rates and performance across different assets in the pools were low just as the models has predicted. fourth, the po portion of participants who believe a particular episode of asset price increases are justified tends to rise as the boom persists. those who have doubts about the importance of the innovation or the persistance of the gain in asset prices lose confidence their opinions as they underperform and lose business and market share. and market share. .no carrierringconnect 2400

>> securities rarely traded and were difficult to value. nunn told a development of the abx index which allow investors to buy credit defaults wop swas allowed to buy -- investors to buy subprime more easily the ball comes to an end of the basic belief system is contradicted by events. this can happen. naturally as a matter of course because economic fundamentals

deteriorated or because of the change in rules and regulations that disrupt the balance between supply and demand. this might occur in the technology boom because investors can i get to the market first. not everyone will be able to take advantage of it. over time, the failure to achieve first mover status becomes evident and evaluation of just reflect this or lockup provisions on internet stock expires leading to a sharp increase in supply that leads to a large following prices. in the housing boom, the income of about for several reasons. for the boom to persist, underwriting standards had to be continually relaxed. this way, a new bunch of buyers could qualify to be able to afford to buy their homes. the difficulty in replenishing the pool of new buyers limited

how fast demand could rise. the rise in home prices led to an explosion of supply. this was especially in areas like arizona, florida, nevada, and even in california where buildable land was plentiful. this led to a downturn prices. once this occurred, the poor underwriting standards associate with subprime mortgage it became apparent. subprime are worse could no longer easily refinance or sell the house at a higher price and repay the original mortgage. as warren buffett reportedly once said," only when the tide goes out to you discover who has been swimming naked." what is this apply for a central bank that wants to limit the development of such baubles. the first conclusion is assessing whether there is a bubble or not. because there is an innovation,

asset the value should rise but not by how much tax is difficult to assess what the new approach re-evaluation is after an abortion valuation. consider the questions that might have risen relative to the bubble. what is the internet mean for technology investment. how many new start-ups will prosper. ? how fast will internet traffic growth and for how long? similar questions arose with respect to the recent housing bubble. how much will subprime lending increase the demand for housing and how this will increase the demand related to prices? what will the default rate bay? what is the appropriate correlation rate between a different subprime mortgage rates and assessing the value of collateralized debt obligations? how are such correlations likely to differ in a bold vs in the bust.

this uncertainty means that policy makers cannot be sure of existence, size, or persistence of an incipient asset bubble. dealing proactively with bubbles will be difficult. the first step is for the policy maker to work hard to investigate what is generating the sharp rise in prices for the asset in question. sustained price increases are a symptom of changes in demand and supply. the policy makers need to develop a perspective about whether these demand and supply changes are realistically sustainable to the extent implied by market prices. carefully analyzing the assumptions that underpinned the sustained increases in asset prices which might be sentenced of a bubble and considering the risks these assumptions might be wrong is very important. looking at the the announce of the system on which the beliefs

are based might be useful. the dynamics are reinforcing, then there is a greater likelihood of an asset bubble. the next step is for the policy maker to evaluate what tools might be available to curb the imbalances that have been identified the nature of the innovations and belief system associated with particular bubbles implies that the tools used to respond will likely have to be different and tailored to the features of the particular bobble in question. we need to conduct a careful cost analysis, weighing how good a policy might be and the rise in asset prices and how costly it would be to remain passive. many factors will affect the outcome of this analysis

including the magnitude of potential asset bubbles and whether that is occurring in the equity or debt markets. the policy maker is likely to find the compared with equity market bubbles, credit market bubbles are prone to generate higher costs when they burst. the benefits of preventing credit bubbles from collapsing are likely to be higher. credit bubbles threaten the stability of the financial system much more directly than equity bubbles. much of the debt is held by banks and securities dealers that are highly leveraged. when the bubble deflates, it can take the financial system with it, as a result. most equities are held on and on leveraged basis by investors such as pensions and mutual- fund, the sharp decline will not typically threaten the entire financial system. the comparison of the stock market crash verses the equity

crash, the bursting of the housing bubble has a greater negative effect on the financial system and on the macro economy. and this cost benefit analysis, the central bank must understand it will make mistakes. it may fail to temper bubbles that turn out to be disruptive when the collapse or it may try to temper price movements that they may think or bubbles but are not. the cost of these type of errors must be weighed against the potential benefits of limiting the damage. what are the tools with which policy-makers should respond? there are three broad set of tools available for i/ . the first tool is to lean against the wind up conventional wisdom by speaking out about the

dangers associated with the incipient bubble. the policy maker can. the assumptions embedded and the rapid rise in asset prices and question the accuracy of the assumptions. the policy makers might be ridiculed by true believers about the lack of understanding about the important nature of the innovation. over time, it protected central bank that laid out the risk clearly would gradually gain credibility with market participants. use of the bully pulpit would allow the bank to register its concerns. it would raise the risk that the talk by foreshadow more forceful action. beckham temper behavior. announcements can be very powerful when they can be followed by changes in policy. the second set of tools includes those that are macro provincial in nature. i would define macro provincial

tools as supervisory -- macro- prudential. these will temper demand or increased supply in the asset subject to the bubble or increase the ability of skeptics to take the other side of the market in which the bubble may be occurring. to counteract the housing bubble, it might include limiting loan to value ratios, limiting debt ratios, or increasing taxes on housing transactions. several asian and some european countries have used such tools to limit speculative real-estate activity apparently with some success. to limit the subprime lending boom, authorities might want to underwrite -- limit underwriting practices. but i want to enforce appraisal

activity. -- they might want to enforce appraisal activity. supervisory measures that said liquidity and capital requirements for financial institutions is a good tool. it might limit the overall buildup of leverage in the financial system. for the equity market, this might include marshalls for cash, options, futures, and equity over the counter derivatives. for the fixed income market, such tools might be raising hair cut, charged to dealers on their repossessed financing, raising their cuts at security dealers against the collateral borrowing from their customers. or you could raise margin requirements on derivatives transactions.

macro prudential tools are difficult to use effectively in practice. it is difficult to judge their impact if loan to value wishes for a single family mortgage is lowered by five percentage points. how big an impact will that happen housing demand? there is a risk that the rules or regulations will be circumvented. investors might move to instruments or offshore regimes with less restrictions. it is important that the authorities have the ability to apply the macro prudential tools broadly throughout the financial sector. none of this will be easy. more will be required to develop a portfolio that could be used that would be effected and would not be subject to significant in evasion or unintended consequences. let me briefly take note of another issue that i think requires significant consideration. it is the issue of governance. who controls all these tools?

who decides when the tools will be deployed and how extensively or intents of latsively. ? the final tool available to the central bank is monetary policy. this tool is not likely to work as well as macro prudential tool because it is too broad. policy will not address specifically the source of the changes in supply and demand better driving bottle. monetary policy will have big consequences elsewhere. some argue that monetary policy should lean against incipient asset bubbles. the notion of pursuing a tighter monetary policy, the central bank would take out insurance against the risk that the rise in asset prices and would be disrupted.

this sounds attractive in principle, it critically depends on how expense of the insurance is relative to losses the insurance protect against. does not clear that it must tightening of monetary policy would represent a favorable cost-benefit trade-off. the cost of the deviation from the optimal monetary policy in terms of lost output and employment might be high relative to the benefits of a somewhat smaller bubbles. this seems likely to be the case in most instances. historical lthere is some evidet tighter monetary policy will reduce leverage in the financial system by flattening the yield curve and reducing the profitability of net maturity transportation activities.

this may imply a more favorable trade of infighting a bubble. more research is needed on this subject. for now, monetary policy seems to be inferior to macro prudential tools. in conclusion, let me underscore the challenge that central bankers face with asset bobbles. this requires us to be successful in identifying double and developing and implementing a response -- bubbled growth and avert destructive price crashes. this is not easy because asset bubbles are hard to recognize in real time and each asset bubble is different. these judges cannot be an excuse for inaction. recent experience suggests that

asset bubble success and their collapse can be very damaging to the financial system and to the macro economy. a proactive approach is appropriate and three conditions are satisfied. first, circumstances should suggest there is a meaningful risk of a future asset price crash that could threaten financial stability. second, identify tools that have a reasonable chance of success in averting such an outcome. third, we are reasonably confident the cost of using the tools are likely to be outweighed by the benefits from averting a perspective crash. when these three conditions are satisfied, we should be willing to act. thank you for your kind attention. [applause] >> thank you very much for those remarks. our two questioners today will

be next. depending on time, i also have questions submitted in advance. >> thank you for that speech. i really think to important to think about policy responses to baubles. -- bubbles. none of my questions is going to address what you just said. [laughter] >> i did not expect you to. >> here is the first one -- roughly two weeks ago, the congressional budget office released its latest outlook for the u.s. budget over the next 10 years. it is very detailed, the most important single number is

probably 90% which is the debt to gdp ratio which the congressional budget office says we will reach the end of a tender window. do you think the united states could actually reach a 90% debt to gdp ratio? with global financial markets accept that as compared to revolt against it and precipitating a different type of crisis like a currency crisis? >> i think you know that several banks do not like to speculate about the future. it is clear to me that the fiscal path that the u.s. is on today is not sustainable over the long term. how far you can go before it is unsustainable, i don't know the.

we need a viable ethics strategy for this period of stimulus we have undertaken. we don't necessarily have to tighten fiscal policy today. that is probably not appropriate with a weak economy. it would be helpful to have a credible plan of the future fiscal policy consolidation over the longer term so that the market participants are confident that when the time comes, the government will do what it needs to to get the budget on a sustainable path. >> thank you. maybe i will bring it back to today's topic. should it be the fed's role and are they in a position to assess where foul -- where our value is and where bubble's art? s are.

this may inhibit innovation. >> we are not trying to target asset prices. when innovation's occur, asset prices should know. when the asset price movement is out of proportion to the value of the innovation, is the question. to say the federal reserve or other policy makers should not respond when asset price movements is extreme is inappropriate. as we have gone through this crisis, in bubble-bursting can be state -- destabilizing to the macro economy. it is important to underscore the fact that we're not talking about the central bank targeting asset prices. we are talking about the central bank and other policymakers thinking about what the consequence is when asset prices

calotte and when those asset price movements unmoored from the fundamentals. we may not have appropriate tools or we may decide that we are uncertain about whether it is a bubble or not i think we need to be made -- be more pro- active than we have been. when the cost benefit analysis comes down a favorable side, then we should act. >> the consensus economic forecast -- i looked it up again this morning and i looked at the bloomberg survey of economists -- and visions modest growth and relatively high unemployment over the three day yearperiod covered by this. approximately 3% growth and the unemployment rate -- to sending

through 2012. do you think it's possible for meaningful inflationary pressures to arise in this country in the face of such weak growth and employment markets? >> it is possible because this is not just a consequence of the slack in the economy but a function of financial expectations. you could be perfectly comfortable in terms of excess slack in the economy but if expectations of u a kimnmoored, you still have an inflation problem. we are trying to communicate to market participants to our exit and large benefit to reassure people that we have the tools in place to exits mobley when the time comes. -- to exit smoothly when the

time comes. the reason why we tell people this is not because the exit is near at hand but because we want people not to be worried about our ability to do so. inflation expectations are well- anchored. is important we continue to work on that. >> you have spoken previously about harmonization about regulatory reform and you touched on the importance of global coordination in regulatory matters. there are efforts going on with u.s. policy makers. to what extent is it likely that the fed will follow the deliberations of different plans

to tax >> ? >> the fed is very conscious of this across geographic jurisdictions. if you do now haveharmonization of standards, that will lead to arbitrage and a brace to the bottom as everybody starts to lower their standards because they need to help their institutions located in their jurisdiction. we're supportive of that. house support of we are of a particular proposal depends on what they depend -- what the turnout today. there is involvement at the federal reserve on the financial stability board. i have a member of the steering committee. we spend a lot of time b andasel and we are -- we spend a lot of time inbasel because this is what we are trying to achieve. >> the data shows that total

outstanding bank credit, at least as measured by the federal reserve every month, continues to climb. the total of such loans have declined every month for the last year. how important is this? why is credit continuing to shrink? how can we have a healthy recovery in the face of a shrinking banking system and when minded stabilize and reverse itself? >i also have a follow-up. [laughter] >> there is no question that the decline is a function of the

tightening of credit standards we have seen over the last year. it is also a symptom of the fact that some banks, especially small and medium-sized banks, are still under arrest because they have large commercial real estate exposure. that will take many years to work out. i would view the decline in credit outstanding as a symptom of the underlying tightness and credit availability. what i expect will happen is that as the banking system gradually hills itself, we will start to see credit availability and peru. improve. the large banks are in better shape than they were one year ago. last year, large banks that we raised almost $200 billion of equity.

they are in pretty good shape. it is really the small and medium-sized banks that have to get healthier. that will take time for that to take place prie. people are seeing moderate growth over the next couple of years and that is because the banking system is still not back to health. >> you spoke about the importance of regulatory reform. this includes a wide range of financial intermediaries. do you believe that the current legislation before congress today addresses that or does something more need to be done there? >> we don't know exactly what the legislation will come forth from congress. it is premature to decide whether to is broad enough.

it is important that we do not check out the requirements for commercial banks and let all their activities flow into the non-regulated sector. it is hard to do in practice. the fact that congress is talking about systemic risk regulation is helpful in that regard. that implies you were looking at risk horizontal across the financial system, not berkeley -- not of vertically. -- not article it. ver nottically. no chickt vertically. we don't want to drive activity into the unregulated sector.

>> let's move onto tougher questions [laughter] . everyone knows that one aspect of the crisis we just came through is a series of regulatory failures or enforcement failures. the federal reserve was not attempted in that. the federal reserve to regulate bank holding wicompanies and was up big losses. what steps has the federal reserve taken to ensure that the mistakes it made will not reoccur. >> there is no question that that that reserve and other

regulators could have done much better. as a consequence, we have been doing a lot of work to try to figure out how we can do better. we have done some studies at the federal reserve bank of new york and the board of governors is involved how we do supervision. the changes that we're putting in place are designed to do couple of different things. we want to do much more multi- disciplinary -- not as bank examiners but market people, researchers, economists, surveying them to get a sense of the landscape. the problem going into the crisis was everything was looked at on an individual institution by institution basis. you look at their capital and earnings and it was all pretty good. you're not really capturing the linkages across the financial system. we are doing horizontal reviews

and best practices. who are doing things well and who are doing things not as well and bringing the people who are not doing it as well up to snuff. that is an important change. we are trying to develop a more challenging culture about sir provision in terms of thinking about the bank as a business. how do they make money? how does it generate revenue? what risk does it take to generate that revenue rather than checking the box is in terms of if they are conforming to every little piece of rule and regulation. if you do not get the big picture, you will not get -- you will not do a good job in regulation. we're definitely working on that. >> we have one member question before we close. this draws on a recent op-ed from charles schwab in the"wall

street journal." says persistently low interest rates damage the seniors living on fixed income. what are your thoughts? >> i think that observation is correct that low interest rates are not attractive to savers. there is a consequence of that. the federal reserve has to set monetary policy to what is best to achieve its twin objectives of full employment and price stability. our view right now is that the federal funds rate needs to be exceptionally low for per extendediod to contribute to financial conditions to support economic collectivity. we're not getting the job growth that we need right now. would like to see employment gain more substantially than

what we have got. that tells us that monetary policy needs to be an easy setting to stimulate the economy and stimulate employment growth. that has to be our first priority. >> thank you very much. [applause] thank you very much, bill. our affection for you is inestimable put h. [applause] you. before we adjourn for the balance of lunch, i will remind you that the next meeting of the club will be on april 22. we will have the governor of the bank of japan. thank you and enjoy your lunch. [applause] [captioning performed by national captioning institute] [captions copyright national

cable satellite corp. 2010] >> yesterday, president obama met with leaders from around the world at the white house to talk about nuclear security. the white house announced that ukraine will get rid of stockpiles of enriched uranium. we'll get an update on this summit next on c-span. on a this morning"washington journal," we will get an update on the retirement of supreme court justice stevens. >> a republican president and the republican congress in february of march of 2013 will repeal every radical bill passed by this mission in a [applause] . >> did you miss one of the

speakers of the southern republican leadership conference? you can search it, watch it, click it, and share it on the cspan video library. every cspan programs and 1987 is there. this is cables latest gift to america. >> the white house announced that ukraine will get rid of all of its nuclear material by the year 2012. white house press secretary robert gibbs spoke with reporters about the ukraine agreement and other white house issues. he is joined by counter- terrorism adviser john brennan. here's a portion of that press conference. >> ukraine announced its intention to get rid of all its

stockpiles of the enriched uranium by the next meeting in 2012. they will remove a substantial amount of their stock this year and will convert its seville nuclear research facility -- its civil nuclear research facility to operate with regular fuel. this is something the united states has tried to make happen for more than 10 years. the material is enough to construct several nuclear weapons. this demonstrates your grandpa's continued leadership in nonproliferation and comes at an important -- in an important region where highly enriched uranium exists. let me turn this over to john brennan. >> the threat of nuclear terrorism is will and

contributes to global insecurity. there has been indisputable evidence over the last quoted two decades that terrorist groups have searched out nuclear-weapons and that includes biological, chemical, and radiological. the impact of a nuclear attack would be the most devastating as well as the most lasting. thus, the ability to obtain nuclear weapon and to use it is the ultimate and most prized goal of terrorist groups. al qaeda is especially notable for its longstanding interest in acquiring weapons usable nuclear material and the requisite expertise that would allow it to develop a yield-producing, improvised nuclear device. al qaeda has been engaged in the effort to acquire a nuclear weapon for over 15 years. their interest remains strong

today. al qaeda and other terrorist groups know that if they are able to acquire highly enriched uranium or separated plutonium and turn it into a weapon, they would have the ability to not only threaten our security and world order in an unprecedented manner but also to kill and injured many thousands of innocent men, women, and children which is their sole agenda. disturbingly, international organized criminal syndicates and criminal gangs are keenly aware of the strong interest of terrorist groups to acquire fissile material which has prompted these criminals to pursue these materials for their own personal gain. there has been a significant increase over the past decade in sharing intelligence among nations of the world to include intelligence on the ways and means used by al qaeda and other terrorist groups to pursue their nuclear weapons ambitions. while this intelligence-sharing

is unviable, it must be accompanied by a collective and effective action by all nations of the world tuesday night and deprive terrorist and criminal groups the opportunity to gain the nuclear-related material and the expertise that would allow them to fulfill their evil goals. indeed, our future and the future of generations yet to come depend on our ability to safeguard these materials and expertise. while there are many different nuclear issues that the administration is addressing, there is none more important than this one. that is why we are focused specifically on nuclear terrorism and nuclear security over the next two days. these issues must be addressed with a sense of focus and urgency. >> with that, we will take a series of questions. q>> a question for the ukraine and al qaeda.

where will the highly enriched uranium be sent? >> the final disposition location is yet to be determined. the announcement and the agreement happened just a little bit ago. that is a process we will work under the united states will provide some degree of technical and financial assistance to ensure that it will happen. >> you mentioned with regard to al qaeda that they have been seeking nuclear weapons for 15 years and that remains strong. can you provide any evidence they are actively pursuing a nuclear weapon on the black market or anything you can point to today? >> over the past 15 years, we have open testimony in court about their efforts to try to obtain uranium in sudan in 1994. you have statements that al

qaeda it seniors have made about their determination to use and say to those weapons. -- to use and seek to those weapons. there is strong evidence that clearly indicates that al qaeda had been trying to procure these materials on the open market with criminal syndicates. the evidence is strong for the track work -- the track record is demonstrated and we know that al qaeda continues to pursue these materials. >> a follow on that same question -- are you aware of any efforts by al qaeda to obtain material or expertise since the meeting that took place before 9/11 were the former members of the nuclear laboratory traveled? secondly, are you aware of any

effort at this point, continuing efforts, to infiltrate that body of trained scientists who could come back into the lab? >> there have been numerous reports over the past eight or nine years about a tense throughout the world to obtain various types of recorded material that is nuclear- related. we know that al qaeda has been involved in the number of these efforts. fortunately, they have been scammed a couple of times but they continue to pursue it. there has been demonstrated interest over a number of years. we are most concerned about the most sensitive of their efforts and therefore it will have only very few people involved in the effort and it requires very good

intelligence. as far as potential insider threat, throughout the world al qaeda is looking for vulnerabilities and facilities and stockpiles and to bring countries that will allow them to obtain the byproducts of nuclear reactors and materials that they can use but also to go after individuals that might have access to the individuals or have the expertise to fabricate a nuclear device. >> have they manage to do that? >> there is evidence of their attempts to do that. i would like to think that we have been able to port their success to that. >> -- their success today. >> [unintelligible]

are they doing everything to protect nuclear interests? can you describe the nature of the criminal gangs use suspect? -- you suspect? >> before john gets to pakistan, i would read to from a readout of yesterday about the president indicated his appreciation of that broad based sentiments and addressed the topic of the conference, reasserted the priority of the conference. the prime minister of pakistan indicated his assurance that pakistan takes nuclear security seriously and as appropriate

safeguards in place. on poland, no decisions have yet been made. i think they are -- that the scheduling is looking at a number of possibilities. >> i will not get into details but today's event as a seminal one as far as nuclear security. it is also part of a process that was started in this administration 15 months ago where we have had regular ongoing conversations with a number of nations and the world to include pakistan to address the goals that al qaeda is after and what kind of threat they pose. our engagement with pakistan runs the full gamut as far as what al qaeda is trying to do. they may carry out the objectives that threaten our national security and the pakistan national security.

sometimes there are criminal gangs that have information that some material has come out from the area of the former soviet union and they will try to provide that material to other groups to sell. all lot of it is scam, red mercury or something else but as far as stockpiles, they need to be buttoned down. this runs across continents. this is not just in a particular area. it runs throughout asia, europe, the western hemisphere. these criminal silicon -- these criminal syndicates are trying to obtain basement -- this material. >> our concerns are global and that is why the president has brought these individuals together today which is to make sure of this collective action. >> the president was directly

engaged on this exact question when exactsardari and karzai travel to the u.s. in the 2009. we understand the concentration of these types of materials in the former soviet republic. >> the there was material from chile and now it is in the united states. are you and the president concerned that the united states might have to make itself kind of a global storage for these materials? >> the goal of this summit and the reason the president is so concerned about it is our genuine concern about the security environment in which

this material is held. we do not worry about the security environment with which the material is held in this country. whether that is in different places around the country, the president's sees the threat of this type of material falling into the hands of somebody who wants to use for their evil designs as the number one security threat we face as a world. this is just the type of announcement that we would like to say. i traveled with then a senator obama to ukraine in 2005 with senator lugar. we visited a facility that was the equivalent of the ukraine cdc. we walked into a room and out of a refrigerator. somebody who work there took out a series of test tubes that were

anthrax. suffice to say, i think the level at which we believe that type of material ought to be secured, in 2005, that standard was not being met at the basilica we visited. -- was not being met at the facility we visited. we provide the type of funding necessary to help many of these countries secure this material. we have assisted ukraine and a number of those projects whether it be biological, chemical, or, in this case, nuclear. >> senate investigators said washington mutual, the world's largest bank that has ever failed, engaged in deceptive practices in its home mortgage business. former executives for the company testified this morning. live coverage from the

subcommittee on investigations starts at 9: 30 eastern on cspan 3. >> cspan, our public affairs, and is available on television, radio, and online. you can also connect with us on twitter, facebook, youtube, and sign up there are scheduled e- mails @ c-span.org. >> this year's studentscam contest best students to create and a 5-8 minute videos. here is what the third place winners. >> the united states is the only country that does not have a universal health-care system. on christmas eve, the senate passed a compromise health care bill.

it would not provide the same coverage as the original bill tried to. is it ethical to provide coverage only for those who are rich enough to afford the hefty expenditure that would literally cost you an arm and leg? this is our country. this video shows you our opinion. the next generation of americans want to make changes in a flawed system. >> on december 9, the president made a speech to the nation about the critical necessity of reform. the majority of the nation knew that the world's greatest country needed to have a system for treating americans and other medical needs.

>> i am one of probably 40,000 people in the san francisco area who do not have health insurance and that is why the issue is important to me because if i get sick and if something bad happens to me, i do not have insurance to cover me. if i want to visit a doctor, i have to pay the full price. it does not matter to anybody more about getting affordable health care. >> the world health organization recently rated america has only 37 about nearly 200 companies in health care. this is despite the fact that we spend the most in the world for health care. as a 2008, 43.6 million americans were uninsured. people had seen their premiums skyrocket. americans can still be denied coverage by their insurance or

dropped from their plants altogether. >> my partner is a nurse. most people think they have insurance. there are 55 million people who do not have insurance and probably another 40 million who are underinsured. you do not know you have that insurance until you get sick. >> many uninsured americans avoid making doctor visits as they cannot afford them. as a result, many serious problems that could have been avoided with preventative treatment get progressively worse. this forces people to go to the emergency broroom. the extra cost must be absorbed by others with higher premiums and deductibles. >> no, i don't think there's a crisis and that is why i am

supportive of the president's efforts to reform the system. it is critical whether there is or not a public auction and i think there are different ways of defining that. nothing is that simple. a public auction versus no public auction, there are grey areas in between. whether or not you have that, fundamental reforms like eliminating discrimination on the basis of pre-existing conditions, those are huge fundamental reforms of health care financing of insurance and of the overall system. >> many of the private insurance companies have been propagating lies about the public auction. -- a public auction. -- public option. they talk about death panels.

this is no more than a scare tactic. nothing even remotely close to a death panel has been suggested in any of the proposed health care bills. >> one of the things about the public option that is a myth is that the government will take over your health care. what the public option is that if you have a private insurer covering you, you can keep it and if you want to switch, you can switch to another private insurer. with the public auction, you have another option. it is not the government taking over your health care. the biggest mix and risk -- the biggest misconception i always hear is that the government is taking over and is a radical change from what you have. >> people claim that the public option would be a gateway measure leading to socialism. it would offer consumers and

other alternative in the free market. others argue that the public option would bring insurance premiums up rather than lower. if this is true, it would surely fail. >> we desperately need reform. it is broken and all kinds of ways. it is broken for a lot of people who are uninsured and that is a moral outrage is also broken in the escalating costs for poor people and sort of broken in the great amount of in the lack of security that people have regarding their insurance if they lose their jobs or their insurance, if they have certain conditions and are not sure whether those conditions will be covered. >> there are still many people around the country who do not accept the public auction and a viable solution to solving the

health-care crisis. >> i have relatives in canada who know how bad socialized medicine as did my and had cancer and my uncle had cancer and they allowed him to die. you sometimes will not get treated for cancer because they do not want to spend the money. if you have really bad luck milike my uncle, they let him die than of a private health insurance companies act with the same provinces and a company, to make a profit. it's not in their nature to act in the best interests of people. as the basis of capitalism. the have a product and market it. the public option is a choice.

>> i am jennifer and i support the public option. >> i support the public auction. >> i support a public auction. >> i support a public auction. >> i support of the public auction. >> we support the public auction. >> i support the public option. >> i would like to know more about universal health care. >> ♪ i used to roll the dice >> to see all the winning entries in the video competition, visit studentcam.org. >> "washington journal" is