher a data person. to see you go through this process of suddenly turning all this information into a story and a narrative in the book. so tell us about that topically was that a challenge for you? you had two years with the data and more on top of that. how did you meet the challenge of turning that into a both?

>> i dramatically underestimated the whole bookwriting process and how emotional it is because it's so iterative and it's really hard to write an interesting book. i am sure that i would be accused of writing not so interesting research reports but try to put that into a book which the whole point of me writing the book was trying to empower people who don't read my research, people who are smart about a ton of things but i've never thought about this issue before. i have never thought about this issue before until 2008. i wanted something like this that the dupnik says so i would call leigh and gripe, could fetch and have steam coming out of my ears and the soot of loss and you were so calm and so gracious. the only i would give her was -- we will go be -- be going to

edit the same time. it's an incredibly lonely process because for me i have a day job so i would do this on the weekend and at night and it's never good enough, ever ever good enough so you find things you think are interesting but then to get it together -- my book is over 300 pages. it changed my view about the whole writing process and i'm really glad i did it. i think i'm not going to be in a rush to do it again anytime soon but i'm really glad i'd did. i didn't number one because i thought it was such an incredibly important issue and number two from a competitive standpoint i couldn't believe that i was the only one who is thinking this way and writing this way again about such a powerful subject in just the span of five years. i feel -- have felt very alone during the states issue which in

both scenarios people thought the calls her was making were so controversial and a few years later there was nothing controversial about it. detroit files for bankruptcy and now all of a sudden it's not that controversial a topic anymore. what this does to the country and what this does to the social divide and class divide and race divide is really -- it's enormously important for people to learn about and do something about. >> we are going to go to q&a in just a minute so if anybody has questions get them ready. when did you do your best writing? i'm obsessed with the writing process so running your firm which you are the ceo of and which has many employees and which cranks out other stuff not relate to your book all the time come to when did you fit that in you you said weekends and wasn't morning's?

was at 4:00 to 7:00? what was the witching hour for you? >> i thought that the process was going to be easy and i would work with ghostwriters and turn my research over to them and they would create this fantastic story and it would all work out well. that did not work so what i ended up doing is just kind of like bombing out critical mass and then shaping that critical mass and calling it and calling it and calling it. it was just getting all the volumes down into the themes that i wanted to work with and many of these themes are not commercial themes. they're very important and i had all the research done. it was getting it into a story that works. another mutual friend of ours john berger who -- she wrote the story about me on fortune.

he came in and help me at the end and was so enormously help all in fun to work with. so then it was easier to edit somebody else's work so he would edit my work and i would edit his and it was the plunder that created this book. >> ugandan and dr. nation into journalism. i don't know what to do. i said welcome to journalism. welcome to writing. it's not easy. this is the stress and angst and this is why the stereotype of the writer is so fraught. you really experienced it because you did read the book yourself with john's help at the end but you really did a lot of the work yourself and i commend you for that. >> the hardest part -- the easiest parts were getting the interesting stuff about the states down. the hardest part was writing anything about myself.

i was entirely uncomfortable about that. i had gotten a number of offers to write it look after the financial crisis and i had no interest in doing that. i really believed in this topic so i wanted to write about it and john force me to cut some stuff in it about myself which i was very uncomfortable about. >> we are the exact opposite. i wrote a lot about my childhood in the book and that was my favorite part. maybe i'm more of a narcissist come to i don't know. i think we have a question over here. >> in your research did you come to some kind of conclusion into what happened with the savings-and-loan collapse in the 1970s? may be beyond your personal experiences but did you discover

why? >> the savings-and-loan crisis was caused by regulatory reform which allow them to open up and to the commercial real estate age -- market and become more concentrated. the whole point was to promote homeownership on steroids. so i think it's a second or third chapter that goes through an exhaustive analysis of the history of housing in the united states how we are the only market in the world with a 30-year mortgage. why do we have a 30-year mortgage to make monthly payments lower? payments lower classes that make make any sense? probably not. it goes through all of that. you also see how -- i also go into parts of, from really the mid-90s to 2007 you had so much financial consolidation.

in the 80s when the interstate banking laws changed you had so much consolidation so the big banks when they were financial services supermarkets they were not only originating products but also selling products and selling product around the world was easier than originating products that they started applying more and more and more. you look at merrill or ups during that time. it wasn't enough that they were the biggest originators of mortgages themselves. they had to buy other peoples. citi was a same way so you take a preview what happened in the late 80s and 90s and then really and that of is the biggest difference between both of those periods was leverage. it was two to three times the leverage in the 2000's than it they did during the s&l crisis.

snl crisis was short and sweet, not sweet but short. the housing crisis, we are not out of it. >> i will interject one more question here. you think we have done enough to ensure that a financial crisis won't happen again in the banking system? >> no, absolutely not. you have one upsetting trend which is the consumer side whereby over 32% of americans have either no access or limited access to the banking system so 20% of americans who once had banking relationships and mortgage relationships have been kicked out of the system. so you have had imagined 20% of banking accounts are forced out of the system and forced into the shadow lending market. that slows down the system to a snails pace. what has caught up or made up

for that is the commercial lending market the junk bond market which is out of control right now and i don't think the impact is going to be as prolific as the housing. if you look at a severity issue versus a frequency issue which was the housing industry that you have bubbles all over the place in certain lending markets in the bond market, then the u.s. bond market, that are going to be problematic and the single biggest problem is how we wean ourselves from a low interest rate that has gone on far too long. >> yes, right here, a question? >> hi. i don't know if you were offered the opportunity to follow up on the "60 minutes" piece or if you were given such an opportunity without editing what would you like to say?

>> my "60 minutes" interview was 90 minutes and i think they aired three minutes of it. so i said what i wanted to say. i don't have control over the editing process or the focus of it. hopefully i have given some sense of what is important to me about this which is so much in one specific market. so much of the american economy that taxpayers experience and homeowners experience, children and people living on oral depending on retirement benefits is a factor in that. i didn't ask leigh the questions she was going to ask before this interview. i think it's an important narrative to say it happened.

if you actually watch the interview i think you would get a sense of what i said as opposed to reading something that was said about something being said in the interview. >> in your book you make much of the fact that the states have no debts and low taxes and low spending but i'm not quite sure they are going to be growing faster in the future. for instance -- point out that you need to foster education innovation and infrastructure, immigration. the states back in the 1870had load debts and low taxes and they didn't go anywhere. >> okay so i would just give you some numbers that would disprove that. if you look at from 2008 to 2009 28 the texas economy has

grown over 14%. north dakota has her own over 44%. although central regions have grown at exponents from other parts of the country and what you also see is the first move which is companies moving into these areas. think about 60 years ago and by the way they shouldn't freak anybody out because every 60 years the u.s. economy goes through this economic transformation which is a great testament to how resilient they u.s. economy and americans are but the u.s. economy has never been more mobile so you can choose to live places. you don't need to be on a riverboat system as you did in the 16 and 1700's -- 17 and 1800's. you don't need to be by a coal producer. it's much more mobile. if you think about we talk about a lot of the influence of the

energy revolution but think about california tech companies. so many of them have built new facilities around austin not because of energy but because it's easier to do business in texas. and california has become so prohibitive to do business and so states are competing more aggressively than they ever have against each other to try to support and attract businesses and businesses, what i originally thought back in 2010 i was creating with no idea that i was going to write a book was actually a desk reference for businesses to see and compare and contrast where they would want to invest and build new facilities. it's absolutely happening. there is more and more evidentiary support of the fact that the growth is absolutely

overweighted to the central states versus the coastal states. the point about education is spot on. you have areas of the country that have low high school graduation rates and don't have the infrastructure you would want for businesses but they also have some of the highest revenue surpluses that are directly going into investing in those specific projects. if i were to track you to my state and let's say my state is wyoming. i'm going there tomorrow for a meeting. they are going to attract your business because i'm not going to charge income taxes. i have a state-of-the-art airport. i have state-of-the-art schools in spoils of riches because of all of my natural gas exposure. it's kind of a redistribution of opportunity for the u.s. which is pretty romantic if you want to look at it that way. >> we are going to do two more questions. the women woman right in the back there.

>> i had a question about clinton with glass-steagall. he took it out. why won't they put it back in? >> the question was about glass-steagall. volcker is an advocate of re-creating glass-steagall. i don't think it's happening at that kind of black-and-white fashion where you read direct laws that separate commercial frank -- banking and consumer banking. what is happening is in a very different way it's happening before our very eyes. one of my favorite people is the former said president of kansas city tom connick who is a big advocate of having financial institutions they specialize institution and when they were specialized institutions we have the best financial system in the world.

the financial capital has been one of our best exports. not everyone may agree with that but what is happening now as you have capital requirements that are keeping certain banks out of businesses so you are effectively kind of doing it the hard way and the banks are fighting for regulators to then nail. i don't know that it's the best possible situation but we are going in that direction whether the banks like it or not -- they don't like it. what you don't have on the flip side is regulators are being very successful about getting the big banks smaller. with it are venting is a small things from getting bigger and what we need is equilibrium. we need as many americans to have access to fair credit and the banking system as possible because that is what lubricates the system. >> one more question whatever here in the middle.

>> meredith, do you find politically that financial institutions are finding it more difficult to -- consumer risk and ultimately post-foreclosuforeclosu recrisis or post credit card crisis and if so is that going to replay the state going into default where you have financial institutions relationship with states to try to get a discount and how do you think that's going to play a politically? >> i think that's going to be really messy. i have written extensively about how dangerous the regulators have been with financial institutions from the standpoint of consumer credit. 2009 in 2010 the c.a.r.d. act just completely eliminated the

lender's ability to price for risk. if you can't price for risk and you are not a public institution you're not going to take the risk. you you have seen two chilean dollars of available credit lines taken out of the system. that is not constructive so those are just credit lines taken out of the system. that is not loans that have been charged off so there has to be some type of happy medium. what has happened is the worst type of unintended consequences whereby the shadow lending industry that is outside financials and under state regulation, not cfpb or the fed is emerging and people aren't getting credit. i am a believer of theory of displacement. you close one door someone is going to open another door and charged very differently so you actually have more regulation which is driving consumer lending of less regulated market

and it's dangerous and unfortunate. it drives me nuts. in terms of what happens in the states i think, so the municipal bond industry is the sleaziest industry have ever seen in my life and i have covered the banks for a long time. it's dirty and opaque. there is corruption associated with it all the time. so what is happening is that big banks -- you have smaller players and then you have big players that have been in this industry and what ends up happening is the banks are well capitalized enough that the states and municipalities are going to see the banks. if you remember four or five years ago milan italy suit its bankers because you know we didn't know what we were doing. we were sophisticated.

jefferson county sued and won close to a million dollar settlement trade we didn't know what we were doing and that is probably have true but if you have such a tightly controlled market with very little transparency it's a bees nest or a hornets nest for i think some really messy lawsuits because the states are going to go where there is money. >> thanks everybody. i want to ask one more question. it's a one-word answer. there is a lot of discussion on who will run the federal reserve when ben bernanke steps downs of who you think would be the best for the economy? >> my bias would be tom connick or summers. >> there we have the final word for word. thank you. >> thank you meredith and leigh. it was a wonderful presentation. the books are for sale and we

have the authors signing books appear in the center so if you come up to the middle. we will see you next week. [inaudible conversations] next on booktv thurston clarke recalls the last 100 days of president john f. kennedy's life which began on the day is today old son patrick died on august 9, 1963. the author reports during the final months of entities like the gained a greater understanding of the civil rights movement, sought a better relationship with the soviet union presented his doubts on

the u.s. involvement in vietnam. this is about an hour. [applause] >> thank you very much. it's a pleasure to be back at politics and prose one of my favorite oak stores anywhere, not just in washington d.c.. i would like to ask you who here has seen a portrait of kennedy in the national portrait gallery that's great. you know it's quite unlike any of the other portraits. it was painted by the estranged wife of willem acuna company we all know about and the story behind how that portrait happened to be there is a kind of interesting one and in fact i open my book with it. i would like to share it with you just briefly. she was supposed to paint one portrait for the truman library in independence, commissary and she was chosen because everybody knew that john f. kennedy was

too restless to sit for a portrait painter. william walton thought let's get blamed to clinic who was known as the fastest fastest brush in the east and she was supposed to spend one day. she came to palm beach over christmas spent one day. take some charcoal, take some -- and do the portrait. that's not what happened. she stayed for four days and she later explained she became both mesmerized by kennedy's graceful positions of the college athlete his incredible eyes and finally she admitted i fell a teeny bit in love with him. well i would say more than it teeny bit as for the next year all she drew and all she painted was john f. kennedy. she got back to new york and she realized she had only seen one aspect of him. she had seen him in person but

she decided if she wanted to capture his essence she was going to have to watch them whenever he came on tv and cut out photographs from life and "the new york times" and she pasted them all over her wall. pretty soon she was working on 36 oil campuses. she had to climb the ladder to reach them. the first picture in my book shows her reaching up into one of her top kennedy portraits. what had she found? i think she found with this taureans and viper for use -- biographers have found for decades since and that is kennedy's elusiveness for secrecy and his passion to secrecy and is habit of compartmentalizing the aspects of his life. ted sorensen wrote different parts of his life were seen by many people but no one saw it all. so dekunick's experiences trying

to capture the essence of john f. kennedy confirmed my suspicion as i started writing this book that discovered they essence of the secret of men who compartmentalize his life. you had to look into every compartment and to understand why he was called a prismatic president you have to look at him through every prism and did my case writing a narrative that wove together the personal the political and the presidential in ways that eliminated each other and by doing that i hope to solve what i have come to believe is the most enduring and tantalizing mystery about john f. kennedy. not to kill him but who he was when he was killed and where he intended to lead us and i say intended because of course we would never know if he would have succeeded. so because more than most

middle-aged men and more than most presidents kennedy was a constant work in progress changing, a moving target. i decided to solve the mystery of what he would done after dallas if he had survived you have to look at the man in the last hundred days. in other words not the jfk of the disastrous to first hundred days of the bay of pigs, not the missile gap cold warrior in his 1960 campaign against nixon. not the president who for two years disappointed the civil rights movement and could not get much of his legislative program to congress and was reluctant to engage in arms control and sometimes seemed paralyzed by the narrow miss of his victory in 1960. now to understand what he accomplished and try to accomplish in these hundred days i think you have to go back to the inauguration and

specifically to robert frost and the poem for us to wrote for the occasion but couldn't deliver because of the sun bouncing off the snow banks on that cold and snowy day. two days later frost came to the white house and gave kennedy a copy and read it to him. the poems celebrated the kind of courage that kennedy had praised in profiles of courage has pulitzer prize-winning book and concluded by predicting quote a golden age of poetry and power of which the beginning hour. as they parted frost turned around and said be more irish than harvard. poetry and power is the formula for another augustine age. don't be afraid of power. at the bottom of a thank you note to frost afterwards kennedy scrawls, is poetry and power all the way. well i say not so fast jfk. because there was indeed poetry

in his first two years in his inaugural address, in his speech during the cuban missile crisis when he said in the case of a nuclear war "that even the fruits of victory would be ashes in our mouths. but, he didn't marry yet the power of the presidency to the poetry of his words. his economic advisor paul samuelson would later say instead of the dashing and decisive president during these years kennedy was in fact quote and extremely hesitant person. now and the introduction to profiles of courage which i believe unlike the rest of the book kennedy wrote himself he praised the eight senators he was about to profile for processing quote the breathtaking talent of the orator compay kennedy, the brilliance of the scholar, well may be kennedy the breadth of the man not yet kennedy and a

belief in the integrity and rightness of their cause and call these heroic men people who had quote failed with the wind until the decisive moment when their conscience and offense propelled them into the center of the storm. well, this is what happened to kennedy in june of 1963. the offense were first the terrifying close brush with nuclear war that happened during the cuban missile crisis and the secret correspondence with khrushchev that followed right to the rest of kennedy's presidency and the brutal suppression of african-american demonstrators in birmingham alabama in the spring of 60. in two successive days in june 1963 kennedy delivered speeches in which he had last married to power the presidency to the poetry of his words and became more irish than harvard.

in his june 10 commencement address at american university here denounced his own unilateral suspension of nuclear tests that proposed negotiations in moscow for a treaty banning nuclear testing. this was a dramatic rate from the cold war rhetoric of eisenhower and truman and of his own. and during this speech he called for not merely peace for all americans but peace for all men and women, not merely peace for our time but peace for all time. poetry mary to power because within six weeks the test ban treaty had been initialed negotiated and signed. the next evening he delivered a nationally televised address in civil rights. the james farmer called it quote the strongest civil rights speech made by any president lincoln included.

after saying that race has no place in american life abroad he announced he is sending congress a civil rights bill and called civil rights a moral issue as old as the scriptures scriptures and as clear as the american constitution. after hearing him speak martin luther king jr. turned to a companion and said can you believe that white man not only step is to the plate but they hit it over the fence. that was not the kind of thing that martin luther king was saying about john kennedy just a month or two before. so during his last hundred days kennedy would be consumed by first to go shooting the test ban treaty and then persuading the senate to ratify it and when getting his civil rights bill through congress. by doing this, he was addressing what were essentially the two great threats to the republic, got a nuclear war and racial conflict. and he realized more than anyone

if they could solve both of these he would be judged a great president. he often called -- referred to something called the high court of history. well all presidents governed but not all care deeply about how the high court is going to judge them and historians rank rather than achievement kennedy would be close to the top. to use martin luther king's metaphor swinging for the fence and first day of office determined to be ranked with or above lincoln and fdr. after meeting kennedy and in the white house in 1962 isaiah berlin the british philosopher noticed that whenever kennedy spoke about churchill lenin or napoleon and this is quoting, his eyes shone with a particular lent. and it was quite clear that he thought in terms of great men and what they were able to do.