because they weren't corrupt and build housing. if they get in and don't create jobs and don't build i suspect they are going to have a problem. the key is you have to have repeatable electionings. that's why standards of accountability. we'll see. we have a huge stake but our ability to affect it is limited. >> the tolling of the bell reminds me we've got to adjourn our panel. we'll take about a 15-minute break. join me in expressing gratitude to our panelists. [ applause ] >> the house democratic steering committee is meeting today to look at what can be done about gas prices, and oil speculation. at that meeting the head of the independent connecticut petroleum market association and a former official with the commodity futures trading commission which oversees oil

trading. c-span will have live coverage. c-span 2 will be live with the look at drones in the u.s. and the impact on privacy, safety and national security. the discussion hosted by the brookings institution. all this week here on c-span3 we're featuring a look at the president's 2013 budget request. this afternoon at 5:25 eastern, veterans administration secretary, both president obama and house republicans want an increase for the department. and at 8:00 eastern, american history tv prime time, and a look at who "time" magazine might pick for person of the year in 1862. james mcpherson is among the historians who nominate for the most influential person on the stage 150 years ago. >> c-span's 2012 local content vehicles cities tour takes our book tv and american history tv programming on the road the first weekend of each month.

this past featured little rock, arkansas with book tv at the university of arkansas. >> he was interested in the 19th century. the civil war. these are two friends, union and confederate, who knew each other prior to the civil war, who fought against each other at the battle of pea ridge. survived the war, came out alive and remained friends after the war and here they are at age 100, sitting on the porch talking about the old days. >> an american history tv looked at life 18 world war ii japanese internment camp. >> wrote a book called the art of gamon. and gamon meant surviving the unsurvivable, sort of. and she talks a lot about how the arts and the crafts were sort of how they kept their sanity and gave them something to do. and about how depression was so

bad in a lot of the camps and that people -- there was a high instance of suicide. so people would make these little things of beauty to give to each other just as a way to say we support you and we care about you. >> our cities tour continues the weekend of may 5-6, from oklahoma city on c-span 2 and 3. >> this saturday at noon eastern, on c-span 2's book tv, our live call-in program with author chris kyle as he talks about his life from professional rodeo rider to becoming the most lethal sniper in u.s. military history. >> if you think of yourself as a family, and if you think of yourself as a team, and she said you know, when i get a raise at work he is so proud of me and it's like we got a raise, our family got a raise. but i really felt as though she had redefined providing to

include what her husband does and she had a lot of respect for what her husband was doing. >> the richer sex author liza mundy on the change of women and how it impacts their lives. also this wbld, america the beautiful, director of pediatric neurosurgery ben carson compares the decline of empires past with america and shares his thoughts on what should be done to avoid a similar fate. sunday at 3:30 p.m. book tv every weekend on c-span2. >> what can be done to boost the u.s. economy, the atlantic magazine hosted an event to find out. in this discussion economists from business, labor and think tanks go through what caused the problems and possible solutions. this is an hour and 15 minutes. >> in this conference we have very specifically tried to include voices from across the

spectrum, in some respects you might say that is the purpose of this conference, and we have asked them 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 between fiscal stimulus that is productive and that which is unproductive. have we properly framed the population question? the most important phenomenon of the last couple centuries has been the unprecedented population growth and the many respects the world is built in expectation of high population

growth. our defined benefits program, our social security programs and the like. 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 diseases have far more to do with job creation in the future than these types of policies. and in any event here is hoping for a great exchange of ideas. and now it is my distinct privilege to introduce james bennett, since 2006, james who is a graduate of yale, 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 preparing to go to the beijing bureau when he was snatched away by "the atlantic" to be editor. join me in welcoming to the podium a true leader and visionary, 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 all have together today means so much to us. "the atlantic" was to advance big ideas in the culture and the society and particularly to try to promote the abolition of slavery. but when the magazine 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. if you bear with me the prose is very much of the era but the critique itself i think will sound somewhat familiar. he identified four different viewpoints. personified them. one, he said one critic, cries that we americans are an unconscionably greedy people ever hastening to get rich, never satisfied with our gains and in the frantic eagerness ever accumulation disregarding like justice, truth, and moderation. a second qualifies this view. and shouts that our vice is not so much greed, which is the vice of the miser, as extravagance,

which is the vice of the spend thrift. and that as soon as we get one dollar we run in debt for 10, we must have fine houses, fine horses, fine millenary, our dwellings must be more royally arrayed than the mightiest monarchs. when the time comes as come it will for paying for all of this, we collapse, we wither, we fleet, we sink into the sand. a third voice he says complains that the problem is actually the absence of a protectionist trade policy. there is no high tariff, and a fourth says that the problem is the very existence of a credit system which is by its very nature inflationary. the writer went on to say all of these 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 a contrivance as was ever inflicted on the patience of mankind. it would be another 50 years, more, i think 1913, before the federal reserve was created to deal 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, our cover piece is on ben bernanke's effort to address the economic crisis we find ourselves in. it is a wonderful piece by roger loewenstine on the cover he is the low, inside he's the villain. he's managed to enrage both the right and the left with which roger argues is a series of daring and ultimately 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, a terrific piece by the political philosopher michael sandell about how market logic has seeped into our consciousness and for those looking for something more fun, a terrific profile by mark bowden of the man who broke atlantic city a gambler who successfully took three casinos for $15 million and how he did it. and at the same time our special money report on our website goes live later this afternoon. now falls to me to bring steve clemmens up here. i generally feel silly introducing steve because it always turns out that everybody already knows him. steve is, if you do know him, is a man who believed deeply in

surfacing the next provocative idea, hearing from as many points of view as possible which makes him a perfect fit for the atlantic. the editor and chief of our atlantic's law division, and the guy who brought us all together today. [ applause ] >> thank you, james. thanks for all of you are underwriters. i want to say we are being covered today by cnbc, bloomberg, live on c-span, and we have many blogs that are streaming this live as well so we've got a big community outside this room. we're going to be putting -- those of you tweet, you like something, you can tweet it. if you hate something you can tweet it. i think the notion, we had a dinner last night and one of my friends who was there, david corn, msnbc commentator and kind of a good left progressive radical writer, i'm not sure

david would like that depiction, texted me after the dinner. he said, steve, fantastic cerebral discussion, really varied but boy does that differ from the politics on the street. i said that's exactly what we want to try and achieve today. demonstrate that you cannot only bring together people who have very different views on what's wrong with the economy and how -- what their precipitation is to fix it but do it 18 way that up lifts the discussion and doesn't tear it down so. the notion of being both provocative yet constructive i think is important today. now i have the pleasure ever introducing and bringing to the panel our next panel. come up, guys. we won't delay. we have ed loose, the chief u.s. commentator for the financial time who is is going to moderate this next session w. us we have craig alexander, chief economist of td bank. peter hooper, deutsche bank

securities, and co-head of deutsche bank, paul mccully, the global interdependence center. thomas pally, senior adviser and also a senior fellow at the new america foundation and e. smith publisher of naked capitalism. ed sloos a great friend and pal and we not only have copies of the atlantic for you, and a great issue to get as james said but thanks to the financial times and i believe in magnanimi magnanimity, we've got the fp out there and said also the author of a forthcoming book you can order on line on amazon, called time to start thinking, america in the age of decent, that means going down. that shows you where ed's thinking is no matter where the nasdaq may be. ed, the floor's yours. >> not sure this is -- it is working. thanks, steve. amazing audience here which i

imagine amounts to about 1% of your friends on facebook. i think you're a world record holder other than lady gaga. thank you for that introduction. i won't re-introduce my guests. we have about an hour and quarter to ask what caused this crisis and how to fix it. i'm sure that's too long. it's all very straight forward. i will get straight to the question. and start with eve. well known to all of you of naked capitalism with a well known book, econ that came out quickly after this crisis. and ask you, eve, from the perspective of today looking back on 2008, looking back on the build-up to 2008, you can almost indulge in a 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 that there's no one real culprit. what, from a slightly different perspective, what do you think would have happened or not happened in 2008, had dodd frank already been in place? >> honestly i'm not sure that the outcomes would have been materially different. the big profile of what happened is that we had a growing level of consumer dent in the united states. the biggest culprit was of course the housing bubble. we had growth in other consumer debt. the housing bubble some call it as early as 2002. but it probably would have died an early death in 2005 because the fed had started tightening in 2004. country wide was predicting its

levels would fall in 2005. what kept the party going was the introduction of credit default -- protocol, the international prot column on credit default swaps that allowed people to take short bets and ironically the other side wound up being aaa tranches of cdo owes that wound up on bank balance sheets because banks could -- traders could game their bonus systems. so and there are complicated mechanisms that led those to drive demand to the worst subprime dent and extend the life of that market. so it wasn't just a housing bubble. it was financial innovation gone bad. dodd frank doesn't address the credit swaps market. repos are how bank balance sheets now they funded bank

balance sheets. those looked to be able to be gutted. we don't really know yet. a lot of the dodd frank is still in play. the other hope for dodd frank was that we now have resolution procedures that banks when they get sick in theory, the fed, the treasury, the fdic can put them down in a more orderly manner. no one has ever shut down a major bank trading operation cleanly. some point you have to stop the music, if you're going to resolve it. 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 big trader you don't want to have your positions frozen. so the notion that you can have a bank that's people think is in trouble and say we're going to have dodd frank resolution, we won't have these run, it's -- it's -- i'm very concerned that we're not there. >> so the short answer is no. >> is no.

but this is the frustration. >> i wasn't being facetious at all. you have a book coming out which, if i quickly advertise it the destruction of shared prosperity and the road of economics and 20% off as well. that might -- do you agree that the hero is ben bernanke? >> that's two questions. question one. dodd frank would have had some effect. and i'm reading dodd frank in the broad sense of tougher regulation. awareness by the fed what was going on, not allowing a lot of the excesses that developed, not so much the wall street piece but the lending piece of it. the very originating piece. but what would have happened. we're trapped in stagnation now.

that's what my book is about. unless we do the right things to get out of it. what would have happened we would have tumbled into stagnation earlier. when historians look at this period, the trouble begun with the bursting of the stock market bubble in 2001 and what the fed managed to do was to keep the thing rolling along by allowing the housing bubble and facilitating it, and it was the right thing to do at the time we were in. i would have been making the same decisions as a result of this, six years of letting the bubble go on, we accumulated masses amounts of extra debt that we're now burdened by. we have a tremendous destruction of credit worthiness, which is so essential to the workings of a capital assistant. now we're trapped in stagnation. so it would have made a

difference, our stagnation would have been milder than our stagnation is. i hope we'll come back, if we have time i'd like to develop that. >> we'll come back into what the new normal looks like and whether this recovery is a bona fide recovery. paul, you used to work at pimco, which is obviously the biggest player in the debt market. you are now a philanthropist, global independence center and the think tank you set up recently is looking at these questions. you coined the phrase, mensky moment. who is responsible for the minski moment? >> we the people are responsible for the minski moment. the contribution to economic thought is that capitalism is inherently not self-stabilizing but self-destabilizing. that we move from boom to bust, and that proper regulation can dampen that human nature.

but can't eliminate it. so the essential contribution 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 in the minski moment. i think that we could have done things well before 2008 that would have dampened it. so i do believe in the power of we the people through the regulatory structure to dampen our own pathologists, but we clearly didn't. if i have to point one finger, i actually have ten, just given one, it would be the federal reserve, not with 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 san acceptable mortgage, and capitalism run amuck, decided to find out just how low it could go in the creation of mortgages and then put them in cdos. so actually, if there was one thing that could have been done different that would have changed history, was if the fed had to find what constituted and acceptable mortgage in our society, and no money down, teaser rate, with no documentation doesn't strike me as an acceptable mortgage. >> so your cover would be the anti-hero? >> actually, no. i am a huge fan of mr. bernanke.

i think mr. bernanke has learned from experience, but also i think he was a very, very smart man for a very long time. he's 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's a hero of the piece i'm presenting in a couple weeks' time for the glc. >> we'll get back to that. pete, you're, of course, an expert official, before you joined deutsche bank, 26 years, i believe at the fed, the market committee in that time. could you give the case for the fed? nobody has yet mentioned what some would describe is the ultimate cause a opposed to the global financial imbalance, is that a factor? american consumption? >> well, let's go back maybe a

little further and look at a slightly larger picture, and 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 well up into the double digits, the volcker decision, that kicked off a inflation. that kicked off a bull market for bonds and stocks. inflation came down over time, the fed was successful with volcker and then greenspan taking the helm after him in bringing down the inflation and engineering the great moderation, lasted for 25 years. a period during which inflation not only came down but risk generally 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 affirm belief that home prices would never drop.

they had never dropped at least over the period of history for which we had good data, and this was a factor that fed very much into both the financial engineering that you are talking about, and i think fed some complacency at the fed, i'm not going to disagree with paul on the regulatory breakdown. there was a philosophy at the fed, 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 -- was one of the contributing factors. i'll say that certainly the success of the fed taking risk out of the system, bringing inflation down, allowing home prices to go up, et cetera, was a fundamental oops. greenspan was proclaimed a hero himself for the success. >> talking of the great moderation, craig, you are from

canada, and td bank, chief economist, which i was surprised to find out is the eighth largest bank in the u.s., as well as the second in canada have a good vantage point to see what's been going on in the united states in the last few years and what has not been going on in canada. can you share some insight there? is there more that we can learn from canada? >> well, let me start off with the comment about the great moderation and then work in the differences and experiences. because i think it's a really good point. you know, in actual fact, your example of "murder on the orient express" works. i cannot find anybody who is not to blame for what happened. people took mortgages they never should have and lenders made mortgages they should not have loaned. they could sell them as products to investors that didn't appreciate the risk and shouldn't have been buying them. it was facilitated by incentives

like mortgage interest deductibility which is something we don't have in canada, that encouraging peeople to take out bigger mortgages, and a host of other behavior. and the regulatory oversight was not robust and financial innovation was not so quick, people couldn't actually keep pace with what was happening, oh regulators fell behind the curve. banks weren't holding enough capital. so, in fact, everyone was to blame. and part of the reason the interest rates were so low so long is because the global circulation of the reserves from china flowing into the treasury, alan greenspan conundrum not getting interest rates up when he wanted to. and when we think about the great moderation, it was complete fallacy. all right? economics tell us, you go

through business cycles, and during expansions, balances will build up and at some point a shock will hit you and it will cause an unwinding of the imbalances. i think the problem was as we had lower stable inflation and interest rates there was simultaneously a greater willingness to extend credit. there was a -- a push for yield and a low yield environment that meant people were going up the risk curve. and ultimately what was happening was, every time imbalance, as imbalances built up every time we would have been unwound, the fed increased the credit bubble. we will a credit bubble. not of the united states. a credit bubble throughout the entire advanced world. >> in terms of canada, you had much, much -- >> so when everything -- when the housing bubble in the u.s. collapsed it was the catalyst for the unwinding of the excesses, and one of the core reasons why the canadian financial system weathered the storm so well was, first of all,