i do not see any indication that and he has approved it, the impression i get is that he was still involved in the construction of this well. is that correct? >> he was aware of the day-to- day operations. i do not believe he had the intimate details of the actual engineering design. >> ok. but, he has knowledge, and general knowledge about the well-designed and the day-to-day operation. is that correct? >> yes, captain. >> now, using these documents, there were two management changes. if i can go back to the document, that mr. matthews got

from the bp website, the bp drilling and well operation policy. yes, sir. yes, sir. now, i believe that on page four, the second paragraph, i think you read that before -- i think you read that before. it is about a business unit leader. leader. can you read that again for me, sir? >> the business unit leader is accountable to assure that any deviation from policy and established procedure, and all non-routine operations have gone under a of corporate risk assessment, and permit measures

have been taken to manage the risk prior to the performance of the operation. >> yes, sir. if you have two in one day, does that qualified as non-routine? as non-retain at this stage in the project? >> it was not out of the ordinary to have to change the depth of the well. i also consider the tapered strain that was the other moc, because it was really in line with the basis design, i did not consider it non-routine. >> ok. so, based on that, he should not have been notified as the business unit leader? >> i do not know if he was

notified or not, but i would not inside -- consider either one of those non-routine. >> it appears that the construction of this well has from my non-expert opinion, problems. for example, you indicated there were three kicks. >> 1 tick. -- 1 kick. >> it appeared to me that during a critical time of operation the decision was made to allow the

attendance of the routine training, which is required to be taken every two years, and replaced with a someone who has less experience. less experience. >> estimate that decision? >> we have folks who keep track. he was assigned to d p d q, which was the platform. that rate was shut down for a short period of time. he was available. to go fill in. all the leaders are qualified trade some have less experience than others. he was available to fill in. >> he was available, but he had

been there throughout -- for how many weeks? >> he had been there for a week. he replaced him with somebody who is available and allow this more experience to go through a routine training opportunity. did anybody bothered to contact mms to ask for an extension? >> we did not contact them to

get an extension. >> was there any risk assessment? did anybody assess that? how was the decision made? >> there was no risk assessment down. we feel that all of the well site leaders are qualified. it was a critical stage. running d.c. meant casing is a part of every well. -- running up cement casing is a part of every well that we drove. i do not believe there was any issue with him going in and taking his required training. >> we part of that decision?

-- were you part of that decision? >> i was informed that he did to go to school, but i was not part of the decision as to who was available. >> you had no concern about him >> you had no concern about him taking off to school? >> i had no concern. >> what is the procedure? is there one? >> not that i am aware of. there might be, but i am not aware of it. >> when it shows up in the helicopter, and another one gems on. >> i misunderstood your question. everyone is different. each individual. what happens as that you write relief notes. they used to be handwritten notes.

in this day and age, we send e- mails to each other. usually the day or two before. we also talk on the telephone. we have a system in place where there is always a well site leader who has been there. that is the way the schedule is staggered, on purpose, to make sure someone is familiar with the operation. he would have gotten handover notes. he would have had a conversation. he would be working with another while site leader to have been there. >> is there a checklist? a written checklist? part of a standard procedure for the release? the checkoff, sign, and turn into somebody? >> not that i am aware of, no. >> what is the dp policy -- what is the bp policy for the well

site leader to maintain communication? he went to the school, said he had no communication with what is going on. is that standard procedure? >> yes, that is standard procedure. he is not on the raid -- rig. he is not in the line of sight. he is going to a critical training that is required by the mms and bp. it is standard for him not to be in contact. >> as the well site leader, senior representative of bp, to not to be in contact for that long period of time after he is off the station? did he make a report to you

after he was released saying that, are we good to go? anything like that? >> i talked to him before he left. i said, be careful. have a safe trip. he is going to school and he needs to go to training. >> my understanding is that a couple of the i.p. from -- vips from bp were on the deepwater horizon. what is their relationship? >> can you be more specific? >> ar they call =? different business units? >> mr. bryan is the vice- president of drilling and completion at intervention for the gulf of mexico. mr. sims does not report to him

directly, but he does report to mr. bryan. all the people who work in the dnc bp organization openly report to mr. bryant. >> ok. so mr. o'brien was vp for drilling and completion and he is the senior guy. he had knowledge of the well- designed and the daily operation. when he landed on the deep water horizon, he became the senior vp representative, is that correct? >> i would not see it that way, capt. the person who is in charge on the person who is in charge on the rig is the well site leader. >> the well site leader -- he

can do what ever without to saying, not without discussion without -- with mr. o'brien. >> he can follow the procedure that we have in place. i am sure that if there was an issue that he wanted to discuss, he could have discussed it with mr. o'brien dread the well site leaders cannot just do anything they want to do. we have a procedure. >> that is fine. in anticipated situations and it is not in the plan, what he asked mr. o'brien for his direction?

>> i believe he would call me first. if it was an issue, because there are issues -- there are times when issues need to be pushed up, mr. sims is my boss. if it was by coincidence that mr. o'brien was there, i am sure that he would been more than happy and willing to participate in a conversation. >> is it customary work standard procedure that when the vp for drilling and completion, have to a rig that he has a briefing from the well site leader? before his interaction with transocean personnel? >> can you repeat that?

>> is a customary when the ldp of drilling and completion, when he or she arrives on the vessel, that they get a briefing from the well site leader? >> in mr. o'brien's particular case, he sat in a briefing with transocean about safety because he had never been there before. that was the first thing that what happened. then he would sit down and talk to the well site leader. it also depends on the time that he got there. depending on the operation, i know that he would not bother the well site leader at the time if he was in the middle of something. >> was there anything -- was there a briefing? >> i am not aware of any

specific briefing. >> i did have one question. you would think that the well site leader would call you if they had any concerns or questions. it is that what you said? did anyone call you on the 20th about the interpretation of the negative test that were being performed? >> i have one follow-up, capt. you did not believe that the well site leader would meet and greet the vice-president when he comes to you -- -- rig? >> i would think so, yes. >> i would think so, too. >> he stated earlier that you did not get an opportunity to see the halliburton reports from april the 18th.

have you read that model? have you looked at that model? >> i saw it after the incident. >> if you had a book to that model prior to the incident, -- if you had looked to that model prior to the incident, would it have set up any red flags for you? >> we would have huddled up and discussed it with all the parties involved to see why it was indicating that. as i mentioned before, i did not even know that that particular piece was in there because it was never brought up in any meetings. it was never brought to my attention the whole time i have been involved with the horizon. >> do you know what this report is shared with anyone within transocean? >> i do not know if it is

distributed to be -- to anyone on any -- on the rig. the actual cemented reports that would go with this would be shared because it is the actual job. it is not a model. it is the actual job. >> do you know what it is shared with the transocean personnel? cox id -- >> i do not know what the modeling shared with them or not. >> you had a management change because you were not able to reach the anticipated death in this well. i understand -- depth from this well.

did you change the death because you found your anticipated target or you're not able to get down to your to anticipated target? >> this will have an objective and a secondary objective. the main objective was a top target, which was the reservoir that was found. there was a secondary exploratory tale. that is what this nomenclature is. when the pressures came in different than what we anticipated and we sat the drilling liner, at that time, the subsurface staff was informed, this is the way forward. to you guys want to stop and at this particular level and continue? or if it is successful, do you want to stop?

the target was successful. they chose to stop the well at that point. >> thank you. >> good morning, sir. i have a few questions related to maintenance. i understand that you are not responsible for that directly. i am more concerned about your level of awareness and how they will impact the drilling operations. you indicated that you had seen the dp audit from september of 2009. >> yes. >> one of the items was the fact that there was to engines that were well beyond their scheduled maintenance cycle. do you recall that? >> i do not recall the directly. >> contains -- those engines were indicated they were scheduled for overall in may of

2009 and june of 2009. they still showed up in the audit in september, does that concern you? >> i remember discussing the complete audit with transocean and giving them the audit. they were debriefed by the audit team. it is up to transocean to come back with a plan on how it is going to abide by the audit. >> were you aware of their plan for carrying out the scheduled maintenance cycles? >> i do not recall the exact plans. >> into a dozen aides, the >> into a dozen aides, the deepwater horizon suffered a total blackout. work -- in 2008, the deepwater horizon suffered a total blackout. do you recall what the cause of that incident was? >> i do not remember the exact cause. >> i am sorry, sir, i do not

remember. >> thank you. you indicated that you participate and receive the daily reports from the deepwater horizon. is that correct? >> yes. >> you were previously shown reports dated 24 of february parade can you take a look at that for me? >> i am playing catch-up. >> i understand. >> i have a 24th. >> if i could direct your attention to remarks and it talks about rick equipment that is down awaiting the parts. do you see those items? there is a list of eight of those.

number four says, it is out of service and parts are on order. >> engine down, at does not give an explanation. >> ok. >> if you could look at the other daily reports from the 13th of march. if you could look at those remarks section in the center of the page. are those same eight items also on that report as well? >> yes, sir. >> the fact that the show up just three weeks later essentially in the same burbidge and language, does that raise any concerns as a well team leader? >> with exception of the engine, which i do not recall, the other items were on there for a long time, mainly waiting on either

parts -- it also had parts. the rise attention her could not be repaired until we -- it was going to be repaired. other than that, these were mainly long-term items that appeared on numerous reports. >> yesterday, i asked him a question. he had been looking at these reports. if he saw the same items appearing time and time again on these daily reports, to which he might ask additional support. do you have a similar threshold? >> yes, sir. that is why i know the status of these because we discussed it

with the transocean people and they gave us the different responses on the different time frames on when they were going to have these pieces replaced and fixed. >> if you were unsatisfied with the progress being made by transocean, who would you go to to try to gain their compliance? >> paul johnson was a great manager. -- rig manager. >> during your daily meetings, do they epoch's debate in those? >> on occasion, not every day. >> how frequently do they participate? >> once a month. >> at least once a month, a member of their group would be aware of the various maintenance and related issues that were ongoing? >> yes. >> they would have some level of awareness? >> yes. >> de know, if ever, based upon your conversations in your

meetings, did anybody reports that these items to the coast guard or one of the maritime classification societies related to the deepwater horizon? >> i do not know if transocean reported the items are not. >> as far as you know, no one in the bp -- no one within bp did? >> not that i am aware of. >> not that i am aware of. >> sir, are you familiar with maritime classification societies as they relate to offshore drilling platforms? >> not really, sir. >> you did not really understand what their role is in the inspection certification of the vessel? >> no, sir. co>> did you ever visit the deepwater horizon? >> yes, sir.

>> what was the nature of your visit? >> i would go to see the crew, see the well site leaders, talk to the third-party folks. just for general visits. usually did not have any plans or major agenda. just to go out and see how everybody was doing. operation running to safety walk around to see the overall condition of the raid -- rig and talk to the people. >> do you recall when your last visit was? >> it was at the beginning of february. >> do you recall whether or not you discuss any particular safety items? >> we discussed dropped objects and hands placement because that was a thema -- a theme that we

were concentrating on. >> do you recall whether or not any of those said the discussions related to the way or the deferred maintenance on the vessel? >> we did go through with the transocean people on board about any progress being made on the main and tissues and any issues any way we could help. >> were you satisfied with their explanations concerning progress? >> yes, sir. >> ok. thank you, sir. i have no further questions. >> you indicated that all personnel dues and comply with transocean safety management systems. based on previous testimony,

senior personnel did not recall some of the basics specifics regarding the safety management system. did bp received a result ofch. these safety management system audits, the last one? audits, the last one? > did the marine authority group or which group received the results of the safety management system audit? >> i did not receive it. >> i did not receive it. >> we base a lot of things on

vessel safety management systems. it appears to me that there it -- this lack of knowledge of the system, there is a lot of overdue maintenance issues. are you comfortable with the safety of the vessel? safety of the vessel? i know you tried to comply with it. are you comfortable with the inspection of the safety management system on deepwater horizon? horizon? >> we trust transocean to run an effective operation. we use their safety management

system. they are the owners, they maintain, and we choose to operate under their safety management system because they are the experts. they have the marine group and the minutes groups. the minutes groups. to answer your question, we had faith that transocean was attempting to maintain a safe ship. >> in the military, you know, we often say that faith is not a very good business decision here. that is my point of view. >> the investigation into the oil rig explosion included testimony about the alarm system

on the rate. this portion is $1.50 prada -- 1.5 hours. >> please, racial right hand. -- raise your right hand. do you solemnly swear that the testimony you are about to give is the truth, the whole truth, and nothing but the truth?

>> i am representing mr. williams. >> thank you. >> for the record, could you please state your full name and state your last? w-i-l-l-i-a-m-s. >> thank yo sir. >> by whom are you employed? >> transocean. >> and what position do you hold with transocean, sir? >> chief electronics technician. >> and how long have you been the chief electronics technician? >> approximately six months. >> prior to your becoming chief electronics technician, what was your positions within transocean? >> electronics technician prior to that for a period of one year and prior to that i was a roustabout. >> and how long were you a roustabout, sir? >> with transocean, two years. >> were you a roustabout with another company as well, sir? >> no, sir. >>id you have any other oil and gas exrience outside of

transocean? >> none. >> ok. as chief electronic tech, can you please briefly describe your job responsibilities on board the deepwater horizon? >> first and foremost job responsibilites included maintaining the fire and gas systems and any and all electronic signaling devices throughout the rig. >> can you give me a background of your experience? >> i was in the united states marine corps and i was certified avionics technician on aircraft. that was the education level i used to achieve this job. >> can you indicate where you were located at the time of the incident? what i was in the e.t.hop.

>> could you give us your best recollection of that day up to the event? >> starting at the time i will cub? >> yes, please. >> monday was a short chain today which would have been the 19th. i got about five hours of sleep the night before. we rotate from days 2 nights and from nights to days. nothing real unusual that day. it we were in a holding pattern, waiting for rig for operations to finish a cement job -- a floor operations to finish a cement john.

we have pressure everywhere. they may get a no-go zone. i had some housekeeping items that needed to be taken care of. i needed the starboard crane that had been changed out during routine maintenance, and i had gone up to reset the limits as part of my job scope. the electrical limits for the boom after they changed up the cable. we stayed for approximately an hour. i took the chief mechanic with me, who was new to his position to familiarize him with the operation and give him an idea of what i do verses what his responsibilities on that same job would be. we went up to visitith the crane operator. we went through the limits. we stayed for approximately an hour and conducted some tests and made sure that the boom

could all the way down and all the way back up. we tested the limits. i proceeded back to my shopo take care of the rms requirement for that job. i eded to go put notes in the system and what my man-hours -- and lock my man hours -- log my man-hours. >> was anything that indicated there was a problem going on? >> i was on the phone with my wife. i have a paga rack. there is one forward and one half. -- one aft. during our phone conversation, we heard a gas flow will be announced -- level being

announced. my wife actually heard the announcement through the telephonend asked if i needed to get off the phone. i told her that it was just an indication to make everyone aware of what the gas levels are. i had become somewhat immune to them because we gothem so frequently. i did not even hear them anymore. we were getting gas back continually on this well. whe the levels reached 200, that is the cutoff for outside work and that is one answer concerning myself with gas levels. i know that they are high enough that i do not need to be making sparks anywhere of any kind. that is when i started panicking. that was the only indication

that i had that something was not necessarily out of the ordinary, but something to get your attention. >> after that occurred, didou hear anything, engine over speed or any thing will you were in your shop? >> could you rephrase that? >> was there anything out of the ordinary after you heard that alarm? was there any sound that indicated engine over speed or any kind of hissing? >> what happened next was that i heard a hissing noise and a thump. my shop is located directly below the riser package. it is not uncommon for the operators to run that in reverse to retract it out and it would hit the mechanical stops in the back and would literally thump in the shop.

i heard a his and i assumed it was a hydraulic lift -- a hiss and i assumed it was a hydraulic lift. at that point, i got off the phone with my wife and told her that i needed to go check this out and make sure we did not have hydraulic will going everywhere. within seconds of that, i started hearing beating -- beeping. it is coming through my ventilation system. there is a cross ventilation systemnd i could hear the panel beeps, our local panel alarms. -- of which are local pane alarms. i wanted to know what was going on. i was trying to put this together in my head.

we have the bomb, the hissing -- the thump, the hissing and then the beeps. i heard the engine start to rev. my shop is located directly center of the rig with engine numb three on my portside and engine number four on my starboard. i know which engines are on line at any given time. i could hear engine no. 3 star to rev up -- start to rev up. the guardians were way above what i had ever heard before. it was continually and steadily rising i knew that we were having a problem. all the lights in my shop popped.

the light bulbs themselves started to pop. i knew really -- i knew we were in trouble. i grabbed a door handle and the engine goes to levels let is higher than i can even describe. it is spinning so fast -- its soft -- it stopped spinning and then there was a huge explosion. >> after that initial explosion, were there additional explosions? >> there was. that explosion blew the fire door that was between me and those spaces of the hinges. it blew the fire door and myself across the shop. within seconds, the co2 system

started discharging. the co2 controller was inside my sh as well. i could not see anything. i could not breathe because of the co2. there was no oxygen. i crawled across the floor and found the opening and made my way out. i had a small flashlight in my pocket that i put in my mouth to try to see. i still could not see. i made it to the next door by a seal and stayed on my hands and knees because i could feel the heat and i knew that if there was going to be in the oxygen at all, it would be at the bottom. as i reached the next door, i reached up and grabbed the handle for it and then exploded. that was explosion no. 2. >> what was the time frame? >> i have no recollection of time. that explosion pushed me back 35

feet into another wall. as i clear that door, i remember getting are really angry. i do not know why i got angry. i was mad at the doors. the doors were beating me to death. two doors in a row hit me right in the forehead. it planted me against the wall somewhere. my arm would t work. my left leg would not work. i could not breathe. i could not s. i knew that i had to get outside and get some fresh air. the co2 was overwhelming. as i am crawling through the area, i crawled across the bodies of at least two men. i do not know their condition and they are not responding. i assume that they are dead and i keep moving because i know that i am in no condition to help them. i can barely tell myself of this point.

-- help myself at this point. the flooring was elevated about 2.5 feet. all the panels were missing. i was tripping and falling for this grid worked -- through this cribwogridwork. i could finally see light and i assume i'm headed in the right direction. eventually, i make my way outside. i turned to the right, and i knew what little bit of breeze we had was coming off the starboard forward bal. -- forward bow. you always walk up when of fire and smoke. i turned to the right, and as i

did, i got my bearings and got my eyes cleaned out where i could see and i noticed that there was no walkway. there were no hand rails and there was no stairwell left. one more sp and i would have been in the water. that point, i looked up the wall and the exhaust stack for engine number three, the wall, the hand rail, the walay, all of those things were missing. there were completely blown off the back of the rig's. -- they were completely blo off the back of the rig. i needed to go back to the left and head towards thestar birdseye of the rig's. there are two lifeboats their. -- there. what i saw, what i heard and what i felt, i seriously considered launching a lifeboat

by myself. i knew that something really bad had happened and it was not going to get any better any time soon. i had an inclination that this was worse than anyone could expect. i thought about it for a second and i remembered that i have responsibilities. i have a emergency station to go too. the problem was, my emergency station no longer existed. i made a decision to put my life jacket on right there and try to make my way to the bridge, which would be my secondary muster stations. -- station. i made the determination that if i could not make it there, i will launch the lifeboat by myself. the hissing noise has turned into a full-blown war and i look

at the dog house and the derek. the dog house is on fire and half of the derek is on fire. it is then that i realize that we had a blowout. i made might way of wind and walked across the main deck, all the way forward to the -- my way of wind and walked across the main deck, all the way forward. i told the captain that we he no pow and no ecr. he looked at me with a dazed and confused looed and i told him that we have no ecr. it has blown up. engine number three has blown up. we need to abandon ship, now. i just kept sang it over and over and over. at one point, i was told to come

down, sit down, we are working on it. my supervisor walked over and assessed my injuries. he went looking for medical supplies and could not find any. he'd found a roll of toilet paper and began to try to stop the bleeding. i got enough of it out of my eyes so that i could see. i got an of toilet paper on my head to stop the flow of blood into my eyes. i remember him asking about the standby generator. he was asking the captain if he wanted him to start the standby generator. he asked if it would give him any propulsion he said no, it would give a

sling. it would give us the ability -- it would give us lighting. you have to have the stem by generator -- the standby generators. i would have to say that because you have to go back to the fe, the generator was located adjacent to the dereck. it dawned on me that no one had volunteered to go with him we were sending a manned by himself to try and start this generator. if there was going to be any success in that, we needed more than one man. i grabbed him by the shirt kaelin told him that he is not going by himself, that i was going with him. he objected to several times.

and i said that if i do not go, you do not go. you are not going by yourself. at that point, another man, i believe his name was paul, grab ahold of my shirt tail and went back to the fire. we crossed the main deck and proceeded into the stand by a generator room and me several attempts to start this generator. i do not know how long we were in their. we made several attempts. several times, which tried other things that steve thought of. as an electrical supervisor, he was very familiar with the standby generator. we could not get it to respond. the signal would come on telling

me that the batteries were available, but the engine would not do anything. we decided to stop the attempt and make our way back to the bridge and report our findings to the captain. on the way back to the bridge is when i noticed that lifeboat no. 1 had descended and was motoring away. they had descended from the rig's. as we got back to the bridge, the captain announced that he had given the order to abandon ship, that it was a lost cause and we would not be able to fight this fire and that it was time to leave. as we were making our way down the ladder way to get to the lifeboats, liboat no. 2 descended. now, the to forward lifeboats are gone. once they go down, there is no coming back up because we have no power.

someone made mention of if we could make it to the aft lifeboats. when i left there, they were in good condition. i did not see any physical damage or fire on a life boat deck at all. there would be a huge risk to go back across the main deck. there are several mining -- minor explosions. we did not know which way the derek would fall. we did not wanto risk walking through there and having a fall on us. the decision was made to try to launch a life raft. there were three lifeafts available to us. after what seemed like forever, we finally got one life raft or

deployed -- one life raft deployed. we had an injured man with us. our first concern was to get him loaded. we were having difficulties with the draft and the angle with which to deploy. there was something on up in the arm. i am not sure what. there was a terrible and between the rig and a laugh last -- and the life raft. eventually, they got him loaded and there was a crowd of folks trying to get into the small opening. i remember grabbing two people and backing them up against of walter we had a 20 football kid behind us that would shield us from the derek -- i remember grabbing two people and back them up against a wall.

we had a bulkhead behind us that would shield from the derrick. the smoke and heat are intense. there was some type of backdraft occurring underneath the vessel and it was starting to wraparound and feed itself. at that point, i was not sure that the right -- the life raft was going to survive. there was so much heat coming up that i thought the life raft might pop or melt and the people inside would cook. as we were waiting for an opening to develop for us to get into thlife raft, when the whole finally developed and everyone had gotten in, the life raft deployed. there were three of us with no life raft and no lifeboats. there are two more life rafts at our disposal, but as long as it took the first one to deploy, i

honestly did not feel like we would survive trying to deploy a second one. i did not know if we could successfully deploy another lifeboat in our condition. it was at that point that i am informed the other two individuals that we can stay here and die or we can jump. i remembered that in our training, they teach you to reach your hand around july traffic a run your life jacket and take one step and fall. the problem is, there is no life raft at the bottom. -- there was a life raft at the bottom. we could injure somebody. i remember telling a young woman that we would have to run and jump. i rember her responding that she could not jump to rid --

could not jump. i remember the other individual jumping and told her that he just did it, that she had to do it. she said that sheould not do it, so i told her to watch me. i cleared the life raft by a pretty good ways. once i hit the water, when i came back up, i could not see anything again. now i've got a new set of problems. i have a hydraulic fluid, gasoline, diesel, what ever it is that is on the water is now burning my entire body. i cannot hardly breathe. i could feel the heat from the fire underneath the vessel. i started backstroking with the one arm and one leg that would work until i it remember feeling no pain, no heat, and i thought

that that was it, that i had died. some time later, i felt the heat again and i kept thinking that i had to swim. i heard something in the distance. i heard, "over here, over here. i did not know what it was, but i started swimming as hard as i could towards it. at one point, i did not hear the noise anymore or feel the pain anymore and then i felt something start lifting the about of the water. a small, orange rescue craft had grabbed me and flipped me over into the boat. i member telling him that we

need to give away from this fire. i was letting him know that the situation that we were in is normal. i said tt i could not leave, that i still saw more lights. we retrieved a person, which was the dynamic position operator. at that point, i asked if we could leave. they said that there was a raft in the water and there were more lights on t water. we proceeded to go back towards the rig again. now, we a close enough and i can feel the heat again. i see the life raft, and it is literally still under the rig's and i could see people outside of the life raft.

we get up to them and throw them a line and i realize one of the man is the chief electrician -- mint is a chief electrician. i told him that i did not have a nice. our policy was no pocket knives. as we pulled the life raft away from where it was, it was still tied off. there is a cutting device inside of the raft to cut the pager line. in the panic in the darkness, they could not find this cutting device. as we try to pull the life raft from the rig, it was not moving. we were simply stuck. finally,ne of the gentleman that was in the life raft had a pocket knife and we got it to

them and they cut loose and we pull ourselves over. >> thank you. just to go back, you had mentioned that thereere several alarms going off indicating that there was a high gas levels when you are on the phone with your wife. is that right? >> that was a high gas little alarmed that came over the intercom system. >> do you know at what level? >> at 2 units of gas, that is where all her work has to cease. >> use said you started hearing panel alarms. what were you referring to? >> there are operating stations for vessel control systems and those are the local panels.

that is where they get all their data and that is how the control functions on the rig. >> did you hear any alarm that would indicate a general muster? >> never. >> are you familiar with the alarm that i am referring to? can you explain to me how that is set up as far as your knowledge as to how it is set up? what's the general alarm is set up to inform the entire risk of any of three conditions, number one, fire, no. 2 combustible gas, and toxic gas. each alarm has a particular town. there is a red, yellow and blue color code.

you get an audio tone and a visual tone with every general alarm. >> digit either one of those alarms -- did you get either one of those alarms? >> no sir. >> the you know why you did not? >> yes, they were bypassed. how do you know that they wer bypassed? >> because i saw it on the screen. the correct word is inhibited. >> can you explain what inhibited means? >> you have four states of alarms. if you have normal operating conditions, and inhibited condition, which simply means that the sensor is acti, it is sensing, and it will give the information to the computer, but the computer will not trigger an alarm for it.

it will give you an indication, but it will not trigger the actual alarm. there is an override condition which means that the computer will not consider that sensor for any purpose. >> were there any alarms that were in the override position? >> none that i am aware of. >> this, and i am not familiar with the deepwater horizon' alarm system, if you did it in one area, what it shut in the air intake or black? >> that would be a bad analogy because there are no sensors in the engine room. how a system works is that there are several toxic and combustible gas sensors located

in key areas. mainly around the drilling package. the drilling package being the key. sendary is all the air intakes. that could be from accommodations tongine rooms to machineries bases, anywhere that fresh air flows. all spaces are controlled with a band that forces r e.m. so that you can consistently circulate air. and when you get th in one zone, the zone should trip an emergency shut down and you should sound of the general alarm. -- sam the general alarm. -- a sound of the general alrm.

>> do you know whym this was inhibited? >> i had inquired about a year ago, and the answer i got that -- was that they did not want people woke up at 3:00 a.m. in the morning due to false alarms. >> did you voice a concern to anyone about the possible safety issues of tt? >> yes, i did it, to the senior officer on duty and my supervisor. >> who were they? >> one was tom fields, the supervisor that is no longer employed with transocean. the other one was steve, i would have to look at my notes for his last name. >> did anyone else know that the alarms were inhibited? >> in his normal course of

duties, he would not see that page. >> who on the raid was in charge of that system? -- on the rig was in charge of that system? >> the operators were the first level. the second level would have been senior dp's . the third level would have been the chief mate. the next level would have been the captain a then often leave the oim. >> were the all aware that the systems were inhibited? >> yes, sir. >> if the systems were not inhibited, would have prevented the initial explosion in your mind? i know that this is your opinion. i am not saying you know the

cause of the incident, but if these were in place, would it have allowed personnel to get into an area that was safe and would have caused an explosion on the engines? >> objetion, i do not know that this person has the capability to -- >> when you get two detectors to go high in one zone, that is zone should trip. that will control the fire dampers in your power and your 11 switchboar. all of those things should trip. air supply for that affected zone should trip. also, you wuld sell the general alarm did it is how the system is designed. >> do you know, from your

position, if the coast guard had er given approval to have the systems inhibid? >> i do not know. >> i am going to move onto another subject. yesterday, we had a witness that referred to this well as the " wealth from hell from hell." is this common on the rig? ? >> yes, it is. we have experienced aell very similar to this where we got stuck and had to have wild well control come out and we have to sever the pipe by putting a shot into the pipe. we lost it will cometely.

-- the well completely. now we are in another quarter of another zone, but this well exhibited those same characteristics. we were getting tons of gas back all the time. we got stuck. we have to sever the pie. it was deja vu all over again. if i remember correctly, it was steven curtis who coined "the well from hell." he is now deceased. >> how long were you on the deepwater horizon?

at any time did you hear a bp leader request that a driller bump it up? was he referring to? what's he was talking about the red of penetration -- >> he was talking about the break of penetration. within days, we blew the bottom of the well. >> the drill actually penetrated? >> yes. >> i think you had indicated that you saw chunks of rubber. is that correct? >> yes, it is. >> can you explain that? >> prior to the accident, which

would have put it back about five weeks, i was in the central shaft -- in the drill a shafshf. while troubleshooting and working on that system, a representative walked into the back of the doghouse and he had in his hand a double handful of rubber. the only thing they're at that time is the only thing that is rubber down there and that is the annular. as he delivers these chunks of annular rubber, a look at the senior supervisor -- i look at the senior supervisor and i asked him what the hell that was. he said it is no big deal.

that is normal. >> who is that? >> that would demarcate -- mark hague. it took me a few days to understand or to formulate why we were getting chunks of rubber back. there was an incident prior to that when we were in testing mode and the annular was in close around the drill pipe. i got a call from the nighttime tool pusher to come investigate whether or not there was an input to the stick to hoist the block wall the annular was closed a.

he said that the blockade moved 15 to 20 feet. we need to know why. myself and the electrical supervisor conducted an investigation. it was an informal investigation. we got into the chair log data and dissected the data. what we determined was that one of the styx was moved into positive direction. we could not positively determined which stick. the tax system inside the log was not accurate enough. it's an awfully -- it simply said joy stick a and joystick b. we did confirm that there was joy stick input. -- joystick input.

we confirmed that it was pushed but we could not confirm wch stick. one of them have been given an input demand -- command. the annular was closed prior to chunks of rubber coming up. >> who is tommy daniels? >> tommy daniels is the electrical supervisor. keeping on the topic, on the panel, was there ever a problem with a pressure regulator valves? >> yes sir, there was 3 >> could you elaborate? >> at about the same time of

the inadvertent stick movement, and there was an issue with the bop control panel purge system. how that system works is the dog house i purged, so its positive pressure and the panel inside the dog shaq is also purged, so that you have two purged systems working simultaneously. another tool pusher had held the back door open to the doghouse for an extended perd of time in the drilling shaft lost purge. -- and the drilling shaft lost purge. during this extended time frame of him having that door open, someone had opened both of the

glass access doors to the b of the control panel, and it lost purge. i got a call from the ad on tower which was also one of the deceased, dawn clark. i was told that i was needed to the record immediately, that the panel was dead. buy it -- before i got up there, marquette already arrived -- mark had already arrived. i informed him that i had worked on that system on the last rig moved and that i had discovered what the issue was with it. i told him i could get it

started an automatic so it would work properly. -- in automatic so it would work properly. the repair that i made was really not a repair. it was a true to the system to give it to start an automatic mode. once it started, it would keep running until it lost purge. when it loses purge, the whole purpose is to power it off because it thinks that gas may be in there or something that is combustible. i had trusted to run on automatic, so it was running in automatic mode for a period of weeks. it was not until it lost birds that turn itself off and i asked mark if he wanted me to started back in automatic. his exact words were, "no, a the damn thing has been in bypass four years.

why did you even mess with it? as a matter of fact, the entire fleet runs in bypass." >> earlier, when i ask you a question about the chunks coming up, you made reference to another problem. >> yes. >> can you tell me what was going on? >> that system is located in the doghouse. it is the main operating point for the driller to control drilling functions. it controls everything from mud pumps to top drive, hydraulics, it controls everything.

for three or four months, we have had problems with this computer simply locking up. we even coined a of the term " blue screen of death." inside the doghouse, there is "b chair." there are three chairs. we had ordered replacement hard drives from the manufacturer. we had actually ordered entire nearly new system -- an entirely new system to upgrade from the operaing system that it was using. those computers were actually

used on a very unstable platform. between the manufacturer and the rig, they could not get the bugs worked out of the new operating system. they could not get the old software to run correctly on the new operating system. our sister raid was going through those growing pains for a spirit we have already ordered the equipment, we were just waiting for them to make it work. in the meantime, we were limping along with what we have. we ordered a new hard drives. they came in and wee got them back running. the chair would run for two or three days, and then it wld crh again. tommy daniels was instrumental.

i cannot tell you how many hos or days he spent focused entirely on getting these chairs resolved. be new to his position as a logical supervisor, he took it upon himself that he would resolve the issue. -- as electrical supervisor, he took it upon himself that he would resolve the issue. >> the correct -- do you recollect if there was ever an incident when the "a chair" was down? >> not to my owledge. >> do you know how long ago that incident was? >> not exactly. >> but it was down during an incident. >> it was discussed that the

chair crashing caused the kick. the loss of the medications to the drilling package. they have no way to monitor any thing for several seconds. before they could get the "b chair" up, they got a kick. >> i want to go back to something we talked about earlier. when you talk about the pressure regulator valves, you said that it was a policy that it be in bypassed for the entire fleet. >> yes. >> the know anything about the inhibited alarms on the other fleet. is there any thing you can think of? >> when i was on the deep water millenium, i was dirt

out of bed by an alarm. -- i was jerked out of bed by an alarm. >> thank you. we reviewed a few audits on the matenance of the deepwater horizon. can you touch upon the pipe wrecking system -- racking system? >> yes. >> what was the condition of that? west german. >> jumpe-- junk. >> junk? >> yes. >>that was our number one downte caused. >> in some of your testimony,

you said that it had been indicated that the raid had been scheduled to go to the shipyard for repairs. were you are of that? >> yes, i was. >> were you going to be involved in that? >> my part of it would have been the complete rewiring of both pipe racking systems, top to bottom. >> who was on that to you? >> it would have come down from the electrical supervisor. >> were you aware of an audit that occurred? >> i was, but i was not a part of it. >> did anyone present those items to you? >> no, they didn't. >> one thing that the audit also

mentioned was that there was a personnel retaining issue on board the deepwater horizon. is that accurate? >> yes. >> due to have any issues within your means responsibilities because of that? -- do you have any issues within your responsibilities becae that? >> no. >> whatever works have come and assist with maintenance was needed? >> yes sir. were they as confident as those others on the rig's? >> to my knowledge, yes. >> where did they come from? >> displaced from other rig's ad new hires. >> or the familiar with the

systems they were working on under your supervision? >> the last two that i got from there were not. they were familiar with the electronics, but not our specific electronics. >> do you know who had control over personnel issues? >> no, i do not. >> thank you, sir. i have no further questions. >> mr. williams, just a couple of follow-ups. were you on the rig in 2008? >> yes sir, i was. >> were you familiar with the brown out of that occurred? >> yes, i was. >> can you explain what happened? >> i cannot. i was part of the deck crew, then. it was light outside for us. the only thing that we knew was that the crane shut down. >> you worked on the emergency disconnects system? >> no sir, i have not.

>> no more questions, thank you. >> good morning. i just have a few questions. you indicated that you were familiar with the censors. >> yesterday >> would to be familiar with the location of those sensors on the vessel? >> yes sir. >> will be familr with the locations of the intakes and automatic shutdowns on board the vessel? >> i could find everyone of them. >> you also indicated you were familiar with the pds system as well -- th eds system as well. >> yes. >> i have a couple of schematics of would like to put up and i would like you to go to those

and indicate the locion of where they are. >> s sir. [no audio] >> i am going to give you a blue pin. just for purposes of identifying

[audio difficulties. >> the diagramming that we have a pierre is the deepwater horizon safety plan. i would like you go up to that diagram and take the blue marking pen and draw a circle around the gas sensors that you know are located on that level and around the engine room. >> can we pull this out further?

>> certainly. >> that's better. >> the engine rooms themselves do not have gas detectors in them. >> are there some locat on that level of the deepwater horizon? >> yes. >> can you circle where those locations are? . .

>> the main debt vince up here on both sides of the rerig -- te main deck vents up here on both sides of the rick, we are not seeing that shell shakers on this level. >> when those alarms activated, where were you see the indication that the had activated? >> you would see the indicion at that ccr and the ecr.

>> could you take that be pen and also draw locate -- -- >> circle around those locations as well? >> thank you, sir. he may sit down. -- you may sit down. i am going to ask a little more information about the gas detection system which you previously described as you experience it on the evening of the 20th. can you take is in a step-by- step fashion and describe how the gas detection system is set up. what happens when an alarm activates, and then the sequence of events that is set in motion by that alarm. >> any detector that is in a normal state can go to a high

stake are eight high-high stake, depending on the level of gas or toxins that are present in the atmosphere. when you get to those detectors to go high-tide in one designatedone, or if you get one detector in two adjoining zones, the system esd's at that point should trip, shutting down the air and electricity to that space. at the same time, the general alarm should sound and individual alarm panel said in the ecr and ccr should also sound. >> or the engine rooms in a single zone or are there separate zones for each individual engine room? >> in regards to the fire and gas system, the engines only

had a thermal detectors in them. they did not have a gas detector actually in the engine space. the only thing -- the only gas detectionad for those is for the air intakes. the index had the gas sensors mounted to them. >> of each individual air intake has a gas sensor? >> not exactly. >> please explain. >> the two circles that i drew on the port and starboard side of the rig, those were " consider the main air intakes for the injuns basis. one side -- for the engine spaces. >> i believe we have been told that each one of the engine turbos has a separate air intake. is that correct? >> yes. does each one of those have a separate center? >> no sir, they do not, not to my knowledge. >> when you describe that you basically have to have to alarms

activated the hi-fi state within the same zone, what would set that in motion in this series of events that you described on the 20th? >> what would set the alarms in motion? >> you explain that you srted to hear the engine over speed and you had heard the gas alarms triggered. >> what i heard were local alarms on the panel. i had no idea what type of alarms they were. i could just to the beep, beep, beep on the panel. i did not know what alarms they were. i did not assume anything. i just knew i had a bunch of alarms coming in one on top of the other. as fast as i could acknowledge them, another e was going off behind it. >> you areot aware of for those alarms were going off as far as location? >> no idea. >> i believe you indicated that the gas detection system is also

tied into the ventilation system automatic shutdown process. is that correct restore >> yes, sir pickett could you describe in more detail how that happens? >> we have 30 esd panels located throughout the rig. they are stand-alone, manually operated panels. there is i want to say between 12 and 14 buttons on that panel. each butt corresponds to a set of functions that are going to occur if you press it. emergency shutdown for say the drilling package was esd no. 4. i am familiar with th because we just recently tested it. it would have shut down the power to the rich lore, basically, shut down the air- conditioning, hydraulics, the block, it shut it all down. and it shut down the air intakes.

so it functioned in manual mode. we never tested the automatic feature, to my knowledge. i never tested the automatic function of it. we did not go introduce gas somewhere to see what it would do. it was just understood that it would work. >> you indicated that when this series of alarms would go off, if you had to in the same zone, it would trigger that esd system. wi respect to shutting down a main engine, can you describe the sequence of events that would happen if those alarms triggered? >> if the fire dampers close, you lose your air intake to the engine and the engine would suffocate for lack of oxygen. i can say that thomas daniels explain to me one time that an esd got rid of him accidentally

and shut down an engine ventilation intake, and it's up to the fire doors off the hinges in the engine kept running. it was looking for air, and it just literally sucked the doors off the hinges. so those esd's we never tested because of that risk. so the function of them was to snuff out the engines. if it cannot get air, it cannot run. >> are you familiar with the term read saver? kent -- rig saver? >> i honestly do not know. >> we had some testimony from the trechief engineer.

is it yr understanding, and i refer to that -- i believe is termed a standby generators. what is the difference between a stand by an emergency genator? >> an emergency generator would give you entire read power, where a standby generators is available to do very little, honestly. is there to assist you to get your main generators back on line. >> are you familiar with what happens if you have an engine running and a generator running, and for some reason it trips off the line, is there a standby ready to pick up the load all the time? in this case here, if the no. 3 engine tripped off the line and exploded for whatever reason, there was a designated secondary engine that should have started and picked up the load. >> correct. >> if in fact that secondary

engine does not start, what happens? >> within 10 minutes, the standby generators should have cranked. >> he said within 10 minutes. i believe that is also what [unielligible] explain to us. is it your impression that that restart within 10 minutes is basically automatic, that no one needs to push additional bonds or switches are turnabouts or anything else to make that happen? >> that's how i was b.g.e. that is how i was explaid that the system worked. the only testing of the standby generator, to my knowledge, was a manual start, just make sure it would crank and run. >> when the chief engineer was here, he explained to us that when you all went down to the backup generators location to try to start, that he switched it from automatic imanuel. do you recall that happening? >> yes, sir. >> would that be the normal

process as far as you understand it to start that generator? >> yes, sir. >> would that be because 10 minutes had not elapsed since the main shutdown -- since the shutdown of maine power plant gregoire >> we did not care about that. we wanted the generator on line. >> thank you. thank you, sir. i have no furtheruestions for you at this point. >> mr. williams, he recently stated a few moments ago the outboard air intakes on the port and starboard side cover all three engine rooms on each side crest or >> yes, sir brigance we have received testimony earlier in the second hearing that there are two air intakes located under the risers feet engine

room 3 and 4. are you familiar with those caused more >> yes, sir. they are directly under the riser stake. >> what do those vents fee? >> they are also feeding into the engine spaces. >> you have to import into out war on each side? >> yes, sir. >> all right, thank you. -- you have to importwo in boaro outboard on each side. >> the p a system would be the only other men'means of communication. it was anyone else monitoring at from the bridge? >> there was personnel on the bridge. >> so the people on the bridge, if they saw high-high alarm

would then notify the people in those zones that there was a gas situation? >> that was their plan, yes. they were going to be the ones to interpret what the gas alarms did and make the determination themselves to sound the alarmr not. that is the way it was explained to meet your >> who were those people? what position did they hold? >> dpo and senior dpo. >> you indicated that there were some alarms that were bypassed, is that correct? the vessel has a bypass log that is maintained? >> not tmy knowledge. >> so who racked these bypasses? >> the inhibited alarm? to my knowledge, no one track

it. >> so if there was other safety devices that was bypassed on the deepwate horizon, to your knowledge, there is no procedure in terms of documenting and remove it -- approving them, closing them out? >> there was for individual detectors. >> but there is no one bypass log that is maintained to track all the items? >> there was a log for individual detectors and sensors, a hand written log. as they would get an erroneous reading or a fault condition that would display, they would write in the logbook and they would call me so i could put it my list. as far as the general alarm, no law that i am aware of. >> -- note lono log that i am a.

>> should they approve these bypasses before they bypass? [inaudible] >> thank you. i was just asking was there a procedure to spellut how these bypasses are documented and tracked. >> just so we are clear on terminology, he is not using the word bypasses. i just want to make sure we are all on the same page. >> is just a general term i use, when the safety device or alarm is not in the proper condition,

that some action i taken to bypass or inhibit it, or whatever it is. >> i am just concerned that there are two different modes, one being bypassed and one inhibited. we are talking about an inhibited alarm condition at this point. your question is whether the oim or the vessel master should know about this condition? >> these discrepancies, and how they are followed up and closed out. if there is one that you know. [inaudible] >> when i started in the et

schaub officially in april of 2009, the fire and gas system was a wreck. there were several detectors that were faulty, overridden, and mpletelygnored out of the system due to lack of maintenance. i took it upon myself and my assistant to rectify that, and weothe fire and gas system back up to stufsnuff. made a point every pitch, when i got out there, the first thing i did was go to the station and see how many detectors were inhibited, how many senses were inhibited, how many were overridden, how many were faul. because that was my primary concern when i got to the rig, was my own safety.

during on it, bp audit, i guess it was august of 2009, they discovered how terrible the fire and gas system was, and it was brought up in their audit. it was actually noted. during that time, there was no tracking of the fire and gas system, to my knowledge. there was one dpo done it this way and another when done it another way. there was no standard procedure for tracking fire and gas. after the audit came e log book. we had an actual, physical block that the senior dpo was the only one to write in it. he or she would write in it when the alarm faulted, what zone, location, everything, and then when it was repaired and who was

repaired by, and the date, so that we cannot let fire in gas get in the condition it was when i started. does that answer your question? >> it helps paint a picture here for me. >> you mentioned the bp maritime insurance on it. did you participate an audit? >> no sir, i did not participate. >> have you ever participate any external audits or surveys? >> one, abs. >> can you elaborate on that? >> an abs represented came out and my entire function with him was fire and gas. he allowed me to pick which smoke detectors i wanted to put smoke to, which toxic and which

combustible. he also ensured that we tested all six of the infrared they are located in the engines basis. we did test each one of those. it was not a pick and choose, we tested all the engines. he was satisfied with the results of the test. >> do you know whether that was for a class survey or was it relating to regulatory -- you don't know. the first part of your answer, something about he allowed you to pick and choose which ones to test customer >> yes, he did. he told me to pick, i recall six smoke detectors, and he gave me

general areas o where to pick them, one from accommodations, one from a -- -- machinery space, one from an office space. he let me pick the numbers, and he stood by on the bridge while i went and shot smoke to it to make sure we would get the indication and get the alarm. >> if the abs surveyor was conducting that activity on behalf of the [unintelligle] do you think it was appropriate for him to allow you to pick and choose? >> i thought it was a little range for him to allow me to pick the ones i wanted. it sure made it easier on me, i picked the easiest ones to get to. >> indicated that during the event when you were up on the bridge and you were asking the captain about starting the standby generators, and he was asking you what about the

generator? >> no one asked me anything about t generator. >> he said what does the generator due, is tha correct? >> the capt. inquiry about would give us fire pumps, a way to fight fire. >> should he have known that before hand? >> there are a couple of cab drivers out there we could ask the same question to. >> i appreciate that, sir. >> this is not something this man can answer. he cannot judge the captain. [inaudible] >> there is no reason for that. >> your objections are noted.

please sit down, please. now, let's back up a little bit. who is responsible for the safety of the vessel and the personnel aboard the vessel, as you understand? >> it depends on whether we are latched up or under way. >> let's say, when you are on the way, who is responsible for the vessel and the personnel on board the vessel? >> the master. >> to the master of the vessel -- should the master of the vessel know what the standby generators is capable of supplying? >> i have not looked at his job -- it was something i heard him ask out loud. it was not directed at me.

>> a lot of the testimony we have received relating to the problem incidence of the vessel. has america, how long have you serve that seek -- as a mariner, how long have you served at sea? >> just the three years with transaction. >> are you familiar with international said he management -- saved the management -- how long were you serving on the deepwater horizon? >> just shy of two years. >> did have a safety magement system aboard the vsel? >> we had the hs manual.

>> can you describe to me what you know about the hs manual? >> help, safety and environmental -- they changed it to h and s menu. that was our bible. that laid out what we could and could not do. >> what is in that? >> a little bit of everything. it is a very thick -- sever hundred pages. >> does it describe the relionship between who is in charge, under what conditions they are responsible for that role in that manual question or >> i never read that page, if it is in there. >> any references on the vessel that relateo who is in charge? >> not to my knowledge.

>> how about in the hs manual, does it describe how equipment discrepancies it documented, attract, and resolved? --elp equipment discrepancies get documented, track, and result? >> can you rephrase the question? >> does itescribe how equipment failures it documented, track, and resolved? >> not to my knowledge. >> how about equipment maintenance schedules press mark >> no, that is not in there. >> so is there any guidance on board the vessel with regard to -- a lot of these maintenance issues, equipment discrepancies, a lot of people

side as the reason it is in order. a lot of items did not been compled in that period of time. i just wonder whether there is a system that really documented and follow through on some of these items. so to your knowledge, there is not, on board the vessel? >> the rms system was the forum that i used to track my workload and to document what i have done for any system i have worked on. >> that is the rig management system. so you have the hs manual system

that use and then the rate management system, but as f a juneau, in terms of the safety management system on board the vessel, you are not familiar with that quiz more cracks not a stand-alone document, no. >> so the risk-management system, he testified there was not a perfect fit. is that your experience also question or >> yes, it was ovehelming. >> it did not match up with the system on board the vessel, is that correct? >> a lot of the equipment they wanted us to do maintenance on, we did not have. some of the equipment th needed maintenance was not included. there was a lot of redundancy from the impact system, which was the previous maintenance system. when they did the merger, they

imported all the data from the impact system, and the corporate [unintelligible] a lot of times would be identical to the ones that came over from impact. sometimes we would have four different listings for the same job. ere was a lot of that that we were still working through. i personally put in probably 100 change requests over the previous three or four months, to eliminate some of our work load that was redundant or did not apply. >> so you got this rig maintenance system deployed on the vessel that was not a perfect fit. i understand from the testimony this morning about the software that also had problems.

>> yes. those e not related, though. >> i understand, the overall picture of -- >> the chairs themselves work completely independent and isolated from the entire rive network so there was no chance of infection, virus, hacking, there was no opportunity for that. >> and there is no system to track some of these bypasses or abnormal conditions of the system. do you think some of these things, these examples, resulted in the condition that you found with regard to the condition of the gas and fire system when you took over, or do you think there is another reason why the conditions that she found --

that you found -- >> i think it was a combination of reasons. >> i just have a couple of questions. i should have addressed this earlier. you indicated you are familiar with the damper assistance and in particular concerning the engine rooms. if i ask to go up to the diagram, could you indicate the position of those dampers? could you just go up there encircle the location of those dampers for me, please?

thank you, you can sit down. >> are there any on the turbos? fire dampers? >> there are, across the back deck, but there is no fire and gas -- there are no detectors that it is back there that i am aware of. >> in the course of your responsibilities in respect to maintenance, did you have any duties with respect to maintaining the fire dampers? >> yes. >> what are those responsibilities? >> ensure that the signal given to open or close the deborah was received and that t actuator function. >> how frequently did you te those mechanisms?

>> i did not, the marine department did. >> so you are responsible for the censors but not with respect to activation? >> yes. >> thank you. it has been about in just a litt. we want to spend some time to talk about the investigation and your thoughts. we'll get to your calls in just a moment. on the line with us from louisiana is the owner and editor-in-chief of bayou buzz.com. we're asking our viewers this afternoon who bears the most

responsibility in this explosion. is there a sense from what you're covering, what you're posting online, where people's feelings are? who does bear the most responsibility? >> well, you know, right now i think most people are looking at bp. bp has said they're responsible although in court actions it looks like they're trying to reduce their responsibility. but i think the people here in louisiana certainly are looking at bp. bp's been the one who said they're responsible. they've come along with commercials saying they're responsible. i think a lot of people in louisiana are looking at bp realizing at the same time they're not really good players in this whole environment. >> and bp set aside this $20 billion fund to pay for the claims. the white house and bp agreeing

on this. checking your website today you write about a couple groups' concerns over the $20 billion fund, public citizen and common cause. what are they concerned about? >> basically, on the face of what they're saying, they're saying there is a conflict of interest in terms of the money. they're saying that there are some criminal allegations being made against bp and so that in order for the united states and bp to be a partner in basically maintaining the drilling in the gulf that for the purpose of monetary benefit, what they're saying, at least what i'm understanding that they're saying is that basically it's really hard to go after them criminally if you're also trying to ensure that they exist.

>> these hearings, the coast guard and interior department hearings, have been hearing from fellows working on the rig the night of the explosion and others involved in the deepwater and bp operation. today the texas attorney general has filed suit against the federal government about the moratorium on oil drilling. what's the sense in louisiana about the moratorium? how quickly does that need to be lifted from the people you talked to? >> that's a burning issue here in louisiana. there is no question about that. it's becoming an incredible political issue given that the elections are coming up and one election actually is coming up for u.s. senate, the republican primary, just in a couple weeks. so the moratorium issue has become probably the number one issue as it relates to the political and economic, you know, people are suffering down here not just in terms of the

seafood industry and also of course the tourism ministry but the oil and gas industry, you know, just basically people are seriously thinking about moving out of the state because of the lack of action in that area, lack of drilling. >> the website is bayou buzz.c.com. lots of great articles about not

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[captions copyright national cable satellite corp. 2010] [captioning performed by national captioning institute] not by being really productive infrastructure. anyway, it was useful, 50 cents on the dollar wouldn't look so bad. but it is a bigger problem in the long run because in the long run you have to raise the taxes and when you raise the taxes, you get these tax multipliers kicking in because in the future you're going to have even lower g.d.p. that say 1. 1,1. 5, depending on the estimates. different from the short run result which makes it look like a much worse deal. that will be on the fiscal side. on the monetary side, of course

it is a whole additional topic in terms of in general what is the monetary policy effect? what do i think about what the federal reserve has been doing and all this. i didn't highlight it in the analysis i drew. it is really based on the credit side and looking at the kind of distortions in the credit markets based on a differential between something like b-rated corporate bonds and u.s. government treasury securities. when that spreads and gets really large there is an indicator that something malfunctioning in the credit market. it is highest in the post world war ii period in 2008, 2009, so it does definitely indicate something on the credit side malfunctioning. next highest would be in the early 1980's. it would be 1982, almost as big but not quite as bad.

so the estimate for that report, it was kind of holding fixed, at least a kind of credit channel and to some extent that would be related to monetary policy. so there is that effect and that must have been a big negative contributor to the g.d.p. growth, particularly 2009 when we had minus .something percent growth. mostly i thought it made sense for the federal reserve to a have an aggressive reaction to the financial crisis and the recession. this kind of customary monetary policy with sharp cuts and nominal interest rates and more direct quantitative things about open market things and such, the thing that has really surprised me about bernanke and the fed is the extent to which

they have built up the balance sheet and private liabilities. very heavily concentrated on mortgage-based securities. i didn't really understand why the fed wanted to get into that business. you're talking about really thes of dollars worth of stuff. somehow making political decisions about where to be in effect investing. i think this is compromising the fed's authority. of course, what do i know? i thought it was a dangerous step and really unnecessary. i didn't follow that part of it but i think to understand, you have to go back to bernanke's background where he did a lot of research on the great depression, the role of the credit channel in the depression and i think the last thing he ever wanted to be was this charge when we had another depression so i think he is willing to do anything that looks aggressive in terms of avoiding that outcome.

i think some of these steps are counterproductive. >> dan mitchell. you mentioned that you had conversations with the people at the big macroeconomic models and the awsality between non-defense purchases and g.d.p. did you actually get into the issue of did they think their causality was right? get a sense of how deeply they believe it? >> i haven't found it that easy to penetrate. ray has one of these models and he is basically an economist. i can talk to him about identification and causeation. i know in his model, the

differences of quarterly frequency can be treated as -- moving independently. you're attributing the association at a quarterly frequent si with g.d.p. to causeation from the government stuff to the g.d.p. he gave me some reason why he thought that was reasonable, particularly invoking this idea that the government has these long decision lags and implementation lags and it really can't move very quickly and somehow that timing is going to be a rational for this assumption. i talked to mark alexandriay who has one of these -- zandy who has one of these mod wilson moody's. he told me he was treating federal purchases. he said state and local purchases somehow were being relate to movements from state and local revenue. and somehow he wasn't treating those in the same way but i

couldn't pin down how he was treating -- i don't see how you can identify that. i thought it made a lot of sense that he was treating state and local revenues and when the economy goes badly the revenue goes down. then i didn't know what the source of identification was. i didn't know if it was all being driven over federal-to-state government transfers. i haven't been able to pin that down. i think if i talked with mark more i could pin that down. i talked to a couple over macroeconomic advisors. i forget their names. four or five of these things. they are all basically the same in terms of key identity assumption. it makes the same asthauges the movements at a quarterly frequent si and the government purchases get to move first and then the association with g.d.p. is tributed as

causeation. so of course that is in the academic literature. i think it is hopeless to look at this kind of macro timing among the major aggregates and say well, i'm going to assume this one moves first. i'm not saying i have a better way of doing this. at the moment, i don't know how the get the causeation from non-defense purchases or transfers to the g.d.p. you don't have the usual kinds of sperms that you want. that's why the wartime expenditure is so brilliant. of course the criticism is that it is different. a good part of our paper is devoted to the issue what can you learn from nondefense multipliers to defense multipliers. a lot of other people --

>> with much of the research that has been done on the multipliers for g.d.p., has any meaningful research come out of that respect to what is the effect of taxation -- tax changes and spending both on the defense and nondefense side on the rates of growth and productivity. >> i'm not sure. i guess you would want a long-term perspective. i don't have really a good results on that. a lot of the work i did before about cross-country determinants of economic growth are related to that question about what produces productsivity growth over the long run and then there were various determinants including

human capital and the nature of markets and government interventions. so from a cross country evidence in the long-term i would be able to talk about something. i don't have anything in the context of this kind of analysis. either minute or other people's. -- either mine or other peems. >> thank you. >> i guess i have two questions. someone in looking at wartime expenditure increases, particularly warmed war ii, isn't there a reason to be concerned that you might have particularly during world war ii have a subpresentation during campaigns to increase savings when there were bonds for the war and other ways and secondly, i'm curious about whether there is a correlation between your -- your defense spending gross variable and the

rainy variable and what would happen if you left out the rainy variable in term turnovers extendture growth. >> part of the paper is devoted to various issues about how the wartime multiplire relates to non-defense. world war ii is certainly a time of unusual intervention by the government into the economy. purchases of consumer durables in particular were heavily rationed, including automobiles. there are other forces that go on the other side. at the same time the government is basically telling companies to do certain things with respect to production, production mandates like producing tanks rather than cars and they are also drafting 10 million people into the

military dafle telling them you have to work here and of course that is part of the gd. the g.d.p. includes some kind overp made-up wage rate with what the military personnel are doing. another force, looking at labor-supply behavior, especially during world war ii. you can't explain it with the usual kinds of price and income effects. you look at things like wages and other kinds of variables, you can't do it. the work ethic is much higher in world war ii than you can explain in a normal manner. he thinks about that having to do with patriotism. which i think makes a lot of sense. i don't usually invoke things like patriotism in analysis. i like to think about economic variables. but i found it kind of convincing. that force found it would be much higher because the

production with unemployment underlying it explains a lot more. so we kind of made a list of these various elements and argued that our view of the forces that make the multiplire too large are more important than the ones that make it too small. i don't have definitive evidence on that but it is not at all obvious that you should focus on this one rationing channel. i agree that that is a force but it is by no means the only force and again, if i didn't have to rely on the wartime driven defense expenditure movements which have these other characteristics that i agree, i wouldn't. i would be happy to rely on the nondefense part. the problems there are actually much more serious than related to the imprintses you get from the defense part. on the correlation between our variable and the ramey one. of course it has to be

imperfect or we wouldn't be picking up separate effects. it is because the ramey variable sble moving in advance of the increases. 1950 is especially important as an example of that. the previous work we did, which had draft distributed for example through the national bureau of economic research did not have the ramey variable in it because we zrnts those data. the main result that was affected was on the question, does the multiplier depend on the amount of economic slack and that was where the earlier analysis yes, we did find this kinsian like channel where we got a higher multiplier. it is quite clear why it is appearing. as i indicated before, i think you get a lot more more indication from canada.

we have the data for australia and all the other countries that entered world war ii. we'll get a lot more information about that maybe. >> a lot of people are discussing buying the effect and the uncertainty of the economy, i'm wondering what thoughts are of overcoming the effects of stimulus and how that might be incorporated into your model? >> a casual imsuppression that a lot of uncertainty about various things in the current economic climate. i thought about that more on the fiscal side. there is a lot of uncertainty about what the size of the future government is going to look like and what is going to happen to taxes, financing that. how much are taxes going to go up. what is going to be the form of the taxation?

i think there is a lot of unsthrernt. i haven't really looked on the regulatory side. there is a lot of uncertainty about what further interventions are going to occur. in principle that would fit into this kind of analysis. this is really kint with the romer-romero argument. in order to do the kind of analysis i did, it doesn't have to be that you have everything in the equation that explains g.d.p. growth. what you hope for is that the things you left out are mostly separate from the forces that you're concentrating on. that is the same argument romer-romer makes when they try to look at multiplier effects and i thought that was actually correct. on the regulatory side, does it somehow move together with the things i'm focusing on? i don't think it would confound those estimates but i mentioned before in the analysis i did

hold some kind overp measure in the credit conditions in the financial markets which might be related to monetary policy but more importantly, the results that we get on the fiscal side are not much affected by whether or not you hold that constant because it is mostly strat from that. -- separate from that. >> first professor barro, thank you for your coming. i think you have touched on my question in somewhat different way. i will rephrase t. in peacetime, what will be the effect of saving and spending and the metered spending on the g.d.p., the following year respectively. thank you.

>> at this point the only reliable estimates i have are the multipliers that i estimate in that context. if i'm trying to extrapolate what is the effect in a fiscal stimulus package of nondefense government purchases i'm going to use the kind of multipliers i estimated from the defense side, something like .4 to .5 in the year and then if you're saying you keep those expenditures at the same level for another year, basically what the stimulus thing was doing, you get an additional effect of about .2 to the accumulated level over two years. since i don't have anything more he reliable on the nondefense part, i will use what i get fre the defense part. on the tax side, i have different kinds of estimates from my results and the romer-romer results. those will tell us the story. >> since i don't have the

estimates of civilian expenditures, not what i call non-defense government purchases, my best estimate is that the spending multiplier applicable to that is the same that what i estimated from the defense side and then i said we tried to look at do you think it could be bigger or smaller, which is one of the questions before, i think it is too large in terms of the extrapolation of non-defense. that's what i would be using .4 to .5. i'm hoping, for example, in this current study i'm doing, on new deal expenditures, we will be able to get a better estimate related to non-defense government spending. the period in u.s. history when it is most dramatic and they vary like crazy from one state to the other so there might be enough information from there to get something more reliable. i should also note that of course i'm taking the approach that the long-term data can be used in a single framework to

isolate the kinds of estimates you want. some people think that whatever is the last year, which happens to be 2010 or 2009, that you can't use anything from before that. . in which case we're never going to know anything. maybe that's right. up here. >> please forgive me, sir. i'm a bit embarrassed to ask this question. i'm just a poor, simple practitioner. i'm afraid that i'm not entirely clear on how you answered the question of today's session. do we need a new stimulus? and what do you think will happen if we get one and what do you think will happen if we don't get one? >> i've tried to apply the results that i had to evaluating the previous first

stimulus package. one set of results that i get from that, if you're talking about given fiscal deficit, you would have got an bigger effect. maybe a slightly different time pattern. but particularly over a year or two, you would have been much better off on the expenditure side. it is also true if you look at the magnitude of the fiscal stimulus in terms of how big it actually was, it can't possibly have had a major effect one way or the other on what happened to g.d.p. in 2009 into 2010. it is not big enough actually to have a big effect, even if you think multiplier is some crazy thing, which i think the administration thinks. you're asking me about a second round of fiscal stimulus, since i wasn't too favorable with the first one, again, i would say you're better off with a given

fiscal deficit focusing on the tax side. i think it is better to focus on cutting tax rates rather than throwing money at people which is the kind of tax revenue that romero and romer think about. that means it is particularly a mistake not to extend tax reform of 2003. frankly i wasn't a big fan of the bush administration. i think they did a lot of things wrong and mostly in terms of expanding the size of the federal government. much better than 2001. i think it has favorable effects on the economy. it is no part of current proposals. i have some estimates about those effects.

>> following up on that question, you were mentioned 2003. during that period, post 9/11 because of the interest of going into the middle east and being involved in iraq, there is quite a bit of stimulation as far as nationalism, people were interested and afraid and we were also interested in thwarting the enemy or finding out who the enemy was. when you say stimulus isn't a big components of that fervor or excitement or enthusiasm, nationalism, patriotism, all of these things which were inbum went upon winning the -- incumbent upon winning world war ii is it in the best interest of our president to come up with a promotional campaign to driver this overall

stimulus that we're looking for? >> remember gerald ford with the whip inflation now buttons? i'm pretty sure it is not my expertise to assess it. i found it convincing from mulligan's research but there was something missing in explaining labor side world war ii. it is not that i know a lot about patriotism per se or that i did a lot of analysis of it but i did find that convincing. if you asked me about things coming out from 2001 that are different in terms of looking at expenditures and taxes, i would have thought about things like well, there is a big international threat. property might be threatened. what's going on in iran and iraq might have something to do

with those threats. i would think about those kinds of effects which are not the variables i've colluded related to the events after 2001. fervor, i don't know. i would be perfectly happy to look at research related to that but there is nothing i can really contribute to it i suppose. i don't think there is a lot of that right now i think i would probably have to stop. that's what i'm told. [laughter] [applause] >> in a few moments a forum on

the european economy. in an hour, a rally with colorado democrats. >> journalist jeremy scahill, a contributor to "the nation" magazine speaks at the journalism training summit. his books include "black water" the rise of the world's most powerful mercenary army. 3:30 p.m. eastern. now a forum on the european financial markets with jurgen creutzmann. he spoke at this event associated with the free democratic party. this is an hour. >> welcome. i'm delighted that you all could join our invitation

today. i'm klaus gramckow. i want to welcome the viewers of c-span today. it is a great pleasure to have you with us. feel obliged to say what we are doing here with the friedrich naumann foundation. it's the foundation associated to one of the german parties, in this case, the free democratic party in germany. we have offices in 60 countries all over the world where we promote democracy building and human rights. of course, it's very hard to do in washington, d.c., so i'm the head of a project called transatlantic dialogue project. the name basically says what we

are doing. we're trying to create dialogue among decision makers on both sides of the atlantic as well as in washington to see in brussels and berlin. for these reasons we are delighted to welcome the member of the european parliament, and he is here this week on his own initiative which i want to commend, and he's getting information on consumer protection and on class action suits because those are issues that are before the parliament and he wants to get information on both sides, so i'm really thankful that he on his own initiative made this trip and of course, then i took the

opportunity to ask him to speak on the subject, and i think the members of the people here show how interested washington audience is on the issue of the single market without the single currency, and i'll ask him to talk not only about the single currency, but also to talk to him about the financial reform efforts that are going on in europe, so i'm really happy that he was very willing to do this. jürgen creutzmann has been a member of the european parliament since 2009. there were european elections beforehand and he worked for 25 years at a big giant german

chemical company, baff, and in the later stage joined the state parliament. ithe was a state representative for 11 years. he was vice president of the parliament, and also the last four years was the chairman of the european committee, so when it came about to select the people of who might want to go into the european parliament, they asked him and he said why not. he had promised his wife, and i asked if i could tell this story. he promised his wife he would retire from politics, and then he ran in germany on a position where the free democratic party never got anybody in parliament. he said i'm not running, and by the way, i'm on the list and it's doubtful i'll end up in the european parliament.

last year we had a very good year, and all of the sudden, he was a member of the european parliament, and his wife isn't really happy about it, but that is his political skill to solve that problem. [laughter] so i'm really delighted mr. creutzmann you're here today, and i'm happy to see all of you, and i'm looking forward to your presentation very much. please welcome jürgen creutzmann. [applause] >> thank you very much for your nice invitation. in the moment i would not be when you look to the free democratic party, i would not be in the european parliament to see how fast something can change in politics. anyway, we are elected for five years, so from 2009 to 2014.

we have to work on it, and we have the first thing because the united states made a report to the european parliament, a commission to the president, and he made also the proposal that he could push the market better, and said we need collective regrets, and i said, okay, this is close to class actions in the united states, and that's the reason why i'm here to inform you a little bit what is in favor and against that. i will see what the commission will bring us in autumn, i think. now to my topic of single market without single currency. it's not up for me to stand before you today to present to you a european view of one of the most pressing issues of our time. what is in the crisis measuring

between germany in europe to prevent crisis in the future and working together at the global level for a sustainable economy. the financial crisis in global economies in the summer of 2007 is a presee dent in history. it created the deepest recession since 1930. in 2009 the gross domestic product shrinks by 4 percent. finally, in the third quarter of 2009, the economic recession came to an end in the eu in large part to the exception of the largest measure put into place in the european economic recovery plan. the economic to recovery plan included a fiscal stimulus of about 2 billion euros and about

3 billion euros at the eu level and the european investment bank. the fiscal stimulus was completed by proposals to speed up construction reports and measures at those european and national levels. as you know, the crisis has causes, innovation and products, willingness to lenders to take excessive risk, low interest rates, and the greed of investment for higher yields with belief credit agencies recommendations allowed complex investment products to include a wide range of investors. the credit interest complexity of products and the license of intermediation change may sometimes be impossible to clearly evaluate the nature and

magnitude of the risk involved and identify those who buried. by special purpose vehicles banks could invest in such products without fulfilling the capital requirements. between banks eventually led to a crisis that had to address the stimulus packages and financial aid to support banks that were too big to fail. in the eu economic recovery measures led to enormous increasing in public spending. at the same time as another consequence of the crisis, eu faced sharp decrease in text revenues. all this led to public deficits, budget deaf sis, and widely public debts. the first references are found

in states including italy, greece, and spain which had high property spending for many years. as you are all aware, greece marked the beginning of the -- from government bonds, they had to accept the highest grades introduction of the euro. this increased the payment obligations and review credit waiting even further, so we had a vicious circle which ultimately threatens the country's in 2010. it became a euro crisis with rapid shifts with investors massively pulling out of the euro. following government on the ninth of may you remember state

agreed on the seven 150 ewe row rescue plan to save and protect all the big states too like spain. in total, loans were 500 billion euros were approved by the e. u. in addition, it was were available by the ims. in spite of the spes of these short term measures, recovery from both will be slow and painful, the financial and euro crisis shows the monetary union needs to be reformed. last week the u.s. congress adopted president obama's reform

package bringing the biggest changes in banking regulations since the financial crisis in the 90/20. what is being done in europe to reform the markets? the european party and parliament requested a relation and following guidelines and principles. first currency. there has to be more currency on the market. for example too many credit defaults are traded over the counter and not on property trade market. second, responsibility, all market participants must take risk responsibility for their actions and take corrective issues. third, stainability, market sustainable must be restored on a long term basis without hindering those and innovation. we need stronger corporation of

superviz ri bodies and invest in protection which must be approved in european and national level. the parts of my speech to translate this into more concrete proposals. financial markets this means in concrete terms, supervisory bodies must cooperate more internationally and exchange information of sees systematic risk. also for the national supervisors and central banks. they need european supervisory authority to work as a dente official system much like the european system of the central banks, such european supervisory authority should directly supervise trust border financial

activity in the e. u.. they submitted a legislature proposal to grade three european authorities. these are the banking authority, pension authority, and european market authorities. in addition to them, the european systematic risk to act as an early warning system was in the federal bank. the free democratic party consider these proposals are going in the right direction, however, in the european parliament they don't go far enough. we would prefer a reform in the supervisory party as outlined before, however, the members state the problem only want to limit this new authority to the supervision of rating agencies. the negotiation has been

difficult and are still ongoing. with regard to banks, we ask the following. banks must be able to go bankrupt. if they do not constitute a risk. otherwise we have a problem. banks should be prepared for crisis situations with emergency plans which would also enable the quick separation of certain parts of the banks. the system needs to be more long term oriented and transparent. risk management needs to be improved, balance sheet activities must be limited. they should follow business models, for example banks specialize on small and medium businesses. at the same time, the deficit that are familiar to a bank must

be regulated as a bank. further more requirements needs to be revised and must be implemented both in the e. u. and in the usa to prevent unfair competition. in passing the three negotiations, they should follow the commissions own legislative proposal in july 2009 increasing capital requirements for book and reauthorization. further more banks are required to have sound practices that do not encourage or reward excessive risk taking. on july only a few days ago, european parliament and member states doomented the new

directive. banks must keep bonuses on their basic salaries. the other limit for bonuses, but you have strict guidelines in order to prevent the bonuses. the biggest part of the bonuses are paid after three to five years when the transactions have proved to be successful. if the bank gets into financial difficulties, bankers are liable that have not yet been paid to them. in addition, the commission is working on proposals to harmonize insolvency laws going hand in hand across management system proper banking industry. such a european policy mechanism would allow the practice to survive and the remaining parts of the company particularly

bankruptcy. rating agencies should become more transparent, assist more quickly, and provide clear information on the methodology. it has to be clear what a rating means. we have to discuss inherent con clintons and rating services at the same time. in april twin e. u adopted agencies to tackle these points. from january 2011 our ratting agencies work with the market authority. supervision is to increase in general, but supervisory authorities will not be allowed to influence the credit rating system. these are to prevent conflicts of interest and to ensure increase as well as a stable

policy of credit ratings. however, the new regulation also makes it more difficult to small waiting agencies to access the european markets which strengthens the big three agencies. in fact, this political structure should be broken. the e. u. should swiftly go abroad of an independent counterrating of its own. the european parliament would make shier they are carried out. the private rating agencies should be be european rating foundation which would to the german. this rating foundation would be limited to country ratings is

very important only for country ratings to start competition with and between the other rating agencies. it would be dent of the central bank and influence of the commission of the member states. the foundation should be independent financing itself for selling ratings to investors. in future it is mandatory to have two ratings. one of them from the european rating foundation. now i have spoken a lot about initiatives of the financial market reform in the e. u.. however, financial markets are more interconnected than in any other market. thfer, if you really want to prevent another crisis from happening, we need to reach international agreement on financial market reforms. the most important form in global reform in emerging

economies. in the submit last june all countries agreed, i quote "to lead on a sustainable path" however, the u.s. and european in political positions can be aligned and public budgets. the u.s. in some emerging countries want to strip savings policy and ask for more stimulus to increase. by contrast european countries made clear in the transition of the budget after spending billions on the crisis. france and jeremy and usa failed to reach an agreement to make banks pay for the cost of the financial crisis.

to adopt and improve the levy on their banks. however, e. u. countries are planning to go ahead with the european bank levy and it is very important and crucial also because when you have the bank levy on the european basis for the european member states and others don't take one, it's very, yeah, it's a very crucial point that the money goes in that area where you don't have such levies, and for example, you know we are discussing about if when the united states and europe go in the same direction perhaps the next nice place to address that don't have all the regulations, and that could create a problem because it doesn't work when you make that relations. of course, it is to fear the

levy could lead to a loss of competitive banks and could lead to other companies that do not have a levy in place. a document made no reference to transaction tax chilling any chance of bringing such measure on a global scale in the near future. the parliamentary checks supports the financial activity debt limited to high-risk transactions. i know that transactions tax with very small margins could perhaps and would create money to form the budget. it would be help to review the budget deficit from the last years, but as i mentioned it doesn't work because you can go

and make orders on the internet all over the world. we failed that proposal. we can agree there is a long way to go until a comprehensive global reform of financial market can be reached. now let us assemble this as a crisis. we need a new basis for the economic and union. we need a new basis for that, and that is very important. budget has shown a need for monetary policy is only possible in the long term if economic policies are correlated with other members, and that's the problem we have. when you compare the euro with a dollar, it's -- not only a single market, but also you have the same taxes. you have the same basis on

economy when you push it, but you have different currency, and that can create problems. the first, the euro crisis confirms critics who never believed that it could work. some politicians in germany demanded three. nevertheless the euro brought considerable economic advantaging. if you recall what's at stake here let's go back to the gurned lying assumptions. first of all, price stability. since the end of the second world war, germany has also been a champion of fiscal policy, the bank with an excellent reputation and success in the fight against inflation in germany. this single strength which also is located in germany.

the first ten years of the european economic and monetary union, the ecp has even more successful than its predecessors. since the introduction of the ewe rows, inflation rates dksed in all european countries. second, the exchange rate was a dollar. since spring 2002, the ewe row was always racing against the dollar. it led to devaluation of the euro, and you know that he recovers a little bit. most of the ewe euro countries have exchange rates before currency has been less frequent. third, boost of the economic growth. the trade of products of

services in the internal market because it saves cost for change and prices are earlier if you had to compare. further more, businesses no longer need to agent against exchange rate. that's important because germany and export driven countries, and for us it was very important that we introduce the euro because we have now a big advantage to deliver on our products into the european market without looking to exchange rates. in germany and other countries one of the growth boosts of about 2 percent. the boost for foreign trade takes along to the euro has increased by around 5 percent especially because some companies which had never exported goods in the other e. u countries and the export business.

fifth and finally, protection from currency crisis especially in european countries which credit ratings suffered most in the economic crisis. if greece and spain still had national currencies, this would have come under enormous pressure to devaluate. since these countries would have been mostly foreign country, that debt could become more threatening. in the list of proposals of reform in more detail, we should have a look on how the economic and the economic monetary union works at the moment. at the moment 16 of 27 e. u. countries are members of the euro. eleven countries have not entered but have the obligation to do so except from great

britain and denmark. in order to change the monetary union, the country must fulfill the criteria adopted in 1991. this is to ensure a similar stable economic development of the participating countries. the following conditions should be fulfilled or must be fulfilled. the country must prove price stability. this means the inflation rate may only be 1.5 percent above the average inflation rate of the three most stable euro zone countries. the stabilization of the government must be sustainable, this means the yearly deficit of the public budget may not be higher than 3 percent. gdp gross domestic product and may not exceed 60 percent of the

cost domestic product. the exchange rates must be stable. this means the national currency may not go beyond the margin of deviation of the european monetary system for at least two years before the exclamation of the application. the interest rates of long term credits should be similar that means the long term credits should not be more than 2 percentage points of the three countries with the highest price stability. however, as you know greece and the euro zone of a basic stay tissics this is clear as we learned later they put in the budget for defense, not in budget of the whole budget and put it out, and so it was brought up to increase the cost

for defense, and you know what is fighting and thinking against turkey. they are close to them both part of the nato, but most money is spent in the military budget to protect a little bit what we are thinking for the against the turkey. belgium and italy missed the debt criteria with more than 100 personality letting them charge the monetary union and that was a problem of political decision. in addition, the criteria is stability and gross spike of 1999 was intended to ensure that the member states maintain budgetary discipline after the single currency is introduced. it is open to the counsel to

penalize any member state that fails to take appropriate measures to end excessive deficits. usually it takes form on interest bearing deficit with the community, but it could be converted into a fine if the excessive deficit is not corrected within two years. however, concerning these penalties they are subject to assessment of the circumstances by the counsel, and that's a problem. in march 2005, the european counsel under the pressure of france and germany who elects the rules, the ceilings of 3 percent of budget deficit and 60 percent of public debt were maintained but the decision to declare a country of deficit can rely on certain parol.

. i will not give you the measures, but the behavior of classically adjusted debt budget for a level of debt for the duration of slow growth period and the possibility about the deficit is related to productivity enhancing procedures. it is clear that the economic and monetary union needs to be reformed in order to prevent future crisis like the one caused by greece. the european parliament asks for concrete measures in this respect. first, the european commission must receive the necessary comp sigh. second, compliance with the stability and prospect must be enforced on the basis which put more emphasis on the exeness. compliance needs to be

improved. it could range from naming to shaming, warnings and voting rights in the counsel to agriculture, structural and cohesion funds to reach the member states. the commission should receive more rights in order to keep recommendations to member states already at the formulation of the economic policies and draft budget. competitiveness needs to become part of the economic policies. this is very important because then you will not create devaluation and you are competitive and you can bring your competitive on the international market, but on the european market, and why the competitive is one of the issues we need.