blackout for seven of its eight home games, the jacksonville jaguars have covered approximately 10,000 seats at ever bank field with tarp since 2005, reducing their stadium capacity from 76,000 to 67,000. the teams regularly take action to fill their stadium, giving away tickets, selling them for less than face value, so as to avoid blackouts. why not eliminate the blackouts? >> i think that is profane. i think it's evidence that the clubs actually understand. the nfl doesn't want blackouts. the clubs don't want blackouts. senator lee and grassley both made that point in their opening statements. no one likes blackouts and that includes the nfl. so i think the examples that you have shown are clubs trying to respond and the league has adjusted its policy to be more responsive.

we think over the long term it has served and it's in the business judgment of the league that has served it, but as that shows, clubs take extraordinary examples to avoid them. >> i'm going to continue this conversation with you and the other witnesses but now turn to senator klobuchar. >> thank you. thank you very mu. thank you to all of the witnesses. i thought i'd start with you, mr. waldron. the blackout rule was put in place in 1961, is that right? >> the sports broadcasting act was adopted in 1961. the fcc's rule was put in place in 1975. >> most of the money made by sports tickets came from ticket sales, but today nfl games are consistently among the most popular television programs, certainly in my state where we're proud of the vikings and with that comes a significant increase in revenue.

cost of tickets has significantly increased. it's a big expense. do sports teams need blackout rules the same way they did half a century ago? if not, why do we have the same rule? >> no question that those facts are all right. this is in the record. it may surprise people that as much as a quarter of the revenue of the nfl still comes from ticket sales. ticket sales still sort of remain important. the nfl has a balance. they want to have popular games on television and they want to have a stadium that's full. you can imagine the scenario in which the other sports, they only play 162 games or 82 games, so every game is not a special event.iis not a special event. in the nfl, they work hard to make every game a special event, so they try to balance that maximizing the full stadium capacity with the engaging of the fans on television. it's a balance and they have, frankly, adjusted that balance. we think it encourages fan attendance and fan engagement over television.

>> the fcc voted to repeal blackout rules which prevented cable and satellite operators from airing sports events blacked out on a local station. what prompted the fcc to change its stance? is there anything preventing the nfl and other sports leagues from negotiating blackout rules directly with cable and satellite operators now? >> what prompted the commission's action was the change in the sports industry since 1975 when we adopted our rule, principally the two facts that the senator has noted. in 1975 the principle source of revenue for the nfl was ticket sales, and over 60% of the games failed to sell out. now those facts are both reversed. tv revenue is the principle source of revenue for the nfl, and most games are sold out. what the commission concluded was that there was very little risk that elimination of the

fcc's rule would lead the nfl to move its games from broadcast television to pay tv. the objective of our rule from the outset was not to maximize the revenues of the sports leagues or of the broadcasters, but to try to protect the right of viewers to see games. at the time the rule was adopted, it was thought that the rule would help to keep games on broadcast tv by eliminating the risk that if a cable operator, for example, reported a station, that might lead the leagues to fail to sell the games to that distant station, and more viewers would lose the right to see the games. we concluded because of the changes in the industry, that risk no longer existed and therefore the rule was outdated. i should note that to your last question, the commission's action simply eliminates the support for the private blackout

policies that was previously in the commission's rules. that action does not prevent the leagues from continuing to implement their blackout policies as a private matter without fcc support. although, as i say today, blackouts are increasingly uncommon, the risk of blackouts continues. >> thank you. does anyone want to add anything to that? any other witnesses? >> thank you, senator. i think this discussion would be helped by understanding how we got the law in the first place. we're talking a lot about the anti-trust exemption as though it's always been there. let's talk about how we got here. in 1953, the united states department of justice anti-trust division succeeded in litigation with the nfl on anti-trust. are you commenting on the packers? >> we are commenting. we just noticed it. it might not have been your

smartest move given that half of the senators here are from minnesota. >> i realized that as i started talking. but we gave you brett favre. >> we're not at all distracted, are we? >> i was just thinking of senators finegold and cole. they enjoyed that. >> but we are here now. continue answering. >> i love the color purple. >> all right. >> 1953 u.s. versus nfl, the department of justice succeeded in winning litigation against the nfl for violating anti-trust laws. why? there were four things. number one, the league restricted the broadcast of games locally during a home game. number two, the league restricted the broadcast of an away game in the home market. number three, same restrictions

with respect to radio, and number four, a kind of blanket power given to the nfl commissioner to restrict broadcast all over. the court said no. three of those four violate anti-trust laws. one, the restriction of broadcasting games locally during a home game, the judge allowed to stand. that was 1953. in 1960, a new football league, the american football league, came along and did a deal with abc television network, whereby it pulled all the teams' broadcast rights and did one nationwide deal, so the nfl tried to do the same thing. it enter the same type of deal with cbs. no, said the court. that violates our 1953 order. what did the nfl do? it came right here to this committee, the united states congress, and it said, we need your help. how can it be fair that the afl gets to pool its broadcast rights but we don't, that's not fair. and congress agreed.

the sports broadcasting act of 1961 was expressly designed to overturn the 1953 eastern district of pennsylvania decision, while at the same time preserving that court's decision to allow local blackouts. that's how we got here. it was to overturn a case brought by the united states department of justice during the eisenhower administration. what does that mean for today's discussion? the court in 1953 and congress in 1961 both premised their decision on the importance of local ticket sales, the importance of maintaining the economics of the league. that was over a half century ago. it's perfectly legitimate for this committee to revisit the statute from 1961 and ask, do the same economic principles apply today? we at sports fans coalition

think they don't. any time the government gifts a league to a sports league, it's legitimate to ask, does the gift still make sense? it is after all a gift from the american people to a private, multi-billion dollar organization to get an anti-trust exemption for your type of business practice. >> thank you very much. my time is expired. >> senator franken. >> the threat of blackouts during re-transition contract disputes is especially concerning to me because that could potentially affect fans of any major sports league. such contract negotiations seem to be growing increasingly contentious each year. last year, for example, negotiations between time

warner, cable and cbs led to a month-long blackout of programming that affected millions of consumers. as you know, comcast proposed the acquisition of time warner cable is currently being reviewed by the fcc and the department of justice. it's a deal that would unite the two largest cable operators in the country and, in my view as i've made very public, it should be rejected. i think it's simply a bad deal for consumers. i don't believe it would improve service or choice, and i believe it will result in higher prices. a combined comcast time warner cable company would exert particular power in the sports programming market. you've noticed that both companies have long track records of trying to prevent individuals who don't subscribe to cable from viewing games. can you explain what that means and tell us what you think the implications of the proposed acquisition deal would be for sports fans.

>> thank you, senator franken. let me note that sports fans coalition is on record opposing the comcast time warner cable merger and filed a petition to deny the fcc to that effect. your question regarding the effect on sports, my friend from covington mentioned the economist who opposed us in the blackout proceeding, mr. singer also authored a paper that we cited extensively in your pleading that said when a cable company owns a regional sports network, the tendency is for fans who don't subscribe to that cable company to not be able to see the game. that's the trend. as opposed to let's say an independent regional sports network that's carried more widely on other providers. mr. singer and his colleagues went on to conclude that the bigger the local cable company, the worse the problem gets. and that actually just makes sense intuitively. if i'm going to give up revenue

by not sharing my sports with you, the smaller you are, the bigger i am, the less of a loss it is to me. so that was the conclusion of singer et al. in the context of the proposed merger, take a market like los angeles. los angeles has time warner cable and as i mentioned time warner cable owns a regional sports network. the merged entity would acquire roughly a quarter million new subscribers from charter. what does that mean? the local cable company is getting bigger. as a result, the trend we already see today when time warner cable owns dodgers games and won't see to it to those games are seen by everybody, it's going to get worse. if the cable footprint gets bigger. that's why sports fans coalition has chosen to oppose the merger. >> thank you. i'm going to get on a little bit different subject.

mr. waldron, this is addressed to you. we talked a lot about the tax support and i think as a country we provide such enthusiastic sports for professional competitive teams at least in part because they we recognize all the ways in which they can enrich our culture. yet, we have a team in the nfl that continues to call themselves by an offensive name, a racial slur. the use of the name is hurtful and insulting to so many people

in our country, including in my home state of minnesota, where we have a large and vibrant native american community. i've heard from tribal leadership in my state who understandably find this name offense and harmful, as do i. a simple step would be for the nfl to address the need for a name change. what is the league considering doing at this time? >> senator, i recognize the importance of your question. i am not in a position to answer it. i advise the league on television matters but i will consult with them and get back to you with an answer. >> i would appreciate that. thank you. mr. chairman. >> thank you, senator franken. just to continue with some of what we were discussing and i think mr. lake addressed part of this issue. mr. waldron, i guess it's your contention that the fcc failed to consider certain evidence and therefore reached the wrong conclusion by a 5-0 vote? >> sure. i'm not -- it's an assessment of uncertainties and mr. lake cannot prove that he's right anymore than i can prove that

mr. lake is wrong when he said the fcc's prediction was changing the sports blackout rule will have no effect on what the nfl does with respect to it. their judgment in looking at the evidence and looking at the sports economist study and the dr. singer study, they said, no, that was their judgment looking at the evidence. the nfl has been at this for 50 years. it actually wants to maximize the number of people in the stadiums. >> things have changed over that 50 years. >> i understand that, and they watch this every week. the nfl watches this every week. >> isn't the present policy in effect to the disadvantage of certain cities over others, certain fans over others. for example, the ralph wilson stadium in buffalo represents 28% of the population in this city, that stadium can hold 28% of the population compared to

the capacity of soldier field in chicago which represents 2% of the population of that city, the stadiums in the new york area probably even a smaller percent which may be the reason that they are regularly filled. but the threat is there for all fans -- new york, connecticut. maybe it falls more heavily on buffalo, cincinnati, san diego, tampa bay, where economic recession, population trends may have made the markets less robust. isn't there a discriminatory aspect here and as as far as it frankly hits the elderly, disabled, and folks who can't attend? >> two parts of that answer. first is i think the league has

recognized the different stadiums and different clubs are in different situations which is why it has adopted and adjusted its policy and adopted more flexibility and the flexibility that was adopted in 2011 or 2012, frankly, it has benefitted the very clubs that you mentioned, tampa bay and cincinnati and san diego. that's one of the reasons we have not seen that. to the point about the elderly and we've all seen the studies -- >> if i may and i'll let you finish on the elderly and disabled and people of modest means who may not be able to afford tickets right now. if you're worried about filling the stadium, why not just lower the ticket price? that's the way the market normally works. you have the immense benefit of an exemption from normal market forces in the anti-trust exemption. why be greedy about it? the anti-trust exemption are the keys to the kingdom.

they are the gold mine for you. it seems to me you've taken -- you continue to take a step too far. isn't it in your own enlightened self-interest to eliminate the blackout legislation? >> all the sports leagues enjoy that exemption. congress passed it to benefit the public by putting sports on television. that was the judgment when congress passed it in 1961. it has been a benefit to the league. i don't want to suggest otherwise. we recognize that. but it's also been a benefit to the public in that regard. the dr. singer study that was cited earlier, he actually found that it actually does have a downward pressure on prices for the very reasons that you cite which is if you want to put people in the seats you're going to lower your prices and you actually have an incentive. because of the blackout policy, clubs have that intensive. but i don't want to lose sight of your very important comment about the elderly and latinos. many of those same people can't afford cable, yet to watch every sabres game they're going to have to pay $80 to $100 a month.

and that's six months of the season. everyone hopes they watch all of their games. they certainly watch all of their away games. every buffalo bills away game is on free over their television in buffalo. and as many that are sold out. so we think that the league actually has used its benefits under the sba responsibly and to benefit the public. >> i'm going to ask some of the other witnesses to respond to the points that you have made very well. mr. lake, in essence i think you've heard mr. waldron say that the fcc could and would have adopted a conclusion. what would you say to that? >> we held a proceeding in which we received extensive comments from a wide variety of parties including conflicting presentations and the conclusion of the five unanimous commissioners was that based on

that record, elimination of our sports blackout rule would not be likely to lead the league to move their games off of over-the-air television and onto pay tv. the commission noted that the contracts today extend through 2022, so that ensures that they will remain on over-the-air television at least within that period. >> so the fcc in essence, to put it from the fans' perspective, found no uncertainty as to what would happen? >> they certainly concluded that the very likely result is that this would not take games off of over the air television. >> mr. goodfriend, do you agree with that conclusion and particularly as it affects the smaller cities and fans in those cities and the threat to fans in the larger cities as well? >> senator, you'll note from our prior conversation i am wearing a green bay packers tie so i care about small market teams very much.

i think it's a little bit of a red herring to argue that all this is made possible solely by the united states congress in granting the anti-trust exemption. the nfl is not running a charity. they are a highly profitable multi-billion dollar organization. they put their games on television because that's where the money is. they put their games on broadcast because that's where the audience is. the day that pepsi and budweiser and gm stop paying top dollar for top ratings on broadcast, we'll see a change. until that day comes, the nfl's maximizing its revenues as any rational business actor would. professor rodford at the university of michigan, in the submission he made that the fcc pointed out that even under the most exotic assumptions, the threat of a local blackout might put a few thousand more people in seats on any given sunday. contrast that with the loss of revenues from taking a game off

broadcast, it would be in the millions, perhaps tens of millions. professor ford concluded the rationale economic actor would say i'm not going to give up all that money on the broadcast tv side just to put a few thousand more people in seats. that's why intuitively you could say there really is not going to be too much of a connection between putting games on broadcast and having a local blackout policy or anti-trust exemption that sustains it. rather, the league will make money. that's what it does best. if it thinks it's going to make more money putting it on broadcast or putting it on espn as with monday night football or on thursday with the nfl network, it will do so. it already has. it's important to differentiate between what the league gets between its local blackout policy and broadcast tv. i think it's a red herring to threaten taking games off broadcast unless we get this

anti-trust exemption for local blackouts. the numbers just don't add up. >> thank you. miss greenberg, what does this mean for ordinary consumers and fans? how are they impacted? >> well, there's a problem with fans being able to afford to go to games. our figures are that from 2010 to 2013 the cost for a family of four to attend an nfl game increased by 8% to $459. that's out of the pun intended, the league of many, many families. so of course they turn to free broadcast to get access to their games. i'm curious about something that mr. waldron has said on several occasions, that the nfl has evidenced a lot of flexibility about the blackout rule. i wonder what evidence there is of that.

i think what we're really talking about, as david has just pointed out, it's enormously profitable, not an act of charity on the part of the nfl. it's enormously profitable for the league to have games on broadcast television and that's why they do it, not because they're so flexible. i don't understand, as you've pointed out, i don't understand the fighting this blackout rule issue when it doesn't seem to be a problem for them and they could be part of the solution instead of being part of the problem. for fans it's obviously critically important for those fans who can't make it to the game because of physical disabilities, the costs are too high, because they have kids at home, i'm puzzled by why the nfl is fighting this very i think sensible proposal. >> mr. waldron, has any consideration been given within

the nfl? i know you can't speak for other leagues, but within the nfl to changing the blackout rule? >> actually, after the fcc repealed its rule in late september, commissioner goodell said that he was going to study it. my understanding is that the owner's committee is studying this issue. >> is there a time line for it possibly actually reversing the rule? >> i am not aware of any time line for that. i can get back to you on that. >> if you could let us know whether there is any time line for the committee reaching a conclusion, i'd appreciate it. what will be the determining factors in the consideration that the owners -- and they're the ones to decide? >> yes, yes. >> what will be the determining factor in their decision? >> it's a really good question

and i will come back to a comment that was just made, an economist study that said blackouts actually increase ticket sales by 4,000. that's the league's contention. so that's the balance that the league has faced which is, we want to have fans' attendance and games on television. that's the balance that we face and it has been adjusted over the years in order to frankly take care of some of the large stadiums that were out there and lots of consequences. so that is the consequence which is the incentive for fans to attend as well as maximizing broadcast television. we don't like blackouts. no one likes blackouts, but they look for that balance. that's exactly what the owner's committee is looking at. >> i strongly encourage them to do the right thing on their own. i think they become heros rather than the opposite which they are now. it is an outdated, obsolete rule which in many respects, to be

very blunt, the owners seem to work hard to avoid imposing as a matter of practice. that's why they issue free tickets or low priced tickets or fictionalize their attendance, not in the sense of any fraudulent activity, but they go through the pretense of filling the stadium so as to avoid the blackout which is against their interests and the threat of a blackout gives them a black eye no matter what they do. i look forward to hearing more. >> i will share that perspective. thank you, senator. >> miss greenberg, i hear about cable rates all the time. you've raised the issue very appropriately. when we talk to cable companies, they point to the cost of sports as driving, in many respects, these rates skyward. is it fair to black out games after driving up those costs to

the fans of, in effect, buying the cable services and mr. waldron has raised this as well. >> absolutely not. consumers are right to be furious about the fact that they're paying these very high rates and may not even have access to the sports programming that they are paying for. not to mention all of the other subsidies that taxpayers and consumers provide to sports teams. it's patently unfair and that's one of the reasons why we're so strongly supportive of this legislation. we think consumers are angry about it and they have a right to get access to the programming that they paid for. >> when you go back to your client whom you've represented

well here today, mr. waldron, i hope you'll remind them that we are acutely aware of those other public benefits that the league enjoys, and not just your league. again, it's not meant to put the focus only on the nfl but those benefits in subsidies and infrastructure, whether it's transportation or stadiums or other kinds of public benefits that professional sports enjoys and we've chosen to single out one which is the anti-trust exemption. these public trusts really demand a public trust from the league itself, special public benefits in my view demand a recognition of that public trust from the league. do any of the other witnesses -- mr. goodfriend?

>> >> there is one category of american here who has not been mentioned and is harmed by the local blackout policy. i just want to make sure this goes on the record. local broadcasters, local grocery stores, local business people often scramble at the last minute to buy up blocks of tickets in order to avoid a blackout. if ever there was an example of a tax being imposed on business people, that's it. it is a tax imposed on them by virtue of this protection, the anti-trust exemption, that allows the league to threaten a blackout. i'll point out that the sports fans coalition in our reply comments pointed to allegations that were provided to us from an executive we wish to remain anonymous, that the reason why those three playoff games that you alluded to in your opening statement in green bay, indianapolis, cincinnati, the reason why those threatened blackouts didn't occur, it was

alleged, was because the nfl pressured broadcast networks to buy up unsold tickets in order to avoid the blackout. now, let's assume for a moment that that allegation is true. let me get this straight. the united states government gives the nfl an anti-trust exemption, the nfl takes that anti-trust exemption and exerts power on other third parties to get them to buy something from the nfl at full value. now, the nfl had every opportunity to turn around to me, to sports fans coalition and say that's blatantly false, how dare you make such allegations. instead they said nothing, nothing. for weeks, nothing. when it was their turn to file at the fcc, the best they could come up with was if sports fans coalition cares for fans, they shouldn't care how we employ blackouts. in my opinion that's an admission.

do we allow the league to avoid blackouts. they talk about how few there are, yes, that's true, but how did we get there? do we allow the league to avoid blackouts by coercing others, allegedly, to purchase tickets, or do we say enough is enough, you don't get the gift anymore. you don't get to have your anti-trust exemption for local blackouts. there would be a loud cheer not just among fans but in my opinion, local broadcasters, local grocery stores and local business people if we did that. >> thank you. i might point out with respect to those local businesses and grocery stores and broadcasters, if they got together the way that clubs or teams do in collaboration to maximize their bargaining power, they would be

seeing their state attorney general or the united states attorney general and they would be in court defending against an anti-trust prosecution, civil or criminal. so this exemption is really very special, very unique, and very undeserved if the leagues in my view fail to recognize their special public trust because of that unique exemption. i would invite any other comments. if there are none, we're going to keep the record open for one week and i will adjourn. thank you.

on the next washington journal, davis price looks at federal government funding set to expire this thursday, december 11th. after that, georgia representative doug collins discusses transparency in the health care law and possible release of report using alleged use of torture by the cia. plus your phone calls, facebook comments and tweets. washington journals live at 7:00 a.m. eastern on c-span.

mit jonathan gruber will testify in front of the house oversight committee on his recent criticism of the obama administration's rollout of the affordable care act and his belief that administration officials intentionally obscured details to allow passage by congress under 2010. see that hearing live at the 9:30 a.m. eastern on c-span 3. later, john kerry talks about isis and the use of military force. he will testify to members of the senate foreign relations committee that starts live at 2:00 p.m. eastern also here on c-span 3. next, international monetary fund managing director christine lagarde discusses economic global issue answers the role of

the imf and the state of the china, europe and the u.s. she spoke earlier this month for 40 minutes. [ applause ] >> that was last year. what an extraordinary 12 months we've all witnessed. who would have forecast the price of oil. in june oil was $102. in the midst of mideast may may hem, the isis crisis, it is now $62 degrees.mayhem, the isis cr now $62 degrees. precisely how much did that person make by shorting oil?the degrees. precisely how much did that person make by shorting oil? and think back to when qe2 was a very large ship, before it was

hijacked by bankers. then eqe3 and possibly qe4. and with qe, it is not quite kwet qed. since we last gathered, there are new leaders. three countries together bring together 2.9 billion people. the trajectory of those countries sometimes colliding. more facts from the future from many people on our climate. a year of anniversaries, a particularly poignant one, is that literally 25 years ago this month, the nikkei, december 1989, the nikkei peaked at just over 38,900. today closed at 17,6600.

on present trends it will reach its former high at around 2039.. on present trends it will reach its former high at around 2039. and given contemporary longevity, we will all be here to witness it. on the other hand, probably not as ceos. the average life span after ceo is 4.6 years. for those of you that have been to seven ceo councils, i'll let you do the math. anyway, there are people to whom we must give particular thanks for their particular contributions. first of all, to rupert madoff. quite frankly, he helps all of us at the journal and news corps

and at fox in ways that are perceived but some not even imagined. the new chief executive of dow jones unfortunately another former editor, he is leading dow jones with energy and with efficacy. to the two jerrys. they sound like a and stand-up comedian act. in part they are. much work to do, he said. on that score. and leading the paper, boldly into the future, to jerry, the washington bureau cleef of the wall street journal. you will meet many influential washingtonians in the next 24 hours. to john busse and dorothia harry, and our committed cable

conference team, we wouldn't be here without you. now, look, there is one distinguished group that deserves that particular collective thanks. they are not just sponsors. they are al chemists. they are the akbrol education group, lanova, nasdaq and work day. if we could give them a collective round of applause. now to work. washington is still the center of the world. for the next 24 hours you will be the epicenter. the coming year will be profoundly fascinating and important. an unfold in configuration of congress and president confronting institutional and permence in.

you here and the world outside the hear from those influencing the core policy debate. but this day and a bit has to be a dialogue. active, not passive. so please, please participate. and to start the conversation, we are extremely fortunate to have with us jerry baker and managing director of the imf, christine lagarde. thank you very much. >> we do have a chair for you, christine. not quite a hostile environment as that. >> thank you very much noers extremely kind remarks and for both the wall street journal and news corps which has been extraordinary and is appreciated by everybody who works there and lots of people elsewhere.

christine, thank you very much indeed for being with us. i know, thank you for making the time to be with us. i know you are very busy. christine is dashing off straight after this to catch a plane to a country somewhere. normally when the managing director of the imf is dashing off to catch a plane where sm where, that's not good news for that country. but that's not the case here. let's start by looking at the global economy. i want it look the at very dramatic move that robert mentioned again that you've seen in oil prices, energy pricees. 40% roughly decline since summer in oil prices. when you have seen these things in the past, dramatic turn arounds, dramatic shift, something like oil and energy, it often results in quite dislocation in a lost dislocation for countries. balance problems, financial

problems. elsewhere. what do you see so far as you look at this really dramatic change we've seen. what are you seeing from the imf in terms of the stresses and strains that this is producing as well as benefits it is producing for the global economy. >> i this i what we do first is try to analyze where it is coming from. whether it is ysupply or demand effect. and this is predominantly supply. so 20% demand, 80% supply. that's good news. so if i was in qatar or kuwait, i probably would not look at it in the same way because there be will winners and losers. but on the net basis it is good news for global economy. and we have a rule of thumb that is based on a lost modeling and analysis of what is taking place, but essentially, if we

have 30% decline and we have a bit more than that, it is likely to be an additional .8% for most advanced economies because most are importers of oil whether you look at u.s., japan certainly, europe absolutely, china big driver of growth. all of them are net oil importers. so if you add another .8% to knows countries, probably .6, less critical for this economy, it is a net booster on an aggregate basis. so winners and losers. granted exporters are taking a hit. for some of them, my assumption is a calculated hit. >> net, net as you say, and russia is going through

dislocation right now. the rubble declined. how fragile is russia and what kind of threat does the fragility pose teo an economy. >> if you ask me what i'm concerned about at moment, certainly geo-political threat created by the currents endeavors and i'm putting endeavors with an s. and the burden that it is taking as a result of it going down is fragility and they know it. so it remaines to be seen what the reaction will be. but it is certainly something that is an add-on to depreciation and sanctions affecting the russian ekmoin as well. so you have three factors at

play on the russian economy. >> do you think the imf will need to be involved again. looking what the is happening with the energy producing net -- net exporting countries? is there going to -- are we seeing whether it's in the -- is there a need for, you do you think, for some intervention by the imf? >> three points. i was in kuwait about three weeks ago and addressing the gulf councils. i told them, i said to them, you might not be used to it but if it continues the way it does, most of the economies, will show fiscal deficit. and you know, you should be prepared for that and you should build the buffers that you need in due course to deal with that. second point, if you look at who is most effected, we just mentioned russia. you have to think about iran clearly. think closer to home venezuela.

and not the smaller ones like nigeria for instance. that will be affected as a result of what is happening. third point, if the imf was called upon to help not only ukraine as we do and have to the at moment, but many of the other countries, i would seriously need help from this country so that our quota and our volume of capital to be engaged as loans from those countries would be engaged, so i need your help. >> let's go around the world and see, again, this much of the world is helped by this -- >> yes. >> let's look at the global economy, global hot spot, starting first in europe. it looks like, it is either in or very close to its third recession in five years. this is a continent that seems

to be reliving japan's experience for the last 20 years. it seems not to be getting any bet are any time soon. what's the outlook for europe? what needs to be done? >> this is what i call the risk of the new mediocre. new mediocre being a combination of low growth, anywhere between .8, possibly 1.3% next year. low inflation, which is really bad news for countries where debt to income ratio is close to 100%. >> risk of deflation? outright deflation? some are in deflation. >> some are in deflation but it is also -- it would get worse -- >> it might get worse because of the price of poim boil. but we are talking about nominal inflation.oil. but we are talking about nominal inflation. it might pass through, at least a portion of it might. and high unemployment.

now you look at this and that's bad news. but if you look at the other end at much lower price of oil, so cheaper energy, look at euro that is clearly been deappreciating over the last three or four months and if you look at the banking sector can which has been sanitized clean stripped by the acb and where remedies have been taken, you have three components that should be moving into the territory. >> i'm not suggesting a walk in the park. europe is a piece of cake, no, it is not. it is complicated landscape and one where the political gains and illusions and hints to how politics should improve certainly that's an area whereat the european level politics should play a positive role, positive role for growth, for good and for the people.

as you know, there's a very intense debate in europe as to what could be done tp there is a strong view from some that there could be a strong -- they haven't follow had the route of the bank of japan and fed is buying government bonds. there's that route and the germans, we are strongly he resisted by the germans. they say you can't constantly inject adrenaline. where do you stand on that? do you think the ecb should do more? >> we are talking about the eurozone? the uk is operating differently. but the eurozone has to run on all cylinders. you can't say well we will do that first and then we will wait and see and we have other monetary policyes.

they need to use all available tools. so that means growth and job friendly fiscal policies for those that can afford it. monetary policy that is quite aggressive and it means absolutely structural reforms they have been talking about and just get on with it and do it. >> they talk about it a lot but -- i mean look -- >> no, you can't say that. some of them do. if you look at spain, a lot has been done in spain. if you look at ireland -- >> france. >> yeah, france. i don't cake it personally, i can assure you. very particular structural reforms. particularly the labor mark the have to be commended. >> and but the euro, struck by pope francis, the pope went into the european parliament and gave a speech, even he, even the pope, one assumes that the pope

is there, obviously to speak the truth. >> tell the truth. yes. >> but also to give comfort. what did he say in europe is haggered and elderly. >> the grandmother. >> yes. like a rather sick grandmother. it is like that, isn't it? >> i'm not privy to his way of thinking. and you know -- >> have a try. >> i'll have a prief at meeting with him next week and i will ask him what he meant, about this grandmother -- which is an oxy moron. so i think he wants to give a little kick and say, come on, i'm challenging you. you can do better than that. you cannot be that haggard grandmother. there is something in the belly of the europeans that can, you know, be stirred to good fire. >> forgive me for saying this, as an englishman who lived here

a long time, the euro is making it worse in the creation of the euro was a terrible mistake? >> you know, i believe -- >> that was a question, i'm soarly. >> i think you know what, i think that the mistake was to have assumed that the by moving into a monetary single currency, everything else would follow. and the union would be a given. which has not happened. so if you have a currency union without a fiscal union, without a banking union, it is like not having all cylinders to fire with. i hope that's what they will be working on. >> let's move on, china. again, as robert mentioned in his opening remarks, significant reforms just in last week you are seeing more financial reform of the financial sector very significant economic reforms perhaps tackling big question of the state enterprises. but of course, all is carrying on at a time when growth is clearly slowing.

the official numbers may be say. 7.5, i think -- what is your sense? does china pull off this trick, more than a trick, there balancing act, of reforming its economy, making those market pro market reforms that he clearly seems to want to make. while maintaining enough growth to keep people fed and happy and in jobs and from rioting in the streets? >> many of us have for many years have expected china of not being able to deliver. many have shortened china. the truth of the matter is it actually delivers. and what it plans on doing, it does. so they might be using slightly different devices, tools and policies than what we are used to, but when they say that they will deliver 7.5%, and they are gradually being more confident with it being 7 than 6.5 and

gradually phasing to more moderate growth rate, i think that's what they are going to do. and you know, we look very carefully at the monetary policy. we look very carefully at structural reforms. this is just happening. >> how stable is the -- is the financial sector in china? there is a lot of concern about overbuilding, overaccumulation, and everybody has worries about the -- >> there is. >> how much of a threat to global financial stability does china's financial overhang represent? >> i this i what the -- what the chinese managerial authorities are particularly concerned about is that, which you just mentioned. so the expansion, the unreigned expansion of credit particularly for the local communities and for the housing booms outside the big cities. but also concerned about shadow banking. that is certainly an area where

they want it use, as i said, sometimes unconventional tools to bring shadow banking under control and use shadow banking to the point where eventually interest rates can be freed as a result of pressure of shadow banking. >> japan, lots of interesting things going on there. an experiment the last two years -- two years, about two years ago, going to have another election in a couple of weeks. new route of monetary easing from the bank of japan. but it looks like that big experime experiment, despite all of the excitement, and the nikkei, and rapid growth, it seems to be falling again. are they going to get it back on track? >> i think you have to give them the credit of trying to -- trying something that was really hard and trying something that is still very hard. because i don't think that the

prime minister has given up on the three -- on the three -- certainly central bank governor is very keen on just staying the course. continuing. he is still continuing to do what it takes to make sure that inflakes goes up to 2%. where clearly, it is a bit short on the delivery is both on the structural reform and on the fiscal commitment. our sense is that once the election so over and done and hopefully his handle be stronger as a result of the elections, he comes back to the fiscal plan, gives a very clear indication and solid indication of the timing of the consumption tax increase from 8 to 10%, as was planned before the end of the year, in 2015. so then there is no uncertainty. everybody understands what will happen, when it happens, and

they don't anticipate -- our sense is when they do that and going forward and hopefully bring that debt which is currently out to about 245% to gdp, we they give that indication, they can certainly for the short term put in place a stimulus that will compensate the immediate effect that we have seen back in april when they increase from 5 to 8%. so on that fiscal front they have do that. clearly. structural reforms, they have to open -- for the moment, you know, there is no slack in the japanese economy. when they do stimulustimulus, wy put money in construction, there is nobody to build. the labor market is so tense. and prime minister abe signalled for the first time, they have to open up, not only to women, because japanese women are very talented, but also for

immigration. they have to open up a little bit. >> let's bring it back home to the united states. relative bright spot here, right? >> yeah, yeah, yeah. >> everybody agrees, 2.5%. but growth rate at 2.5% after the kind of recession we had in 2007, 2009, is not very impressive. it is delivered in large part by a massive monetary stimulus. largest we have seen. everybody expects that to be steadily withdrawn over the next year. feds are probably going to raise interest rates. is the u.s. economy strong enough still to stand on its feet without the help of the central bank? >> if we include the effect of the oil price, next will be 3.5%, and that should be strong enough for the monetary to stand its course. and i think they are putting out

so many senses andsome criteria, so many indicators to identify when it is the good time to raise interest. but they will do that very delicately. very sensibly. they will give the right signal to market. and 3.5%, not bad. >> even one quarter. the year over year growth rate -- >> but i'm talking about next year. next year forecast, you know, the second quarter was 4.5. >> sure. >> annual rate. and 3.9. so it is, you know, not bad. >> we will hear from stan fisher, vice chair of the fed tomorrow, and we will go on some of these issues. we're talking about europe, japan, u.s., my question is a broader one. hasn't the world become to dependent for so long, and what growth we've seen is it seem to have been stimulated by this,

inevitableably, artificial and ultimately destabilizing dejeks of demand you have seen for all equality, from central banks, and we haven't really seen in the developed world at least, we haven't seen sustained growth based on structural factors, the kind that is necessary. are we not just dependent on the repeated injections of monetary stimulus? >> it has been most helpful in the last two years. had it not been around, we won be talking about this growth in the u.s. in particular or in england for that matter. >> and it has been necessary, helpful and gradually phasing out and i think by the same token, all of the -- you know, regulators and sympathizers have to be -- so they can use tools

to eventually temper without them and put those bubbles down. i get your point. monetary is fine but it has to be supported by structural reforms. by focus on sound fiscal policies as well. >> you think they can rely on the stimulus and not do the really hard stuff like making people work harder and take tough pro market -- >> i this i that's what central banksers are saying at the moment. if you look at what was said o yesterday or today, yesterday i think, that's hi poins point. we have done everything we could. over to you. and please dot job. >> we will look at broader financial conditions in the world. we are six years on from the financial crisis. a lot has been done. huge amount of regulatory change. a lot of tough regulations imposed on the financial sector.

are we confident that we are now pretty well safe from the kind of financial disave thor that we saw six years ago? we have done the right things? >> a lot of progress has been made. i think despite the market trepidations, and some in this room actually, the fact that we addressed it from a capital liquidity leverage point of views, having some regard but not too much regard for banks generat generated modelization and risk waiting methoids think was the right thing to do. and all of the respectable -- big banks will say the same thing. more core capital is the best

remedy to the possible risk. because that sector has become much more regulated, much more supervised as well. you have seen, we have seen the development around the segment. shadow banking developing growing nicely. and to the extent that this part of the business, from very narrowly to very broadly, that segment has to be supervised, checked. because it is the public good. it is the creation of money. at the end of the day. and one more question for me. as and because i know the regulation issue is a tricky one. >> what is also important and i've heard that from many bankers friends. whatever it is, they want certainly. they want to know what the landscape is. they don't want this sort of variations, maybe it will be 9%,

maybe over such period of time. everybody needs certainty in business. to have three pretty much put to bed and have the them in charge of being implemented i think is good. >> you don't think it is too far. you talk it bankers here or in europe and they are crawling with regulators. banks have regulators and compliance teams and responsibilities and amazingly three years after passing of dodd-frank, the dodd-frank rules are still being devised and implemented. and banks seem to be reluctant to take risk. reluctant to lend. reluctant to do what is needed to do keep healthy economy doing. >> there is nobody to lend to and no demand. i think that's a debated point. >> one final point then i will open it up for questions. and come back to your point about the imf and its changes, changes you are trying to make.

you were in the middle after big debate with mostly u.s. congress. we have a new congress coming in now, getting congress to agree to changing quotas. now we don't want go into details here but the fundamental change would be eken shlly to give more voting power to the emerging -- to emerginging countries, particularly like china. the system you've got is still one that is from back in the past. but the fear here, the u.s. is still the largest shareholder. paying in the most amount of money. still carries the can when the world needs that support. is the u.s. able to -- if you make these changes, is the u.s. able to have the influence it needs in order to look after the interests? >> absolutely. the changes are designed by the u.s. in the first place.

the u.s. keeps veto right. the imf will stay in washington for as long as that is the case and will continue to have a big say in whatever the institution does. but instead of having china as the sixth, you know, ranking member in the institution, china needs to move a little bit up to be, you know, to just be representative in the economy. and to see currently, membership of the ins, with weak leadership is painful. it is painful. it is the largest economic play if the world. largest defense play in the world. largest financial play in the world. and around the table of the imf, it is a weak partner. and it has to be a strong partner. we need u.s. leadership. >> in towaorder to achieve thatu said you would go up to capitol hill and belly dance. >> yes. >> is that right?

>> yes. >> has anyone taken you up on that? >> i'm practicing. practicing heavily. but as soon as they pass it, i will, i promise. >> thank you. we have time for a couple of quick questions please, before we enjoy dinner. anybody? yes, over there. i think there are microphones circulating. could you identify yourself? >> as global firefighter, could you tell us what you're looking at, as you think the crises are going to come? you are worried about what people aren't focussing on now? >> we have -- we currently have about 40-ish programs under way. and what when i say programs under way, i mean, countries to which we are lending because they have balance of payment difficulties and are prepared to actually reform themselves in toward have access to loans. we're not in the business of

giving grants. we give loans and get our money back because we are -- we have privilege status. because we hold the money of the world. not of the u.s. but of the 88 members. we currently have those countries under program. where else would colorado it be difficult? ukraine is one country that is a big issue. and where more financing will be need fed we want it deliver and support a ghoost is, at least for the first time from our perspective, is serious about reforming the country and about trying to eradicate some of what is plaguing it. all countries that will be affected significantly by the decline of oil price, which produces of oil, i think should be under watch and venezuela is clearly one country where it

could end up being difficult. i would watch very carfully at central and southern europe and countries in asia. >> a chance we would have to bail-out venezuela then? >> no, no, no. i'm not suggesting that, you know, it would have to be bailed out. but i think is a country where there is instability and that instability is not desirable for all sorts of reasons. >> thank you. another question, please? please, wait for the microphone, i'm sorry. >> good even and thank you for being here. >> good even ppg. >> from your perspective, would you mind commenting on where you see the trend line of free trade versus protectionism and how the current crisis in global

economies is affecting that trend line. thank you. >> thank you so much for raising that. as one of -- it is one of my big positives. you have the u.s. economy. price of oil. and the focus on growth. g20 decided to elevate to add another 2.1 percentage points over the next five years.