house and senate and pursue the interests of the two% that control 90% of our wealth. host: our focus in this last half hour is the focus on ben bernanke and the role of the fed following comments last night. ben bernanke, up for reappointment for his position as chairman of the fed, his nomination passed the banking committee late in december and he will face the full senate later this month. . "the financial times" writes about which direction the fed is going this year. open-" this year -- "this year the fed will see fighting for its vision of regulation reform, closely allied to that of the obama administration, which is under threat in congress as some legislators seem to diminish the central bank's role in supervision of financial

institutions and said that the sweeping audits. mr. burning he said that there was little evidence that low was little evidence that low inte had been a large contributor to the housing bubble, one of the charges made by the obama administration." next caller. caller: we have got to limit regulators. once we limit regulators, the power of the people are destroyed. the people are the government. when you deregulate or term- limit representatives, you take away the knowledge and experience of the position and you fill the void with lobbyists. those two things are wrong to do. since when has the president's job been to create jobs. if the president was required to create jobs, they would be government jobs. every individual that loses their job wants to blame the

president for employment. blame, bill. enjoy your day. host: you do the same. let's see -- more regulation control and confirmation from a controlled party? yes, it was lack of regulation. from business news this morning , open-" said a late surge in car sales before 2010 -- this morning, "a late surge in car sales before 2010, marking the second best month of 2009 after august, which received a major jolt from the cash for clunkers government rebate program." also this morning a story about the world's tallest building. "amid a crisis, dubai is opening up the tallest tower after the

city seeks to revitalize their economies after a debt crisis in 2009 that forced them to turn to of the body for help. the government hopes that the unveiling of the structure is going to pierce the cloud that has lingered over the clouds since december, when it received a second $10 billion bailout loan from of dhabi, after some creditors abandoned due by." that is from this morning's world section of "of the washington post." -- section of "the washington post." next caller. caller: happy new year. one thing that was not on the books, after years of people trying to get attention, they did not even enforce the rules on the books. when you come to the housing crisis the most disturbing thing

is that people were led into second mortgages that they could not afford to pay and they wound up losing their house. i thought that was an error on the part of lending. it is very unfortunate when a person's income does not allow them to get this large extra amount of financing on their house and they cannot afford it. host: darrow, republican line. your thoughts? caller: that gentleman that called about apathy, he needs money to know that. i cannot believe that ben bernanke is complaining about regulations for mortgages when 1994 as a mortgage regulation act, the fed was given the power and they did nothing. no. 3, ben bernanke reminds me

of the governor of texas, in that movie, open-" this -- in the movie, "of the biggest little whorehouse in texas." -- in the movie, "the biggest little whorehouse in texas." host: from "the new york times" "the argument is that the chief lending by banks led to the recession after 2001." next caller, what is out? caller: good morning. i am seriously questioning whether ben bernanke's statements are worth heeding. i have been listening to the

comments prior to my own. the gentleman before me referenced 1994. he was at princeton in 1994, ben bernanke had nothing to do with the federal reserve. i think that he hit the nail on the head. the banking community right now is spending millions of dollars. never mind the problems that they created in a willy-nilly participated in -- they created and willy-nilly participated in. he needs to push harder against a lobbyist for the banking industry who are doing -- he needs to push harder against the lobbyists for the banking industry to help prevent bubbles in the future.

host: ben bernanke was speaking last night about financial regulation in the past, as congress prepares the financial regulation package between the two bodies. he said that he had this to say about the role between regulators last night. >> the role of entering the housing market to bid for properties was not general short-term interest rates, but the increasing use of more exotic types of mortgages in the associated prime underwriting standards. the conclusion suggests that the best response to the housing bubble would have been regulatory rather than monetary. strong supervision aimed at problems with underwriting practices and lenders with risk- management would have been a more effective approach to constraining the housing bubble then a general increase in interest rates. moreover, regulating supervisors in the private sector would have been more

effectively address without necessarily having to make a judgment about sustainability of house price increases. host: the fed chairman, ben bernanke, talking about housing last night in atlanta. "the washington post" this morning talks about the role of fannie mae and freddie mac. open-" the obama administration has promised -- "the obama administration has promised to rollout new ideas for fannie and freddie this year. a liberal think tank with ties to the administration has proposed new entities called charter mortgage-backed securities, a privately owned firms that would package mortgages into securities and sell them with an explicit federal guaranteed. securitization fees would go into an insurance fund to

protect taxpayers against defaults." this is a editorial this morning from "the washington post." open-" this proposal grapples with the fundamental problem -- "this proposal grapples with the fundamental problem of the old fannie and freddie -- an immediate an implicit government guarantee permitted, then cheap access to bar of funds, which they gambled in pursuit of maximum returns to shareholders. it also wisely emphasizes that the new organization's was held rebalance federal support between rental housing and single-family homes. this seems not only risky, but redundant given the federal housing administration's support for home buyers of modest means ." friendship, maine. bill, an abandoned mine. go ahead. caller: -- bill, independent line.

go ahead. caller: this is merely a smokescreen to ask to excuse what they're doing by design. how are people with no jobs going to afford anything with that the inflation that we have coming? i have to say, i am 59 years old. i cannot fault someone who is 44 that does not know about the sinister founding of the fed, which is private and 80% owned by foreigners. how can we have someone establishing monetary policy and look at their success so far that is foreign owned? we are americans. my generation -- i cannot go back to sleep. to the younger folks, get a grip on this. these people are taking over your country. they have been working on it for 100 years.

the organizations in great britain are part of the same cobol of people. if you think they are out for your benefit, think again. take in the tory. host: thank you for the call. the flight 53 incident from last week is still having an effect, tsa has more screening bound for the u.s.. in "the hill" open-" senator schumer penalizes -- "senator schumer penalizes airports and u.s.-based airlines should threaten not to fly to them in order to send a strong message,

adding "you do not have to be albert einstein to realize that flights from foreign countries pose a greater danger." cincinnati, good morning. gregg, republican line. the role of the fed in financial markets. go ahead. good morning. caller: i wanted to make a couple of comments. regulation in the financial sector and in the united states is well known. typically the problem is some kind of oversight, even the attempted bomber on christmas and the national security problems we have had for the last few years. regulation that is required or needed to be overlooked --

needed could be overlooked. thank you. host: the vice chairman of the fed spoke at the conference in atlanta. in "the financial times" they reported, "the fed has been working internally for months on how, when the time comes, they would put an end to the exceptionally loose monetary policy adopted since 2008. that exit strategy is delicate for economic reasons, not least the $100 billion in excess reserves formed by the fed's massive increase to the size of its balance sheet. the fed has taken pains to emphasize that the proof --

preparation does not indicate an imminent change in strategy, as recover -- recovery remains anemic." md., -- excuse me, california. democratic line. gary. hello there. caller: basically what i believe is that this is simpler and i wanted to touch on something, historic leading interest rates for mortgages have been 6% over the last 60 years or seven years. -- 60 years or 70 years. adjustable rate mortgages were always a gamble, hoping that the rate would go down. i was fortunate enough to be in that situation. the adjustable rate mortgage has been the most common loan out there. people and lenders were promising people that houses

were going up. they would take a risk of getting an adjustable-rate loan, and the rates would actually be going down. but the lenders were increasing the mortgages. therefore, people were losing their houses. as they exited the depression to stabilize the housing market, now they have a fixed rate 30- year low on homes on the market, rejecting by year's -- buyers that have fixed, fha, said the loans. host: what is the reasoning behind that -- fha, steady loans. host: what is the reasoning behind that, do you think?

caller: these efforts were great programs that got us out of the depression. these lenders that own these homes really need to extend these good borrowers. host: go ahead. caller: everyone says that 0% down is bad. it is not bad. the only problem is the adjustable-rate loan. they are raising the rates when the rates are going down and people are losing their houses. host: thank you for the call. massachusetts, republican line. caller: the thing is, remember the savings and loan? regulators told us about that. the keating five overrode them. we had clinton with whitewater.

that is what happens when regulators overturn the congress in government. new york city, rent-controlled in 1973. owners could not raise the rent because of new york city re leaders. hence the bronx was burning. -- because of new york city regulators. hence the bronx was burning. host: ready to ramp up security on u.s. found air travel, we have a look at that as we report this story -- "yemeni forces have killed the two al qaeda militants." the morning, go ahead. caller: my opinion on regulation as opposed to the interest rates is that regulation is something that is done more for the

people. it would present more intelligent scraping of the american people's pocketbooks. if they raise the interest rate, it would always put more money in the pockets of the bankers who have grossly profited from the banking crisis. the other point i would like to make is that i really like your program, but i would like to see more than people being able to vent about the issues of the world and it might be a great idea to give people more tools and the direction in which way to go in order to make the change. host: interesting comment. how would you do that? you have the floor. how would you suggest people that call in use these tools? caller: what i am asking you,

as a news station, is that you must have access to information or organizations that could point people in a direction where they could become more involved, as opposed to making a phone call inventing. that there is actually -- making a phone call and venting. there is actually a thing to you can do. host: this speech is available, the one from ben bernanke, online at c-span.org. he had a lot to say about the will of the fed. >> the federal reserve is working not only to identify the problems in financial institutions, but also to move from an institution by institutions supervisory approach to one that is dependent on the financial institution as a whole. toward that end, we are

supplementing reviews from individual firms with comparative evaluations in cross firms with firms and markets. we are sure to strengthen our commitment to consumer protection, strongly advocating financial regulatory reforms, like the creation of a systemic risk council, that will reorient the zero structure in this country. leverage in liquidity must be a valid deleted from a system wide perspective, -- leverage and liquidity must be evaluated from a system wide perspective. host: good morning, bob, on the democratic line. st. louis. caller: yes, we do not need regulations. we need jail terms. we need these people out. we need to get rid of the federal reserve. i do not understand why most of

the money that bernie made of soul went to israel. -- bernie made of -- bernie madoff stole went to israel. the federal reserve is nothing but a ponzi scheme. we need to round them up and send them back to israel. they are all jewish, are they not? host: joe, republican line. caller: i hear a lot of these callers blaming the government for this problem. they are to blame and there is no doubt about it. individual people are just as much to blame. they did not budget. they thought that housing would always go up. they told their congressmen that they wanted no money down home loans. they do all of these things and they blame it on someone else.

but the problem is that everyone is blaming everyone else nowadays. if i was a bank, i would look at the typical attitude conveyed by your callers and say -- heck with it. they would be blamed for being a racist or whenever. host: 5 more minutes on the role of federal regulations, preventing crisises. the house is back on tuesday, on january 12. the senate returns on the 20 at the january. new republicans reporting on line this morning, boarding a "with both houses having passed health care reform, democrats simply need to work out a compromise between the versions. it appears that they are not going to let republicans gum up

the works again did. according to a pair of senior capitol hill staffers, one from each chamber, house and senate democrats are almost certain to negotiate informally rather than convene a formal conference committee." next caller, go ahead. caller: i heard that they're going up by $1 on everything that they can. they are going to sock it to us. anyway that they can. i would like to revisit iraq. on the subject of the kbr, where the soldiers were sickened by the liquid that was coming out when they were cleaning up the water over there. two, i would like to revisit amy johnson being raped over there, plus all the other women raped by the ceo's under the company of one of dick cheney

affiliate's -- dick cheney's affiliate's. -- affiliates. they are not investing in protective of vehicles and one bit. let's have a network, our soldiers are coming back, sickened by cancer or other things. host: thank you for your call this morning. one more from "the wall street journal." open-" two main political parties in the u.k., kicking off a busy election year, each showing themselves off as a party that will defend public services -- even as the u.k. tackles its record public debt. prime minister gordon brown is

expected to call elections in many and what is seen as the most dramatic uk vote since the labor party swept to power in 1997." one more call on the fed from mount olive, mississippi. good morning. caller: good morning, bill. happy new year. i would like to comment that congress has a responsibility to regulate the value of our money. that is the biggest problem that we have got. the federal reserve, they are not even supposed to be a federal reserve. we have got a problem with an imbalance in prices, we farmers are not receiving what we are supposed to be receiving. that is a big problem in the economyy of the united states

>> a live look now inside the state department here in washington d.c.. the secretary of state hillary clinton and the prime minister of catarrh are meeting today. -- the prime minister of qatar are meeting today. it is almost half past noon and that has not yet happened. we will continue to look in on this for an update and in the meantime, move on for a look at another portion of this morning's washington -- "washington journal." the author of a "j.f.k. and vietnam" with a discussion of today's policy in

afghanistan. john newman is a professor at the university of maryland in the honors program. here to talk to us about j.f.k. and vietnam and more broadly the issue of afghanistan and president obama. a couple of weeks ago david obey was quoted in talking about these parallels between afghanistan and pick -- and vietnam. he was quoted as saying that "i came here in the house in 1969 and i determined that i would give nixon a year because he inherited the war. he said he bit his tongue for the war and he reminded the current president of the mistakes of the earlier war. i said the same thing, he said, to obama. what were the lessons that president obama should take from j.f.k.'s early experience in getting the u.s. into vietnam? guest: you hear the criticism in comparing afghanistan to vietnam

and people say this is not vietnam. that is true in certain ways, but in many more ways it is just like vietnam and becoming more like vietnam. the biggest problems we had early on were a failed government from a corrupt central government. we had an army in south vietnam that we could not build large enough to contain the insurgency. this is occurring in afghanistan now. one of obama's goals was to increase the afghan army from about 95,000 to about 143,000 to the end of this year. if that does not happen, that will be a tip -- terrible failure. but we could not get them for 150,000 tonight -- to 170,000 in 1972. there are traders reporting that the afghan troops are not good fighters and not willing to fight. the terrain is very similar. we have mountainous terrain and we had joggles. this is not like iraq. this is not like the plains of

normandy. but the biggest lesson is counterinsurgency. this is not a set piece battle. we are facing insurgents who were not fighting very well at first in 2002 2003. but they developed a strategy that eventually works. and when you do not have enough troops to contain an insurgency, this is what we are fast approaching at this time. host: you were a vietnam veteran? guest: i was in the jungles of thailand at the time the war ended. host: what did we do in -- that was right or wrong in terms of the viet cong? guest: 810 to one ratio to contain the insurgency. host: is that figure -- you need a 10 to one ratio to contain the insurgency. host: where does that figure

come from? guest: you need half a force to protect the cities and pipelines and so forth. the draft is to fight the war. let's say there were 10,000 taliban, and doc would mean you would need 100,000 -- and that would mean you need 100,000 troops. there was a week to cbs last year or our commander now, general mcchrystal, in his recommendations to the president actually said we are going to need 500,000 troops. i have been waiting a long time to hear that number because i know what it means and how many bad guys are out there. that would mean we are afraid we are looking at possibly force of 50,000 or so. in the last year or two, we have seen some reports coming through the news media, according york and other intelligence organizations saying 10,000,

15,000. that is too big for the afghan army to handle. even if they can fight. what i see about -- what i see obama doing, which is what j.f.k. was trying to do, is to train the vietnamese to fight the war. the surge appears to me to be the beginning of a withdrawal, which you know has been stated to be beginning about 18 months after to give karzai and his regime enough time to stand up and fight for itself. we will see. host: we have our numbers on the screen and we will get to the calls in immelman. -- in a moment. you laid out a number of issues which have to be practical issues that have to be dealt with, but the fact of the matter is that you bring vietnam and it becomes a political issue as well. tell us how you view this as a political issue.

guest: the lesson that we need to learn, i think, from john kennedy's experience is this. he was with -- he was withdrawing at the time. we have the classified documents. but he did not tell the truth to the american people why? for political reasons. he wanted to get it reelected in 1964. he had begun to order the withdrawal in 1963. host: and these would have been the trainer said you talked about. guest: 16,000 of visors, not combat troops. but my point is that obama should not repeat that experience. he is clearly going to do the best that we can in a given amount of time, but what we face

the prospect -- if we face the prospect in the >> we believe this now to go back to the secretary of state and the prime minister of qatar coming to the podium. >> i am especially pleased that i get to welcome his excellency, the prime minister, back to the state department. i hope you have all had a chance to rest and enjoy the holidays. i know there is a big agenda in front of us, which his excellency and i have been discussing. it is very important that this meeting be held at the beginning of this new year so we can immediately get to work on the many matters that concern us. as a friend and ally, the united states and the partnership and friendship between our two countries is a model, based on

mutual respect and mutual interest that president obama called for in cairo. today, we not only discussed a wide range of important issues, but also how to deepen and broaden our partnership. among the matters that we consulted on, the situation in yemen is a top concern. how can we work together and with others to stabilize yemen, assist in securing its borders and providing for its people and combating al qaeda. the instability in yemen is a threat to regional stability and even global stability. we are working with qatar and others to think of the best way forward to try to deal with the security concerns. and certainly, we know that this

is a difficult set of challenges, but they have to be addressed. i also thank the prime minister for his efforts to facilitate an end to the crisis in darfur and to promote stability and security in the broader miliband -- middle east as well as africa. we both have a shared mutual interest in moving toward a comprehensive peace between the in-between the israelis and palestinians. we both share the goal of an independent and rival palestinian state and we are committed to doing what we can -- to an independent and viable palestinian state and we're committed to do what we can to launch negotiations that would lead to a two-state solution. we know that president abbas is a partner for peace and can help deliver that to the bosnian people. the prime minister and i discussed the future of -- to the palestinian people.

the prime minister and i discussed the future of iraq and its need to be integrated back into the larger region and that it go through this next and electoral cycle and create greater stability among the various constituents within the country. we discussed the importance of international solidarity and dealing with iran, particularly with respect to its nuclear program, and its compliance with various obligations under the u.n. security council, the iaea, the npt, etc. finally, let me express our appreciation to his excellency and to his majesty, and year, and his country -- ami and tor, his country for combating disease across -- across the country and to the world. i thank you for your candid

thoughts on so many important matters and i look forward to continuing our dialogue in the year ahead. >> thank you very much, madame secretary. have the new year. i am very glad in the first working day to be here with madame secretary. at that -- as madame secretary mentioned, we discussed all of the issues that are important for both countries and i want to highlight about two or three issues, and one of them is yemen, the support and visibility of yemen and unity of yemen. we think there is only one solution to be solved for a peaceful way to solve this problem. the second thing is about the middle east track and the palestinian-israeli peace

process. we are hoping that this peace process could start again and attempt to start an agenda and endgame. we're looking to see where is the endgame. i really thank obama and madame secretary of the administration for their efforts that have brought hope that began to us to continue this process. there will be difficulties and if will be up and down in this process, we know this. but the most important thing is how we can do a unity government between the palestinians so they can concentrate how to deal with the peace process. also, the israelis and palestinians have to know that the solution to solve this problem is by dialogue. dialogue is a very important -- that there are no gains in this dialogue because we know that jerusalem is a very important part. winner of the settlement, there is a problem.

and -- we know the settlement, there is a problem. these are the elements in which all of the countries agree in the process. i hope both sides realize they have to work together. all of us, we are ready to help. all of us rely on the united states help and involvement in this process. i think that is a very important matter for the region. the other program, if we are talking about iran, we are robbing -- we hope that iran can be solved through diplomatic means. and we hope for stability and we know that it will not come unless iraq complies with international law and also complies in how to solve the

problem with the dialogue. thank you very much. >> thank you so much. >> happy new year, madam secretary, your excellency. on yemen, madam secretary, what is the latest you can say about the tariff threat to the u.s. embassy? and given the -- the terrorist threat to the u.s. embassy? and given the long standing conditions, what is the u.s. prepared to do to help yemen combat their terrorist problem? and given the content -- the conditions with mr. optimus of's father, -- mr. r abdulmutallab's father, what could the u.s. have done with pulling the be said? and drexel and say, you said that there was only one solution to yemen and that is trying to help in a peaceful way. could you expand on what that means and what you think the

u.s. can do to help yemen? >> those are a lot of questions, your excellency. let me start with yemen. as you know, the u.s. embassy closed january 3. it remains closed today. that is in response to ongoing threats by al qaeda in the arabian peninsula, so-called aqap. they have been ongoing and certainly predates this holiday season and are aimed at american interests in the yemen. on december 31 we send what is called a warning message to american citizens in yemen to remind them of the continuing threat of terrorist actions and violence against american citizens and interests. and as always, we remind u.s. citizens to maintain a high level of vigilance and to

practice enhanced security awareness. the united states commenced yemen for the recent actions it has taken -- commends in yemen for the recent actions it has taken to disrupt the networks. we are reiterating our commitment to assist in those efforts. we review our security conditions constantly and will make a decision on reopening this -- the embassy when security conditions permit. with respect to what happened with the terrorist on the plane coming into detroit, we are not satisfied. we are conducting an internal review. the current -- the president has called for a whole of government review. based on what we know now, the state department fully complied with the requirements set forth

in the interagency process as to what should be done when a threat -- or when information about a potential threat is known. but we are looking to see whether those procedures need to be changed, upgraded, and that is my goal as a secretary to do everything i can to make sure that not only american citizens, but all people traveling on airlines of any nationality can arrive at their destination safely. it will be meeting with the president tomorrow to go over our internal reviews to hear what others in our government also have concluded and to take whatever additional steps are necessary. >> thank you, as you know, this is the fifth 46 the war in yemen. for that reason, we know that --

the fifth for the sixth war in yemen. but for that reason, we know that this has to be solved through dialogue between the high fees and the yemeni group -- government. . the hofi's and the yemeni government. we hope that there is a way to stop this problem through meaningful dialogue. we support the unity of yemen and that is a very important role. it is very important also not to spread our power or our efforts to these kind of things and we have to concentrate on the terrorism and how we can fight the terrorism in our region and others, so we do not export it somewhere else. >> thank you so much. the happy new year.

madam secretary, if i could start by asking a follow-up question on yemen, what do you hope to get out of the meeting in london at the end of the month? and what can the gcc countries -- what role can they play specifically? and your excellency, regarding the peace talks, are there conditions on the ground that can further the hope that there is successful talks and an end game? we are hearing of the possibility of quick resumption of talks. the crux thank you very much and happy new year. i think -- >> thank you very much and happy new year. i think the meeting at the end of the month in london is an opportunity for nations that can play a role in helping to stabilize yemen can come together and discuss steps that each of us can take individually and collectively. obviously, qatar has played an ongoing role, as other gcc nation have. in that region, the spillover

effects from instability directly affect the neighbors. obviously, we see global implications from the war in yemen and the ongoing efforts by al qaeda in yemen to use it as a base for terrorist attacks far beyond the region. we are going to listen and consult with those who have long experience in yemen, such as qatar does, but his excellency and others, and work together to try to -- both his excellency and others, and work together to try to encourage the government to take steps that will lead to a more lasting timeframe of peace and stability. there have been numerous conflicts in yemen. they seem to just get worse and worse with more players involved now, and it is time for the international community to make

it clear to demand that their expectations and conditions on our -- that there are expectations and conditions of our continuing support. so, they can take actions to better support and provide peace for the people of the region. >> happy new year. can you remind me again of your question? >> regarding peace talks in the middle east and are there conditions on the ground for successful? ? >> there will always be difficulty in the peace process. we have a long history in the peace process. this history should not let us down. or let our morale to be down. we have to continue to push. there is no magic solution. -- now, the parties have to make a decision. they have to move and comply

with the united nations resolution in madrid. it is very important help for madrid and all of that. to bring us together for a long lasting peace for us and israel. >> president obama said last year that he would have a pretty good sense by the end of the year whether iran was interested in pursuing dialogue about its nuclear program. there are no signs that i'm aware of that they're interested in carrying out the agreement that was reached in geneva. one, out from your point of view, is the value deal dead?

-- is beat leu deal dead? number two, is it tied to the revolutionary guard corps? and lastly, you believe that additional sanctions could play into the hands of the hardliners, who often make the argument that they are engaged in a struggle with foreign forces and try to rally people around them that way? they even made that argument as they were crashing the protest recently. >> week remained committed to working with our -- we remain committed to working with our international partners, addressing the serious concerns we have regarding iran posing a clear program. our approach, as you know -- regarding iran seven nuclear program. our approach, as you know, it is an engagement track and a pressure drop. as i said, our results in trying

to engage iran have not been encouraging. we are disappointed by their response to the proposal for the taron research reactor. and the iranian government announced a deadline to receive a positive response to their unacceptable counteroffer. yes, we have concerns about their behavior. we have concerns about their intentions and we are deeply disturbed by the mounting signs of a ruthless repression that they are exercising against those who assemble and expressed viewpoints that are at variance with what the a leadership of iran wants to hear. we have avoided using a term -- the term deadline ourselves. that is not a term we have used because we want to keep the door to dialogue open. but we have also made it clear

we cannot continue to wait and we cannot continue to stand by when the iranians themselves talk about increasing their production of high enriched uranium and additional facilities for nuclear power that very likely could be put to dual use. we have already begun discussions with our partners and with like-minded nations about pressure and sanctions. i can appropriately comment on the details of those discussions now except to say that our goal is to pressure the iranian government, particularly the revolutionary guard elements, without contributing to the suffering of the ordinary iraqis, who deserve better than what they are currently receiving. iran is going through a turbulent time in its history. there are many troubling signs of the actions that they are taking.

we want to reiterate that we stand with those iranians who were peacefully demonstrating. we mourn the loss of innocent life. we condemned the detention and imprisonment, torture and abuse of people, which seems to be accelerating. and we hope that there will be an opportunity for iran to reverse course, to begin in engaging in a positive way with the international community, respecting the rights of their own citizens, but we will continue on the dual track approach. >> have been a year. -- happy new year. i would like to ask you, actually, both of you, whether there has been any progress or

anything regarding the middle east process guarantees that the arab countries have asked for. also, have you discussed aid through the palestinian -- u.s. aid to the palestinian authority? >> yes, we have discussed aid to the bosnian authorities. the united states has continued to provide significant aid to the palestinian authority. we also discussed the commitment that the united states and qatar share toward the we launching of the peace process and negotiations between israel and the palestinians. we are going to do all that we can to bring that about. that we understand there are many complexities to this situation.

but we reaffirm our commitment to working with this. we know that the palestinians deserve a state to fulfill their aspirations. the israelis deserves security to live peacefully side by side with their palestinian neighbors. the arab nations have made a very positive contribution in the peace initiative of the arab league and others. it we will be even more committed this year. we are starting this new year with that level of commitment and we are going to follow through. hopefully, we can see this as a positive year in this long process. >> you may answer in arabic, your excellency. >> ok, that is easier for me. [speaking arabic]

[speaking arabic]

>> madame secretary, with regard to the letter of guarantees that you have asked of the arab countries, as you know, qatar today, chairs the current arabic committee for another round and we have given a letter to that effect to the administration right after the u.n. meetings. we are still awaiting a response from the u.s. administration and we -- this response will be very important to us as it will give us a clear idea about the u.s. perspective on the u.s. -- on the peace process and how the u.s. sees the end game. with regard to the issue of assistance, you know that qatar has always given assistance to the bosnians and catarrh shall continue to get assistance to the -- has always given assistance to the palestinians and catarrh shall continue to give assistance to the palestinians -- qatar shall

continue to give assistance to the bosnians. thank you very much. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2009] >> and from the associated press today, people traveling to the u.s. from 14 countries now face new security regulations, including full body pat downs. new rules went into effect today. there are reports that several european countries are still figuring out how to implement them. the measures are in response to a failed bombing attack on christmas day from amsterdam to detroit. 14 states on the list are considered to be -- state sponsors of terrorism or "of interest." and officials as many passengers who are not from those countries or traveling through them will continue to see additional measures. all passengers on u.s. down international flights will be subjected to -- u.s.-bound

international flights will be subjected to random screenings. that is associated -- from the associated press. tonight on "the communicators" ron ekstrand -- a broad spectrurod beckstrom. congress is still on break this week, but many staff have returned to capitol hill and negotiations resume on health care. the house returns january 12 hole with live coverage here on c-span. the senate meets again january 20 with live coverage on c- span2. the british house of commons returns from its break this week and we will have live coverage of prime minister's question time when prime minister gordon brown takes questions from members of parliament.

>> american icons, three original documentaries from c- span now available on dvt. -- dvd. a unique journey through the iconic homes of american government. at sea be excluded detail of the supreme court, go beyond the velvet ropes of public tours of the white house, and explore the history, art and architecture of the capital. american icons, a 3 diss dvt said. it is $24.95 + shipping and handling. >> now, federal reserve chairman ben bernanke on past monetary policy and housing prices. he spoke to a group of economists sunday about the need for additional financial regulations to prevent future so-called price bubbles in the housing market and other industries. this event was held in atlanta at the annual meeting of

vanderbilt university's a american economic planning association. it is about an hour. >> welcome to this important event. is an honor and a pleasure to introduce this morning speaker, ben bernanke. he will speak for about 40 minutes and then take maybe four or five questions and then try to catch his plane. academic pedigrees, we both have the same undergraduate thesis advisor, dale mortingson, and our thesis on the same subject. we both learned academes at m.i.t., and then ben became one of the most powerful people in the world and my only claim to fame is having been briefly ben's landlord. a decade ago ben and martin

published a definitive paper claiming how decreasing values affect the society. and that claim is an outpouring to events, and take a look at that paper when someone tells you that macroeconomics were result of the problem of 2008. ben, thank you for joining us today. [applause] >> thank you, bob, and dale for coming as well. coming as well. the financial crisis that began in august, 2007 has been the most severe of the post-world

war ii era and it's range of financial constitutions that failed or came close to failure, possibly the worse in modern history. although forceful responses by policy makers around the world, avoided collapse to spark a global recession that we only now are beginning to recover. even if we stabilize our financial system and revigivate our economy, it's essential that we learn the lesson from the crisis. and because it's so complex, its lessons are many and they are not always straightforward. surely the private sector must improve their ability to monitor and control of risk

taking. they not only have oversight of financial institutions, and more fundamentally of important gaps of architectual around the world. we have policies and practices and have legislative and regulatory reforms that were exposed by the crisis. as for legislative policy, we must learned lessons for monetary policy. some have concerned the monetary policy an essential role in the crisis. they claim that the monetary process by the federal reserve in the first half of the decade caused a bubble in the housing

system. the proponents argue for a greater role in policy for preventing and controlling bubbles in housing and other assets. in contrast others have taken the position that monetary was appropriate for those that prevailed. and that was not the housing bubble or the right tool for controlling in the housing crisis. obviously by the economic damage caused by two bubbles over the past decade. a great deal more of accuracy rides on resolution of this debate. the goal of my remarks today is to shed light on these questions. i will first review the mern american policy and assess whether it was appropriate given the state of the economy at the time and given the

information to the policy makers. and i will discuss evidence from the sources of the u.s. housing bubble, including the role of the monetary policy and i will define lessons from these policies. i will begin with a brief review of the monetary policy in the past decade, focusing from 2002-2006. as you know the economy had a largely recession from the dot-com boom and the large rise in stock prices. after the terrorist attacks in september 11, 2001 and the attacks in iraq, and scandals in 2002, clouded the information from the early part of the decade.

slide 1, shows the past from 2002 to present. with one key monetary policy, the target of the federal fund rate set by the foc. the federal reserve controls the rate for one association to other. you see that this lowers from 6.5 to 1.75 in 2001, and to 1% in june, 2003. after reaching the then record low of 1%, the target rate remained at that level for a year. and in june 2004, the rate was raised reaching 5.25% in june, 2006 before pausing. and more recently as you know,

and the right part of the slide indicates that rates are cut sharply once again. the low policy rates were accompanied at various times by guidance of the committees. begin in 2003, the policy was noted to remain accommodated for quote, a consider period. the monetary policy response in 2002-03 was note -- noted by two factors. first the recovery remained quite weak and jobless until 2003. real gross domestic product rose at an average rate of just above 2%, a rate insignificant

to halt increases in the unemployment rate that peaked by 1/2 percent, and second there were concerns of a possible unwelcomed decline in inflation. taking note of the painful experiences of japan, policy makers worry that the united states may sink into deflation and that was one consequence of the rate hitting zero bound. limiting the scope. those decisions in this period were faced with the risk of hitting zero-bound, policy makers should control the rates and being constrained by the lower bound on the policy interest rate. although these were warranted

in policies in subsequent years, the question remains if the policy was necessary. since we cannot know how the economy would evolve under policies, the answer to this question is conjectual. one approach by this question is to compare policies during this period and the recommendations from the taylor rule, developed by john taylor of stanford university. this approach is subject to a number of indications. notably simple policy rules like the taylor rule are only rules of thumb and important people can disagree about the details of such rules. moreover simple rules may leave out factors that may be relevant such as the risk of

the policy rate hitting zero-bound. which is why we don't make policy based on such rules alone. for these reasons even strong components for simple policy rules are advised to be only used as guidelines and to ensure robustness that recommendation of alternative rules should be considered. that said much of the debate about monetary policy after the 2002 recession, make use of such rules, i will discuss them here as well. slide 2. the well known taylor rule relates the prescribed setting of the federal funds rate, the rate of the monetary policy with two factors. first the deviation and consideration points of the long-term inflation objective and second, the output gap,

that defines current output usually defined by gdp and the normal and projection of output. the taylor rule is given in this equation in the slide. in this equation, i sub-t is the rate. and pi t minus pi star is from the rate of period t. and yt minus star, the output gap is the real inflation output from output star. the period of these describe how strong the output is from the target to the potential. as we would expect the taylor rule tells policy makers that interest rates should be higher when inplation -- inflation is

above the target or greater than the potential. taylor in 1993 estimated the real value of the federal funds rate to be 2.5%. and it shows that the federal funds rate expressed here in nominal terms is two rates of inflation. the real value of the federal funds rate should equal 2% according to the rule. to make the taylor rule operational, you need to specify "a" and "b" and choose output and measure the potential output. in his 1993 paper introducing his rule, taylor suggested setting "a" and "b" to 0.5.

for example, according to the original taylor rule, if output rise 1%, then the rate should be raised by 0.5% or 50 basis points. following taylor's suggestion, in slide 3, we show the guideline implied by the taylor rule from the period of 2000 to the present, for the cpi and the fed's assumed targets at 2%, and output by real gdp and the output retrospective as the frbs model. the taylor rule is juxtaposed from the rate shown in blue. the comparative rate in slide

"b" shows that the policy rate was too easy from 2002-2006. the indications of the taylor rule by 200 basis points on average from 2002-2006. the validity of the conclusion depends on the assumptions and measurements are appropriate. room for disagreement exists. for example, some empirical assimilation evidence that the output gap by taylor rule "b" in the output equation should be 5 as shown higher by taylor. these represent policy rates by recessions and the aftermath. the descriptions of the taylor rule have difficulties of

measuring the output gap, these are well known. the choice @@@@@@@ @ @ @ @ @ @ r >> as noted it, it is based on the familiar cpi of inflation. for its part in the past decade the fomc is focused on it measured by the press index byn+

and it appeared to be on a steep downward trajectory. in contrast the cpi data showed core inflation in 2003 at 2%. and these were raised by inflation of the period implying that inflation was rest of a risk than thought at the time. and that such indicators would not be known in advance and policy be available at a given time. for my purposes today, however, the significant concern of this taylor rule as a policy benchmark is indication that monetary policy depend on curves of the value of output. the taylor rule in slide 3 relates the prescribed policy rate to the inflation rate and

output gap that correspond in the same quarter. however, monetary policy works with a lag, and the monetary policy is forecast gap of the variables than the current variables. therefore in that spirit there are projections that have current input on policy decisions. the distinction between current and forecasted values does not matter much. like high levels of output today may signal those in future. however over the past decade this has been an important one. on several occasions in this period, surges in energy prices

led to inflation. according to the taylor rule, these episodes should have lead to a significant tightening of monetary policy. however, both the fic and private forecasters provide for these to coincide and not forecast for inflation. consequently policy was not tightened as much as would have been called for by the standard taylor rule. to put it another way, the standard taylor rule makes no increase says in inflation expected to be temporary and those long lasting. in contrast policy makers have expected temporary to give strategy that policy affects inflation only with a significant lag. slide 4 shows the quantitative

implications of this point. that in blue and the policy restriction by the standard taylor rule, the dashed line are the same in slide 3. also shown as the dotted green line is the policy path described by the taylor rule by projected inflation over the current inflation over the subsequent three quarters. forecast are those made in real-time, that is the time that the corresponding policy rate was chosen. these are the staff forecast, the so-called green book forecast prepared for each policy makering. because green book forecasts of the period for 2004 are not publicly available, from 2000 on they are projected using

methods developed by invoker-wheelland. these are measured in the graph by the pce price index that was available at the real-time than by the cpi. the slide shows that the alternative taylor rule prescribes a path for policy. in other words when one takes into account that ÷t

employs inflation forecast is the guide. i have explained the inflation forecast, monetary policy reports with a lag and that policy making should be forward looking. one may look at current inflation values. however note from slide 4 with current inflation values would recommend that the f 1 c raise the policy rate into 2008. just as with the financial crisis in september and october. that's a policy decision i suspect would not have garnered much support. the forecast inflation in green dots explains the monetary policy early in the past decade and as well as to not respond as aggressively that turned to

be a temporary surge of inflation in 2008. this suggests that the taylor rule using forecast inflation is a benchmark and a guide for appropriate policy. although monetary policy from 2002-2006 appears to be consistent with the goals of max stability. we have not addressed that monetary policyings perhaps appropriate for output goals contributed to the housing bubble. let me turn now to that question. to set the stage for the discussion, slide 5 shows the annual increase of nominal housing prices. after slow growth, the housing prices rose in the 1990's. growing at an annual rate from

1998 to 1999, thus the beginning of the run of housing prices predates the housing policy. 2007 dates the boom of 1998. on the other hand the rates were in 2004 and 2005 and the housing increase and thus this does not rule out the housing policy. to try to assess the importance of that contribution, in the remainder of my remarks i will consider briefly two major questions. first the housing prices shown in slide 5 is quite large. could a monetary policy have contributed to the increase that we observe, if not, what

does account for it. second, houses rose in this period in many countries. not just the united states. if monetary policy was the source of housing increase in the united states, it seems reasonable to expect that international perspective that those houses would have rise as well. is that the case? with the respect of the magnitude of house price increases,economists have found that only a small portion of increase in the housing prices in this decade can be contributed to the housing policy. this can be used in models that make no use of economic theory. to demonstrate this finding in a simple way, i will use a statistical model that

summarizes the historical interfaces of the housing model. this model is similar to economists that seek to analyze the evolution of data series over time. the model incorporates seven variables including measures of economic growth, inflation, unemployment and house prices and the federal funds rate, and it's estimated using data from 1997-2002. for our purposes the value of such a model can be used to predict the behavior of any areas studies, assuming that the historical situation holds and that the other historical values are included. slide 6 shows these from

2003-2008. . . assuming the other six variables took their actual values of during the years between 2003 until 2008. those in the shaded area can be thought of being close to or within two deviations of the corresponding forecast. in line with the earlier discussion the left panel suggests that although policy following the 2001 time was accommodative, it was not inconsistent with the historic experience given the macroeconomic environment at the time. the right panel shows the forecast behavior of house prices during the recent period.

as you can see the rise in house prices falls well outside the predictions of a model. thus, when normal historical allusions to taken into account it is difficult to describe the house price bubble. a possible objection to this conclusion is that becau prices to monetary policy may have been different in the past decade than was in the 1980's and the 1990's. about one-third of mortgage applications were for adjustable rate mortgage products in 2003-2004. this linkage could rationalize the stronger effect of monetary policy on house prices in the

more recent period. some evidence on this question is provided on a slide 7 which shows initial monthly payments for immediate priced houses a three different prices of mortgages. the interest rates used in calculating these payments are the actual percentages from 2003-2006 as provided by freddie mac. a comparison of the initial monthly payments shows that the uniform payment is about 16% lower -- shows that the arm payment is lower. it is not sufficiently lower because it provides the amortization of principal. moreover, less policy would have had an effect on arm payments.

this is taking into account the feedback effects of monetary policy on the economy. under this scenario, we found that the initial arm rate would have been slightly higher than the base line and that the initial monthly payments for a borrower under the policy would have increased by only about $75. this results does not suggest that tighter monetary policy would have persuaded many potential borrowers. slide it seven shows initial monthly payments for some alternative types of variable rate mortgages.

these more exotic mortgages at show much more significant reductions and the monthly payment then could be obtained through standard arm. " for those focused on minimizing the initial payment the choice of mortgage type was far more important than the level of short-term interest rates. the availability of these alternative products prove to be quite important. it is likely a key expedition of the housing bubble. slide eight shows the percentage of variable rate mortgages with various exotic features beginning in 2000. the use of these non-standard features increased rapidly from early in the decade through 2005/2006. because of such features are presumably not approve for many borrowers, it is evidence on slide eight of deterioration.

of the picture that emerges is consistent with many accounts of the time. at some point both lenders and borrowers became convinced that house prices would only go up. borrowers chose and were extended mortgages they could not be expected to service over of the longer term. they were provided these and the the expectation that committing equity would soon provide refinancing into a more sustainable mortgages. for a time rising prices became a self-fulfilling prophecy, but further appreciation could not be sustained and prices collapsed. this suggests that policies rather than monetary ones would have been a more effective means of addressing the run up and housing prices. i will return to this in my conclusion. let me now turn to the international evidence on the link between these two.

cross-country evidence is shown in slide 9. the figure is drawn from a recent study of 20 industrial countries by the international monetary fund and replicated by the board staff. the vertical axis shows the change in inflation adjusted house prices in each country from the fourth quarter of 2001 until 2006, which is the sharpest period of price appreciation and most of these countries. countries represented by diamonds that are further north had relatively greater house price appreciation over this period. you can see from the figure that house price appreciation, though of course large, was actually less than that of the majority of countries in this sample. the horizontal axis of the figure following the study shows the degree of monetary policies

or tightness in each country measured by the aviation policy in each country from the description of the taylor roll over the corresponding period. countries shown further to the left had more accommodative policies over the period. the united states is shown as having a relatively accommodating policy, as you can see. that is driven in part by current and not forecast of inflation as i discussed earlier. interestingly, essentially all of these countries had monetary policies easier than those prescribed by the taylor role as shown by every country is situated on or to the left of the vertical axis in the figure. as this slide shows, the relationship between monetary policy and house price appreciation over countries is quite weak. for example, 11 out of 20 had

both tighter monetary policy relative to the prescriptions and a greater appreciation than the united states. the overall relationship between house prices and monetary policy commissioned by the solid line, as the expected slow in that tighter policy is related to slower appreciation. however, the relationship is insignificant and economically weak. moreover, monetary policy could explain only about 5% of the appreciation across these countries. well, then what does explain the house price appreciation across countries? in earlier remarks, i pointed out that capital influx through emerging markets and industrial companies -- industrial countries helped appreciation and low long-term interest rates in those countries, the

hypothesis. today is not the appropriate time to visit that hypothesis in any detail, but i would like to take a moment to show that accounting for inflows it is providing free fall. slight 10 which is analogous to slide 9 shows the relationship between capital inflows and house price appreciation for the same set of countries as in the previous slide. also, house price appreciation is shown on the vertical axis of the figure. the horizontal axis shows the increase in the current account or the increase of capital inflow for each country measured as a percentage of gdp. the downward slope of the relationship is as expected. countries in which accounts worsened and inflows rose are shown on the left half of the figure. they had greater house price appreciation. however, in contrast to the previous slide the relationship

is significant but statistically and economically. over 31% of those appreciations is explained. this simple relationship requires more interpretation before any strong conclusions can be drawn. in particular, we need to understand better why some countries do structure causes than others. i will know here that with more accommodating policies reduce capital inflows, the relationship appears to be inconsistent with the existence of a strong link between monetary policy and house price appreciation. my objective today has been to review the evidence on the link between monetary policy in the early part of the past decade and the rapid rise in house prices that occurred roughly the same time. the direct linkages are weak because monetary policy works in a lack. their response to changes in inflation and other economic variables and it should depend

on whether the changes are expected to be temporary or longer lasting. from that point it is taken into account that policy during that period the accommodative has not been appropriate given the state of the economy and of policymakers meeting objectives. house prices began to rise in the late 1990's. although the most rapid increases were the lowest levels, the managing was too large to be explainable by the stance of monetary policy alone. moreover, cross-country evidence shows no significant relationship between monetary policy and the pace of price increases. what policy implications should we draw? i noted earlier that the most important source of lower initial monthly payments that allow more people to enter the housing market was not the general level of short-term interest rates but the increasing use of more exotic

types of mortgages and the seceding decline in underwriting standards. that conclusion suggests that the best response would have been regulatory rather than monetary. strong regulation and supervision and the problems with underwriting practices and lenders' risk management would have been a more effective approach for constraining the housing bubble than a general increase in interest rates. moreover, regulators, supervisors, and the private sector could have been discussed about risk-management without having to make a judgment about sustainability of house price increases. the federal reserve and other agencies did make efforts to discuss this. in 2005, we worked with banking regulators on nontraditional mortgages and arm products. in march 2007, we had

interagency guidance on a sub- prime lending. in 2006, we used authority granted to us to issue rules to apply to all mortgage lenders and not just banks. however, these efforts came too late or insufficient to stop underwriting standards and constrain the housing bubble. the lesson i take from this experience is not the financial regulation and supervision are ineffective but that their execution must be better and smarter. the federal reserve is working not only to improve our ability to identify and correct problems in financial institutions but also to move from an institution by institution supervisory approach to one that helps the financial system as a whole. it towards that end, with comparative evaluations across firms and analyses of

interactions between firms and markets, we have further strengthen our commitments to consumer protection and we have strongly advocated financial regulatory reforms such as the creation of the systemic risk council that will reorient our country's overall regulatory structure towards a more systemic approach. the crisis has shown us that indicators such as leverage and liquidity must be evaluated from a system wide perspective as well as the level of individual firms. is there any role for monetary policy in a dressing bottles? economists have pointed out the problem of using these to pop bottles and many of these were illustrated by the recent episode. although price bubbles appears obvious in retrospect, all of them do. in its earlier stages, economists differed drastically over whether prices were sustainable for whether the bubble was a national or

merging or in a few markets. an interest-rate increase in 2003 and 2004, it could have weakened the economy at just a time when a recovery from the previous recession was just being established. that being said, having experienced the damage that the bubble can cause, we must be vigilant in ensuring the recent experiences are not repeated. all efforts should be made to strengthen our regulatory system to prevent a recurring crisis and to cushion the effects should another crisis occur. however, if adequate reforms are not made or they are made to insufficient, we must remain open to using monetary policy as a supplementary tool for adjusting risks. proceeding cautiously and keeping in mind the inherent difficulty to that approach, clearly we have much to learn about how best to make monetary

policy in this new era. maintaining flexibility and an open mind will be essential for successful policy-making as we feel our way forward. thank you very much. [applause] >> the chairman will take about four or five questions. raise your hand. a microphone will be brought to you. only after the microphone comes to life give us your question and the chairman will answer. >> on international statistics, are there two or three places where you think improvements in comparative international statistics would help with understanding some of these things especially in forecasting? better comparative international data? >> we certainly could use better

information on the capital flows which is one of the issues that are showing relevance to the asset price movements in conditions in the economy. that is an area where we have really rough statistics and the precise information about where the flows are coming from. that would be one area to emphasize. we have a good idea on trade, but we still have difficulties in, for example, distinguishing the value-added components of trade both abroad and domestic. it is a wonky thing. >> thank you. >> when you drew the distinction between the contemporary is data and forecasted data, what you did is he made a comparison between cpi contemporaneously

and core pce tested. if you had usedco -- core pce contemporaneously and forecasted the distinction would be smaller or even if you had used a real time contemporaneous g.d.p. deflationary data in forecast today that the distinction would be smaller. the biggest ever to is using the cpi that john taylor did not use and that is where the big distinction cons and that is where you get that ridiculous policy description in 2008 because of the very high cpi inflation coming from the energy crisis. >> let me be clear. the forecast version of the slide, we used total inflation

and it included overall inflation. it does make a bit of a difference. it also makes a difference in the way we use real time output the way we use real time output the recession was a little worse than we cut at the time. with unemployment statistics as a supplement. your reference to court, the reason car makes a difference is because the core inflation tends to replicate the forecasted inflation precisely because the entire point is that policymakers were not putting full weight on temporary surges in energy prices when looking at the response to inflation. you get some of the same effect when you look only at core. it was really the forecasted part. >> on your point on the tiller

rule using forecasted inflation as opposed to current inflation what are your thoughts about tips despite problems, and secondly, looking at the new types of mortgages,-and mortgages asian and other new products -- what about the lower policy rates causing the firms to come up with those in addition to regulatory problems? >> on the first part concerning expectations, it does not really matter from this particular exercise what you use. tip spread for historical analysis because we only have those reliably back to the early part of the decade. neither ted spreads or forecasts -- tip spreads both

responded to the increase in energy prices. the put in the very of tips, i suspect you'd get pretty much the same result. in terms of your second car -- second question, i do not think it is the cost of the funds but the question of the bubble mentality. these firms lost a lot of money on these mortgages. it is not like they did not. they made loans and they came back and did serious damage. evidently, either the people making the loans have the wrong incentives, which is part of what happened, or the people who are writing the loans were not taking into account sufficiently the risks that house prices would stop rising in loans would not be serviceable. i would put the bubble mentality, the poor incentives in herons in the we loans were being made -- inherent in the way it loans were being made,

and the innovation and changes in mortgage structure being the primary reasons for the problem. >> you argue that the emerging market seems to provide a better explanation for housing price increases than the u.s. money supply. in view of the fact that in europe it is a national currency and many of those do not use the national key currency but are convertible. they have a u.s. dollars to lend it to the u.s.. does that modify your conclusion? u.s. dollar supply supplied to the inside world? >> i did not get the last part. >> it is not going to be

entirely in the u.s., the money supply. some of it may go somewhere else. >> u.s. currency certainly goes abroad, but the phenomenon i am talking about is the increase in savings rates. when i say global savings, i do not mean just savings rates alone. in some cases, emerging asian crisis, investment rates went down and that was the source of the saving outflow that needed to find a home elsewhere. anything can happen including the buildups in reserves, a very high savings rate associated with emerging market development strategies, oil prices or another part of the story. they traded large accumulations of wealth that needed to be invested. there were a number of factors to generate savings in these

emerging markets. we have these rather perverse relationships of capital flowing from poor countries to rich countries. let me be clear. i am not trying to put blame outside the united states. there was an analogy in previous crises when we see foreign capital coming in and the country receiving the capital does not do a good job investing it. we saw that in the asian crisis, for example. what i'm arguing to some extent is that one aspect to this is that all of the capital can flowing into the u.s. and other investor countries and we did not do a good job investing it and put too much into housing the of these mad via these bad instruments. we're trying to reform our banking and regulatory systems which is what asia had to do in the 1990 proxy. >> mr. bernanke, i noticed that

you did not talk about the other side of monetary policy which is the money supply. you look at interest rates and the taylor role. i notice that the adjusted monetary base is growing very rapidly again. can you explain why that is going on? also, what role do you think gold plays after this financial crisis? are you concerned that india and china are now net buyers of gold? is that a reflection of a loss of confidence in the dollar and our current financial system? >> on the money supply, the monetary base is the consequence of the federal reserve policies. we have been purchasing securities including treasuries and mortgage-backed securities. we have a target which we have announced for that. those purchases will create more

monetary base is as it creates excess reserves in the banking system. the net effect of on purchases was muted due for quite a while as we were creating excess reserves. the other parts of our programs with the lending to banks, swap agreements with foreign banks, the whole programs which were dominating our balance sheets were unwinding as the recession is ending said the need for liquidity has disappeared or more moderate. the decline in borrowing has been offsetting the increase in asset purchases. as the short-term borrowing has come down to a minimum level, the effects of asset purchases are showing for. i have talked about this in

numerous occasions and has a written -- and have written an op-ed. we are aware we're going to have to normalize our balance sheet. we have to have an exit strategy to make sure the increase in the monetary base does not lead to forward increases in credit aggregates. we have a strategy for doing that which includes both raising the interest rates that we pay on reserves plus a number of measures we have been testing that will allow us to drain reserves. we are quite confident that we can constrain growth as needed to exit from this unusual policy when the time comes. as far as gold is concerned, i will not get into investment decisions being made by people around the world trade the

dollar remains a dominant currency in reserves. you can see that every time the conditions become worrisome and stress rises, people still use the dollar and see the u.s. as being one of the most the best and most liquid markets in the world so i am not too concerned. >> thank you, mr. chairman, for giving a very instructive or i may say "geeky" address. thank you very much. [applause] >> so there, john taylor.

so you are no longer a core guy? >> that is a shorthand forecast. [laughter] >> president obama and his family returned today from their hawaiian vacation. this is right after they landed at the white house. his meeting today with his homeland security adviser. new screening measures are put into effect for some people traveling to the u.s. from or through 14 countries including yemen, nigeria, and saudi arabia.

congress is still on break this week but many staff have returned to capitol hill and to negotiations on health care. the house returns january 12. you can see live coverage from c-span. the senate meets again on january 28 with less coverage on c-span2. the british house of commons returns from its break this week and we will have live coverage of prime minister's question time went gordon brown takes questions from members of parliament wednesday morning at 7:00 a.m. on c-span2. tonight, the president of the internet corporation for assigned names and numbers, and non-profit agency.

>> now available, "abraham lincoln" a great read for any history buff. it is a unique and contemporary perspective. from scholars, journalists, and writers. from early years to his life in the white house. in hardcover at your favorite bookseller and now in digital audio. learn more at c-span.org /lincolnbook. >> now a look at the impact of vice president biden. "washington journal" talked this morning with the author of an article on the vice-president. it is about 45 minutes. is a contributing editor to "new york times magazine." he wrote a piece on june biden. joining us from new york right now, good morning.

you wrote in that piece, instead of the role every bus president wants, but which only his best -- predecessor had enjoyed, to be the last voice in the room. so, one year later, is he the last voice, in terms of policy decision? guest: i think so. if there was anyone who was the last, he is in it. being the last was in the room in the bush administration meant that you could drive policy. bush came into office knowing almost nothing about foreign policy and ended up to be enormously suggestible. dick cheney was influential because he was talking to george bush. that would never happen in the obama administration. whoever is the last voice is

still speaking to mr. obama, but this is an administration formed by the president. the one who matters the most depends very much on the sun deck, but within that circle, -- circle, but within that circle, mr. biden is very prominent. host: otherwise, hillary clinton, james jones. the vice-president, what is his main focus in foreign policy? guest: there is a focus -- meaning, what place in the world are the most knowledgeable about? i think beyond that, this source of influence is this sense that

he is giving advice based on decades of experience in the world. he knows everybody, he has been everywhere. there is kind of a combination in and do biden of common sense shaped by ordinary experience, and a deep knowledge of people and places. when it comes to questions like how do we balance our relations with russia, what do we do in afghanistan? joe biden is an important voice. host: your piece came out a few weeks before the president announced a troop increase to afghanistan. do you have a sense of what role he played in that final decision?

guest: i would distinguish between the contribution he made in the course of those many weeks, and the outcome. he had a role in forcing people to me examine the three options that general stanley mcchrystal had given mr. obama. they were convinced that it was inadequate, so in effect, they tasked jim jones to find a new set of options. not only that, but finding a new not only that, but finding a new set of options that were the valuable. -- were valuable. mcchrystal gave the three

scenarios. he knew that we could send 80,000 troops, which he would walnot happen. he really wanted 40,000 troops. it was from that that the delivered of process began. by and played a key role in insisting that we rethink all of the assumptions that the basis of policy. for example, we said we would train 250,000 afghan security -- could we actually do that? we talked about a civilian surge that would come along with the military. what can be accomplished with a government as corrupt and weak as them? i think his goal was to ask the hard questions. in some ways, make himself on

pleasant. asking the questions that no one was completely sure of. that is perhaps why the process took so long. did the answers come out the way that joe biden wished they would? i would say no. the number of troops -- which will still be close to 40,000 -- is far more than he wanted. the expectations about nation- building, and i do not really know what we expected to on the civilian side of afghanistan, are still more ambitious than what joe biden wants. he does not think we can do it in the amount of thime that is going to gel with our military objective.

host: the remains -- he remains suspect about the afghan government as well. guest: years ago when he met with hamid karzai at a dinner, someone said to him, mr. president, how are you going to address this problem of corruption? in fact, he said, what problem? joe biden, famously -- dinner was over -- he threw his napkin down and said, this dinner is over, and walked out. nothing has happened to defrost his relations with president karzai.

both biden and richard holbrooke have terrible relations with karzai. host: james traub is with us to talk about the influence of joe biden. republicans, 202-737-0001. democrats, 202-737-0002. independents, 202-628-0205. you can send us an e-mail or tweet us at. next phone call. caller: i think our president is doing very well. if we wanted joe biden as president, he would be president. i like the idea that our

president is intelligent. he is not a puppet, like the last eight years. i think he is doing what he is supposed to be doing. host: james traub? guest: i guess i would agree, in general. he believes he could be a good president. i believe this is almost a desirable alternative. he is a very knowledgeable, bright guy. i do not think he has those qualities of character. i do not mean to say that he has no character at all that americans look to have as their president. i think obama, for all the mistakes he has made, has proved that people have a deep sense of comfort up and we did with him, as a person.

biden is more of a hyperactive person. -- deep sense of comfort with him, as a person. host: franklin, new hampshire. caller: mr. traub, i know you denounced the history of vice- president cheney, and you believe that he was just awful. if you would be kind enough to share with the audience what you know about the history of the vice-president? i would also like to know your opinion of what i would call ridiculous decisions of having trials in new york for ksm, releasing the terrorists from guantanamo.

they do not even want to face the fact that we are at war. joe biden but it would be a great idea to dissect iraq into three pieces. what do you feel about the current president who has weigh less experienced than the former vice president ever had when it came to foreign policy? guest: there are a lot of questions there, but i will try to enter a few of them. why am i being so negative about dick cheney? i can give you a couple of answers. obviously, he had a deep-rooted sense that after 9/11, this nation was under threat. i think what he never grasped, though, is we live in a world

where our actions are seen and judged. those actions affect our ability to get what we want in the world. when the world sees cheney arguing in favor of waterboarding and says that this is something that we have to reserve for ourselves even though other people consider it torture, that affects our ability to act. if america is seen as a bully to torture in order to gain its own objectives, that changes who we are, and who we are has an effect on our ability to act. if others feel that we are no longer committed to our human rights standards, that hurts us. i also think the national security deliberation process in the previous administration was futilely distorted by the way in which cheney, in effect,

unleashed his own chief aides to ride roughshod over the process to make sure that he achieved the goals he wanted. by the way, something donald rumsfeld was doing at the same time. if you look up the process now, it is much more rational and much more likely to come to a good resolution. what you say about obama not having as much foreign policy experience as joe biden is right. what obama has, though, is a deliver tiff gift, which -- is a deliberative gift. whether or not you agree with it, they found out this process as well as they could.

host: the chief of staff for vice-president biden said that "jamie was his own --che cheneys his own office of government." has vice-president biden benefited from the vice- president cheney's expansion of the office? guest: enormously. when i was hearing this theory, i thought, when the president decided to nominate sonia sotomayor, biden interviewed all the candidates. no one had done that before,

until cheney. so biden, who was head of the senate judiciary, had a perfectly good rationale for doing something that no vice- president had done before, until the cheney. -- dick cheney. clearly, the role that joe biden played in foreign-policy is highly unusual for a vice president, except it pales in comparison to the role that dick cheney played. host: next phone call. independent line. caller: i think mr. trumaub is from the left, just like his publication. all the appointees that the

president has given us are also on left. i think the vice president is a buffoon. our president is an intellectual fool. everything he has done is against free enterprise, and our country is going to turn into socialism. host: turn to his foreign policy purview. you are writing about nuclear nonproliferation. what role will he have in that? guest: that will be a big subject in the coming months. if you look forward a little bit and ask yourself what are we going to be talking about in february, march, april? the issue of nuclear non- proliferation will be enormously important. in february the president will

introduce the nuclear posture of review, -- posture review, the strategy of the administration. and that is shaped by the president paused deconditioned -- president's the ambition to move to no nuclear weapons, but to do so as carefully and strategically as possible. within that world, biden has a couple of important issues. one is the cover hinton test ban treaty. the senate voted against it in 1999. the u.s. already does not test its nuclear weapons but is an important statement to the rest of the world, that we are willing to sign a tree that we so how far have declined to.

it will take -- treaty that we so far have declined to. it will take a big push to get all the democrats and republicans. that will be biden's job. the other issue is gaining control over nuclear fuel. there will be a head of state- level summit in the spring that he will provide -- preside over that will shape global regulation and also probably to promote national legislation in various countries in order to control or nuclear fuel -- ensure nuclear fuel does not become available to rogue states. host: next phone call. caller: two things.

number one, as far as trials compared to many of -- military tribunals, don't we and up giving extra legal powers to the government that we would not have constitutionally-given, so we lose the deficit -- the essence of what we are fighting for, democracy and the rule of law? secondly, as far as hamid karzai is concerned, we need to genuinely threatene pulling down of nato. he is blocking power control of afghanistan. we are better off without him. guest: two things.

your point about how we damaged our own well-deserved reputation for caring about human rights -- this argument about closing guantanamo is driven by deep fears. it is troubling to me to see that we have become so afraid, the idea of moving these folks out of the facility, -- it does not seem like an act of national surrender. that is wrong. your point about karzai is fair, but you cannot make a threat if you are not going to go through with it. should we say to him, end corruption, govern better, or we believe? ? we leave?

-- we leave? i think the president would say, on balance, that is not in our interest. host: next phone call. caller: i have a problem with labels, and i cannot get my head around them. i hear people refer to leftists, conservatives -- i have to give it some pause because i have to think about what that means. even when i call in, i have to think about that. i tend to vote on my conscience. based on that, here is my question. first of all, this gentleman who called from louisiana, he

obviously fits into this stereotype that i have about the redneck and tell the date. i wish you would give people like that more time and question them more about issues that might expose where they are really coming from. i can see him making a noose while he is talking. where is he coming from? i think that we cashould do that instead of ignoring them. not talking about the guy from louisiana. with regard to joe biden, what is his relationship with hillary clinton? what are his political aspirations, and will they collide with the clinton's aspirations in the future? guest: let me start with the back half of the question, does

joe biden been that he can be president one day? i did not asking that question. i do not know why. if i did, i am sure that he would have given some sort of have the reassurance. he never actually said in my political career will cease when i am done being vice-president. it will, but there is some part of his brain that believes that he will be able to run for president at 74. i do not think that will happen, but he is an ambitious person. how does this affect is a relationship with hillary clinton? not at all. these are very hypothetical relationships. they have practiced every tuesday morning at the vice- president's house. from everything i have heard,

they have a warm relationship. they do not have radical disagreements. hillary could feel, at times, that biden is intruding on her territory. if you expand the role of the vice-president, you are moving on to someone else's territory. in general, this group of principals -- secretary of state, defense, national security, vice-president -- they seem to have a pretty smooth relationship. they have disagreements, but it is not personal, that's not affect the way of deliberations, the way that it did in the first term of george bush. host: and james traub talking

about vice-president joe biden this morning. talk about the role in which he has been fairly prominent, at least on camera, about the oversight of stimulus spending. a bit outside of his foreign policy forte. guest: yes, and you do not hear too much about that anymore. host: what is that? guest: foreign-policy has turned out to be so consuming. my guess is when this started in february, march of 2009, you would have expected to see biden continuing to take domestic trips in order to promote the stimulus. i do not think he has done it as much now because he has had to take foreign trips abroad, and also he had this new iraq portfolio.

so he has become a smaller player on domestic issues as he has become a bigger player on foreign policy issues. . my impression from the centers i talked to is that a lot of them think that biden is -- you know, he talks too much. the some of them think -- i do not know if they think he is a

buffoon, as one speaker suggested, but the fact is, they think he is a knowledgeable guide and they like him. he is a likable person. i think he left behind good feelings in the senate. god knows he was in deep relationships there over many years. people like lindsay anderson on the republican side on the isle our people to me speaks to regularly. he spent a lot of time with them. when it comes to the comprehensive test ban treaty, that has been entrusted to him because he has been working as much as anybody to try to push that through the senate. host: next up is connecticut, anthony on the independent line. caller: you were talking about the first term of the bush presidency, and i totally agree with that because i read a lot

of articles and magazines about vice-president jeanie's secret meetings with the energy task force -- vice-president cheney's secret meetings with the energy task force. how is joe biden similar to that? or is he knockenot? where does he come in as a vice- president? i do not see him as deeply in as cheney was in the first presidency. bush was on his own. i'm looking to the obama/biden presidency a little differently now because i see the vice president is more for the -- the president has more for the country than the vice president.

do you agree with that? guest: in the first term, there was the feeling that there were different policies colliding with each other inside the bush white house and there was a rumsfeld camp, rather, rumsfeld himself and his aide. and there was biden -- and there was condi rice and her aides and, of course, colin powell. it was a mess. there were policies being made by a president who had far too much confidence in his own gut. he would make a good decision. if you read over the accounts of how a decision was made to attack iraq, nothing could have had a more radical contrast with where you saw in the process in afghanistan. you do not see these colliding policies in this administration. i do not think biden conducts these meetings with constituents

in the dark in the way that cheney does. although, i suppose if he did i would not know about it. but everyone there in that administration, they are acutely aware of how dysfunctional this process began in bush's first term and they're very determined not to have that happen amongst themselves. and so far, it has not happened. host: you do writing your article about questions raised about the senator biden's votes on foreign policy, etc. you write that his church and has scarcely been perfect in the past. -- his judgment has scarcely been her third in the past. "when was the last time biden was right about anything, the military writer asks in his blog earlier this fall, apropos on his views aren't the current afghanistan. -- on his views on of the

current afghanistan. where has he been wrong on some issues tomorrow these to the wisdom of the time? guest: self criticism is not a big component of biden posing nature. i should add that and neither is it of most senior politicians. i never asked about the gulf war vote. i did ask him at length about the 2002-2003 timeframe. he takes the view that i never thought about bush would conduct the war as recklessly and bosley as he did. which of course, is what -- recklessly and flawlessly as he did. which of course, is what so many say. that may be a bit disingenuous. i tend to think that a lot of democrats have pursued a trajectory toward biden's. they were very uncomfortable with the use of force in the post-vietnam era.

he was very much a candidate against violence. his vote in the gulf war may have had something to do with that. then came the 1990's and a democratic president that had these humanitarian interventions in the balkans, somalia, haiti and elsewhere. suddenly they got this idea that force could be used wisely in some cases. but only in this kind of moralistic cents. when iraq came along in 2002, i think there were a lot of democrats, biden, hillary among them, and felt it was important to demonstrate that they believed force could be used not just in a humanitarian context like in bosnia or kosovo, but in clear defiance of our own national security principles. that must have driven so many of them -- in clear defense of our national security principles. that must have driven so many of them to vote in favor of this. so many of them have discovered

unexpected dangers, that things do not work out the way you thought they would. now there is a hard-headed realist mentality you find among many of those same democrats. it is a long and bumpy road they have trouble. host: delaware is next on the republican line, good morning. caller: i am not a reagan republican, by any means. i have a greedier -- a great deal of respect for former president eisenhower. however, i must say the vice- however, i must say the vice- president biden has been due to the wars they created. these were incredibly damaging to the u.s., a round the world,

and someone needs to look into their finances, regarding how much money they made. host: delaware, republican towns like a democrat. guest: you can find plenty of other motive for why they thought it was it was right to conduct the wars, and the way they conducted them. i am not even raising the question, and i do not know the into to that, but it is clear there have been few episodes as reckless in american foreign policy in the way that we decided to go to war in american foreign policy as the way in which we decided to go to war in iraq and the way in which we conducted ourselves after the initial phase of the war ended. host: james stroud, a writer

for the "new york times" -- james drogba, a writer for the "new york times" where are you working on now? guest: i have a piece coming out in january, early february. before that, have a piece on west africa. i was just on new guinea and set a goal, in a place that few people could locate on the map. -- end sunocand senegal, a plact cuba could locate on the map. south american drug lords have discovered that if they route their shipments per liter west africa is less likely to be discovered. a big fraction of cocaine is now going to west africa. these are very weak, rickety, and in many cases it enormously corrupt governments that are just being threatened and in some cases destroyed by this cocaine traffic.

it has become a national security problem for the west, not just that cocaine is flooding into europe. that is bad enough, but that this whole region is threatened by this tide of cocaine. that will come out toward the latter part of january. host: back to the calls, ohio, ray on the democrats line. ray has gone away. houston, texas, mike on the republican line. caller: i want every person to know that i am a republican. secondly, i would like c-span to know that you have too many seminar callers calling in as republicans and they are not. is pretty obvious that they do this. the last two callers calling in on the republican line acting like obama supporters and i find that insulting. as far as vice president biden, i think he is a good example of a career politician.

he has been in the senate for 36 years and he is exactly the kind of politician that we tea party people want to eliminate from washington. we want people to go there and serve a term or true and get out. -- a term or two and get out. i am tired of it. i have no trust in government and it seems to me that too many people from the "new york times" go on and gabble about they're doing this and what a long and to read his career. i'm sorry, i want someone who knows what it is to pay their bills. we do not have the posture at all. host: mike, we will get a response. guest: first of all, i do not think biden has had a courageous career. meet the guy likes being a politician and clearly, he is good at it.

the question is, is the value of the knowledge these guys have offset by what my considers there to be condemned the sunk into the world of power in washington. it is true. and republicans discovered this into their own grief as well, you get acquainted with power and you lose sight of what brought you there. it is a problem. but do -- but does that mean that we should be better off by having term limits, for example? i can only say the and i live in a state that has term limits for its public officials and i think it has been a disaster. there's almost no accumulated knowledge whatsoever. i would not want to have such a set of rules and not at all persuaded that having businessmen, as opposed to saying, lawyers who went into politics, we would get a better set of policies and what we have right now.

host: barry on the democrats line, good morning. caller: do have some real concerns as a supporter. it is one thing to be the opposition and now that you find the realism of running the foreign policy, you also have this administration voting for $636 billion in the largest defense appropriations bill in the history of the world. and we have a drug trade in afghanistan, the undercount berlin and the room, because it seems to be funding the karzai government, the taliban, and al qaeda. nobody wants to talk about it. i understand you want to talk about the drugs come across the mexican border, and we should do something about that. the what about the war we are losing people in and where the drug trade is the main source of income in the country? guest: you know, nobody has a

good answer to that question. i do not think that anyone is trying to avoid it, but in what is now, let's say, 30 some odd years of drug eradication programs that this country has pursued abroad, nothing has worked. god knows that we have a lot of experience with drug in revocation in latin america and south america. you still at -- the drug in eradication in latin america and south america. and you still have enormous quantities of cocaine being produced there. in afghanistan, we have tried to do crop substitution, crop the revocation. and we have somewhat gathered -- rebethe opium harvest is 20% oro below what it can has been in previous years. the long-term answer is that you have stated -- you have to have a decently functioning economy so that people can live without

producing drugs. that takes a long time. if we think that war is worth conducting, we will have to conduct it even in the presence of an opium harvest. we can do what we can, but we are not going to wipe it out because no sensible farmer in a deeply impoverished place like that is going to agree to forgo a big cash crop like opium in favor of something that does not earn him very much money. it is a terrible problem. host: james traub with us talking about the role of vice president biden. guest: it is easier to stay in completed policies, but in terms of the state's -- is easier to t

in terms of the state, if obama said "i insist on a freeze of settlements built by israel" that would in the end force a painful choice on the israelis and then they would say ok. prime minister netanyahu has agreed to a much lesser temporary halt in settlements. but that has hardly been enough to get the process of negotiations on the block. that is a failure. i do not know if there is an obvious better answer, but it was a failure. you could say it similarly with iran. obama hoped that if he adopted a less confrontational stance towards the regime in tehran, they would be more willing to enter into a negotiation process that would lead to their abandoning their nuclear enrichment program. they did not happen.

host: butler, tenn., floyd on the republican line. caller: i'm a republican. you have a couple of callers in before saying the republicans were calling in and saying we are republicans and i cannot truthfully say -- i am a card- carrying republican all my life, 68 years old. and since 1994 i am disgusted with republican greed. i have watched this country go downhill since '73. education has fallen 48%. no jobs, you cannot tell me that wal-mart -- i have lived long enough to see wal-mart, the largest institution and employer in this country. the we are a joke.

them wars are a joke. we're still building the pipeline. everybody denies it. i made that a a, a vietnam vet. -- i am a veteran, a vietnam vet. i'm more disgusted with the united states in 73 when our country created to create that to make profits. host: let's get a response. guest: what is fascinating to me this morning is the matter of argument we are having with republicans to each other. i think a lot of democrats have called in and disagreed with each other, but there is not that sense of arguing for the soul of the park -- party. it is striking to me to see republicans question each other as modified republicans. in a host: article about vice

president biden, you write about host: in your article about vice-president biden you write about steve clemons of the new america of foundation calling them progress of guerrillas and democratic neocons. and who are these folks and how do their views differed? guest: i'm smiling because not long ago i happened to see susan rice, our ambassador to the u.n., and i cited her as an example of a democratic neocon. literally, i walked into a room and she turned to me -- her first words out of her mouth or "democratic neocon"? i said, ok, sorry. but are these meaningful distinctions? the first thing i would say is that there is relative ideological much of nighy in the administration. there are disagreements, but smaller -- ideological homogeny 80 in the administration. there are disagreements, but

they are smaller. these labels are not applicable as they used to be. it is harder to find a right label. that distinction is a distinction between people who are basically focused on issues of power and of trying to manage power relationships as opposed to people who think of themselves as morally driven and are primarily occupied with humanitarian interventions. people who are more control and about trying to promote democracy and others that think that is a pipe dream. but those distinctions exist. we have one more call for you from georgia, ben on the independent line.

caller: i like to your the people talk, but as far a as "washington journal" also talked about the policy in afghanistan. t2. host: retired major john newman is a professor at the university of maryland in the honors program. here to talk to us about j.f.k. and vietnam and more broadly the issue of afghanistan and president obama. a couple of weeks ago david obey was quoted in talking about

these parallels between afghanistan and pick -- and vietnam. he was quoted as saying that "i came here in the house in 1969 and i determined that i would give nixon a year because he inherited the war. he said he bit his tongue for the war and he reminded the current president of the mistakes of the earlier war. i said the same thing, he said, to obama. what were the lessons that president obama should take from j.f.k.'s early experience in getting the u.s. into vietnam? guest: you hear the criticism in comparing afghanistan to vietnam and people say this is not vietnam. that is true in certain ways, but in many more ways it is just like vietnam and becoming more like vietnam. the biggest problems we had early on were a failed government from a corrupt central government. we had an army in south vietnam that we could not build large enough to contain the

insurgency. this is occurring in afghanistan now. one of obama's goals was to increase the afghan army from about 95,000 to about 143,000 to the end of this year. if that does not happen, that will be a tip -- terrible failure. but we could not get them for 150,000 tonight -- to 170,000 in 1972. there are traders reporting that the afghan troops are not good fighters and not willing to fight. the terrain is very similar. we have mountainous terrain and we had joggles. this is not like iraq. this is not like the plains of normandy. but the biggest lesson is counterinsurgency. this is not a set piece battle. we are facing insurgents who were not fighting very well at first in 2002 2003. but they developed a strategy

that eventually works. and when you do not have enough troops to contain an insurgency, this is what we are fast approaching at this time. host: you were a vietnam veteran? guest: i was in the jungles of thailand at the time the war ended. host: what did we do in -- that was right or wrong in terms of the viet cong? guest: 810 to one ratio to contain the insurgency. host: is that figure -- you need a 10 to one ratio to contain the insurgency. host: where does that figure come from? guest: you need half a force to protect the cities and pipelines and so forth. the draft is to fight the war. let's say there were 10,000 taliban, and doc would mean you would need 100,000 -- and that

would mean you need 100,000 troops. there was a week to cbs last year or our commander now, general mcchrystal, in his recommendations to the president actually said we are going to need 500,000 troops. i have been waiting a long time to hear that number because i know what it means and how many bad guys are out there. that would mean we are afraid we are looking at possibly force of 50,000 or so. in the last year or two, we have seen some reports coming through the news media, according york and other intelligence organizations saying 10,000, 15,000. that is too big for the afghan army to handle. even if they can fight. what i see about -- what i see obama doing, which is what j.f.k. was trying to do, is to train the vietnamese to fight the war.

the surge appears to me to be the beginning of a withdrawal, which you know has been stated to be beginning about 18 months after to give karzai and his regime enough time to stand up and fight for itself. we will see. host: we have our numbers on the screen and we will get to the calls in immelman. -- in a moment. you laid out a number of issues which have to be practical issues that have to be dealt with, but the fact of the matter is that you bring vietnam and it becomes a political issue as well. tell us how you view this as a political issue. guest: the lesson that we need to learn, i think, from john kennedy's experience is this. he was with -- he was withdrawing at the time.

we have the classified documents. but he did not tell the truth to the american people why? for political reasons. he wanted to get it reelected in 1964. he had begun to order the withdrawal in 1963. host: and these would have been the trainer said you talked about. guest: 16,000 of visors, not combat troops. but my point is that obama should not repeat that experience. he is clearly going to do the best that we can in a given amount of time, but what we face the prospect -- if we face the prospect in the next year or two that it is not going to work and we leave and the respective of election, you tell the american people straight out what is going on. host: louise, republican line for jon newman. caller: i would like to say --

first of all, i want to go back to the 9/11 attack and that is why we are there. 9/11 happen because of our support for israel and conveyed on page 147 of the 9/11 commission report, it shows what motivated the 9/11 hijackers. there is a video about it, too. host: forward this to your question on afghanistan for john newman, go ahead. next up is forestville, md., democrats line. caller: i'm a democrat and i believe that this war is similar to vietnam. i agree with mr. newman to a point. i think that they should really take these soldiers out because they're only killing our soldiers pointlessly.

and there is a -- just make sure they cannot come to the united states, simple as that. guest: 2 the previous caller, the significant events -- the significance of 9/11 is actually important, in a sense. unlike vietnam, we are fighting a war against someone who attacked us. that is the difference between vietnam and what is going on. it is true that the al qaeda folks are not there, or very few of them and they are crossed the border. if you look very closely at the campaign speeches for obama and the address at west point a few weeks ago, he has made it clear from the beginning of this is not just about afghanistan. this is also about pakistan. he could not have said it any better than during the campaign. he said, look, if musharraf does not do anything and we have

actual intelligence, we will do it. host: in the context of vietnam, that have the echoes of the so- called domino theory? guest: difference here is that this is another country where the enemy has actually retreated to. it is not just a sanctuary. that is where they are now. they're not going to come out into afghanistan where we can get them. that is part of the problem. but yes, you have cross border sentries in cambodia and laos, and we have them here in pakistan and perhaps even north in use pakistan and tajikistan. host: next call from florida, good morning. caller: kennedy inherited from eisenhower and nixon and now obama has inherited from bush and cheney. what is the parallel doubt -- there? guest: there is a parallel.

first, john kennedy refused to put in combat troops even the eisenhower told him to do so during the transition time. that became the defining aspect of kennedy posey vietnam policy, not to do that, to train the south vietnamese to fight. obama already inherits a war that is -- inherits a war that is already in combat mode. it compares to nixon in -- who inherited the war from johnson. going into 1969, we're coming out of vietnam. nixon took four years to do it, another 20,000 soldiers, american soldiers died during the withdrawal. the lesson there is, look, when it is time to come home, do not take for you -- do not take for five years to do it and lose 20,000 soldiers. host: tony on the republican line, go ahead.

caller: i am not just some young kid listening to you. you compare it to what happened in 9/11. vietnam, we did not get on from the north vietnamese, did we? another thing, we had the flower children out there painting their faces and protesting. it is a lot different now. you have the majority of people at 9/11 supporting going over there. and north korea, you could nabhan them at the beginning of the war. it was not until later. guest: the caller has a good point. of all the similarities and differences between vietnam and afghanistan, the fact that those were the people who attacked us

gave was a moral right, whether you agree with war or not, to go after those people. but that did not last long. the mowlawi attacked iraq, which did not attack us, -- the moment we attacked iraq, which did not attack us, took our eye off the ball and our resources away and it changed our standing in the world. what should have been finished, the job that should have been finished in 2005, 2006 in afghanistan was not, and it came back again. host: i have a comment from twitter. guest: what i know of president obama's statements about this is that the greatest threat, this is the president speaking, to our security is in no sanctuaries in western pakistan.

that is what i think we are going to see in the next year or two. we're not talking about pakistan very much right now in the media, but if the president is true to his word, that is going to be news. host: with his of taking troops, he announced that at some point, some say 2011, there will be a consideration of the drawdown of forces from afghanistan. looking ahead, what you think that looks like? guest: there has been some debate within the administration about the timetable. obama specifically mentioned 18 months. that means 18 months in downstream, we begin marine troops out. secretary gates thinks that they could be adjusted and so on. but the stated policy is clear, we will increase the force. we will help or root out the taliban and helped stand up and afghan army and then we are coming home. host: maryland, john, democratic column. caller: good morning, dr.

newman's. i was wondering with respect to the vietnam situation, there was an aspect of deception in the pentagon with respect to the reports on the advisers and the press of the war and the status of the fighting ability of the vietnamese army and the defection rates. i was just wondering, what do you see, if anything, with respect to possible deception between branches of government and the formation of policy with regard to afghanistan today? guest: this was a terrible -- terribly important lesson. there was, as i mentioned in the book, an extended time frame of not just a little bit of deception, but whole cloth lies of the size of the enemy, in this case the big pond, and combat operations going on in the field.

-- in this case the viet cong, and, operations going on in the field. we saw this with the 9/11 commission. it's sort of hijacking of the intelligence process that really undercuts the ability of a nation to actually marshal the national resources necessary to meet national objectives. it is early in the administration and i hope we do not see anything like that again. host: what if president kennedy had decided to withdraw trainers, advisers from the four? guest: are these two options -- from the war? guest: there are these two options, you train them or you get out. as matt amera said in his papers, when the training session is over -- as mcnamara said in his papers, when the train session is over, it is over.

the student has learned what he has learned host: next call from florida, go ahead. caller: the vietnamese war was more of a political war and this particular thing going on now is getting into where it is not just a religious war on their side. i believe we have people in this country who think it is a religious matter as well. i've spoken to people who are thinking of backing off a supporting israel and they keep quoting things out of the bible that say wer#@@@@@@@@@ rb :rzk)á

child of pakistan and surrounded by support. it is not just religious. it is not just religious. is an egg -- ethnic breakdown as to prevent 45% pashtun, 25% of afghanistan are tadzhiks. the demographics are much different. 95% working in the vietnam and it here, you have to bring trouble differences. it is a much more complicated situation in afghanistan and vietnam. host: what you think al qaeda has learned from our experience in vietnam?

guest: guerrilla warfare, for one thing. host: we do not know how to fight it? guest: no, that we could, but they learned how to fight as an insurgency. they were not doing so well in 2002, but they perfected a way to do it in about 2004 and 2005, that is, to attack in groups of 50 or 100 and immediately afterward to break up into small groups of five so that any counterattack afterwards it will not have a lot of casualties. host: you talked about fighting the soviets. at some point, did we have a cia trainers to the merging -- to the mujahedin? guest: we wish we had.

we have a lot of people in pakistan, maybe some agents who got in, but we had very little control over what happened on the ground during the war. host: next caller, j., on the independent line. caller: i have a couple of comments and then i have a question for the guest. i personally think the karzai administration is hand-in-hand with many segments of the taliban. i think they ought to be. obviously, the karzai government is a cesspool of corruption and in debt -- ineptitude. now that the taliban and al qaeda know that we are leaving in 18 months, i really think all we have done is send over 30,000 bull's-eyes and they will die for no purpose whatsoever. i would like your guest opinion on one thing. this is the taliban uses opium

and the traffic in opium and what not for a primary source of income, why don't we buy the opium crop? i don't think the farmers care what happens to it. they do not grow hair when. they grow opium. if we bought it, would that reduce their source of cash? guest: i'm not really certain with the economic impact would be. it might be useful to deny cash to the taliban, of course, but the picture might be a little more complex than that. with respect to the first comment about the sending the bull's-eyes there, i understand that and i really feel for the soldiers that are over there. the night before last, my son returned from the 10th brigade -- from the third brigade, 10th mountain division. he spent two tours over there and we are happy to have him home safe and sound. but you cannot expect obama on

his first day of taking office to simply cut and run. he took a long time to review the policy and he got a lot of heat for that. i think it was the right thing to do. it took kennedy a year to decide what he was going to do before he drew the line in the sand, no combat troops, advisers only. host: did he increase the number of advisers? >> the significantly -- significantly. obama has taken a few months to review the strategy. as i understand it now, our policy is to bring the troops home after this surge. host: i want to get your reaction to a weekend editorial by the year digit foundation.

if the war in afghanistan starts going south, president obama will parolee quick rub and risk getting bogged down. he ran up the troop commitment all the same period in 1968, the north vietnamese launched a major offensive during the tet holiday. they lost that battle that they, but the fact that they were able to mount a large-scale offensive -- and became a common view and johnson's presidency fell to ashes. guest: that is the problem here. we cannot win this militarily. general mcchrystal knows we are not going to get 500,000 troops of there. the mere fact that he said it means he understands this is not a militarily winnable situation. we not have a national resources

to go fight. host: you said you welcomed your son home back from his second tour. with your views on that, how hard is it to hear his take on afghanistan? he certainly must retain a fair amount of optimism on things. guest: it is interesting you ask that question. he and his colleagues in the third brigade of the 10th mountain division, the toughest time for them is to be very careful in the use of military force. they are very aware of the local population and the taliban are always hiding. they will shoot and then go hide amongst the kids. it is a tough place to be in when your colleagues are taking rounds and the people shooting are hiding amounts the kids. our troops are up there are keenly aware and is terribly important that the act honorably. host: any chance that he will go

back? guest: he is actually getting out of the army. he has done six years, two tours. host: brenda from georgia, republican line. caller: i would like to take your boy back to when the british were in afghanistan when russia came into afghanistan from all of these countries got together and were trying to get a hold of the war -- of the oil in afghanistan. they came back that hossein was one of the biggest ones to come into power at this time. and they did all of us try to get a hold of the oil. the united states people need to stop and think, yes, this was about oil, to keep it out of hands of these countries that wanted to get that oil. they need to be thankful to george bush that he had the guts and the sense to get rid of

hosseihussein and his murderers. the iraqis can live today in peace without these murderers. guest: i would just say this, lee, that is going to war in a country is the intent of the president, you put that before the american people and have that discussion. but you do not tell them that they have weapons of mass destruction that they are going to use next week or that they were behind 9/11 to do it. host: an e-mail from new jersey. guest: he is our right. once we reach that sort of tipping point, of the longer we

stay, but more people die. you have to have the political courage to come out when there is no way to win. host: to the best of your information and knowledge, the size of the forces of the outcry in afghanistan, let's combine al qaeda and the taliban, the size of the u.s. forces of waiting? guest: and i have been to a lot of press conferences and over and over again officials are not giving us numbers. what i have seen our figures like 10,000, 15,000, in that range. if you look at obama's plan to increase their troops to about $140,000 -- 140,000 troops or more, that tells me about 14%, 15%. host: next call from indiana. caller: isn't this so-called war these days, the is insurgency, s

in this moving toward the same type of war that vietnam was? i hear that they are throwing around on the table euthanasia, the draft is going to come back possibly. what they're saying, the afghanistan soldiers are not training and it is not enough. it seems to me at this point, you've got to start looking at things from all angles.

because you just sent 30,000 troops over there. guest: i think that he is right. there are those similarities. and we talked about them already today. and the insurgency is growing. and that happened back in vietnam, too. those are the police allergies. host: about 10 more minutes with john newman, 21 years in army intelligence. the book you wrote in 1992, a "j.f.k. and vietnam." is it going to be republished? guest: i think they can get it online. but right now i own the rights to it and when i decide to of david, we will do it again. host: north carolina, go ahead. caller: i have a two-fold question drawn by an air force veteran, although i did not end up in afghanistan have any

point. my question is more about the terrain. i wonder if you have anything to comment about the differences of terrain between afghanistan and vietnam. i would agree with the earlier comments by colin powell that we should have come in with afghanistan -- to afghanistan with overwhelming force. i was wondering how that would play out if given a second chance. guest: good question. it is different, but similar in the sense that it is terrible terrain. whether we are talking up the dense jungles and marshes of vietnam, it is not the type of place you can send a tank into or an armored personnel very easily on the bridges in afghanistan. -- the richesridges in afghanis. about general powell oppose the

idea of coming in with overwhelming force, the initial surge -- about general powell's idea of coming in with a warming force, the nestle surge -- the initial surge had that idea. there were small pockets and enclaves and we just never finished the job and we should have. because now they are back in spades. they're back again. i agree that we should have made the decision to go in with more resources than we did, but we did not because we were fighting a much larger war next door in iraq. host: if you're right in. guest: there are 40 countries participating in the

international security forces in there. maybe not as much as we would like to see in terms of the commitment of troops, but there are 40 countries involved in this war and have been for the last 10 years, but i agree with the caller, and i do not think anything i have said would disagree with that. bnl was a place. it was not a training ground for communist insurgents all over the world, and that is an aspect that we are very worried about. just north of afghanistan, we have is pakistan, turkmenistan, and tajikistan. these countries are ruled by very repressive regimes the russians left in place to preserve their power and influence, and we are in bed with them because we want those supplies. they are critical for us, but it is a breeding ground for al qaeda, the central asian countries, and more than ever in 2008, for an fighters were coming into afghanistan to support the taliban, so the caller is right. this is a problem that is

getting worse. host: couple more calls hear from john newman. we will hear next from cambridge, massachusetts, and philip. there you are on the independent line. caller: i would like to give some credence to the ratio of 10 to one debated earlier on what it takes to take care of the war. when i was a young officer in nigeria, we were facing the troops there. in spite of the colonial empire, dominance of algeria for decades, we knew very well what was going on, and we lost. as a u.s. citizen now, i am extremely concerned that we are not putting enough power behind the war, and the answer to the possible outcome is total

failure. thank you. and the possible outcome is total failure. guest: the point i made at the beginning of the show. that is the no. i watched for every day. how many bad guys are out there? there comes a point when you know the afghan army cannot grow to a point where -- to defend themselves, that it is pointless to say. -- tuesday. host: -- then it is pointless to stay. host: are all the generals that have been leaders over there, are they all vietnam veterans? guest: i do not know. host: with their command decisions in vietnam the commanders in afghanistan should take a way to do differently than we did in vietnam? guest: i'm not so sure about that. i disagree with some of the things that general westmoreland did in terms of reporting intelligence to the president and the public, but i think in one sense i agree with him that

a lot of the decisions were made by political leaders. in particular in vietnam, to go in with combat troops because we thought the sign of soviet conflict was such. china would not cooperate and give their realigns to the soviet union's -- we thought that china would not cooperate and give their real lines to the soviet union and that turned out not to be true. that was a political decision made by the national leadership. obama is trying to avoid getting into a similar stalemate in afghanistan host: one more call for you. lowell, mass. danielle on the democrats line. caller: from my own experience, i opposed the war in vietnam and probably attended almost every demonstration in new york city at the time. but after that, i traveled to india on a spiritual journey and

spent some time in afghanistan when women were still doctors and teachers. it was the tail end of four years of peace there. -- 40 years of peace there. one thing you will not be aware of is that the taliban only has a 4% to 5% approval rating in afghanistan. they saw what was happening there. i followed events there since then, you know, in the 1980's we should not have left and we left a terrible situation. we cannot repeat it again, because if we do, there will be a lot of deaths in afghanistan. the way that obama is doing this is very different from bush, who left the situation in the that -- in benign neglect, similar to what his father did.

the people are -- our people, we are trying to get in more civilians to agriculture. i think it has been exaggerated about the government there. while karzai had to survive while he was being neglected, he is a pashtun. however, he is a peaceful one. his father was a parliamentarian. he himself is not pocketing money, or whatever. host: we're going to let it go there and let john newman reply. guest: i know we are short on time. it is crucial and my son talked to me about all the time how important it is, and the

soldiers know that, to treat the local population while group a lot of their medics were training kids from the -- were treating kids from the village who were being hurt by the mortars from the taliban who could not shoot them very well. and we are expanding considerably the civilian effort t. host: how does that compare with vietnam? guest: we suffered in the early years of the war for not having paid attention to that. host: thanks for being with us this morning. we appreciated. >> the secret service says another person on the guest list was allowed into a white house state dinner for india's prime minister in november. the secret service says someone traveling with the indian delegation was allowed in. the service says this person was

screened at the hotel with the rest of the delegation who attended the dinner. the homeland security department says new security procedures have been implemented. tonight on "the communicators," president of the internet corporation for assigned names and numbers, and non-profit agency responsible for managing internet names and addresses. tonight at 8:00 eastern on c- span2. >> there is less than a month left to into c-span's 2010 -cam contest. $50,000 in prizes during discreet a five minute to 8 minute video on one of our country's greatest strengths or a challenge the country faces. it must incorporate c-span programming and show varying points of view. winning entries will be shown on c-span. do not wait another minute. good our website for contest

rules and information. >> the british house of commons returns from its break this week, and we will have live coverage of the prime minister's question time when prime minister gordon brown takes questions from members of parliament. live coverage wednesday morning at 7:00 eastern on c-span2. the bbc recently looked at the last 20 years of prime minister's questions. their program is about an hour and 15 minutes. up next, we will look at some of the debate from the day and hear how televising the house of commons made an impact on the public's view of the british parliament for 20 years. >> the question is that all members who are returned for two or more places in any part of

the united kingdom to make their elections, for each of the places they will serve within one week after shall appear so there's no question on their return. >> this is what it looked like november 21, 1989. the speaker of the house of commons was bernard woodrow, and this was the first televised session of the british house of commons. joining us by telephone today to talk about this 20th anniversary is the comptroller of bbc parliament tv. mr. knowles, what has been the reaction by members of the house of commons looking back at this 20 years of being on tv? >> i think that's most now regard the decision to televise it as simply a matter of inevitability. very few now look back and think that they did something really remarkable that could be

overturned, but at the time, they have been through many boats being turned down each time until eventually, the decision was taken to go for it. >> the leadership at the time -- what was its position? margaret thatcher was prime minister. >> margaret thatcher was absolutely and decidedly against televising the commons and thought it would destroy the place and turn it into something quite different than that which it had been. the vote was taken despite her influence. >> after that, as i recall, there was an 18-month kind of trial period? >> yes, and there was a time after the vote, nearly two years, before televising actually started, and when it did, i think it was for a 12- month trial, and that is

something you'll find in any changes that we ask or get now to delay televising or access to parliament is done. it always comes in to test the water and see whether it can be made to work. >> since the house of commons went on television, it has been seen every night here on c-span, but my question to you is -- who sees it in great britain? >> there are really two kinds of audiences. prime minister's questions is watching very widely andsñrçó on pretty much everyçó imaginable v channel in the u.k. and gets a very big audience. all the people criticize us for being too knockabout, people also do want to watch, but the day-to-day business of the

commons and the lords and the scotch parliament -- that is a watch on bbc parliament, and there really are two kinds of audiences for that. the audience is home, and that is -- very often, is retired people watching in the daytime, and then the audience in offices and people who've maybe in the past mayçó have trouble into westminster to receive the debates, but now actually find it useful just to tap into it by watching what is on television or on line. >> yes, i should have made that clear that what people see in the united statfc is a small portion of what you do. >> that is right. prime minister's questions, the way two sides line up against each other, in a kind of face- off. and it is very different from most of the european parliament's, most of which are in heavy cycles where the speaker might go up to a podium 'qeáqp" out a speech.

ñiñrçótheñiñi comments -- commoa very different style. >> in the united states, the television before the senate. some said it was because the house on television that the senate finally went on television. in your case, the house of lords was already on television. is that correct? >> that aside, the lords had been televised for four or five years before hand, and i think the same could be said to apply. it became very difficult for the members of parliament and of the commons to justify why they could not be seen when the lords did not have a problem with it. what is interesting is that ever since -- and we have had quite a number of changes to the rules of coverageñilp, making it much easier to watch than it was the first -- in every case, the changes to the bulls have started like in the lords and then been adopted by theçó

rules.s -- the changes to @z2j >> how many cameras are in the house of commons to cover the debate? >> we have eight cameras in the commons and six in the lords. >> how are they man? >> they are all likely operated from a central control gallery. what has changed in the 20 years about the way that they are operated is that it is now possible to see wide shots of the chamber, listening shots of people who are taking part in the debate but who are not speaking at that moment. we would like to push it further. we like to have the full range of reaction shots just like it would be in normal, outside broadcasts, but at least it is a long way forward from the original position, which is that you could only see the picture of the person speaking, and really only a head and shoulders shot of them. >> since you cover this all the time, do you have a feel for whether the televising of the house of commons has changed the

institution at all or whether it changes any of the debates? >> i am slightly doubtful that it has made a huge difference. certainly, mp's who we had interviewed about this tend to deny that it has much of an impact. they simply got used to it, they are only -- that there on television the whole time, that they just used to the idea, and some of the silly trickery that went on at the start about being on television, and making points of order just to get yourself on television -- that stock. and there was a ridiculous device where people is to gather on the person speaking in order to make it look like that person was gathered around their fat -- their supporters and friends. they just can use it. >> peter knowles joining us today from scotland. thank you very much. now, we are going to take back to more of the session.

this is the first session of the first day of televising of the british house of commons, november 21, 1989. you are going to see prime minister margaret thatcher as well as an interview that c-span cameras did that day with british tv producer michael cockerel. >> i have always voted against the televising of the proceedings of this house. [applause] and i expect -- [laughter] and i expect that i always will. a brief intervention did nothing to alter my view. [laughter] despite the strongly held opinions which i have on these matters, i received a letter three weeks ago. i believe that a copy was sent

to each of us and possibly even to you, mr. speaker, which made the following preposterous assertion -- "the impression you make on television depends mainly on your image 55%, with your voice and body language accounting for 38% of your impact. only 7% depends on what you are actually saying. [laughter] i thought that i should enlist the sympathy of the opposition with that lab proposition. the letter went on, and you may think that this is an a struggle and -- an extravagant

things as far as myself is concerned, but the letter went on, "we can guarantee to improve your appearance through a personal and confidential image consultation. you will learn if you need a new hairstyle" -- [laughter] "and where to get it" -- [laughter] "and the type of glasses to suit your face." the house will understand why i consider that i was beyond redemption on all counts. [laughter] mr. speaker, this board has been a separate parliamentary constituency since 1895.

then, the electorate was 8000. today, it is 80,000. i am glad to be able to report for 100 of those 104 years, these boards have been represented in the conservative interests. [unintelligible] the solitary lapse took place in 19006 -- 1906. [laughter] but four years of liberal representation were more than enough and the highest turnout ever recorded of the following general election. from then on, this board has been a frugal, and since 1974, dry as well.

[laughter] east sussex has long attracted the retired and the semi- retired. [laughter] my liberal friend [unintelligible] whose decision not to seek reelection to this place we all deplore, but that right is to require of tristan. [laughter] and the noble lord lord callaghan has his estate nearby.

[laughter] it will be a source of satisfaction to the party opposite, particularly to those who sit below the dam, as it is to me, to learn that there have been able to share in the growing prosperity of the nation -- to learn that they have been able to share in the growing prosperity of the nation, and the permission of my honorable friend, the member from finchley. [applause] but others can share in this prosperity, too -- t zero of --

1600 members of the senate ever comes of have left. they remember -- they remember, mr. speaker, that the right to bind legislation was fiercely opposed by the body opposite. i was proud to have had a hand in extending the opportunities for home ownership in the housing act of 1984. last month, phase two of the hospital was open. all of the medical wards have been transferred from st. mary's hospital, built in the napoleonic stage, to our new hospital. i am pleased to be able to tell the house that our hospital has informed my friend, the

secretary of state, for help of its inception to seek approval to become a self-governing hospital. in august of 1980, the house gave a third reading to the east for harbor bill. indeed, 180 of my honorable friends stayed up until 10 past 6:00 in the morning in order to vote for it. the house will want to know the construction work on the harbor project is well under way. the new harbor will be eased point, in the vanguard, now head of the vanguard of the increasingly important and increasingly successful service industry.

when a harbor, our fishermen will no longer have to drag their craft onto the beach. 1800 small boats will have room. entrepreneurs for new mcorp west -- [laughter] refugees from the andes, the grocer's from all bexley, intellectuals, real or imagined, from chechen and ambition, the honorable gentleman, the honorable, the members of the northwest, whose reported aspirations to become the greensburg minister and i am unable to endorse, all these and many more besides will be able

to seek refuge from the storm in the new eastbourne harbor. [laughter] now, i must leave. there is absolutely no way in which i will give way to a member of the liberal party. now, i must leave the terms of the medic. i welcome the commitment to support the remarkable changes taking place in eastern europe. the german chancellor mentioned

warsaw, poland, and made the image of lights. there's no part of europe as london, paris, rome, or berlin. the concept of europe stretching from the atlantic to the europe. it is a concept i share. i am strongly in favor of the free movement of people and capital in the 12 countries, which make up the union, but i have no confidence in presumed superior wisdom of the commission in brussels as compared with the judgment of this elected house of commons. recent events have reinforced that view.

if we look forward to the day, as i do, when the whole of the european family can share in that freedom and democracy of which we entered, then the long term the enlargement of the community is more likely to come about if the nation state of the 12 do not succumb to the halting ambitions of the super naturalist. mr. speaker, i also welcome the commitment to defeat terrorism in northern ireland, in great britain, and in europe. we often send a message from this place to friend and foe alike that our resolve would never weakened. and that their campaign of terror is as odious as it is the top.

tourism flourishes were those who perpetrated believe that one day tara will triumph. that is why we need all of us to give notice. mr. speaker, the government's commitment to pursue a firm financial policies designed to review the complaisance. it is a matter of deep regret to me that inflation is now more than 7%. high interest rates are not the only weapon to defeat inflation, but there are an essential weapon. >> order, order. >> our hope that until we secure stable prices, we characterize the stewardship of [unintelligible] mr. speaker, yesterday, the president of romania made a speech in bucharest, which lasted for six hours and which was punctuated by 67 standing

ovations. >> order. order. it is customary to give a fair hearing. >> yesterday, the president of romania made a speech in bucharest, which lasted for six hours, and it was punctuated by 67 standing ovations. i am saddened that i was not asked to move a vote of thanks to him, but it has been an honor to make this speech. it will be a matter of relief for the house to know that there is no person and response being asked to do so on a subsequent occasion. >> you are watching live coverage of the british house of commons on c-span. as the house of representatives

have gone into recess pending the call of the chair, we are able to bring you this on the main network. we do know that at any point in time the house of representatives might come back into session, and we build lead our live coverage of the british house of commons for that. we wanted to talk a little bit about what our viewers are saying before some of the main speakers get up to speak, and we are pleased to have with us in our studio michael cockerel, who used to beat the chief political reporter, now an author and television producer. what is a reaction to what you have seen? >> i think it is fantastic. television in britain has been going for 50 years, and the first time television is now in the house of commons. you cannot really believe that 600 grown men could be doing this sort of thing, and then, we have just seen this speech, which actually was a very good knockabout speech. many of the jokes would be

difficult immediately to understand americans, but here is a man who began by saying how much he hated the idea of television in the house and that he had been circulated by these image builders, say how you come over on your practice sends 50% on what you like, 38% on your body language, and only 7% on what you say, yet, here was a chap who showed that the televising of the house of commons would be quite a success. he showed that television will, actually, be able to capture the drama of these great events. >> i remember when the senate went on television thursday senator john glenn went down to the floor of the senate and basically talked about how members would have to wear their red ties. was that for all members to look better on television? >> there was an idea that you

look better on television if you wear a blue shirt when the german parliament was televised for the first time. it is said that in the papers today before, and every single one of the 500 members of the german parliament came in wearing blue shirts, but you can see that they are actually wearing different colored coats, and i think that there will not all look like american anchormen. >> we can look at the gentlemen on the floor during one of the introductory speeches. what can you tell us about him. >> he is a labor mp, and he is responding to what we had this morning, which was the queen came and opened parliament this morning, and traditionally, immediately after the queen makes this speech, mp's from both sides make a speech saying how grateful they were. it shows the queen has come to

her parliament, and they, the members, are very pleased to welcome the sovereign to parliament. >> the speaker of the house has already risen. in his first 15 or 20 minutes of the house of commons, he called for order. is that unusual? >> it is not unusual. it would have been unusual if he had not arisen within 15 minutes. remember, this is an event -- the house of commons is now pack to the rafters. there are 650 mp's. there are not even 6 engine 50 seats in the house of commons, and they are all they're excited as schoolboys. what is surprising is that there has not in a way been more people trying to hog the camera. most of them have been on their best behavior. there was at the very beginning when the speakers started talking -- someone got up and made the first point of order, and he became the first mp to be on television. >> we hear a lot of the

undercurrents, the talking going on, and rubble, i guess it might be called. is this something we will constantly year? >> yes, the house of commons is an almost unique institution in that one of the things you do not do to show approval is to applaud. so the way they approve of things is to say "hear, hear" this is an extraordinary mass of sound. almost as if you go to dinner with an mp and say something mildly amusing. instead of them laughing, which is the normal way people communicate, they go, "hear, hear off." they have this parliamentary way of making sounds. >> how well margaret thatcher come across this afternoon? in just a few minutes, maybe 20

minutes, she will be addressing this commons. >> she has always been very concerned about television coming to the house of commons. she has always voted against it, and she says she has voted against it because she believes it will destroy the intimate atmosphere of what is essentially a debating chamber and that the lights and cameras will be very interested. other people think that she is against it because she thinks the cameras will work to her disadvantage. at the moment, until today, the commons was just on the radio, and she is very fluid on the radio, but she was reading from her notes and wearing glasses. wearing glasses can look to someone as if there is some intimation of mortality. the british publisher not normally see mrs. thatcher wearing glasses, and they do not realize that she reads her notes. they think, especially in prime minister's questions where you

have to think on your feet, that is made up as she goes along, and that is not quite the case, so i think she is very concerned about that. there are also different views as to how she will come across because television is a close up and intimate medium, and if she is seen as really shouting at the top of her voice, this may alienate many people. on the other hand, it might have the opposite effect. it may make people think that this is the our lady of acoustics by what she says. i think what will happen is it will work both ways for her. at those people who already think she is a wonderful iron lady will say, "good on you, margaret." and as people who cannot stand her will have their own impressions intensified. i think she may learn because of television to adapt her technique. what she used to do -- and we have not heard any of it yet -- when they really do the shopping so you are really trying to talk over a wall of noise -- what she

would do was try to talk over the top of it. i think what she may do now is just lean back and lets the wall of noise build up so that she is shown as the lone woman against the mob obeying hooligans -- the what -- a teh mob of baying hooligans. >> how will the head of that labor party, cross? >> the leader of the opposition, he has not got that much hair, and he said he is rather worried about the way you would look on television. he said to some of his colleagues on the labor front pitches, -- the labor front benches that they have all got to grow some hair because the camera comes from above.

you can see, especially if you are looking down, just the top of a bald head, so i think -- this may sound so the festival, but this is the sort of thing that people are concerned about because television is an impressionistic medium. but the other thing is that he wants to become the next prime minister. at the moment, he is 15 points ahead of mrs. thatcher in opinion polls. here is a unique opportunity for him to try to influence the election, people who would not normally have seen him or would not normally switch on two things -- they will switch on because they are watching the historic televising of the house of commons, he, i think, will attempt to be very prime ministerial. he also will try to curb -- he is called the wealth wallflower, that he talks too much -- welsh waffler, that he talks to much,

uses three words instead of -- where one will do. i think he would try to curb that. every tuesday and every thursday, there is what is called prime minister question time where the prime minister gets up and asks the question from any member of the house, but traditionally, the leader of the opposition is allowed to ask at least four questions of the prime minister, so this is all seen as a rather gladiatorial contest. >> prime minister's question time when week from today that a schedule. we thank you for coming by. we'll keep you here as much as we can to help us fill in the spaces where the american audience may not understand. right now, though, we have to go back to the house of commons. >> that research reveals that during the last parliament there

were two other members of the class of '83 with similar maturities to my own who seconded the laurel address. at the subsequent general election, both of them lost their seats. [laughter] now, mr. speaker, the secretary as a model of kindness and currency, and of all i must tell him that i got his message loud and clear, the return to the house as the honorable member who has proven these various political allies and the political lives cast a particular debt. alice are being lived at the most -- hours are being live at the most exciting of times. recent events in germany and eastern europe have shown that history is a constantly moving

target, and that nothing is set in concrete, either literally or metaphorically. it was john kennedy, whose words we have all recall over the last few days of the berlin wall, it was kennedy who said, "some men see things as they are and ask why. i dream of things that never were and ask why not." it is because i believe that the program revealed by the greater speech is in accord with the spirit of that message that i have no hesitation in commending it to the house. >> point of order. in the course of the previous speaker's speech, he mentioned

some clement lloyd. i never agreed with him politically, but is hit -- is it right, knowing that it is televised -- [crowd of poor -- [crowd uproar] to use the occasion to make a snide comment about someone who is no longer here? even though i personally disagree with him, he was a good member. our justice system dictates that we are not going to hear that sort of thing. >> in order. even before we were televised, the house would sit we have

freedom of speech in this house and every honorable member must take responsibility for what he says year. order -- it is not a matter for me. the question is that an humble address be amended as follows. "most gracious sovereign, bring your majesty -- we, your majesty's most suitable and loyal subjects, the commons in great britain and northern ireland in parliament assembled, offer our humble thanks, your majesty, with a gracious speech, which your majesty has addressed to both houses of parliament. the leader of the opposition." [crowd cheering] >> mr. speaker, for those who may be uninitiated, it is one of the most pleasurable customs of this house that the leader of the opposition is allowed on this occasion to pay compliments

on their speeches to the honorable gentleman -- gentlemen who have moved and seconded the address. i do that with my usual passion and enthusiasm, particularly for the usual sparkling performance of the honorable member is the great the house. as i looked across the chamber of him, certainly one of our number, who, like myself, has not presented himself at any television charm school for grooming, the only concession that i made by in that direction myself, i suspect that the honorable member is much the same, is to take possession of a kindly and generous offer made to me by one of my honorable and learned friends, who shall remain anonymous, of something called puppy food, which look like several blotting paper is,

apparently for the purpose of mopping one's head. after the ordeal of moving the religious, i would be more than happy to pass this across to the honorable member, should you require it. he, of course, in any case, needs no tuition in charm or indeed in gentility or sovereignty. .

he should not worry about that all, mr. speaker, because the castoff look along his own front bit and see so many secretaries , the home secretary, the transport secretary, to be absolutely assured that harris not necessarily evidence of wisdom. -- that hair is not necessarily evidence of wisdom. i have been tempted from time to time to try and convert them to a different set of classes so that he could double the output of mine shadow chancellor of the exchequer.

i mean of course, in all respects, other than political. mr. speaker, we also heard from the member who was an earnest member of parliament, and have shown in his time not been considerable courage, because it was the at the time of 1983 general elections to his considerable credit called upon conservatives not to vote for the national front man who was a conservative candidate. and i think everyone will acknowledge that courage and i strongly support the member in that. i know the honorable gentleman's wife who is an active supporter and we have had mutually productive and counters in securing that liberty.

it is celebrated in today's queen's speech. not only is he the conservative for the no. independent bookmakers association an office of some considerable distinction, i would imagine, and i leave the prime minister to talk to that. [laughter] the honorable gentleman also shares a birthday, the same birthday with the drummer of the rolling stones. he hinted that he himself might become something of a rolling

stone. until then, we shall be informed and delighted by his contribution. >> the prime minister. [inaudible] >> mr. speaker, my first joined the leader of the opposition and congratulating my honorable friend in the way in which he moved a loyal address. he did in his own inimitable style, dry as always, to which i am eternally grateful. even the opposition has benefited very much from his concern for posterity. when we were in opposition, which we will never be again -- [unintelligible]

he moved private bill after private bill, or council houses, a bill to privatize other corporations and cable and wireless, of course privatization goes nowhere with a labour government. they want nationalization of the major centers of production and distribution. may i also congratulate my honorable friend who seconded the motion. he is well known for having won his seat against all odds and he will do so again. he is always looking after his constituents. i was very glad that he pointed

out learned that the labor government is the father and mother of unemployment. may i just finish? my at just finished thanking my honorable friends and then i will give way to the honorable gentleman? it is up matter a happy coincidence that in the year where the loyal speech contains reforms, that they are distinguished solicitors? both of my honorable friends are to be warmly congratulated. i give way to the honorable gentleman. >> in what respect the account

given by the former chancellor of the exchequer of the departure -- of his head -- of his departure was inaccurate? >> i will come on to dealing with the economy in just one moment. in the meantime, i would like to deal with some of the things which the leader of the opposition said. i had better deal with them now. the national health service -- he omitted the point that that for every 1 pound labor spent on a national health service, this government has spent three. yes, we did achieve economic growth in the first of our european competitors, a record number of people in jobs in this country under the conservative government, for all time. he talks about traffic congestion. under the labour government, they had it cut the amount spent

on motorways. they ran the economy so badly. he then came on to pensions. he omitted to say that the pension rights in the european community are very different from here. moreover, he omitted to point out that it is the labor government that was not able to honor a pledge to protect pensions against rising prices. it would have required a 20% increase and they had not had the money to do it. he omitted to say about our teachers that there are higher proportion of teachers to students than ever before. there are also bigger numbers of students in higher education. he spoke about war widows. it was this government that freed the war widows pensions from tax altogether.

the average age will go up very much more than inflation. the age allowances will go up by 14%, and for those aged 80 and over, by some 70%. what they had in the soviet union was not socialism -- of course it was. the union of soviet socialist republics. massive nationalization, and if you look back at speeches in opposition, he wanted more nationalization. massively high taxation. such detailed control that at the end of the last period of labour government, manufacturing output was lower than it was at

the beginning. he omitted to say that. they ashley said that manufacturing output went up. it did not bury it was lower than it was at the beginning. may i point out that far from being dragged along behind, we are in fact ahead in the way in which we are implementing -- for example, in the way we are implementing the directors for the single market. by now some 68 single market directives should have been implemented by the end of june. france has yet to implement nine. denmark and the netherlands, 12, and all others more than 12. italy at 33. we have the record with only three measures being on implemented. -- being on implemented -- un

implemented. of course you cannot have subsidies if you are at their terms. if you permit subsidies, the richest country while at the bigger subsidies and there will be no common markets, no single market, and therefore nothing extra for us to enjoy it. he then pointed out that there were times when britain was isolated in their argument gets come up when we try to get a fair deal for britain for the budget. and we're still opt to -- isolated. and we will stay isolated until we have succeeded. yes, we were isolated when we had to implement policy. yes, we were isolated one that wanted a common tax, and we went on with our arguments and eventually we wondered what he

calls isolation is really winning your argument. -- eventually won. what he calls isolation is really winning your argument. the 1970's were a decade when britain was in decline. when socialism meant that we had to be treated like some third world country and rescued by the imf. in the 1980's, britain regained her strength and pride. we are no longer afraid of change but can respond to it with confidence. one moment while i particular -- what is this particular paragraph. british industry has said friend to new ways and new technologies at an unparalleled rate. they can once against get a good return on investment. all the latest three years, we're seeing a 40% increase in

business and investment. that's an unprecedented and vans. that is why industry like steel, newspapers, and now the docks have now been transformed to be the best in the 1990's. that is why this country has been getting the lion's share of overseas investment coming into the european community. the preferred to come to britain. the government sees two main task in the period ahead. we must do everything possible to encourage and sustain genuine democracy throughout eastern europe. but in the euphoria of the moment, we must not underestimate the magnitude of the task. by genuine democracy, we may not just the outward trappings but the underlying substance, free elections and a multi-party --

>> order. she wants to get on with their speech. the prime minister. >> i don't think anyone has given away more than i have. by a genuine democracy, we mean free elections and a multi-party system together with all the freedoms that were set out in the helsinki final act. it is certainly not going to come about quickly. it is time for some european countries to achieve reform and it may well take years. britain is already helping poland and hungary. we're ready to do more as part of an international effort. our second task is to enable these great changes to take place in conditions of stability in europe said that no country feels that its alliances or borders are threatened as a

result of them. the members of the exchange's -- this would not be happening without the courage of president gorbachev. we all have an interest in seeing his reforms in the soviet union succeed. these matters were discussed by the european community heads of government at a very successful meeting in paris last saturday evening. this approach received wide support. we all welcome changes in eastern europe and agreed that the community should continue to give them every possible help. the particular urgency of poland and hungary's needs were recognized. the european council in just over two weeks' time will decide whether additional -- what additional help the community could offer, not just financial help, but food supplies and training. we also consider the possibility of extending the european community programs in areas such

as technology and education to eastern europe. we're looking but the various options for bringing eastern europe into closer association with the community. we will discuss this further in strasbourg. mr. speaker, at the same time we have worked with nato and the warsaw pact, and they continued to be the basis for defense borders are not on the agenda. we will continue to abide by the helsinki final act. indeed, without nato and the european community, these great events would surely not have happened. mr. speaker this was an excellent meeting and a very satisfactory outcome. the next that is for nato heads of government to meet on the fourth of december and president bush will report on his meeting with president gorbachev. before that happens, i shall be

meeting president bush at camp david later this week. the reaction of the right honorable gentleman, the leader of the opposition, to see what is happening in eastern europe as another excuse to weaken our defenses by getting rid of nuclear weapons. even though they are a fundamental part of nato strategy. it is because we had nato, because we kept defenses strong, because we deployed against the soviet union and convince them that they could never succeed in intimidating or threatening the west, that we are now witnessing these great changes. mr. speaker, times of great change our times of great uncertainty and even danger. we have to be prepared for any threat, however unexpected. we are winning the battle of

ideas. we must make sure that subsequently we do not lose the peace. our nuclear deterrent and the collective security provided by nato remain the cornerstone of our defense. how we react to what is happening now will shape europe and the world for decades ahead. against a background of our sure defense, we can enlarge opportunities, enhance the quality of life, and improve well-being. it is the right one for the britain of the 1990's and i commend it to the house. [unintelligible] >> point of order, mr. speaker. >> you are watching live coverage of the house of commons. you just watch the speech by prime minister margaret thatcher. prior to that, the leader of the opposition, neil kinnock, the

leader of the labor party. joining us is michael cockerel, and author of some books. it is representative of what you have seen on the floor of the house? >> yes, although everyone is on their best behavior. but neil kinnock and margaret thatcher had given way. that allowed people to interrupt them a great deal more often than they normally would. sometimes the prime minister can be positively aggressive. i am not giving way. but the convention is that you give way. sometimes people can stand up and try to interrupt you in order to put you off your stride but as you can see, she was very gentle about it. i have two customers there now will take the first one in in the second one. they may be playing up for bid

for the camera and it will tend to revert to the more traditional form. >> you have written about her for television. >> i thought she was very nervous to start with. i was saying before in this program that she had a problem about whether to wear her glasses are not. this seems to me she got her speech written in very big tight so she did not have to wear her glasses. because neil kinnock did raise some points that she did not anticipate, she had written it down and our handwriting and had the lifted up in order to be able to read that. at times she was not quite clear whether she wanted to have them on or off. but for most of for a speech she did not have for spectacles on. i thought she looked a little more tired and matronly, all older than what has seen her

some time before, because normally she will come into a television studio for interviews and there will be a great deal of words will have gone into the makeup. no doubt she has been made up for television, but she has been a sweaty chamber for an hour before she got up to speak. she could not go off and potter knows beforehand. >> the leader of the liberal democrats is right there and the speaker of the house of commons. we will go back to that. we have 10 minutes more that we can bring you. i wanted to ask you a couple of things to help me understand -- members waving something. what are they waiting? >> they are waiting what is called their order papers. that is the order of the day's business. that is one of the things that do not do in the house of commons, they have various ways

of showing the reproval. one is to waive their order papers and say here here at the same time. >> looking at most of the camera angles, you're able to see the person sitting behind them. it is a wider shot. >> i think the reports, which many broadcasters had about how restrictive the coverage was going to be, turned out to be a bit exaggerated. you had not only shots which were wider than just head and shoulders, if you saw the background of people -- in some cases, and this may cause some controversy, it looked as though the deputy prime minister, upon the prime minister, was actually falling asleep. now we the broadcasters -- this

is an experimental transmission of the house of commons. after six months the house will decide whether they wanted. it will be interesting to see whether on the british network news tonight the run those pictures where it certainly looked to me as if the deputy prime minister was falling asleep during the prime minister's speech. it will be interesting whether we highlight that our hope and pretend it really did not happen. >> we will be back to chat and about 10 minutes as we wrap up our coverage. let's go back to the floor and listen to the speech by the leader of the liberal democrats. >> in terms of times spoken. it is a matter of record that the honorable member spoke six times only. mr. speaker, we will always

listen to the prime minister's speech with great interest i must say that for my part, the most remarkable statement that she made was the statement that she made the starter for speech in which she said week will nevr be in opposition. mr. speaker, what a remarkable statement that is. i remind the right honorable lady that this is a democracy. a little more humility on her part, a little more understanding of our electoral mortality, might lead to better government in britain. and rather less of the kind of abuse of power that we have come to see as the hallmark of this government. now, mr. speaker, but the right honorable gentleman who spoke as the leader of the opposition and the right honorable latedy were

right to laydown the criteria for judging the speech -- the last speech of this decade and maps out a program for the first year of the next decade. it is right that we should look at it in those terms. in terms of what it is that we are saying to the fruits of the decade which will be noted as the thatcher decade, and whether or not they measure up to the requirements that now face of britain in the 1990's. mr. speaker, i am bound to say that any rational judgment of the speech must lead to only one conclusion. as a program for the first year of the next decade, this speech is a peculiarly sad, irrelevant and downright eccentric. i did not say that in the spirit of-opposition. [laughter]

this party has supported and does commend many of the things this government has done in the last decade. we believe that they have done some of the things in britain that needed to be done. and those things should not now be undone. we've supported that -- the democratization of the trade union movement. liberalizing markets in britain, all of those have been good thing. but we are not measuring the speech against what they have done in the past. it is against how they measure up to the tasks in the future. at the heart of this gracious speech and this program for the next year of the next decade, there is a vacuum where it speaks of and what it says is irrelevant to the needs of the future and where it does not speak on the issue of training, on the issue of investment, on the issue of europe which is

where britain desperately needs of lead. it is a gracious speech, and if you like, it reflects sighting of the thatcher to take -- decade. -- it reflects the sagging of the thatcher decade it might have addressed itself to the regeneration of the industrial base of this country. the industrial base which is calculated to have been wiped away in a recession with which this government visited the decade. the particularly brutal comment on that legacy of this government, that they entered the 1980's with a long-term recession that damage british industry, and they and a decade perched on the head of -- on the edge of another recession in the

future. maybe it should not be called a recession. i see the chancellor of the exchequer shaking his head. he will tell us that this is not a recession. stagnation -- will that do? his own figures, mr. deputy speaker -- mr. speaker, show that growth will only be 0.75%. given the government's record of accuracy, it is he's so confident that a tiny plus mark will not end up as a substantial negative mark? the prime minister said a dinner speech that this is all in the price of success. this is all the price of success. well, mr. speaker, again the house needs to remember that when we came into the 1980's we were told we had had heart years and a recession, because of the

price. that was the price that we had to pay for past failures. now we were told that we have to have a recession and a hard year because that is the price for success. it would be a sick joke, mr. speaker, and that truth is that overall production in britain has only now just blitzed above its level in 1979. our market share has dropped and continues to drop in the world market. the truth is that inflation is now running at the highest level of any of our major industrial competitors. the truth is that interest rates in britain are now higher than they are in any of our major competitor countries. the truth is that wages and britain are running ahead of inflation at the rate faster than any other of our major industrial countries, and the truth is, mr. speaker, and i

will give way and a moment, that we now have a trade deficit of record proportions. a full 6 billion pounds above what the government predicted it would be only six months ago. that is the truth of the present situation in britain. >> i am most grateful to the right honorable german. can you tell us what a mythical liberal government would do to control wage inflation? >> you've heard the statements that we've made in the past. we would see this government enter into the european union market system which means that we could begin to control inflation and therefore control wage rates without using high interest rates. but i'm here to discuss the government's program. the honorable gentleman -- i'm here to discuss the government programs. in a relatively short speech, i simply do not have time to put

forward all of the alternatives which the seats. mr. speaker, the government says that the success stories investment. investment is a percentage of gdp, and it is now again only just blipped above its level in 1979. with interest rates at their present level, who can doubt that they will begin to plunge back? mr. speaker, this is described by the government as an economic miracle. i say it is not an economic miracle, it isn't economic maros. -- is an economic mirage. >> the leader of the liberal democrats speaking for the first televised session of the british house of commons. michael cockerel, before the house of commons has gotten of

very -- gotten very small compared to what it was. >> the chamber is extraordinary. one of the things that happens is that for the two big speeches, everyone is there. but it shows in a way how quickly television has worn off. within a couple of hours, they are prepared to go back to their normal practices. most debates in the house and the commons are very thinly attended. members have other things to do in the have committee meetings and so on. it is only really for either the big speakers, like the prime minister or the leader of the opposition, that some of the famous parliamentary names that attract people. most of the times it is very thinly attended. one of the things that you're saying -- you can see how few people there are, but when you look at him actually speaking, it looks as if there are lots of

people. he actually has the smallest party, the third party, only 25 members compared to 204 hundred. -- 204 hundred. they have bunched behind them, giving the impression that all his people they're supporting him, even if no one else stayed on for his speech. >> you have worked in british politics for many years, been the chief political reporter for a popular magazine. have you think what they're feeling about television as they walk out now? >> hot. i think it will be the lights. i think they will be on edge because what i say is a great day and and a historic moment. the one thing that they will be doing is bringing up their wives, their mistresses, the

journalist friends to find out how it came over. they do not know how it came over. >> they did not see it. >> all they know is what it felt like when they were in the chamber. in the bars in the house of commons tonight, there will be in this talk about how it came over because the house of commons has more bars than any other place in britain. 13 different places within the palace of westminster, 13 different watering holes. some of them are specifically only for members of the house of commons and for privilege sections of the journalists. they will meet and ask how it looked? there will be scanning the newspapers and watching the highlights on british television tonight said that they can make a buck -- their own mind. the boys in the united states there are a variety of books that can be bought or receive regarding background on members of parliament.

we thought we would briefly go through the ones that are available here. if you want to go to the expensive route, a companion book. sells for about 52 pounds. it has all the pictures, the backgrounds on the in peace -- mp's and then the mp's chart. you can go ahead and see that at the bottom of your screen. it is from a group called parliamentary profiles. it is more of all light hearted guy on how parliament works. and finally, the cheapest one that we could find was one call parliamentary companion, which you can get from top-10 street -- tufton street. you can follow up -- you can

more easily watch members of parliament and learn a little bit more about them. what do you think what the impact of television in the house of commons in regards to its future after the six-month debate here? >> i think that on the basis of what i have seen today, there will certainly vote to keep the television cameras. we are in for some thrills and spills ahead, and we the broadcasters will have to decide whether we put in the cheeky shots of someone yawning or someone falling asleep. but they cannot turn the clock back. this was democracy in action. you cannot say, no, we will go back, go away. for a long time they refuse to even all-out right thing reporters, journalist in the house of commons, because it was thought to be -- it would have

its effect on the privilege of parliament. and it was only 150 years ago that they actually allowed the journalists and. it did not run the house of commons. indeed, it made reporting much more accurate. people was doing was invent what they thought they were saying. and that is not what happened until the cameras can and all you had was the written version , read like a parliamentary sketch, a theatrical notice. well now you can actually see the light flesh and blood. i think it is here to stay. >> the british house of commons returns from its break this week and we will have live coverage of prime minister's question time when prime minister gordon brown takes questions from members of parliament for live coverage wednesday morning at 7 eastern on c-span2. congress still some break this week -- congress still on break

this week. much of the staff returns this week. the house should return on january 12. you can see that on c-span. the senate meets again on the 20. congress may consider another economic stimulus when it returned three of the $787 billion signed a law last february, $307 billion has been committed to states by the federal government. that is up $3 billion from last week. you can find more information at c-span.org/stimulus. will find links to watchdog groups tracking the spending. >> american icons, three original documentaries from c- span, now available on dvd. i unique journey through the iconic columns of the three branches of american government. see the explicit detail of the supreme court, go beyond the

velvet ropes of public tours in the white house, and explore the history, art, and architecture of the capitol building. american icons, a free disc dvd said. is $24.95 plus shipping and handling. one of the many items available at c-span.org/store. >> for the past 44 years, canadian networks has produced a special with the prime minister. canadian prime minister stephen harper answers questions on the canadian mission in afghanistan, climate change, and his relationship with president obama. this runs about 45 minutes. >> thank you for joining us.

>> it is good to be here. it does not seem that long ago since we have the last one. >> we're talking about what can only be described as the great recession. you're talking about the kind of stimulus spending you would have to put in place. is the recovery sustainable and is the recession over? >> economist would tell you that technically we are into recovery. i am much more cautious. we do not yet have that type of private sector lay growth that we need to say. we do not have the turnaround in the job market. we don't have them going back to work but there are some positive things that have been happening. we do have some growth. the employment situation is stabilizing. 2009 has been a tough year, but not as tough in connecticut -- in canada as other places. we're optimistic that 2010 will be a year of recovery. >> when do you think you can choke off the stimulus?

>> we're pretty clear that we are in a two-year economic action plan that ends at the end of the coming year. that will be march 2011 where we will have a second economic action plan budget in march and we will start to plan for the end of the stimulus third we have to keep pushing the stimulus out but we have to plan for the end of bed and plan a return to balanced budgets, and also continue to look at ways in what will be a more constrained financial situation in the future, ways that we can continue to fund activities for a strong economy and the jobs of the future. >> talking about to attend -- 2010 being a year of recovery coming you talk about the fact that the european and american economies will continue to grow slowly for a considerable period

of time, you said. how do we get recovery, particularly with our american neighbor growing so slowly? >> i said they may grow slowly for some time did that is one of the reasons why we put a high emphasis, since we came into office, of the fire -- diversifying our markets. we try it -- we signed trade agreements with eight new countries as we came in the office. we have import negotiations with the european union. we have one enter weight with india. we will continue to push to diversify our markets but there is no reason canada cannot grow somewhat faster than some of the other developed western economies. we are in a relatively strong position and should be able to take advantage of that. >> one of the greatest successes of your stimulus packages had been the home renovation taxes. everyone is taking advantage of it. it is created a lot of jobs and the mayor to real -- the

material used is mainly canadian. are you going to extend this, give us a christmas present ahead of time? >> you can ask me but those answers will have to wait until the budget, until the second phase of the economic action plan in march. but obviously we're looking at ways that we can continue to deliver stimulus, to have real impact on the economy, but at the same time be in a position where we can return to balance budgets at the end of the economic action plan next year. >> i'll take that as a yes, prime minister. let me ask you about eight important issue. interest rates are not going to stay at 0% levels for too much longer. this morning about canadians, quite concerned about canadians taking on too much debt. not only consumer credit card debt by buying houses that they cannot afford.

how serious of a concerned should we take this? >> is a concern. i would not hit the panic button right now. we are monitoring the situation pretty closely. in the last couple of years we of change some of our rules and canada to assure ourselves that we can avoid the kind of housing bubble that they had in the united states. if necessary, we will make more changes to this. but certainly debt levels and canada are a little bit on the high side. they are nowhere near the kind of situation we see -- have seen in the united states. i think canadian family should remember as they renew their mortgage that mortgage rates are really at not just historical lows but very unusual was. it is almost inevitable that interest rates will be higher. family should budget accordingly. >> the budget is forecast to be $56 billion. are you saying that we could cover our fiscal deficit with out tax hikes? is that really possible?

babblers absolutely but we need to exercise discipline. we have to put our deficit into perspective. compared to almost other -- every other western country, we have very low debt levels. we have no risk of any kind of debt interest payments by world that we saw in the 1980's and 1990's, but we have used are good fiscal position when we had tough economic times defined programs to help people, the unemployed, stimulating job creation. but once the recession ends, we have to reestablish fiscal discipline. the government's approach will be clear. we will not be raising taxes but we will be a constraining growth, making sure that growth is very much contained in the future. that the tax base of the country can gradually recover. and within five years, if we follow that path we should be back to a balanced budget. and i think that is the way to

do it, exercises the discipline, not radical programs or radical approaches, but simply to try to live within a disciplined constrained spending growth pattern. >> we see that the government is still hiring people. public-sector wages are still growing strong. what about cuts in spending? >> it terms of the federal government, we have constrained wage growth. through last fall and into the budget, we insisted on very tough contracts with federal workers. we have not had job cuts, obviously, but we have constrained very much the growth of wages within public service. and that will have to continue as we move toward a battle its budget. -- a balanced budget. it allowed us to do a lot of things that will be of long-term advantage to the country, a lot

of infrastructure and research investment. but coming out of it, we will have to constrain spending, and if we constrain spending, i don't think we need to engage in radical cuts but if we can constrain the growth of spending and allow the tax base to recover, we should find ourselves in just about as strong as the fiscal position of any developed country. >> when you're down to see the president, it looks like we were making some progress. are we anywhere near a deal that is going to is be satisfactory to both countries? >> i think that we are making progress. i had a chat with mr. de. i know that he has been chatting regularly with our negotiators. i spoke to president obama briefly about it in copenhagen. i am worried about the bigger picture. the buy america provisions have

cause some disruption. but the back -- the vast majority of our trade with united states is still your intent free beer the real problem is when you see country -- not just the united states -- using a stimulus package to bring in protectionist measures. we all know that what the biggest danger to the global recovery is the spread of protectionism. it has been global trade that has driven growth over the past generation. we would like to see that sustain going forward. we took the very opposite approach. we not only did not put any protectionist members -- measures but repeal -- repeal the number of terrorists in order to stimulate economic activity both here and abroad. that -- repeal of a number of terror acariffs in order to stie economic activity both here and abroad. >> that in many other topics

still to come. >> mr. harper, please do something about the environment now. >> is also compelling concerns there about the environment, prime minister. there is a copenhagen accord, but what is this? there is agreement but it is not legally binding. how would you describe it? >> i think it is important as president obama said, an important step board. it is certainly not all that we were seeking. you are correct in saying that is not yet a legally binding accord. that is where we hope that this will eventually go but in the meantime we have some important steps floor. first of all, we have all the countries in the world recognizing it as a problem and that they need to participate. we had a big battle with the big emerging economies until very recently, denying that they had to do anything about their emissions. this has been something that we

have been asking for for four years since we took office, that we need an accord that includes everybody. everyone is no end. i don't think the objectives will satisfy all in barman ogress but they are realistic and they will make meaningful progress. >> why was canada getting beaten up so much? we got the apostle of the your award and last day? -- apostle --f fossil of the year award. >> the truth is that we have a balance that with economic growth. these and not easy question but we have a position that is held commonly by all the countries that attended the copenhagen conference. i think that it is a good accord from the globe -- for the globe and for canada. i think that we will continue to

be attacked in every country like that. >> with the north american approach, we've talked about 20% reduction by 2020. you know full well once that gets into the mishmash of the u.s. economy, it could be watered down and people are saying that we're allowing ourselves to have our environmental policy held hostage by the united states congress. >> we are in an integrated energy climate. we've seen that if the americans do not take realistic actions on emissions, it is difficult for canada to do quite much. factories in economic activity will relocate south of the mortar -- south of the border. it is essential that we act if

the americans at. since president obama came to was, one of the first things i did with him because he was committed to actually tackling climate change, we sat down and make sure that we're going to be working together on all aspects of this. i think that that will make both of our jobs a lot easier. we do need to make progress and for that progress to be effective on climate change and on the emissions, we do have to work closely with our economic partners in the united states. that is the only way to make the system work. you recall the previous liberal government that never brought in an emissions control issue because they found it was on a workable without american participation. -- unworkable without american participation. the nature of our energy markets and economy is that we are so closely integrated that to be affected, we have to work together. and this can provide a real

opportunity for canada as well, since we are ultimately not just the biggest supplier of energy to the united states but the most secure supplier of energy to the united states. we can do this in a way that opens off opportunity for canadian energy. the boiler some have criticized you for not developing a national environmental plan. what we've seen is quebec and ontario leading the way and pitting themselves against alberta. how worried are you about the unity of the country if we get our situation where you have got central canada fighting with alberta over environmental policy? >> i did not think canadians want to see that. but in the end, any type of arrangement that we've just seen will be concluded that the international level. that is what we've done with our partners around the world, and ultimately we would be acting with our american partners.

we all to merely hope that the provinces will cooperate three provinces cannot contend -- pretend that only the other provinces have to do something. to be effective, we're going to have to have all parts of the country in all industries contributing to the solution. >> your environmental minister was ticked off at some of the cheap shots being taken at the federal government and its attitude about the environment by ontario, quebec, and others during the conference. what you feel about it? double as canadians expect when candidate gets into a international realm and international negotiations, i think that they expect that the provincial debates, the personal agendas will be left behind. some of that was unfortunate. but in the end, it was the countries of the world that were getting together to solve this

problem and acting on the problem. and that is what we found. is there a need for first ministers' conference on the environment to deal with the provinces so that we come away with some solution so we do not get into some war? >> we are not going to lead this in the direction of unity war. there could be some people out there that that serves their agenda. there is no debate in that direction. >> is all the characters of yourself when we were coming into the segment -- use all the caricatures -- use all --you saw the characters of yourself during the copenhagen agenda. >> in terms of climate change, the preponderant those scientific elements is that global warming is rear -- the preponderance of scientific evidence is that global warming

is real. they are about protecting well into the future. there is considerable debate about this, but that said, the overwhelming preponderance of scientific opinion and evidence is that this is a serious problem that we need to tackle. i happen in the was a policy maker that getting every country and every province for that matter to admit that it has to contribute to the solution and understanding that these things have real impact on the country makes this a very complex problem in terms of trying to find solutions. moral outrage in marching in the street. one actually passed have a plan that will reduce emissions in a way that will not cause hundreds of thousands of people to lose their jobs in the middle of a recession. that is what we have been working with our partners to accomplish. >> and it continues on for a long time. >> the truth is this -- in the short term, it is very difficult to substantially

reduce emissions without affecting economic activity. that is a very real problem, one of the reasons why so little has been done about this around the world. longer-term, the solution has to be technologically changed. they're investing tens of billions of dollars in today's research activities. we have a long way to go to get to where we need to be in the next 10 years or 20 years. the boilers the it is canadians face a carbon tax somewhere down the road creche -- >> de think canadians face a carbon tax somewhere down the road? >> we will have to see what the regime in the united states looks like. we will have to harmonize a lot of our efforts with their efforts to be truly effective on a continental basis. but we are looking to avoid any type of additional taxes on canadians. that is a priority of this

government. >> we will be back in a moment. the bullets weeping with power cables. >> there has never been a proven allegation of abuse. >> live from halifax we going to do about afghanistan? babblers this has been a thorn in the side of the government for the past several weeks. what are you going to do about it? would you close down the parlor? >> in terms of the detainee controversy, that dates back to 2006. we're hearing the same stories regurgitated back then. we've been working with our military and the department of foreign affairs and we did a number of improvements or detainee transfer program. and i think they have worked well for the last 3.5 years.

one of the great successes of the mission. it is not perfect but i think it is working well today. in terms of the spring session of parliament, we are looking at a new set of legislation for the spring. but we have not taken any final decision on that. we're still examining our options. >> this session is still in place. no decision yet? >> we will be bringing forth a new budget in march and we are working at the planning of a new spring session now. we've not taken any decisions on a number of those things on timing, senators, all of the things that i read in the paper. bubblers one argument that conservatives say makes sense to in this session of parliament is that your government has been frustrated in the senate because they have been changing legislation, it even legislation passed unanimously by the house of commons. in january, you'll get five new