recession in an aggressive cost- cutting mode. in doing so, they have created productivity gains that have translated in the short term. i am not saying anything bad about productivity. is very important for our economy. in a very short term, a cost- cutting success is a negative for the labor market and that it creates short-term slower growth. i tried to discuss the aspect of that in my remarks. my sense is that the increases in productivity we have seen so far are so large that i am a bit skeptical that they will maintain going forward. in some cases, use the firm segregating productivity just by making workers work harder or by cutting maintenance or other important tasks will find that as demand begins to strengthen,

they will need to bring more workers back on. important tasks. we'll find that as demand begins to strengthen bill need to bring more workers back on. so, i don't know the answer by any means, but looking at these patterns i imagine that there will be some moderate job growth going forward that will not see this sort of zero to negative. the issue as i said in my remarks, it you need real gdp growth of about 2.5% or jobs growth about 100,000 per month on payroll just to absorb workers coming into the labor market. so to make it significant progress we would need after growth than that. so even though jobs are likely to be created next year, i'm concerned that the unemployment rate still might remain quite high at the end of the year. >> mr. chairman, showed large financial agglomerations, which

offer a deposit facility within their structure be allowed to engage in proprietary trading. and if your answer is yes, how would you try to limit the structure of this kind of the dignity? >> i think i know where that question came from. [laughter] chairman, the answer is no. next question. [laughter] let me try. let me try. i understand exactly what chairman volker is concerned about in the issues he is raising. i want to raise a couple of, i hope their subtleties and not just mistakes. first, you know, there's a sense here of, you know, returning to glass-steagall and separating

these market-making activities from commercial lending. i think that kind of movement would not be constructive. as we know, plenty of firms got into trouble making regular commercial loans and plenty of firms that into trouble and market-making activities. so the separation of those two things, per se, would not necessarily lead to stability. the question one has to ask is its proprietary trading an important complement to the normal activities of a commercial bank and i think the question is -- i think the answer is maybe to that question. full-fledged proprietary trading arms ban not be essential, but it is true that we let to commercial banks to hedge their positions, for example, to make markets to customers. to lay off risk in a variety of ways. and so it would be difficult to say with a sharp right line that banks should not be allowed to engage in any kind of proprietary trading in a sense

of holding positions that are on their own books as opposed to on a customer's books. now that being said, i do think that supervisors and regulators need to evaluate this on a case-by-case basis. so, for example, if supervisors and regulators look at a large thinking organization, which is due in proprietary trading or has a proprietary trading organization, and they determined that this company is not able to manage the risks associated with that dignity or that it creates other business risks and risk the safety and soundness. or it doesn't have enough capital liquidity to safely engage in those activities. i think then that the supervisors shouldn't be allowed, by law, to insist that the company device itself or shake its activities. so i do take this idea seriously. i think there'll be circumstances in which a supervisor or regulator would force in his attention to cut

back on these kinds of activities. i find it difficult to draw a bright line because of the commentary be between his activities other commercial banking. and customer related activities. thanks. >> mr. chairman, on a dated evening i've come up in fiscal policies. the imf recently published 49 pages on global fiscal policymaking. how critical is it for secretary kittner and congress to get the fiscal house in order so you can get monetary house in order quite >> well, first of all, let me be clear that there is a big difference between connotative easing and the fiscal debt, the government debt. we engaged in quantitative easing or is called a credit easing because it's been focused at trying to get the credit markets functioning again.

we did that for two reasons. first because we hit the zero down and therefore normal interest rate cuts wouldn't achieve the goal anymore. and secondly because of this extraordinary environment, many markets were not functioning properly and we felt ways to get those markets better and we've had some success in doing that. we have already begun a process of phasing out or reducing many of these extraordinary actions. for example, as you look at the portion of our balance sheet related to short-term financial institutions to commercial paper market, and two other kinds of international swaps with foreign central banks and other kinds of short-term lending. that amount has dropped from about $1.5 trillion at the beginning of the year to a roughly one fifth of that or less today. and we have announced the closing of certain facilities and plant closings going

forward. so we've are to take into very substantial steps towards moving towards a more normal type of monetary policy. and as long as the economy proceeds along the path we think you will, we want to continue to move towards more monetary policy functioning. we will move to monetary policy has called for by the state of the economy, independent of the fiscal situation. we are not involved in that. we are involved in looking at the economy, trying to stabilize the economy. i think everyone knows including but treasury and the congress that a kinds of deficits we've seen this year and next year, about 10% of gdp, are not sustainable. but we have to find an exit strategy for fiscal policy that will bring deficits down to a level, a few percentage points of gdp which will result in a sustainable situation. that, relative to the gross

national domestic product doesn't grow indefinitely. that doesn't have to happen this year or next year. it's not going to happen this year or next year. in a recession this deep you're going to have a deep deficit as well because of lost tax revenue and light. it is important for the administration and the congress to begin setting forth a plan, a credible plan, to show how the country will move back towards the state deficit in the medium of return. i think doing that is important for investor confidence, and i think it's well understood, but it doesn't make it any easier to accomplish. >> last question. >> mr. chairman, there's been an extraordinary increase in financial concentration, especially in the last few years as you know. now, to what extent is there a concern about this financial concentration and have large financial institutions are more or less protected, this put

considerable pressure on the situation. and there's every indication that concentration therefore will increase. to what extent will the federal reserve work to limit the concentration or decrease it? >> henry, you are absolutely right that financial concentration has increased and is quite large in some areas, categories. there are two reasons why we care about financial concentration. one is the traditional antitrust issues. it's a competition being hammered by concentration in particular, markets, or categories of firms. i think that maybe true in some particular areas. i don't think that it's globally true in some sense because even though they are very large burns, there's also a lot of competition in many different markets and many different types of products. the federal reserve, whenever we look at a merger, part of our due diligence process is to look at all of the local areas where

the merged institutions provide services, deposit, and other services and to make sure at the level of small cities or counties that the merger does not create undue concentration that would lead to reduced services at higher prices for customers. and so, we are looking at this from a concentration antitrust monopoly point of view. i think it's an issue to some extent, but i don't think it's a major issue. i think the major issue is the second issue which has a party mentioned in your earlier question, henry, has to do with too big to fail. the incentives that firms have to grow too big in order to be quote, too big to fail. my answer, i think, is the same as what i said before which is we need to make sure that too big to fail is a relative of the past and we don't have that anymore to do that we need tougher regulations for large systemic leak critical firms. we need to strengthen the system

overall time i create stronger infrastructure so that the system can stand pressure on firms. we need to make sure that all systemically critical firms are subject to strong consolidated supervision, which looks at all the risks across the company. and most importantly, and i think this is absolutely critical. and if congress looks to do financial regulatory form i hope they put this at the top of the priority list. we need to have some alternative to bankruptcy or bailout. we need to have another way to close firms that have come to the brink of failure without destroying the rest of the system, but in a way that will allow losses to creditors, and will therefore bring back the discipline that will in the future a feeling firm will be allowed to fail. thank you. [applause] >> thank you very much

mr. chairman and thank you henry and thank you matt for your questions. lunch will be served now. just a reminder in terms of future events in the new year, we do have a date with new york fed president, bill dudley, and with the bank of japan governor. and some other commitments that we are looking to nail down specific dates. so welcome and please enjoy the rest of your$4

over $136 billion has been paid out for those projects. at c-span.org/stimulus you'll find links to government watchdog groups tracking the spending. >> the senate is in a rare weekend session today to debate health care, with a procedural vote coming up later on, moving the healthcare bill to the floor. in order for formal debate to begin, democrats must get 60 votes. they do, formal debate on the senate health care bill could begin after the thanksgiving break. watch live senate coverage today on c-span2. you can watch what your centers are saying about health care online at c-span.org.

you will also find hearings and news conferences, read the health care bill, and follow our twitter coverage online at c- span.org. >> julius genet chelsea has been chairman of the federal communications commission -- to use janikowski -- julius genachowski. this week he is our guest on "the communicators." mr. chairman, give us some of those agenda items that we just listed. would you outline for us your basic philosophy when it comes to the fcc and regulations? >> it is such an important time with respect to communications. our communication infrastructure is increasingly essential to the is increasingly essential to the daily lives of every american,