other water. if you pull of of water from a well, the streams can go down. it does not seem to make sense to argue that there is no question between them. can the states cooperate? i think that the key determinants, first are there are thinking in far-seeing leaders? at royal runs the las vegas water supply -- pat roy runs the las vegas water supply and she is firm on saying that before we get to the next really problem of low water, at which everyone starts fighting with each other because water is such an essential commodity, the fights will get very brutal, very fast. if we wait to the last minute

and everyone looks at shortage of a sudden, if the states can get together early, as the states from the colorado river basin did a few years ago, they basically produced a scheme for dealing with shortages of to a certain level. once they get past that level they do not have a plan for what to do next. her point is -- let's talk about that now. let's not wait until the last minute. i think that state and local governments, the federal government, all of the players can cooperate if they start early enough and are creative enough about solutions. but i agree that if they wait it will be a very unpleasant fight. host: felicity barringer, national environmental correspondent with "the new york times." thank you for getting up early

to talk was about this issue. appreciate it. guest: thank you, you had some bright colors. host: that does it for today's "washington journal." we will see you again tomorrow. have a great monday. ♪ [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2010] .

>> 2 indiana 4 senate candidate debates. they are seeking evan bayh's seat. live coverage at 8:00 eastern. at 9:00, the only candidates running to be michigan's next governor. at 10:00, democratic gov. sean lynch is running for reelection

for a fourth two-year term. >> this week on "de communicators" -- former sec communicators on broadband, broadcasting decency, and their personal experiences at the fcc. >> up next, margaret hamburg on the problem of counterfeit drugs and what the fda is doing to combat it. this is about 40 minutes.

i am pleased to be able to join in on this very important topic. thank you for having me today. the workshop for the partnership a safe medicines goes out the long way to eliminate the fight for harmful and unsafe medicines and to promote the quality and efficacy of every product consumed by our friends, families, and neighbors, which is why i am happy today we can strengthen the partnership between the fda and your organization. we are pleased the partnership for safe medicine is a partner in fda's counterfeit alert network. after all, we have a common mission, to ensure the safety and efficacy of drugs and medical products, and to secure the increasingly complex global

supply chain that so many of our drugs navigate before they arrive in our pharmacies, hospitals, and homes. so it is encouraging to me to see so many of you here today discussing an issue that is so important to the future of public health, particularly in our increasingly globalized world. i know that special agent nancy kennedy has already spoken to you about some of our ongoing activities at the fda, but i welcome the opportunity to offer some perspective of my own. as you can imagine, when the modern fta was created by franklin delano roosevelt, back in 1938, the world was a different place. although the fundamental mission of our organization has not wavered, the organization, on a daily basis, looks very different from the days of its

predecessor. these are challenging times. we are seeing tremendous breakthroughs in science and technology, an explosion in capabilities from many fields of research, innovation, and from industry. and coming from around the world, for better or worse, globalization has affected everything that we do, which means to address their range of public tasks before us, including the important one being discussed here today, we must adapt the powerful forces shaping our modern world. we must equip our agency to fulfill its missions in a fundamentally different and far more complex environment. one of my chief priorities as commissioner, i took this job 18 months ago, has been to accelerated transformation of the fda into a regulatory agency fully capable of

promoting public health in the 21st century. of course, doing that requires a clear set of principles, at a guiding force, if you will. for me, that guiding force is public health. ever since i began my career back in new york city, i have operated from a specific set of principles that are fundamentally intertwined with my background in public health, and today help me to position the fda as a public health agency. understandably, sometimes people ask, what does this mean? let me briefly say, the institute of medicine, one of the premier health organizations in the country, has defined the mission of public health as the ability interest of society and

injuring the conditions in which people can be healthy. in order to be healthy, people need access to a safe school supplies and medical products. the fda's job is to support this access and in doing so, promote health, for an illness, and prolong life. as a public agency, we must prevent problems before they occur. we must focus on outcomes for individuals and populations. we must balance risk versus benefit. we must address unmet public needs. and we must prioritize pirate -- partnerships and multi disciplinary approaches to find meaningful and sustainable solutions to the complex challenges that we face. both consumers and industry groups have a tremendous stake in a strong fda that takes science-based actions on behalf of public health. actions that are transparent and

can expire trust in the public, whose help we try to protect. this is the spirit in which i lead the fda, and the spirit in which i bring this important issue of counterfeit drugs and drug safety. now that i have told you a little bit about my approach to this job as commissioner, let me turn more to the topic at hand. the issue of counterfeit drugs is one of domestic and international concern. i think it is quite astounding sum of the numbers that are out there. in some parts of the world, 30% to 50% of drugs that are being used to treat serious diseases are actually counterfeit. and it is harder to know the full dimensions of the problems. estimates vary considerably and we need more surveillance and dated to truly defined the magnitude and scope of the

problem. one thing that we can all agree upon is it is a real problem, and sadly, it is growing every day. drug counterfeiting, diversions, cargo theft, economically motivated but alteration has changed the way that our world works. in the past decade or so, the pharmaceutical industry has shifted a large part of its manufacturing operations and supply force overseas. today, nearly 40% of the drugs that -- take that americans take are made overseas. in addition to the growth and volume of the imports, there has been a dramatic increase in the variety and complexity of the imported products. so as a result, supply chains

from the raw materials to the finished product has become more complex, and in some ways, more mysterious, involving a web of packagers and distributors. and like any chain, the drug chain is only as strong as its weakest link. the proliferation of additional handlers, middlemen create new entry points in which contaminated and adulterated products can contaminate the -- infiltrate the drug supply. in my view, this is unacceptable. when our agency approves drugs on federal legal standards, the american people have every right to expect the medicine that they rely on for treatment is exactly the package it says it is. something that has been carefully evaluated for its efficacy, quality, safety, and purity.

drug counterfeiting involves larceny and fraud on many different levels. certainly, theft against a manufacturer, but more importantly, it robs the american people of the confidence they deserve and they hat -- they are desert with medical products. a fake medical products may contain too much, too little, or the wrong active ingredient, and could contain toxic ingredients. they can also increase the likelihood of drug resistance, and may prevent patients from getting a real medical products they need to alleviate suffering. counterfeits, diversions, cargo theft are all part of a growing criminal enterprise, which also includes be delivered adulteration of drugs and

consumer products to maximize profit, and potentially other unrecognized threats that i hope we can prevent. we have seen the threat from this sort of threathing. unfortunately, the results can be tragic. in haiti, panama, and other parts of the world, children die because they were poison with contaminated medicine. adulterate hepburn caused injury and deaths to patients across the world. earlier this year, patients receive counterfeit over the counter diagnoses that had a prescription from previous diet pills. patients with cardiac conditions were at great risk if they took these bills that they

that theyls as thepills purchased over the counter. last summer, we found adverse reports in our system from patients reported that their insulin was not control either blood sugar levels. upon investigation, it was found they were using insulin from the same lot numbers that were stolen months before, and likely, it was not stored are handled properly by the thieves, reducing its potency, creating a dangerous situation for those patients. it is sad to realize we live in a world in which some criminals are willing to maximize profits by placing poisons in products and medically necessary drugs, but it is a sad reality we must face. more importantly, a reality we must become more proactive in

dealing with. which is why the fda has taken a number of significant steps since the heparin contamination in order to prevent similar situations from unfolding in the future. we worked hard to help identify and characterize the nature of the heparin adulterant, and the a corporate testing methodologies to determine its presence in the product. importantly, officials now call for testing to detect whether the contaminant that second patients in 2008 is present in hepburn. of course, we have invested considerable resources in inspecting heparin testing facilities related to the supply in the u.s. to determine if the heparin was manufactured in accordance with good

manufacturing requirements. over all, the fda's inspection approach has focused on disability, testing, verification of controls, and prior qualifications related to heparin in, so the contamination would be prevented, detected, and addressed. our efforts have not stopped there. we are committed to putting preventative measures in place that will protect american consumers from economically motivated adulterations of all drugs. the lessons fda learned as a result of this emergency have been more broadly applied toward a strategy capable of identifying and safeguarding other drugs. in order to further this effort, fta is developing risk models to help us identify drugs, drugs with an increase in at risk. this will enable us to target

our resources in critical ways. we combine risc-based approaches with sound scientific evidence to protect the public from adulterated drugs and take a number of factors into account when determining if a particular drug or ingredient could be at risk for acculturation. for example, when a drug ingredient depends on raw materials that are particularly expensive, criminals may have an extra incentive to find cheaper alternatives to the more expensive ingredient. the alternative can mimic the chemical activity of the active ingredient, which we saw in the case of heparin, using melanie and as an adulterant, the risk of contamination is higher. today, the fda has systematically ranked no. 1000 pharmaceutical ingredients in order of their respective risk

of economically motivated acculturation based on a multifactorial risk model that we developed. a subset of these high risk ingredients is targeted for additional sampling and testing at the border. in addition, fta is working to reduce the risk that counterfeit or adulterated drug products reach consumers in the united states market by developing standard for track and trace system that identified the products and facilitate our efforts to recall them. i also want to underscore the threats to compromised drug integrity and supply chain security is a global problem whereby fda cannot work in a vacuum to curtail these threats. to live large extent, -- to a large extent, our success will depend on the relationships that we establish and maintain with our foreign partners. that is why we are working

closely with our sister regulatory agencies around the world on a multilateral basis, with international and national organizations such as the world health organization, the permanent forum on organizational pharmaceutical crime, and to leverage resources to combat counterfeit. we also share scientific and technical expertise with our fellow regulators, providing training around the world, strengthening detections, surveillance, assessment systems, and designing innovative, new information systems. to foster these efforts come at fda has established overseas posts in many parts of the world, including china, india, when america, and we are doing so in the middle east as well. when governments collaborate to safety and security standards, the results support safe,

quality products and economic development through productive industry and a strong, reliable export market. the arrangement is a win-win for us all. in addition, we are working to reduce the risk that counterfeit or other adulterated drug products pose to consumers by developing standard for track and trace and authentication systems, that when implemented, will provide greater transparency and accountability of the nation's drug supply and facilitate our efforts to recall these substandard drugs. earlier this year, fda established a unique standard of identifiers for packages of drugs. this creates a license plate for individual packages of drug products as they travel through the supply chain. this is an important first step in developing a track and trace system and authentication system in the united states.

the fda is firmly committed to doing all we can do to further strengthen our nation's drug supply and ensure the quality and safety of all drugs and the products, here in the u.s. market. to achieve this, the agency is organizing these efforts into a new drug and integrity security program based in the office of compliance in fda centers for drug and the valuation research, which will focus on issues such as counterfeiting, economically motivated altered -- adulteration, diversion, cargo theft, and other types of deaths. this will identify vulnerability is in products in the supply chain, starting with the raw ingredients, continuing through to when they finished product reaches the patient.

the program is just getting off the ground but we expect as it grows, we will be able to focus greater and additional efforts on additional security, and we can advance the ball domestically and internationally to protect our nation's drug supply, and that of all nations. fda is also reconstituting our internal counterfeit working group which will also help to better coordinate our anti- counterfeiting efforts across the agency. it is also clear that the agency needs new regulatory tools that provide the authority we need to meet the challenges we face in today's increasingly globalized market place. we look forward to working with congress on legislation that will give the fda the ability to protect americans from harmful drugs and medical products, and

fulfill our fundamental mission of protecting the health of the public. i would like to close this afternoon by thanking all of you for the work that you do in so many different ways to support the important challenges raised by the efforts of counterfeit drugs and our need to combat them and to support the importance of public health. i want to return to a recognition of the fda's history, where i began. i mention that president roosevelt had an important role in the creation of the so-called modern fta, back in the 1930's. another president roosevelt, teddy roosevelt, signed the pure food and drug act in 1906, which planted the seeds for what would formally become the fda.

he had a quotation that was quite apt for a discussion today. he said, "in a moment of decision, the best thing you can do is the right thing. the worst thing you can do is nothing." we all play an important role in addressing these challenges. if we keep this in mind, that we must use all the tools at our disposal to do the right thing, i am confident we can, and will, succeed in protecting the safety of the american people and people all over the world. thank you for your time and attention and all the hard work and that you do. [applause] i can take some questions. >> the commissioner has been gracious enough to take some time for questions. please identify yourself and your organization you are with.

>> you may be too worn out -- [laughter] >> when is the fda going to enforce the pdma provision of the pedigree? >> first, i have to comment, the name of your organization is impressive, stone cold investigation. [laughter] i cannot give you a specific answer to that question. what i can tell you is, we are deeply committed to strengthening our activities on many levels to address the problem of counterfeits, and active enforcement is an enormously important part of that activity, as well as the effort to look at how to shore up the safety of the supply

chain that every step along the way. i do believe we need to do more, in terms of the track and trace capabilities. we need to do more in terms of supporting issues around pedigree. i think we can do more with existing authorities. this is is -- it is also important to look at the global world for the need for additional authorities and clear explication in the law about important aspects of this agenda. so what i can tell you is we are really very committed to this area of work. i believe this is a critical moment in time to roll up our sleeves and do everything we can, and to do it in partnership with other components of

government, with the private sector, and importantly, our partners in the law-enforcement community. >> university of north carolina at charlotte. i just wanted to ask you about the china office, all the things and meetings that have got on. what has been the major outcome of establishing the office there? >> we have three offices now in china, one in beijing, one in guanxio. first of all, they provide an opportunity for us to be on the ground, have a much better sense of what is happening that may influence safety of import drugs

and medical products, food and other products as well. it enables us to make sure our counterpart regulatory authority in china clearly understands the standards of the fda, expectations for quality, integrity of products that will be brought into the united states. it enables us to be on the ground, doing inspections in ways that are much more easy to facilitate and support. and it enables us to work with local and regional industry as well, to inform them of our standards and expectations, to learn from them concerns that they may have, and really to foster the kind of partnership

between government and industry that is necessary to really appalled the kinds of standards that are so important to safety and quality of goods being imported into the united states. so i think it has been quite an advance. i had the opportunity to visit in august, and i was very impressed by the relationship that was developed, the level of back and forth between sfda, the chinese counterpart of the u.s. fda, with industry, commerce in the country. we are expanding our international offices, because the ability to have that up in a given region, and to really work on the ground with key

stakeholders and partners is invaluable. >> questions? >> as you know, at issue of drug resistance knows no boundaries. the fda has established offices in asia and latin america, but none in sub-saharan africa. why has the fda not established an office in sub-saharan africa? >> it is obviously a critical area in addressing global health, addressing specific concerns of the fta. we are working regionally in africa now, through various programs, including the pepvar program, drugs that are available through that program

for the treatment of hiv aids as well as tuberculosis. we are also working in sub- saharan africa with colleagues from the gates foundation on important project to look at ways to strengthen regulatory capacity in the region. this is a high priority, for me as commissioner. i think it is essential that the usda, sister regulatory authorities in other parts of the world that are sophisticated and mature, work together to make sure we do everything we can to build regulatory capacity in the developing world. this matters to us in terms of raising the standards and oversight of products, import commodities that will be imported into the u.s. is important to those nations in

the developing world. by strengthening legator capacity in those countries, they will be able to assure their people a higher quality than safer set of medical products and food commodities as well. it will help support the economic development in those countries. it will help critical industries in those countries. ultimately, it will help strengthen national and international security and safety. this is a high priority for me, an aspect of the important work that we are now doing to make sure that the united states fda takes its place in a globalized world. >> commissioner, it is safe to say there are a number of folks in this room who would be willing to help in that effect. i am sure you would have a great

deal of partnerships available, particularly in sub-saharan africa. other questions? >> thank you for all your efforts. pharmacychecker.com. one thing that has not been addressed often, during the conference today, which has been good, is the problem of access, which is a problem of access and affordability. there are approximately 51 million americans who do not have health insurance. there is a small percentage of americans to buy their drugs on line, who buy them from other countries, such as canada. the facts show over the past eight years to 10 years, most of them have been able to do so

safely, pursuant to a prescription. farther efforts from the fta in the coming years -- are there going to be efforts from the fta in coming years to prevent them from doing so? >> at the end of the day, we want to support access of americans to the highest quality drugs that they can receive, drugs that are safe and effective and affordable. we work toward that goal in many ways. however, i am deeply concerned about the increasing use of the internet to access prescription drugs and other drugs because it is hard to verify where those drugs are coming from and assure the quality of those drugs. we know from the activities that we take every day, at critical

of border entry points, mail stations such as at jfk and other places where products come in, we find drugs coming in that are not at all what they purport to be, that are grossly adulterated, that either have no relation to the product they purport to be, or have too little, too much of the active ingredient. some containing toxic ingredients. others are just ineffective. and that can put people at risk because they need to be taking these medicines but they are in fact taking something that will not serve their interests. we have seen numerous problems

of this nature. we recognize that people need to be able to access drugs, but we think we need to inform them about how to do it in a way that will protect their safety. i think nobody should access internet pharmacy sites without discussing it with their health care provider, making sure that the site they are ordering from is, in fact, accredited, legitimate. even though it might say -- even though it might say they are from canada -- our experience is much of what is presented on

these internet sites is of questionable legitimacy and can put citizens at risk. >> we have time for one more question. in the back. >> first of all, is a tremendous honor. i am with the canadian international pharmacy association. following up on the last question -- [laughter] our association wants to be a part of the solution. we saw the same brands of drugs. we have worked for the last eight years to provide a safe, a workable medication that does

the right thing, at an affordable price. we have heard a lot of discussion today about counterfeit medicines, and there are two related issues, as i see it. there are serious drugs that will harm consumers, and there are intellectual property violations. we all agree, patients should have access to safe and affordable medications that work. what is the fda doing to focus on making a clear distinction between spur areas drugs, on the one hand, and drugs that are manufactured by the same drug manufacturers, with the same dosage form, same delivery mechanisms, for all intents and purposes are the same drugs manufactured by the same manufacturer, but are somehow

being swept into this title of counterfeit medicines? >> as a science-based regulatory organization with a public mission, we are focused on those products that represent a risk to health. we believe strongly that the challenges of addressing the sub standard counterfeit drug must be our highest priority and our organizing principle. there are many forums for discussing this aspect, and it is a broad set of issues. it is not to minimize the importance of the intellectual property concerns too important aspects of industry and society,

but for the fda, our focus is on those products that represent a serious threat to health. we are determined to work with our sister regulatory authorities around the world and with critical partners in the health-care system, in industry and in the public, to provide the best possible education about the risks, as well as aggressive actions to reduce the risk. >> before i allow the commissioner to go, i know at the end of the program there are a number of folks and individuals representing government who are looking to get together to have a dialogue about these areas. the department of justice,

commerce, a number of different individuals. there is value and some collaboration posts. just for reference, we will be meeting on that side of the room after words. commissioner, again, thank you for your work, your leadership, and join me in thanking the commissioner. >> thank you. [applause] >> president obama this morning is meeting with a number of the nation's governors, mayors, and cabinet members. there will be talking about the nation's infrastructure. after that, he is expected to make an announcement to the press. we expect to begin in about 10 minutes from now. current and former central bank officials will talk about monetary policy at the state of the global economy. speakers include christina romer, who recently resigned as

the chair of the council of economic divisors, and paul volcker. coverage begins at noon eastern. campaign 2010 coverage begins with a debate between u.s. senate candidates in the kentucky. paul and conway are battling for the seat of retiring jim funding. then to indiana for a debate for senate candidates. -- bunning. they are seeking democratic senator evan bayh's seat, who is retiring. then at 9:00, the only debate between the candidates hoping to be michigan cost governor. and at 10:00, john when she is

running for reelection for a fourth two-year term. his opponent, john stephen, has served as an attorney general for the health and human services. what are people watching at the c-span video library? you might be surprised. whether it is the most viewed the events of the day, week, or month, you can find every program since 1987. the president is to speak at about 10:50 on the nation's infrastructure. while we wait, some headlines from this morning's "washington journal." by the associated press. it says that the government is likely to announce this decision on friday. marking only the second year without an increase since automatic inflation adjustments

were adopted since 1975. the cost of living adjustments -- host: we want to get your thoughts this morning. what will the impact be? if you receive social security, we want to hear from you. this week's announcement raises more immediate concern for older americans.

host: arkansas, mike, social security recipient, but you make of this? you are on the air. caller: good morning, i just got up. i heard your topic and wanted to be the first caller. host: what do you think about this?

caller: i understand that everyone is in a crunch right now. my biggest complaint was my 7% increase on homeowners insurance this year. 7% increase on car insurance. i do not know which for they are using, but it is not the correct one. if everyone is going to be kept in the crunch, let's keep them there. the insurance companies need more profits? i do not know what to do, we are going down the drain. close to what is your monthly pay check from social security? how much do you rely on it? caller: how much is my social security?

$1,808 each month. host: that has to cover all of your bills? caller: yes, ma'am. host: clarence, independent line. caller: what you want me to comment on? i hope we get back on the comment -- back on target with social security to really give the people the consideration the need and put things back on equal basis when it was a beautiful thing, you know? host: this announcement expected on friday, those receiving

social security will not get a raise. host: omaha, gayle, democratic line. your on the air.

caller: i am on social security. it is crazy, i have other income. the cost of living has not gone down, it has gone way up. host: do you think that this will hurt the democrats in the fall? even if you read the article, it happens automatically. host: -- caller: the democratic administration, they know how to do the figuring. they have changed the cpi or whenever it is called.

besides the $500 billion they have cut out of medicare, i think it will have a huge toll on the democratic election. host: do you plan to vote in november? caller: yes. host: do you plan to vote for democrats? caller: i am not sure. i have been a democrat or as long as i can remember. but i am not sure that the republican could do it better. host: your thoughts this morning, ralph? caller: in 1946 there were pushing to have social security and, ironically, i was going to go for the option but at age 50 i became disabled somewhere

between $60,000.70000 dollars over a lifetime, i have since drawn out over the last 17 years. host: port washington, the morning. caller: i just woke up to this music and it is pretty terrible. everything else around me goes up. my rent goes up every month. pretty rough one.

i was getting the food, but i did not get the food thing for a long time. i make it 5 with $744, but those food things aren't extra $400, this winter i will get by at $844 each month. host: what do you think your energy bill will be this winter? this time of year i do not turn the heat, unless i absolutely have to. in the winter it will get close to $70 per month.

if anyone can answer this, i have heard it once before, when they figure the index, they exclude food, fuel, and one other, which makes no sense to me. the most important things when you think about they gave to those guys, that money, they put a gun to our head. kicking us down and little bit because the rent was going to go up next year. host: are you going to vote in

november? caller: i have lost all faith in my political process. the democrat, the republican, there is no birth -- difference between those parties anymore. why vote for any of them? nothing will change. obama was supposed to be different. he was exactly the same as george bush. all of these sitting democrats and republicans are in lock step on the real issues. host: did you vote for president obama in 2008? caller: it was my first boat for

a democrat in all of the years i have been voting. i have been waiting for the democrats to grow a pair for my entire life. host: tell old are you, greg? caller: 48. host: you said that you are collecting social security disability? caller: yes, ma'am. host: pennsylvania, good morning. caller: i have been in the entertainment business my entire life, my social security because of the way i live, about $600 per month. i lost my house, that is the way things go.

if anyone out there thinks that some deer hunter from the tea party is going to care, yes, obama is this and that, everyone is trapped, the government really is, but it seems like they care more about me. the people from podunk, the people that know nothing about government, helping you and your social security? this president is doing the best he can and the democrats are the only way. host: more about how social security benefits work, payments

increasing in 2009 -- host: one caller called in to ask if energy prices are a part of that calculation in this sounds like it is. curtis, michigan, good morning. caller: think you for c-span.

social security, you know, it is just like health care. there was a time when the republicans were fighting against social security just like they were fighting against health care. right now we are not talking about any kind of reduction in benefits, we are talking about the fact that social security i have a $250,000 check that i got last year. i think that as long as the democrats are in there, they will fight for the social security benefits against the republicans. we do not have to worry about social security.

i am confident that the president will do the best that he can do. i know that the republicans will not get their hands on social security and i think that we have to be patient and understand we are not giving a reduction. talking about $10, $15 that we do not get in a raise because of the cost of living. host: we will get back your phone calls on this, but first some more headlines on this. the money section of "usa today."

host: that is "usa today" on the job outlook. in 23 states, courts are handling homeowners in the fall in "the wall street journal." there is a picture of kim jong il and his son, the headline, "the rising sun." they attended a for raid over the weekend. -- attended a parade over the weekend. you can see this article about korean exiles and the picture below that is a big sure that you can see in "the wall street

journal flows both this morning. vincent, you are on the air. caller: everyone misses the point. we put i just can't see everyone calling up and complaining about the same thing, when it should not be. host: we will leave it there. ruth, democratic line. caller: good morning. thank you for taking my call. my voice is shaky because i am so concerned about all of the callers that think that the democrats and republicans are the same. they are definitely not the same. i have a brochure from citizens in the congress, wall street

reform, campaign finance energy, single payer, health care, etc.. so many people are talking about sitting out of this election, saying that democrats and republicans on the same. they are not the same, they are different. more concerning are some of the candidates that are running that are talking about privatizing social security. if that had been the case, as george bush had wanted to do when he got into office, the money lost to the people who are collecting social security would have wiped them out. i am also concerned about not getting an increase. not for myself, i can make it, but there are some many people who are collecting social security, but the czechs are so

small that they cannot afford medicine, food, or even the basic necessities. the empathy towards people that are not in that top 1/10 of 1% that are billionaires', there is enough empathy that we want to continue to give them the same path, without increasing, which has been going on for so many years automatically for the elderly and the people in need. people, get out the vote. it makes a difference. not all democrats are wonderful, but to have a better chance. host: -- caller: host: juanita, florida. go ahead. caller: thank you for taking my call. to me a raise -- hello? host: go ahead. caller: to me a raise is social

security, but it is not that important. once they go up on medicare on the deductibles, like the lady before, people that cannot live off a small amount that they draw on each month, just $5 or $10 would be so much better for them. that is my point. you go to a doctor that takes medicare, you can look the bill, get it from medicare and how much the markup is. anyways, i wanted to call and voice my opinion. host: before you go, the prices of things are annoying and have you seen that with food? there have been stories showing the price not going out. caller: well, you know --

host: are you there? caller: i am here. host: go ahead. caller: with food, i am a vegetarian. i go to a farmer's market for all of my vegetables. i do not pay attention to them. i do not eat meat, but i do purchased bread and freeze it. i purchased things that enable me to be able to live off what i draw. host: you have probably seen the dustup between republicans and democrats over the chamber of commerce, spending money in the election cycle and the president's saying that some of their ad money is coming from foreign corporations. that is a front-page story in "the washington post." here is an advertisement.

>> karl rove, ed gillespie, cronies for bush. they are stealing our democracy, taking millions from secret donors. it appears they have even taken secret foreign money to influence our elections. it is incredible. tell the bush crowd and the chamber of commerce to stop stealing our democracy. host: karl rove responded yesterday to that advertisement of one of the sunday shows. here is what he had to say. caller: -- >> a desperate political ploy from the white house to distract from the jobless recovery and the terrible economic news last week and the coal face it -- failure of the obama health care proposal to gain support. the president of the united states that accused the chamber of commerce and myself of

criminal violation of the law by spending foreign money on american political campaigns and they have not one shred of evidence. this is a desperate and disturbing trend by the president of the united states to tar his political adversaries that is on restrained by fax or evidence whatsoever. host: that was karl rove yesterday responding to the attack from the democratic national committee. albuquerque, new mexico. caller: what if the to talk to you. i m f zero -- what a pleasure to talk to you. in four years away from social security.

infrastructure is rapidly became an underfunded. >> good morning, everybody. i just had a meeting with treasury secretary tim geithner, secretary of transportation rates look good, and governors like ed rendell, mares light antonio de la rosa and economists and engineers around the country to discuss one of america's greatest challenges, our crumbling infrastructure and the urgent need to put americans back to work -- upgrading it for the 21st century. we're also joined by two former transportation secretaries of both political parties. sam skinner who served under president george h. w. bush, and norm mineta, who served under both president clinton and george w. bush. they are here today because they are passionate about this task. their cooperation, and indeed

this country's very history, proves that this is something for which there has traditionally been broad bipartisan support. so, sam and norm have been leading a bipartisan group of more than 80 experts who, just last week, released a call to action demanding a fundamental overhaul of how america approaches funding and building our infrastructure. today, the treasury department and my council of economic advisers released our own studies. these reports confirm what any american can already tell you -- our infrastructure is woefully inefficient and it is outdated. for years, we have deferred tough decisions. today our aging system of highways and byways, air routes and airlines hinder our economic growth. today the average american household is forced to spend more on transportation each year than food. our roads, clogged with traffic,

cost us $80 billion a year in lost productivity and wasted fuel. our airports choked with passengers cost nearly $10 billion a year in productivity losses from flight delays. and in some cases are crumbling infrastructure costs american lives. it should not take another collapsing bridge or failing levee to shock us into action we are already paying for our failure to act, and what's more, the logger our infrastructure in roads, the deeper our competitive edge in roads. other nations understand this. they are going all in. today as a percentage of gdp we invest less than half of what russia does in their infrastructure. less than one-third of what western europe does. right now china is building hundreds of thousands of miles of new roads. over the next 10 years it plans

to build cut -- dozens of new airports. over the next 20 it could build as many as 170 new mass transit systems. everywhere else, they are thinking big. they are creating jobs. today. but they are also playing to win tomorrow. the bottom line is, our shortsightedness has come due. we can no longer afford to sit still paired -- sit still. we need a smart system of infrastructure to meet the needs of the 21st century, that encourages sustainable communities with easier access to jobs, schools, and homes. a system that decrease in travel time and increases mobility. a system that cuts congestion and ups productivity. a system that reduces harmful emissions over time and create jobs right now. we have already begun on this task. but -- the recovery act included

the most serious investment in infrastructure since president eisenhower built the interstate highway system. we are not just talking to a restored roads, bridges, dams, and levees, but also a smart electric grid and high-speed internet and rail lines required for america to compete in the 21st century economy. talking about investments with impacts that are both immediate and long lasting. tens of thousands of projects for g. with hundreds of thousands of workers are already under way. improving 40,000 miles of road and rebuilding water and sewer systems. we are implementing a smarter, more stable, more secure electric grid across 46 states that will increase access to renewable sources of energy and cut costs for customers. we are moving forward with projects that affects communities across the country to broadband internet and connect 31 states via a true high-speed rail network.

what is more come a great many of these projects are coming in under budget. by investing in this project we already created hundreds of thousands of jobs. the fact remains that nearly one in five construction workers are still unemployed and needs a job. that makes absolutely no sense at a time when there is so much of america that needs rebuilding. that is why last month i announced a new plan for upgrading america's roads, rails, and runways, for the long term. over the next six years we will rebuild 150,000 miles of roads, to circle the world six times. we will lay and maintain 4,000 miles of our railways to stretch from coast to coast. and we will restore 150 miles of roadways and invent a next- generation air traffic control system that reduces delays for the american people. this plan will be fully paid for. it will not add to our deficit

over time. and we will work with congress to see to that. it will establish an infrastructure bank to leverage federal dollars and focus on the smartest investments. we want to cut waste and bureaucracy by consolidating and collapsing more than 100 different, often duplicate, programs. and it will change the way washington works by reforming the pro-government patchwork approach of funding and maintaining the infrastructure. we've got to focus less on wasteful earmarks an outdated formulas and focus more on competition and innovation. less on short-sighted political priorities and more on national priorities. investing in infrastructure is something members of both political parties have already -- always supported groups ranging the chamber of congress to the afl-cio support today. by making these investments across the country we will not just make our economy run better over the long haul, but we will create good, middle-class jobs right now.

there is no reason why we can't do this. there is no reason why the world's best infrastructure should lie beyond our borders. this is america. we have always said the best infrastructure. this is work that needs to be done. there are workers who are ready to do it. all we need is the political will. this is the season for choices, and this is the choice between choice -- between decline in prosperity and the path to the future. our future has never been predestined. it has been built on the hard work and sacrifices of previous generations. they invested yesterday for what we have today. that is how we build canals and railroads and highways and ports that allowed our economy to grow by leaps and bounds. that is how we lead the world in pursuit of new technologies and innovations. it is what allowed us to build the middle-class and lead a global economy in the 20 the century, and if we are going to lead in the 21st, that is a

vision we can't afford to lose sight of. it is a challenge that has fallen to this generation. a challenge this country is going to have to meet and with the help of these gentlemen behind me, and i hope strong bipartisan support, i have no doubt that we will meet these challenges. thank you very much, everybody. >> president obama speaking for just under 10 minutes, offering brief remarks on the nation's infrastructure. this afternoon the president will head to miami for a couple of democratic campaign fundraisers, and then head back to washington late tonight.

the international monetary fund and the world bank held their annual meetings this past weekend in washington. imf managing director spoke at a closing news conference on saturday. he said that modifying currency values must be part of the solution for rebalancing the global economy. he was joined this half hour by the chair of the international monetary and financial committee. >> from the international monetary and financial comedic -- committee. the rest of the meetings will continue for a while. and we will have a brief opening remarks from the chairman of the imf, the egyptian finance minister, followed by managing director of the imf, and then open for questions.

>> as you know, this is the policy-making body of the imf. you probably have the communique in your hands. we discussed a number of issues. chief among them, the global economy and the global recovery. we analyzed a number of dimensions in that. we came to the conclusion that the global recovery is happening, but it is fragile. it is uneven and around the world. it is still threatened by a number of elements that push on the downside. some elements related to a sovereign risk, others related to a financial sector that is still recovering, not fully recovered. we also examined the continuing

work on financial sector reform done by the fsb and other bodies. we welcome basel iii reforms, and we are keeping coordinated with the regulatory reforms so that we keep up with the policy and structural reforms in the cut -- economy. local economists are recovered but never the less poverty rates are a concern among the membership and we are making sure that what we established within the imf are able to help these countries when they need assistance. we have gone it extensively in to the reforms of the imf. the reforms regarding quotas,

governance, with all of its components, the composition of the executive board, the size of the executive board, and a number of these elements. there has been significant progress. all of the parties and balls are converging toward a package that we think will move the institution -- make it more adaptable and more able to deal with problems now that have become multilateral in most of their features and have become very depressing. we have also looked at what is happening in the world economy. there are struck shortchanges in the world that need to be implemented, rebalancing. there are frictions, obviously. you read in the press, there are a number of points of friction. these are being addressed. the institution -- we have come

to the conclusion that the imf is the place to deal with these issues -- exchange rates, and others. they are being addressed in a multilateral action. systematic fashion. the reforms will make this a permanent feature, multilateral surveillance, and establishing the instant and the tools with which to the institution can address such problems and make accommodations that are of a multilateral nature. again, we have looked at the lending facilities. they have been instituted, as you know, in the last year or so. they have been very effective. they stand ready to assist any country, should it need. -- should it need assistance. issues of surveillance and mandate of the fund have come to the forefront because of the structural changes we have seen in the world economy. the structural changes have to

be analyzed, they have to be drafted and managed. then national -- natural institute to do that is the imf. the forms we are institution -- we will institute will make this instance to -- thank you very much. you. nk managing director? >> i have little to add. just to describe the atmosphere -- practice was very effective, even though it is something we are doing now 10 years -- more than 40 people are gathering. it makes it possible to have real discussions. i think it was very useful, most on the idea that because it was

so uneven and created differences in interest rates, triggering follows, which in turn triggers reactions and problems, we needed to find a more cooperated way to deal with this. that is a very interesting step forward. at the same time, a spillover report presented to you six months ago, which has been worked out and more precisely defined since then. now in the process of being experimented with, a rather large set of countries. i think that is the right tool for the imf to address the question of systemic stability. the idea, do you know, is that usually the surveillance process

is through bilateral but there was little attention are no attention all paid to the consequences of economic policy implemented in one country on other countries. systemic countries like the u.s., europe zone, japan, china, what they do for their own economy has consequences. the need to have this kind of spillover report has been discussed for months, and now i think it is part of our tool box. and i expect the very important reserve. it will be a part of basel iv, and i myself will attend. the conclusion of article iv, and major player, to show the interest we have in it and to make it consistent. from this point of view, along

with the debt study we will make in that study, how to manage in the short term the problems created -- interesting step forward have been made on this question, question of the international monetary system. the other question is the one that the chairman addressed, which is a mandate on the governor's. makes many headlines. we are still not there. but we are not too far. on the quota question and the chair question. one is the size of the increase, second, the shift, third, question of the board, four, minister engagement in imsc, 5, selection of the managing director. on all this, i think an

agreement will be found on the coming weeks, maybe days. not done because there is still diverging views. we already have a changing quoted in 2008 and one week before we completed the review, still diverging this time. i think we are on the right track. >> thank you very much. we will open up to your questions. please, raise your hands and there will be microphones coming. please, identify yourself and your news organization. do we have a microphone? thank you. >> to the managing director. in your first press conference

you describe your system instability initiatives and you talk now about boasting surveillance. is that what you meant or are you looking for something broader? >> i don't see exactly why we have so much noise about this story. we need to boost our initiatives -- and we would do would. they're different ways to do it. including what i said about the spillover report. the fact that i want to attend personally to the article iv -- five big partners, members. and we have to take many initiatives in this field. it is not something new. we have taken initiatives for several months. but of course, during -- because this last when there has been more noise about currency, we would probably have to speed up.

but it is normal business we have been involved in four months, which is to enhance surveillance. >> over there in about the fourth row back, the white shirt. take the microphone and identify yourself. >> thanks so much. with "the new york times." after a period of sustained attention to currency and exchange rates disputes and the prospect of these disputes growing, are you disappointed, mr. strauss-kahn, that the most the committee could agree upon was to work toward a more balanced pattern of global growth, recognizing responsible is a surplus and deficit countries? some people would think of the manage as too ineffective. >> the language is ineffective. the language would not change things. policy has to be adapted. the policy is not to change language. the question is by more were needed policy to make the reality -- a question of -- two

questions. question one you mentioned, the long term central question of rebalancing global growth. there is no way to believe that the global growth will be balanced without change. without some currency value, because it is clear we will have high growth in one part of the world and no growth in another part of the world. ballots and also through revaluation of the parts of the world where you have high growth. the other is a more short-term one. triggered by a declaration on the currency war -- which was probably too strong a war -- word. some emerging countries as a real -- reality are facing large capital inflows and the need to find a way to react to that.

it is on rebalancing growth. the problem is, we can talk and talk about that. what we need is real action. i don't believe this action can be done in another way than a cooperating way. that is why the map framework is so important. discussions taking place in the g-20 is important and ongoing discussion in this institution. possible for membership to discuss -- that is exactly what we are facing. if i may add also, the membership of the imac, all of them recognize explicitly that the solution to this issue is going to have to be cooperative. one of the things they emphasize in the reforms of the institution -- whether surveillance or mandate -- is to allow the institution to be the

center for resolving these kinds of issues. so they are very much aware it is a compact -- corporate solution. >> down the middle aisle on the right hand side. >> thank you. mr. strauss-kahn, you said -- in the process of selecting. i am wondering what are the remaining articles to achieve that goal? why not now? >> there's only one obstacle, the agreement over the members. a joke -- but there are a long list of topics. a large part of the gap has been bridged. but there are still -- is still

a long list of questions members want to discuss. again, on -- i think a laundry list will be provided in the coming. i am not sure i should say day or weeks, but let's say, a small number of weeks. >> thank you. in the front row. the lady with her hand up. >> thank you very much. with "21st century harold." and other " a question for mr. strauss-kahn. during the meeting there is a new argument. some countries suggest we should link the quota rate -- with currency exchange rate change. do you agree that a quota reform should, at the expense of currency exchange rate change? can you tell us if such an idea is still being discussed in the coming weeks during your

official discussions? >> no, i haven't had anybody saying that the condition for the " reform to take place is back -- quota reforms is a place. what i have heard is when the country's once to have a big gun quota, have more say, more voice in the imf, they must also share the problem of a whole. you cannot be in the center and be a free rider. of the more you are in the center the more you need to take your part in stabilizing. it is not that one has to be linked to the other one, it is just the logic that the biggest members of the institution -- let's say, six to 12 biggest members of the institutions are the one that rely on the stability of the system. and so, the more countries want to be high in this ranking, the more they have responsibility toward the rest of the global

economy. it is not technical -- or blackmail, it is just the logic of an institution where you have members having more weight than others. >> thank you. third row back. gentlemen on the right. >> "frankfurter allgemeine." this set your taste -- participate in the article iv consultations. is it the role of our research, role of judge, role of analyst? could you describe your role? >> pervert would describe it. it is all of that. it was a tradition -- a conclusion of the article iv. i follow it. and i started last year --

conclusion of article iv for the euro zone. i think it is not enough and i think what i might take away from the participation was, was it was useful to have this occasion of the wreck the discussion, whether it was members -- and some want to extend it to the most important member. i think it is part of this new initiative that i think is useful for the systemic stability, which is to have a more discussion, sometimes multilateral, sometimes their lateral. and if it has to be bilateral, finally in a multilateral context, has to be done by the imf. >> thank you very much. here in the front row, in the middle. thank you. >> i am from greece. thankfully we are not the center of these days. you repeatedly said the greek government is on the right track as far as consultation and

other measures are concerned. you also said that you need growth. and we said no growth. i am wondering how greece can achieve growth in a world economy that you just said has anemic or uneven growth rates. >> first, i have repeatedly said, you are absolutely right, that greece is on track and i think what will be achieved by the greek government, and even more by the greek people, is really amazing. the whole population has realized that they were at the edge of the cliff and they needed to really manage, and they are doing it. it is a very good example, that a nation is likely when it is needed to do the efforts that puts them back on track. of course, growth is necessary and the program puts greased

back on track with growth, but later on -- greece back on track, but later on. if the european environment is not positive, it will not help. that is why we are trying to push -- the only reason, but consistent with the fact we're trying to push european countries, having more fiscal room to do more on growth, having in mind that some others have no fiscal room at all and may not be exactly greece but in a similar situation but they have to focus on stabilization. i have often seen last week that the message of the imf was sometimes typical to understand, because sometimes we say you should push and of times we say

you should take care. it doesn't stimulate or consolidate? -- does a stimulus or consolidate? consolidate as much as you have to but still nearly as much as you can. in this country specific. depending on which country we're talking, we don't have the same message. but in a europe, there is probably some room for support -- and there would be help for everybody, including four greece. >> thank you very much. a couple of questions. lady on the third row back to the left. there you go. >> brazil. the united states and china keep trading accusations regarding their currency. and, of course, both have their point. of course, anything that should be done, should be done --

a broken record, he sang it again and again. what has to be done now and what can we expect for the meeting in a month? >> i don't want to raise expectations for the g-20. what i want to explain is that the discussion that takes place, not only between china and the u.s., but other partners, a very important one and i think we are now arriving at the moment where people are discussing all the right stuff. they're discussing the right stuff -- the real problem, is rebalancing question. the move of interest rate would be more a consequence of rebalancing. i think everybody understands

this. there is -- no way to achieve growth everywhere it is not done in a cooperative way. that is a message from the framework we will provide for the g-20, and i think it is more and more understood by the capitals. what i expect is the progress of this idea will be stronger enough to avoid conflicting situations, and trying to take into account the arguments of the different parts to find a win-win situation which is described in this framework, a win-win situation in which everybody is better off rather than trying to find the domestic solution to global problem which we know does not work. >> do you want to add anything to that? >> no, i think -- the gist of the meetings this time, people were aware that the problems we will be facing now and the

problems we will be facing in the coming months need copper to solutions. they need people to talk to each other and come up with plans that are agreed among many sides. the imf is being reformed with that in mind, so that when surveillance happens -- when policies are designed, they are designed multilaterally. you said yourself, any policy in one country at facts many others, so therefore, from now on, as the economy becomes more integrated, the surveillance and mandate of the institution has to be more integrated around the world. and then i'll at one point. i agree absolutely with what youssef said, the idea of cooperation. i have been insisting, after strong cooperation in london and pittsburgh -- maybe people have

a mind the crisis is over, the spirit of cooperation should decrease. what i realized during this annual meeting -- i did not know if i am wrong or things have changed -- obviously all the ministers agree with the idea that even if we are not any more of the climax of the crisis when cooperation was obviously necessary, even and more quiet times -- not so quiet, but not as difficult as they were one year ago -- they need to go ahead with cooperation because the economy is globalized. even those being very vocal on the question of capital inflows, the need for capital controls, intervention in the market, and so on, they say that and then they say, ok, ims, what can we do. because everyone realize there

is no single solution that you can apply in your country without having it planned at the global level. that is why cooperation is one of the goals of this meeting. the other one is of the role of the imf. i am proud of that -- that everybody. everybody is saying the right place to do things is that the imf. >> well, thank you very much. there will be another press briefing later on after the end of the development committee. thank you so much. >> coming up later tonight on c- span, our his 2010 campaign coverage begins with a live debate between u.s. senate candidates in kentucky. republicans ran paul and democrat jack conway are vying for a seat of retiring gop senator.

live coverage starts at 7:00 p.m. eastern. indiana, a debate with the senate candidates. former republican senator dan coats is seeking to regain his old job, running against two- term democratic congressman brad ellsworth. live coverage starts at 8:00 p.m. eastern. at 9:00, the only debate for michigan's next governor. lensing -- lancing's mayor will face republican, former ceo of did way. -- gateway. >> middle and high school students, get working on those videos for studentcam, 60's annual video competition.

$60,000 in prizes. this year's theme, washington, d.c., through my lens. for complete rules and information go to studentscam.org. >> coming next, current and former central bank officials will talk about monetary policy and the state of the global economy. speakers included christina romer, who recently resigned as the chair of economic advisers -- advisers and but reserved chair paul volcker. at noon eastern right here on c- span. until then, a conversation about monetary policy from today's "washington journal." he's the resident fellow at the american enterprise institute here to talk about the falling collar. what is the status of the u.s. dollar? guest: well, what's occurred since the last few weeks is the dollar has declined by about 7% and that has been because markets perceive that the u.s.

economy is faltering, that the economy is running out of steam and they fear that the federal reserve will have quantityive easing which is basically -- quan tif easinghich is basic -- quantity tif easing which is basically printing dollars. the fed could be buying a gain hundreds of billions of dollars of u.s. treasury bonds and that means there's more dollars floating around and they're already fronting this by selling the dollar. host: ok. what does this mean for jobs in the country? guest: well, it would be helpful in terms of a weaker dollar means the united states can now compete more effectively in markets, that they can export a lot more. what it also means ishat the federal reserve engages i that kind of policy, what they try to do is try and get down long-term interest rates. so it reduces the cost of

borrowing. the trouble, of course, is that the united states is not operating in isolation. it's being part of the global economy, and moving the dollar down is creating real difficulties for the europeans. you know, so what we got is the euro is now at $1.40, which means that they can't export as much as they were before so the german recovery then runs into difficulty and this could cause problems for europe's periphery countries like greece, irela, portugal, spain. those countries that have been under pressure. if we now have is a strong euro, it means their exports ar diminished. host: for those following this and see that countries like germany and other european countries seem to be doing ok because they're exporting more than we are, isn't this a

matter of the united states just trying to catch up and make sure tt we come out o this recovery in ok condition? guest: that's a legitimate claim that the united states should be pursuing policies that's in the united states' interest. the dangerous thing is people trying to promote exports at the same time through their weakening occurrencies, we see something that's reminiscent which is beg thy flabe kind of policies. what -- neighbor kind of policies. what we're seeing is a currency war, termed by the brazilians, that the united states is trying to cheapen its currency. japan intervenes on its own without really consulting its paid partners. we've got china being engaged in currency manipulation for many years now. you know, so it looks like it's a free fall, we are not getting

the coordination and the danger is this could be a slippery slope in which we get countries retaliating with trade measures. you know, we've been there before in the 1930's. that's something that we really want to avoid from a global point of view. so what one is missing here is global coordination of policies. you know, countries the united states has legitimate interest in engaging of easing but it would be better if this was done in a more coordinated way. host: this viewer tweets in, what does the lower dollar mean for servicing the u.s. national de? guest: well, a lower dollar would -- the united states basically borrows in terms of dollars. so if you were really trying to figure out what a lower dollar meant it would mean what if the interest rates that the united states would be paying? if the fed does drive down

long-term u.s. interest rates through quantative easing, the united states has financesed itself mainly in dollars. it's what charles de gaulle referred to appropriate steps that the united states has, they can borrow abroad in its n currency. if we get low long-term interest rates, at least in the short run, what that means is the united statesays this. the danger, of course, in the end this could lead us into inface, interest rates rise, servicing the debt could be more expensive. host: for our frequent viewers, you've been seeing headlines in "the financial times" abo a currency war. here's "the financial times" this morning. "global clash over the economy." why is this talk of currency wars, no coordination between economists, you see it in "the financial times," but you'r not seeing it in the u.s.

papers? there is no talk of a sort of currency war. what is the impact of it? is it realistically happening or could happen? guest: we do see it in the united states press but we do see it from our vantagepoint which is basically that china is engaging in excessive currency manipulation and what's been occurring is the temperature on the hill has been rising, that there's been a lot of talk. in fact, there's been legislation that is making its way through the hill that the house approved taking measures against the chinese, really putting pressure. so we've seen it from our point of view and i think that we've already got a legitimate case is that china grossly manipulates its currency. its currency by many estimates is something like 20% undervalued. they accumulate $400 billion a year in reserves. the reserves are $2.5 trillion. there's no doubt that china is

manipulating its currency and china is not moving on the currency even though it's given us commitments. the chinese, though, at the meeting saying the united states is running an irresponsible policy, that they're now going to be printing money, that they're going to be driving their currency down. so they're viewing it from the chinese perspective and i think that that is really where the danger is, that we really need to find some common ground and this weekend's meetings at the i.m.f. failed singularly to get any coordination. what they did is just kick the can forward to the g-20 meeting in early november in korea that hopefully something gets resolved there. host: the i.m. managing director spoke about the i.m.f. world bank meetings that happened in washington over the weekend. here's what he had to say about the currency issue. >> whai want to explain is that the discussion that takes

place, not only between china and the u.s. but with other partners as the very important one and i think that we're arriving where people aren't discussing the right stuff. discussing the right stuff is that is the rate. the real problem, as we said before, is the rebalancing question. and the move in the rate ll be more consequence than the balancing of the country. i think everybody understands this, there's no way for the global economy to be stable, to achieve growth everywhere if it's not done in a cooperative way. again, that's the message from the framework that we're going to provide for the g-20. i think it's more and more understood by the authorities. and from what i expect, the prospects of this ea would be strong enough to avoid conflicting situation and trying to take into account the argue of the different parts to

find a win-win situation which exists which is described in this framework. the win-win situation in which everybody is better off rather than trying to find the best solution to the global problem which as we know doesn't work. host: that was the i.m.f. managing director speaking after the i.m.f. world bank meetings over the weekend. desmond lachman is our guest. you said they failed to come to some sort of agreement. he is talking about framework. here is what "the financial times" says this morning. the lack of any substantive agreements and brinkmanship is likely to exacerbate volatility in the month running up to the sowell group of 20 summit. guest: it's true trying to coorditing policies, that we really need to work together, that we need to get a framework but there's another thing to get real action, substantive

action, on getting that kind of coordination. and i think that what we saw at this weekend's meeting is just a hardening of possessions. the chinese say they're not moving. the japanese still talking about wanting to intervene. the united states giving no indication that it's not going to go through quantative easing. hopefully something changes between now and november 12 when we have the next g-20 meeting. to me it sounds like a bunch of platitudes. host: do you believe there could be currency volatility, and if so what's the outcome of that? guest: i'm hoping -- i think there almost certainly will be currency volatility in ts kind of enviroent where different countries are pursuing their own interest where there's a lot much uncertainty. we don't know what kind of quantity tif easingill be on the part of the united states. we dornt know what the japanese will be doing, at what stage they will be intervening. that leads to currency

volatility. but i think what one really hopes for is we can find common ground. i think it's not a question of the exchange rate. it's a lot broader than that. it's a question as to the united states needs to deal with its fiscal situation. the chinese need to encourage consumption. that we need to get broader agreement on overall policies, the exchange rate san important part of that. but it's not the only part. and what i think, as we saw at this meeting, is we saw a dialogue of the debt. nobody really was giving any ground. host: don't the chinese say we do consume, we just consume from germany, we just don't consume products from the united states? guest: no, that's not really the case. the chinese grossly

underconsumes. their consumption is very small fraction of g.d.p. but what's more significant is the chinese consistently run surpluses on their trade accounts. so if they want us to reduce our deficits, the counterparts, the logical counterpart is they need to follow policies that will reduce their surpluses. if the united states just reduces its deficit acting on its own there is not going to be significant aggregate demand. everybody will get in a global recession. one wants to get the united states to fix its deficit situation, but you also want the chinese to fix their surplus situation and hopefully you do this in a coordinated falings. we are just not getting that. the -- coordinated fashion. we are just not getting that. the chinese in june indicated they will move their exchange rate at a faster rate. they barelyudget against the

law. the dollar is depreciatg against the other occurrencies which means the chinese is depreciating against the other occurrencies as well. we get tension between europe and china and if the global economy does slow down a lot, one would expect these tensions to be exacerbated. and this is a rather dangerous situation. host: desmond lachman is a resident fellow at the american enterprise institute. before that he was at sol mon, smith, barney. he was senior advisor to the european department at the i.m.f. as well. atlanta, darrell on the democratic line. good morning. caller: hey, how you doing? and to c-span and to your gut, i'd like to say i agree your guest's assessment of the currency situation, but i disagree with the solutn.