marketplace. it is irresponsible, unethical, and immoral. at -- you must paint the burning platform. after you do that, people will be willing to do things they were not willing to do previously. what the expect people to say what if we give you less of a subsidy for medicare? what do you expect people to say? everybody would like to have their cake and eat it, too. we can solve the problem. mile fiscal bus tour. had two special events where we included a demographically represented group of voters in ohio and virginia. we built the burning platform. they got it.

we expose them to a range of reforms and budget controls, social security, health care, defense, taxes, political reforms. here is what we got back. putting our finances in a order should be a top priority. progressnfidence that would be made this year. i hope they are wrong. a commonit would take of -- companies and of spending .eductions 92% agreed on a set of six principles and values to guide a grand bargain, which came up with. 77% of had a minimum of the 90% support for specific reforms.

what is the problem? the problem is the biggest deficit this country has, a leadership deficit. we do not have leadership. our political system is a republic is not responsible because of gerrymandering, because of the impact on the wing nuts on the right and left on primaries, because of campaign finance reform, and a lack of term limits. we will have to defuse this ticking bomb.-- but congress and the president had failed to deal with this issue and because the president and congress decades ago changed the fed's mission to require it to be concerned with short-term unemployment, which politicized the said. when we get a grand bargain and we implement this in phases,

then the fed needs to change course and we need to get rid of the fed having to be concerned with short-term unemployment. that is not its job. thank you very much. a lot of agreement there, especially when but say that one of our biggest deficits is a leadership deficit. total agreement. i want you to ask your questions, but before we move on, i am dying to ask david stockman question related to looking back. we will move on to the debt. in his book, he mentions that he never thought we were in any danger of the great depression when we had a major bailout, but supposedly from going into a great depression during the financial crisis and before we move on, david, i have to get what you are thinking.

>> this is important, because the craziness that went on in september of 2008 was based on the theory of great depression i call the economic equivalent of wmd. most economists never would have expected that, but the one great scholar of the great depression and who has his analysis totally wrong because he xerox it from milton friedman, who was totally wrong about what the fed did in 1930 happened to be chairman of the fed. he panicked and he happened to go around in the circles of government muttering great depression 2.0, we cannot make the same mistake that the fed made in 1931, which was not a mistake, and they did not have to avoid it. soon you have hank paulson running around who has a five- minute attention span, a highly

unstable, emotional, who fans the flames of -- and this is true -- read his own memoirs -- pretty soon the two of them had created a panic in the beltway that led to the stupid thing called tarp in march and the congress up the hill, instantly for $700 billion without reading the legislation. but of nonsense is that? people likeoth david and me, pete domenici, who in a flash had everything they had done in their whole life wiped out by the panic reaction of paulson. you think i am on paulson's case for good reason? yes, i am. there was not a great depression in store. it happened in 1930 because we war, theto the great

1920's the u.s. had lent a lot of money to buy our exports. we were the china of the 1920's. when the stock market crash, the bond market, which were the equivalent of junk bonds today, cents.om 100 cents to 10 our export machine shut down instantly. we were a bigger exporter and predator than china was today, and as a result the export machine faltered, capital spending dropped by 82% in less than a year and a half, inventories were liquidated massively because the market was dry, capital spending stopped, and that had nothing to do with the fed. it was not a lack of money supply. that is i think a totally erroneous heretical historical argument. to date we are not anything like

that. the hoover bills were in the interior of china when the great crash occurred in 2008. we did not have much of an industrial economy left. there was not going to be a big liquidation of industrial inventory, activity, and jobs. we had a one time shift due to the housing collapse in terms of employment and economic activity that lasted about nine months. it was a deep recession, but it was not depression 2.0. all of this crazy stimulus, this wall street bailout and money pumping was against a phantom problem. it was a cover story so that the goldman-ites running at the treasury could bail out goldman sachs, because this was not want

to spread to the rest of the economy. the main street banks were solvent. they did not have all the stocks it took on their balance sheet. the iran on the bank was entirely in the wholesale money market, in the canyons of wall street, on the so-called investment banks which were hedge funds. it would have burned out there. they should have let it happen. the world would have no worse off with our without coleman because it would have been reorganized -- without a gold mine because it would have been read organized. nized.rga faulted theot be same speculative activity that they are today as they were in 2008. their stock is back to $124, whenever it is today.

it should have been zero. the discipline was imposed, as a result, we have 12 people running the u.s. economy crashing savers, telling people we have the president of the fed yesterday in boston saying is we are trying to drive savers into high-risk investments. to put it in plain english, they're telling granny she has to get out of her savings account which is making 40 basis points, she cannot live on that anyway, and get into a junk bond fund or by the russell 2000 because the wise men who sit on thinknetary polictburo the sabre should be in the junk- bond market needing to levitate. what we have got is a coup d'etat in this country it is an democratically run by a group of

mandarins and elitist at the fed who are getting us into big trouble. this is not a debate about whether they are easier not easy enough. this is about a rogue institution that will take everything down. [laughter] >> david walker, when i talked to david, i think we should end this right now because this is disaster going nowhere. do you have a vision of what the timing and the sequencing could be that could be productive, that could take us out of this without a great depression or some major economic disaster? >> david is talking about monetary policy and the federal reserve, and i share concerns he has there. let me talk about fiscal, because as i said before, tax and spending, right now the fed is the only game in town. they're trying to prop up the economy, the housing market, a lot of people, including u.s.

government. realistically, they will continue to do what they are doing rightly or wrongly until there is a grand bargain. when will it take? if you look at what has been done so far, they had been treating the symptoms, not the disease. for example, if you look at what happened at the end of the year, we raised taxes on people making over $400,000 a year, couples over $450,000, raised capital ,ains and dividends for ppeople did not transform the tax system at all. we have an abomination of a tax system. need to is we streamline our tax code in a lot of ways, which i am happy to get into. what did they do with the sequester? yes, we need to cut defense spending and other non-defense discretionary spending, but not

any steep across-the-board approach. what are they not doing? they are not addressing medicare, medicaid, social scary, $1.10 trillion in tax preferences that represent back door spending that are not in the financial statements, that are not reviewed and reauthorize. they are not dealing with the drivers of our structural problem, which are mandatory spending, and our outdated tax system paid health care is the fastest growing program cost, but the biggest risk the budget is interest costs. in interest, you get nothing for whatever your pain for interest. has to happen is we need to reach a grand bargain and focus not on balancing the budget -- which will not balance the budget. the way that government calculates is a bad joke anyway. what we need to focus on is more

difficult to manipulate, debt to gdp. after world war ii, we had over 100% of debt to gdp. we took it about 230%. we did not pay off the dime of that until 1980. we had fiscal discipline. we grew the economy. we lost our way, we regained senate before it. time, and since 2003, and that is the year that thing spun out of control, we have to focus of not paying off the debt, not balance the budget, getting back to gdp down. we need to recapture control of the budget. you cannot have to slash the of the budget on autopilot and growing. the only two things that should not have an annual limit, one that you cannot have an annual limit on, which is interest. the other is i think we can reform social security to make solvent.

we know the numbers, and you do not have to have a budget. everything else, you have to have a budget, including health care. we are the only nation that does not have a budget for health care. nobody else is stupid enough to do that. we need to recapture control of the budget. we need to spend more on investment and young people and things that were, less on seniors and consumption. we need to phase in a lot of the changes dealing with social security and medicare over time, but that is okay, we can get the miracle of compounding to work for us. we need to talk about who is eligible for what at what's up as a the, you need to reform your tax system, and generate more revenues, and i am happy to get into details, and they are not doing that. what they are doing is they are claiming they are doing a lot when in reality they are doing nothing.

april 5?oday, the president was supposed to submit a budget the first monday in february. he still has not submitted a budget. leading from behind again. it is unbelievable. >> let's hear from you. what are your questions? and fire away.lf >> i am a political independent 1997.ave been since 9 ina defrocked republican. >> david stockman goes after virtually every politician in every party in his book. i am from cnn money, and i'd want to say that sunday was probably the nicest day of the year. i wake up, first thing i read was david stockman's peace and

ruined my day, so thank you very much. understand is, i your point that we were not at risk of a great depression. but given the experience we are seeing in europe, which has pursued a different approach to the christ and the united states did, i question is, how much short-term pain is acceptable? if you accept it all, that adjustment process, if we were not and a great risk for depression, if there was a short-term adjustment that would have inflicted how higher unemployment? >> that goes to the issue of austerity. to the keynesian professors. anm saying austerity is not elective course. it is something that happens to you when you are broke. the reason they have got to austerity in spain and italy and greece and the rest of the periphery is the bond market

finally said we will not buy any more of your paper at a rate than one that goes higher and higher with each new issue. to austerity is spreading to the rest of the continent. france is a disaster. retail activity is collapsing. unemployment is above 12%, and their economy is next in line. soon, germany will be the only sovereign nation standing, and their merkel is because they have been exporting to all the other countries buying their goods. that system will not work. when you ask a question, and i say that by way of preface, but would have happened here? we would have had an austerity, but it was something that we would have to go through any way, and i think that sooner we

go through that your the better off we are going to be. two not think that i have points that will be important. everything the fed did had nothing to do with the unemployment rate being 11.1% or anything else. none of the money the fed created ever went into the main 20reet for the next nine to months after the crisis occurred. it simply stayed in the canyons of wall street, circulated back to the excess reserves on the balance sheet of the fed, kept the money market rate at 0%, and rekindled the fast money belief that the fed has got to put back thingd that is the only that happened. a recovery on wall street, none of this money went into main street. main street is so loaded with debt from the last 30 or 40 years that households did not need to borrow, should not have,

and most of them did want to borrow and the banks did not want to lend because there were very few solvent borrowers left. business, the same way. business has $12 trillion in debt. this is compared to $3.50 trillion in 1994. the easy money would elicit credit growth -- the idea did not work because the economy was overloaded with debt to begin with. it was totally a pointless exercise. the fiscal stimulus helped some people, but most of it was a waste. only $30 billion of the $800 billion went to programs where it should have gone, food stamps, card income tax credit, and other programs to help -- to

help people. my point is when the crisis comes, you bolster the safety net. you put money into helping the desperately poor or people who are thrown into the street or who lose their job or who have no other way of making 11, but you did not put the money into green energy boondoggles so some pilon musk character can try to create an electric vehicle that he sells $400,000 with $500 million of taxpayer money when there are so many damn car companies in the wrong, we do not need musk telling us he is gone to start another car company and sell us selected vehicles that do not make sense -- forhundred dollars $100,000. we could have done half of what they did in the stimulus, but the money in the safety net, the only thing the government should

do as we work to austerity, and begin to get our house in order fiscally, that the private economy heal. shut down these mad man at the fed. let washington focus on the dollars and sense of its revenue and spending accounts, bolster the safety net, put the money we have to spend there and get out of all the rest of it, get out of the bailout business, and it means test social security so we can cut the cost of that dramatically and use it to help people that are actually in need. >> question back here. not a fan of the fed and you did not believe they are helping the job market. under your ideal scenario, but with the job market look like in this country? what would be the normal unemployment rate? should public policy either fiscal or monetary wise have any role?

>> i will answer that quick pick it should have no role. the unemployment rate should be what falls out of the free enterprise system. if it is not manipulated or deform or distorted by government intervention. if the unemployed rate is 6% or 4%, that is the result. you say it isn't that terrible? what about people who need jobs? the answer is if we allow the marketplace to set the price of labor and we got rid of things like the minimum wage, then there would be a job for anybody that wants it, because at the right which, there will be a job even in the united states. what we need to do if we want to help people and the humanitarian is supplement what they can earn $7 an hour and that is what the job is, with card income tax credits or other transfer payments from the solvent and middle-class taxpayers who have an obligation to help citizens who try to help

themselves and still pass a means test and are not earning enough. if we got rid of the minimum wage, if we bolster the earned income tax credit, if we told the government it is none of your damn business where the a plummet rate is, you cannot even measure it, stop mucking around, if we told the fed for get it, this mandate is ridiculous, humphrey hawkins, and let private enterprise were, the country would be a lot better off. i do not know where the official rate of unemployment really is, but we would get real growth, real jobs, real prosperity, and there is not a chance that that will ever happen. >> let me jump in, because i cannot think the fed should be in the business of being concerned with unemployment. that is not its job pick it to be tried to make sure we have reasonable long-term interest rates, fight inflation, try to protect the value of the dollar. i think the country ought to be concerned with the unemployment rate, but i think this is another example of where we are

tweeting -- treating the sentence. first, the way the government keeps score, unemployment is a lot higher than what they are telling you. secondly, when you spend two and a half times per person what 12her countries spend on k- education and health care and get below average results, you got a problem. the reason we have in many cases high unemployment is because we cannot compete on wages. we have to compete on innovation, productivity, etc., and get our education, immigration policy, how we are investing with regard to research and the vomit is not conducive toward what our compared of damage is. we have not moved to the new paradigm to recognize we're not over 50% of global economy, we are 22%, losing market share, to recognize the new

reality. add to whatt they've said pit the reason i am so militant about the unemployment rate not being in policy is because it is now standard, it is the excuse for every loophole in the tax code, for almost a spending program you can think of appeared every one of those items becomes a jobs program, and therefore, that is why we have the disgrace that they've talked about before, the irs rate that is why you cannot get rid of almost anything in this huge federal assessment we have today. all that is going to lead to short-term loss of jobs. that is why we are buying tanks in a world where we have no energy, and why are we doing that put because it is a jobs program. if the federal government was out of the unemployment managing

business and out of the jobs business, and the congressmen could get back to looking at fiscal accounts and seeing what makes best for the long run, where we get the revenue, where we cut the spending, how we bring it closer to balance, and as long as we have unemployment as the excuse, the crony capitalists of america, the bebyists of k street, will like barnacles on this fiscal doomsday machine that i have talked about, and you will not get revenue raised, spending cuts, but because all that is happening in the name of keeping the unemployment rate slightly lower than miss measured one that is reported every went by l.e do >> of the things i learned as a students was perceptions government. i have a perception question.

let's do the way back machine. and i am aer, 2008, citizen of the united states and i see that all of the wall street firms have failed. they are unwinding their commercial paper, laying off their staff in thousands and tens of thousands, and a few global banks have failed. the fdic is trying to sort out the deposit insurance from the rest of the mess, but they are failing but my guess is the dow is in vertical free-fall, and there is zero political support for a safety net of any kind. i remember back then. the public'shink reaction to that perception would have banned, and more important, how would that have reaction have affected what happened in the economy? >> or directing the question to

me, so i will answer. like to but to address it. >> my answer is there were three down and to deduct. the investment banks were not investment banks, they were reckless hedge funds that were way over the -- >> that is not my question. >> i am going to insert. after bear stearns went down, i did not see anything went down. merrill lynch was already finished. goldman could have gone down. i know people in york the think wall street is the greatest thing since sliced bread. down,n could have gone morgan stanley, the banks of europe would not go down. they have socialist governments. the banks in germany would have bailed out of deutsche bank. there was not going to be a confederation.

the main street banks in america were and in good shape. wells fargo was not going to go down. the fdic could have handled it better. we have people who think they're sophisticated, who have watched this, saying this cannot happen, everybody would freak out. i do not believe it. this is the mythology that has led to the crow decapolis capture of policy -- >> you do not believe the -- [indiscernible] >> no. >> [indiscernible] >> it would have burned out within weeks. the public would not have panicked, and we would have gone out to the reconstitution of whenever parts came out of the people who were chastised, learned a generational lesson, and stopped gambling on the future. -- a had to have a little couple weeks of national panic,

so be it, because he cannot keep enabling this kind of activity. >> perceptions matter, ok, and perceptions are set by people who are in power and influence, and frankly, perceptions -- they are influenced by it. and influence by all of you, the media. there is no doubt about that. therefore, what i would say is there clearly was a perception we had a major problem. in my view, something was going to be done. the question is, what should have been done and what lessons have we learned and what adjustments have we made to try to minimize the chance that it will happen again? the maximum leverage the government had was when it was providing financial assistance to these institutions. it did not impose a preconditions on that financial

assistance as it related to lending the money. it did not impose restrictions with regard to executive,. it did not end up making a number of changes with regard to fannie mae, freddie mac, things of that nature. and so in addition, you have to ask yourself, how did we get to a situation where everything happened just all the sudden? part of that is because we do not have very good foresight and insight. this town -- u.s. government has been in existence since 1789. we do not have three things that you needt 101 says to have. we have no plan. we have no budget. and we have no performance metrics. since 1789.

therefore, if we do not know what is going to happen, we just do more. we do more. we wait until things happen to us rather than trying to anticipate and look at the structural problems. i think something had to be done. i do not think there were a preconditions' placed on it and that we have learned enough. >> [indiscernible] --t is my question >> it would have affected the economy, but i agree with dave, we are going to have some austerity at some point. the question is, do we have a little bit of austerity phased in, or do we wait until the crisis the door and we have draconian austerity? i think we ought to be spending more on some investments now. i think we ought to be doing more with regard to critical infrastructure. i also think we ought to be

doing less in a lot of areas that our consumption oriented and things that did not work, whether direct spending programs or tax incentives and tax preferences. owner of the pacific coast " business times." thank you, we talked earlier this fall when i did work for " the denver post." i want to pose another hypothetical. it is april 4, 2013, i am a small business owner. on april 15, i have my next carefullytudying very your book, david stockman, it would suggest i lay off 20% of my staff or least cut my pay, everybody's pay 20%, hunkered down, and prepare for the storm that is about to hit. but it is the real world.

what is your advice to me? >> i think that is fair enough, and i do not suggest you lay off 20% of your staff, but i suggest that prepared cannot be cautious, do not take any significant risk, it yourself the leveraged. if you can generate internal cash flow for projects you believe in, where you have a customer base that you can serve, fine, but i am saying when this thing does it, the economy is going to be harmed. i do not think we're ever going to have a great oppression. what we are going to have is a long twilight of low or no or slightly negative growth, the same thing they have had in japan for the last 20 years. today we have japan trying to 1- up the fed by saying they are right to print money so fast, the equivalent to $3 trillion a year in the u.s. scale of the economy.

it is $900 billion in their economy. therefore, i am basically saying that the adults have no idea what they're doing, the adults of the fed, in the beltway, you are out there working hard, you have got a good business. hunker down, the careful, keep going forward, but get yourself liquid, get yourself out of that, and be prepared for a bumpy ride for a long time to come. >> the you feel the same way, david? believe we can solve this problem, and i have said that. i think the american people are willing to do what it takes to solve this problem. the biggest frustration that i have is that this town we are in the is badly broken. and i think we are right to have a lot more presidential --dership, and in freshman

fairness, i think bush 43 was a disaster on fiscal issues, and obama is a disappointment. he still does not have his budget out yet. -- i think hope the deaf take open the fact that the people are ahead of the politicians, and if we get leadership from president and he starts acting in a governing style instead of a campaign style and is truthful about how serious the problem is addressed to use his dahlias approach to bring people together, and if the media recognizes that reality and if the people start demanding for their officials that they want results, we can get some results, and we can avoid a serious problem. we have more flexibility in our labor market than in europe. a lot of time people in europe will not hire because they cannot lay off people. that is not the case in america. on the other hand, what they can

do is lay off very quickly, passively in this country. we do not want to do that, so if you have a growing problem, it is prudent to recognize it and address it so we can avoid that. >> thanks. vipir all the safe. walker,last point, mr. you talk about solutions. both of you have identified serious problems with the fed, particularly political decision making. given the structure of the fed, how do we reform the fed, or do you believe that we should eliminate the fed? >> i will answer first. there is an answer that is laid out in great detail in my book. go back to the vision of the founders. glass is the greatest inancial statements --still

it's meant to serve in the last century. he was the author of the federal reserve. his version was a bankers' bank. they did not have an open market committee. they were not allowed by government debt. they could not manage or rateomanage the interest paid a heavy discount window. if real banks who were member needed cash, they could bring good collateral cut inventory loans, receivable loans to the ined, and it an exampl was good quality, they could get a loan, with a penalty interest rate above the market rate, and a market rate was set by the free market of savers and our role worst in the various banking markets of the country. that is all we needed. that keeps the banking system liquid. that allows the free enterprise economy to drive how much money

we need him how much liquidity we need. we did not have any central planners treat we do not have any politburo appearing out at the great expense of $60 a chilling and deciding they know what is best. e go back to carter glass' bankers' bank. shut down and bench the open market committee picked it impossible for the government -- for the fed to buy back and allowed only chartered, narrow banks to make loans or take deposits and make business loans eligible for discount loans at a penalty rate, with good collateral, even is the interest rate goes to 20% in the market. that solves the fed problem. that keeps the banking system going paid that is the original vision. the great argument of the 20th

century is between friedman and freeman was wrong when he said the fed needed to manage the economy, to make sure the money supply grows at 3%. they cannot be that trade that has been proved over and over again, and it allows ambitious people to forget about the good professor told them, to be stingy with money to buy at 3% and began to become the committee for the saving of the world which is what greenspan termed -- turned the fed into, and that is a recipe for that mess we're in today. >> reform it, not eliminate it. >> we have time for one more question, but i to see people take a trip to the mike and be turned away. two last quashes with quick answers. said therestockman was almost a coup d'etat in this

country, and he is trying to sell books and but i think he believes that. what do you think? isid is focusing , b.p. focusing on that because he is focused on the federal reserve. it should not be in the bailout business. it needs to be reformed rather than eliminated. i believe some of the reasons it is doing what it is selling is because of the failure of the president and congress, not just this president, but prior president, to make progress in fiscal policy because the lack of proper planning and execution and risk management. a republic that is not representative of the response of -- or responsive to -- the public.

i think we need to reform redistricting to make the purpose, to make it an independent process, to make the purpose to maximize competition consistent rather than minimize it. we need to eliminate democratic republican primaries and the top two vote getters are run off in the general election finance reform and term limits. that today, was a defacto today talk run by hank paulson on the third floor of the treasury building, with all running around, and read his memoirs and you will say he was in constant contact with wall street.

you have one call in there where blank fein calls him up and says i am worried, they are going after morgan stanley pimm if they go down, i am next. you have to do something, and guess what -- the next few days these massive bailout lines were put out. morgan stanley was saved. they had 100 been dollars of federal money injected, and you can see it is in the report of a national crisis inquiry commission. i do not say it was a coup d'etat, a military junta out. they were running the country. bush was clueless. he was hunkered down in the white house, and the only thing he knew was this sucker is going down. that is what he was sad. that was the extent of his knowledge. they have the congress buffaloed. read what some of the congressmen said. payrolls are not being met.

it was all lies. it was not true. it is time the public wakes up to the fact that this is how the country is being run today. >> quick. i am wondering, you talked about what needs to be done. who do you think will do it, your favorites in either party? is you do not make tough transformational or forms unless the chief executive officer is leaving. whoever that is. the truth is there is only one person that is elected by all the people, and that is the president, and joe biden may tell you that he is, but let's get real. nobody else is elected by all the people. the president is the chief executive officer, got the bully pulpit, has the ability to command media attention. he has is the only person who can get that message out there from what set of lips.

he needs to end up bringing people to gather on principles and values and i believe he needs to take a page out of bill clinton possible, when he did in 1998, to hold three representative town hall voters with finding out what the people think. they will find out that they are way ahead of these people. that will give cover for reform the social insurance. that will put us on the path. the question is, will he do it? >> no. >> that was a quick answer. thank you very much, david stockman and david walker, for being with us today. >> a housekeeping announcement. president's budget is coming out next week, so we will get an answer. we start back at 2:00, a brief break, and then come back.

>> as you heard, there will be a discussion on the stock market, how investors are reacting to it and how it is impacting the economy. that will be at 2:00 p.m. eastern in about 15 minutes. we will have coverage on c-span. tonight at 8:00, and look at health care for u.s. military veterans. we look at the current needs of the impactments, and of budget cuts. here is a look at what you will see. >> the fear of the career, when you have that chief of the army stress,d posttraumatic

it is ok. if you think a posttraumatic stress as a natural reaction to an abnormal situation, a natural reaction to an abnormal secretary v.a. and sinn secchi are trying to get notof the -- it should prevent you from getting help and getting some help for your family to deal with the symptoms that you are having. >> you can see the entire program tonight at 8:00 eastern, and after that at 9:00, we will be live and talk about military issues from a national perspective. we will take your calls. the conversation has already gotten underway on facebook. the question is, if you are a

veteran, what has been your experience with health care access and quality? coverageeturn to live at about 2:00 p.m. eastern. there will be a discussion on the volatility of the stock market. collier today we talked with a reporter covering recent news from today's "washington journal." >> renewable energy is the subject of this documentary. they are third-prize winners. ♪

>> we are here to support renewable energy across america. in an president, we live age where renewable energy has become our only solution to impending climate change and a struggling economy. >> everybody's life is affected by this issue of energy. they take a shower. that is energy coming from a hot water heater. they turn off an alarm clock first. that is energy coming from alexis to date. they have a slice of toast. that is an energy with a toaster. as we live in one of the top renewable energy states, we thought we would take a trip to palm springs, california, and see renewable energy up close. we were curious how wind energy

has advanced over the years. where it stands today, and the possibilities for an even more efficient tomorrow. >> this is a wind turbine. it was invented in the 1980's, and it is the first kind of turbine has been placed on a field. it is ineffective, because if the wind blows to heart, they will shut down. when wind turbine nowadays will replace 16 of these. twoehind us we have a megawatt structure. power's 500 homes and pays for itself in five years' pay >> these are natural gas turbines. they are used to compensate for days when wins it is not strong enough. if we did not have enough electricity, power goes out.

are cleaner than coal or other fossil fuels. >> nearly 2/3 of the oil we use in america we have to get from somewhere else. use 1/4 of all the oil that is up out of this planet every single day. we put in treating critics and we drill holes deep in the surface of this planet and we find oil, and we suck will out of the planet, and 1/4 of it must come to this spot on the globe called the united states. that is a prodigious appetite we have for energy. interested inl making wind energy? >> companies such as shell understand real energy is the future. for the last 60 years, renewable energy consumption has been climbing steadily. it is predicted to take an even

more dramatic climate. >> the more we root of our law on american-made energy, the more jobs we create here at home. now,e united states right 1.7% of its electricity is coming from wind picked that employs 800,000 people. by the year 200030, we'd want to be at 20%. that means 75% of all new collector's the coming out of the grid is going to be wind energy paid with that, 20%, 800,000 jobs trade we're tapping into the renewable resources quite well. we're utilizing wind, which we producingays of wind- electricity, and we tap into a tree and the 25 days of sun, so we are using solar.

>> you as renewable energy consumption for 2011 states that petroleum, natural gas, coal, and nuclear take up about 91% of the total energy consumption in the united states. toving only 9% of the hole renewal bills. mr. president, we need to expand the 9% to a greater proportion. we decided to look into solar technology, which is still in its infancy. we met up with new laurent -- numerous solar experts in los angeles, california. >> it is an exciting project, and we look forward to flipping the switch and the solar tv panels will be providing this family with solar from the sun. >> these panels on this one house, it represents a beginning to what can happen in the

future. we need more support from president in terms of a vision for driving economy forward, making it possible for middle- class and working class people to bring clean energy into their personal lives on their home, to have it used to power electric vehicles and to have a cleaner, safer environment. there is a big deal made out of sandy, but what i am hoping is the election will influence the future so if there are fewer sandys. >> if you came back here in five years or 10 years, what you would see is a modification effected. if california can do it, i cannot see why the other states cannot do it either. we are the leader here we are at 20% of our state's power co oming from renewable sources.

>> next we went to seal beach, california, to see the most efficient solar panel in the world. we talked with the director of advanced technology and a member of american solar energy society. >> the important thing is deficiencies and all of solar energy continue to climb, which is good for the future of solar energy, because as we get more efficient, we will be converting more energy from the sun to electricity. isr, mr. president, solar the next big thing they it will be just as big as computers, and everything like that. it will take awhile to get there, but it will be big. >> this country is on the path toward more energy independence, and that is good for people's pocketbooks, good for the environment, good for our national security. we do not want our economy

depended on something that happens on the other side of the world. >> there are people out there that think renewal will energy is not the answer. they believe that we should continue to focus on cheaper alternatives like coal and fossil fuel. but the truth is we are going through extreme climate change, and 2/3 of the oil in this country comes from foreign soil. renewable energy is the future. yet the approximately 9% of our country's energy comes from renewable sources. if we put more of a focused on grenoble's, we can have more jobs and a safer environment for this generation and hundreds of generations to come. mr. president, we need your continued support to move forward and spread renewable energy across america. >> you can find this video and studentcam.org.

willd a few moments we return to live coverage at 2:00 p.m. eastern. there will be a discussion on the volatility of the stock market. today we talked to a reporter covering news out of korea. this is from today's "washington journal." drink us is a writer on foreign policy. is the current situation with north korea different than in past situations? guest: the brinksmanship becomes more dire and the risk becomes greater. it is the same patter we have decades, ae last two

which we ignore them, they are tired of being ignored, they threaten us with dangerous things, and then we bribe them. that has been a basic pattern over the years. this time there are less things we can do to bribe them and less things that will get our attention. the dangers get hired. it is the same old story and much more dangerous than any previous time. the is the portance of north koreans with having unilateral discussions? the goal was to build a six-part process in order to produce a comprehensive regional solution. the idea was america has limited influence over north korea. perhaps china has more influence. if we harangue north korea into

this structure, we could bring to bear the pressure of all five countries at once. north korea would rather deal with us directly because that is easier for them. we're the ones who can make big decisions quicker than to have them run them by the other parties. since about 2005, we have been in bilateral discussions. they are not talked about a lot. the u.s. has been willing to reluctantly meet with the north koreans on a regular basis. the bottom line is needed the six-part process or the bilateral discussions have produced breakthroughs that either side is looking for. de delphi other countries agree on an approach to north korea? guest: not at all. these countries have different interests. you have japan which lists under the threat of north korean missiles which is still at war with north korea, and south

korea, which is north korea's long-lost brother. very determined and basic interest in seeing a change in regime in north korea. china and russia have been determined to see stability in north korea. the u.s. has an interest in olving the nuclear so on a very basic level, we all have different basic goals here. that's not to say there are not things we have in common. those can be served by north korea dismantling it's nuclear weapon program. that is where they all meet and that is the common objective but that doesn't seem to be happening host: has anything precipitationed this current

situation? guest: yes. he main thing that precipitated it was a couple of years ago a deal that was to be announced on leap day. and the idea here was that north korea would agree to all sorts of concessions. -- >> see the rest of this "washington journal" episode on cspan.org. we go to a panel discussion on the stock market. his is just getting under way.

>> good afternoon. i'm kevin noblet, managing

editor for wealth management at dow jones. and welcome. we've got a panel that i'm honored to be moderating. we're going to let them do the talking. we'll have a conversation for about a half an hour and then we'll invite anyone who is interested just by tradition to come up and speak as long as they are a sabew member and identify themselves. when police women go to parties, they get asked to fix tickets. when journalists get invited to parties, they get asked to predict the stock market. if they are being honest, they will tell you they don't know how to predict the stock market. these days at parties a lot are

being told just how scary the markets seem to them. how alienated they've become with markets. how the game seems rigged. ow all kind of complex inexpublicable things are happening. and anybody who listened to the last conference wru heard expressions like prices aren't based on anything real. i think there is a sense in the population of that kind of problem. we have a panel assembled here that is in a good position to discuss this. it will take a little bit of a technology viewpoint, but not entirely. we have anne kates smith. maybe you can indicate who you are. she's the senior editor at iplinger's finances.

you have the entire bios in the programs. i asked the participants to give me a good and bad stock investment that they had made in their lives and ann bought hares in a tech i.p.o. in 1999 and i think it went up the first day but then never hit the share value again. am i right? >> correct. >> that was her worst purchase. her best was she bought into a prepaid tuition plan instead of into a 529 so when 2008 happened, she didn't lose 40% of the value of it. here.id lauer is also he's designer of trading

technology. he worked for austin trading. he testified to congress about what he described as a crisis in the markets and the potential for new crash that is would make the may 2010 crash look tame by comparison. perhaps his best investment was he bought big coin at $3. i think he lost 10% yesterday but he's still very much on the winning side. >> we have andy brooks. he also testified to congress about high frequency trading which he described as death by thousand cuts to market integrity. he buys price stock every couple of weeks. and he bought maryland national bank preferred shares for his mom and she got a new kitchen out of that.

>> jerry davis, professor of management and associationology at michigan's school of business. he focuses on a lot of things, among them how corporate responsibility has evolved or deinvolved and whether shareholder capitalism really works. he leens toward socially responsible funds and he only checks his portfolio four times a year. as boring as he is about his own investments, he's exciting when he talks about the markets and the financial catastrophe e can look forward to. she bought a.t.f.'s in fwoled mining companies and she's down 25% on that investment. but she got out of teck and

advised her readers to get out of tech just a few days before the crash in 2,000. i don't think her husband was out though. >> you write a column, you tell everyone to get out of tech. then you find out your husband was buying tech. you have to ask yourself if the investment in that husband was ood. gambling is a nice place for to us start. there is nothing new about thinking about the stock market as a casino but never have so many average citizens had a stake in that game as they do now. and we might say we are petri fide by what we read in the

news about the markets, hyper fast trading, black boxes, ider deals, rate manipulation. hedge fund sha unanimous gans gans. sha unanimous how ugly is it in a blacks box? >> goldman has the best quote on this and when they were afraid their source code was stolen by a former employee, in the wrong hands this could be used to manipulate markets. or in the right hand. and i would say that many people working in the industry don't believe they are setting out to manipulate markets. they are looking at they study the market and they look for inefficiencies and that's been natural over the course of the market for a very long time.

what you see when you have structural inefficiencies, they don't go away. and that's one of the main criticisms of high frequency trading and certainly the complex market that we are confronted with today created by the regulations and the fragmentation of the market into 17 exchanges, 50 dark pools. it's more than those of us who are trading in it can understand, it's certainly more than the average person can understand. i think the difficulty in understanding what is happening and the relationship of price to enterprise value the previous speakers were talking about is something people fear a lot and they fear the market movements are divorced from reality and inexpublicable at this point. >> i remember we had a speaker a a conference in new york

high official at the new york stock extraining. what was remarkable to me was he had to use a whole lot of six sill balance words to explain the principle. if have you to use six sill balance words to explain it, you are not going to succeed. >> the littliest guy is the juiciest of all. if that retail order ever makes it to market and it usually doesn't because it's filled by internalization systems, but if it ever makes it to market, that's the juicey flow because it's uninformed and they will

pay the spread every time. >> david you also testified i think the same day to congress -- andy, did you. but on a slightly different aspect of the markets. >> everybody likes to say and likes to frame their conversation about the markets as if they are particularly interested in the little guy and the individual investor. and institutional investors are an aggregation of millions of little guys and gallons. so we represent everybody. and so david talked about the usey order flow of the retail investor, but in some respects that's also us as we try and mimic and disguise our order flow to look like retail. so we are in the game here and

challenges of market structure. you all are in this too because clenl e 401-k plans, 529 saving plans, all kind of things that are all co-mingled in the marketplace. our sense is that we have become overly complicated and we've lost the reason that the markets were created to begin with and who they were supposed to serve. i think david said there are 17 exchanges. i thought we were at 13. there are a few too many in the united states. we have 50 plus dark pools that provide no transparency to investors and limited benefit to price discovery. david and i probably agree on a lot of things. we probably disagree on enterprise creation value. i think the market is efficient over time and investors of all

classes should feel comfortable about that. but there is a game going on here and a lot of people have been insented through regulation and arbitrage opportunities that are not self-correcting. have figured out a way to position themselves between investor interest. and they've been part of the marketplace forever and they are good for the market when they operate appropriately. i think our sense is today there are some advantages they are getting that are not fair. and we would love to see some experiments, some pilot programs. the seck and others engage in some constructive 360 self-evaluation. we haven't done that for a long time. these things we've done, how are they performing? when is the last time you didn't get a review from your boss? i guess it happens once every

six months or a year. we need to do that with the marketplace. we've been reluct tonight do that. we don't have the answers. it highly complex but there is stuff going on that is undermining investor confidence. investors don't feel good, that's bad for our business and we would like to correct that. >> i heard you testify how this affects individuals with mutual fund. you are out there trying to decide if you should buy a stock or sell a stock. but what you described is all these other characters are purposefully sending signals basically phony decisions to buyer sell a stock so when you buy my stock in your mutual fund and i'm counting on to do well, you may buy it at a

higher price than you need to or sell it, then i the mutual fund investor is hurt by that. >> absolutely. f i said to all that 94, 95, 96, 97 times out of 100 that i stated i wanted to buy 100 shares of general electric stock and i cancelled that before i bought it. would you think there is something wrong with that. would you think that i was playing a game that should be exposed. >> that is a game but you don't have to play it. individual investors don't have to play that game. the best protection for the little guy is the little guy or gallon herself who starts out not looking at what the market is going to do today or if i

get g.e. tiny bit better or worse in an hour. but if i own g.e. for five, ten, 20 years, i think checking your portfolio once every quarter instead of once every hour or once every week is much better. i think gaming the market is a huge concern with investors. i hear all the time that people are losing confidence. they think is game is rigged and don't think it a place for them. but they don't have to play the game. they start out with an investment plan and think like a business owner or shopper. you buy when they are inexpensive and hold them as long as the business model pans out and when they get expensive you lighten up. you do that by rebalancing your

portfolio which is tough to discipline yourself to do. but the little guy can protect himself. >> gail's point is a critical one is that we are all invested because we do generally all own shares in mutual fund. when they go to market with their large institutional orders, as they rebalance, they re getting nickeled and dimed. so execution quality is eroding long term returns. as they go to market, it's felt in a much greater magnitude 10 or 20 years from now because they've had this erosion and this inferior execution quality. >> i think what you are saying is right, really thoughtful and successful investors take a long term view.

they figure out where they should be on the risk curn as they get older. they rebalance as things get -- great investors play excess. when things are frothy, tech stocks are are tripling. i am a terrible golfer but i played one day on the third if by a guy going down the i sell it right now i won't get the next allocation. i think he ended up making a little bit of money but not a lot.

in between 9:30 and 4:00 there are a lot of games going on and things that are not being done well or serving investors. over time that does detract from the performance of everybody because we represent ll those individual investors. there has been this incredible aggressive push for speed. speed to the market, speed to data. and speed kills. speed is reckless and we've got to slow down a little bit and try to understand what is proper and legitimate information and market data and what is noise that is causing you to be distracted and misrepresent true investing nterest.

don't you keep yourself up at night when you do those studies that corporate governance -- >> i think it's on a decline. >> i do have a bunch of concerns. when we talk about the little

guy and that friend on the golf course. that friend is not the little guy according to the survey. 15% of households own stock directly even one share. if you see the commercial for e trade, i thought that was documentary footage. that is not what happens. nobody buys shares directly. they buy exchange traded funds or mutual fund and that number has gone down a bunch. it reached a high in 2007 at 53% of households. participation in the market is sort of broad but not very deep. the median portfolio is only $29,000. so people are invested about one toyota's worth in the market if they are invested. that is worth keeping in mind. on the demand side people that will make reform are andy and

friends. the individuals probably dobt have a chance. we don't have a chance. don't even try and game the system. you are going to invest through intermediaries and hope you pick the right one. my concern is on the selling side rather than the demand side which is that the number of i.p.o.'s still hasn't turned around which we have half the number of public corporations we did 15 years ago and it keeps going down and then zynga goes public. i hope my pension is not investment advice. they thought they were going to fix it with the jobs act. but in the years since the jobs act there have been 20% fewer i.p.o.'s than in the years before the jobs act. i don't think that's the problem. there is a drought of public offerings and that is my

concern. >> a lot of it has to do with confidence in the stock market and the chief executive doesn't want to go public if they don't believe their stock price is going to prishte as they take actions to improve the long term aspects of that company so you have this drought in

facebook was supposed tock the i.p.o. that was fog to make people believe again. instead it turned into a disaster. it took the little guy that loved facebook and said i'm going to buy that stock. it told them they could pay $48 for a stock that should have

ome out at $28 or lower. the little guy says is this really for me and your point is good. the little guy could be a buy and hold person in mutual funds but they don't feel safe there either. i'll tell you one about the mutual funds, the industry's answer to the little person with a 401-k has been in targeted funds, baby-sit them. tell them they'll be okay if they just do that but that didn't work either because in 2008 when the stock market was plunging, my phone rang insays sently from people in target date funds who were saying my employer said this fund would get me ready for retirement and

i've lost everything. well, they didn't lose everything but they felt like they had lost everything. and behavioral finance tells us when you face a loss it's the scariest thing and you will give up on a chance for a gain if you are too afraid that ou'll have a loss. >> especially with young people who have only heard of the flash crash or what have you, they are just not interested in stocks and it's talking about being out of the market at the wrong time, the greatest contributor to asset building is the miracle of compounding and young people don't get in the market while they are still young, they are going to give that up. >> i have a colleague who is 40 and he said i graduated and

entered the work force in 1999. all these personal finance columnists told me to put money into buy and hold. if he had put that money into a credit union he'd had much less sleepless nights and a lot more cash. >> there is no free return. there is no riskless return. if you are going to earn return above the rate of interest rates or inflation, you are going to take on risk. the idea you can put your money in the stock market and over the long run you'll be better off, there is risk associated with that. and we're seeing volitility and risk. >> i just want to make one point than, i think part of what we're talking about here is that everybody is not facing the same risk, that a lot of

people are alienated because they have the sense that certain players have reduced their risks bypassing that off to other players. and from everything that i've read it's not totally inaccurate a perception. when of us need to know you read a budget item when they say they are going to cut staff we are like why

are you going to do that. we've gone through a decade we've had two huge bear markets and you've never seen that before. this has been a very unusual ten year period. start the ten year period 2008 going forward and the numbers look good, we're not through the ten years yet. think about where you enter and where you need to exit. if you needed to exit in 2008 and sell everything, your timing was unfortunate for sure. >> you shouldn't have been in the stock market if you needed to money. >> have you to start with your plan. it depends on your circumstances, depends on your risk tolerance and age and depends on when you need the money. >> stocks are definitely a long term investment, three years or

longer. you don't have money in the stock market for college if your kid is a high school jr. that's for sure. >> the regulation side and enforcement side is critical. i think it's hard to pin the fear of the market to individual causes but one of the major ones is the belief that sec is not keeping up with high frequency traders. at this point our regulators are unable to find them because of technology subpoenas that areout dated or they don't have the tools. we are still in a complete blind spot. if the regulators took a step and got on top of things with some regular tively simple technology, you would see at least some somewhere confidence

return knowing that the bad actors are being found. because if they had a little bit of insight, the things they would find would be obvious and easily punished under existing law. >> when you testified at that hearing in september, i think senator reid promised very quick action because he said we couldn't toofered let this go. but i don't think has happened since then. >> the wheels of congress and progress move very slowly and it's been frustrating. i guess what we're trying to do and all of us agreed to speak today to encourage you you all to inform your readers to ask questions about these subjects and challenge assumptions and the status quo. i think the press did a pretty

good job of identifying the excessive expectation that is existed in the tech stocks in the bubble of 2001. i think you all did a good job of telling investors ha the facebook i.p.o. was heated up and unsustainable enthusiasm. and there were a lot of columns that said wait two weeks to play. don't play day one, play on day 15. say what's going on with these marketplace. how come all this stuff is going on that looks like gamemanship and scarce me. it's the time to do it now, not the next crisis. >> the reason we are not tting i.p.o.'s is too much regulation and costly. >> we're talking about

regulation of plaveyor. not regulation regarding filings and extent of reporting that needs to be done and other things that are expensive for small companies. >> enforcement is different than regulation. it's enforcement that's needed. they can't enforce what they can't find. and they can't find it because the technology is limited right now, the regulators. >> since they got to confess their own worst investments, you don't have to but it could be a little bit like an aa meeting if you want. you can ask a question and if you can describe some blunder. >> i did not buy facebook. >> well done. >> i'm a freelancer. i write for investor relations

magazine. i'd like to ask a question about the technology and high frequency trading from the issuance standpoint. when i was taking finance 101 i learned cost of capital is impacted by volitility. and i have to believe high frequency trading lives off volitility. i talk to high frequency traders and they say no, we provide liquidity. do you think high frequency trading increase it is cost on capital? >> high frequency trading is a cost in the market. it's a friction in the market. yes, it does increase the cost of capital. it's a straw man when you want to cam pair it to a decade ago when the specialist system. i think you should cam pair it to what it could be, to an advanced system could look like

versus what it does look like which is extremely difficult to navigate. for high frequency trading they thrive off of volitility and complexity. it was their business. it was my business to study market structure. understand where the inefficiencies are and to exploit those. there are studies, all of them industry funded that show volitility has dropped. and when you start to look at the numbers they don't really add up or make sense. there are different ways of looking at value tilt. ts a nuance argument. there are some more studies coming out very soon by r.b.c. that should demonstrate that there are different ways of looking at volitility that show that volitility has increased in certain places at certain times when it really matters and that's when h.f.t. make it

is most money. >> there is a spread between the high and low a percent and a half. and their business doesn't change that much every day, i don't think their stock price should either. the issuing side of the equation in the conversation has been woefully quiet. if i were proctor and gamble or any of the stocks that were hit during the flash crash, i'd like to know why someone kept routing orders to market that is were less and less liquid and not generally displayed in places where there was no semblance of best execution. who routed the stock from $5 to $4.50. why did they do that? what is that about? how does that happen? someone who took an order from an investor that took an order

at $39 and routed it to a market at $5. go to jail now. who made that routing decision. there is this whole subculture about where orders go and how they are prioritized in different place that is is not in the interest of the investing public and we need to talk about that. we need to ask ourselves are we doing the right thing for investors, for everybody. he issuer or the sovereign well fund. everybody is part of this. >> these traders create liquidity. you say in the flash crash and you say there is many of them all the time, just littler one that is the traders disappear. they are not coming in and providing liquidity. >> i can tell you one of the core beliefs officially for the

official account of the flash crash was it was not caused by h.f.t. i was on the trading floor. the largest equity futures trading floor out there on the day of the flash crash in the futures market. and we had the exact same reaction as every h.f.t. shop did on wall street. if you consider h.f.t. was providing 60 to 70% of all market liquidity and you watch the market develop from down 3% to down 5% what happened. click. that quick all your orders come out of the market. when you are watching on the screen it disappeared. there was a moment when there was no order interest in the market. and so to say that h.f.t. didn't cause the flash crash is a very semantic argument that

is made by people who were not on the trading floor that day. >> the folks at get co-must love you. >> i worked for mcgraw hill for 22 years and i owe entirely too much of that stock. my question is david had a rather dire piece in the "new york times" recently in which he warned about the disconnect between the market and the economy and suggested that we're in for another big crash. is he right? >> i listen to him a little bit in the back but at one point he was telling people to get liquid and pay off debt and be prepared. and i thought to myself my first mortgage owner financed 14%, the bank was 18%. 2% ve people today paying

to 3% for a mortgage. his is a spectacular time to borrow money risk adjusted to spend torks invest, to hire, to grow. i'm a glass is half full guy. this is a great country. we have a lot of problems. we will solve them. we might not solve them quickly or the way you want to solve them. we can differ on things but we generally get there. i'm out on that. i'm not buying his book. >> it sounds a little alarmist to me too. when you look at the micro view. eople get scared when they look at the macroview. the quality of earnings is very high. corporate profits are very strong. there is a lot of cash in those

profits. it doesn't seem like a doomsday. it seems like we've gone pretty far, pretty fast, maybe a little correction. but i can't imagine a -- i don't see the disconnect there. >> i'm not a dams dayer but i will say the majority of trading these days is based on car lations and so we our math mat cal model serve to reinforce those correlations and increase those. so the 2008 crisis was a correlation one event. everything was correlated. i fear we're heading in that same direction. i don't know that a crash is imminent but i think that the idea that a black swan could be around the corner and it could be not tied to enterprise value or an erosion in earnings but it could be a glitch or a

reinforcing event of positive feedback loop like the flash crash was is certainly possible as little has changed since then. if the flash crash were to happen an hour later in the day and the market closed before it bounced back, that could have been a disaster. that's why i fear the next crisis and i'd like to see correction before the next crisis. >> if you were an investor and you were out for the day, the flash crash was a non-event for you. luckily because it was at 2:40, not 3:40. >> we were a culture that believed in the stock market, especially the baby boomers. one in four had 90 per of their 401-k invested in stock. those people got out at the

worst time, did not get in. if you look at what has been happening in flows. the people pulled about $400 million out of the stock market since 2008. they put just a trickle back in and they put almost a trillion dollars into bond and my fear is they could be set up now because they think stocks are the bad guys, bonds can lose money too with just a couple of% changes, you could see big losses in bonds. people have to know that. they have to know that there are risks there. they also need to know -- and i went back and tested this. after all the people called me and said i lost everything in 2008, 2009, i went back and tested the advice people are given to have diversified

portfolios. so i created really simple portfolios just like half the s&p 500, half long term bonds and if you would have in 2007 when you thought everything was great, you would have just divided $10,000 that way, half and half, you would have gone wn to about $7,000 100 and that's when you would be on the phone saying i lost everything what do i do. if you stayed the course in less than two years you had all the money back and in three years you had above $13,000. i think people need to know that because they still think they lost everything. and they need the illustration which is why i went back and put it in my book. i had a first edition come out in 2007 and so many people were saying do you really believe it

that i did test it. and the new edition shows people exactly what they would have lost in each portfolio and how long it would have taken to get back. and for those of you that write on personal finance, i think you need to tell people in cents what it nt is. suggested i went heavily went all in in 2008 because it was pretty clear regulators weren't going to let it crash and it would be coming back so people cashed out unfortunately. question about dem fi. one of the questions about baby

boomers and they hold 401-k plans and hold a bigger share of that wealth. the assumption is they will sell it off to someone else and at least under the bush administration the assumption was the chinese were fog to have a much more global securities market. i wonder if that's assumption has changed and whether demographics change the long term outlook on the stocks. and high frequency trading in commodities. i know that's gotten less attention than the stocks. >> i have concerns, i think the 401-k has been a disaster for everyone involved. if you look at what people's portfolios are, they are tiny. there are a few that have enough saved for retirement. the average is $29,000.

you can't retire for six months than if you are living in a major city. so i'm not worried the liquidation of 401-ks is going to lead to a crash. we have to declare the 401-k a failure and find an alternative. >> i think that is the next crisis for the country, a retirement crisis of grand proportion because half of people who are within ten years of retiring have $100,000 or less. part of that is they haven't saved enough but part is they've invested so poorly. only a third of people with 401-ks are investing close to where they should be. that's a disaster.

as we deal with social security and medicare, that's a disaster for the country. >> the industry has tried and we have more work to do to push information to investors about how to invest. it's hard to be a pier sometimes. it's hard to sell. we got a lot of work to do there. but the importance of savings and starting early and staying wit. if you don't know that, i don't know where you've been. and everywhere i turn, i see that. and so i guess maybe the target date fund are a good alternative for a lot of people because they are not going to be able to make a good asset allocation. i'm sorry the average balance is $39,000. it better be a lot of higher or people close to 65.

s is wasn't intended for us. your corporate plan was supposed to take care of you. as we've migrated from defined benefit to defined contribution, we better figure out how to do it well or get better this next cycle. who is going to help those people who don't have enough for retirement? >> on that bright note, we'll see if this conference moves from the doom and gloom that seems to have prevailed so far to maybe a brighter picture or two later in the day or tomorrow. i did want to thank the analysts for being here and sharing their intelligence with us. [applause] . >> the next session will be in

two minutes. captioning by the national captioning institute --www.ncicap.org-- [captioning performed by national aptioning institute] >> we are bringing you live coverage chcofrpbl with the writers and editors conference. we heard tim armstrong, he is one of today's keynote speakers.

at 4:00 there will be a discussion on the social impact of media coverage. and then the featured speaker of the conference. they are expected to resume in just a moment. we'll have live coverage here on c-span.

>> again the next panel on the ociety of writers and editor's conference will start in just a couple of minutes. tonight at 8:00 eastern it's a look at healthcare to veterans and the cost to taxpayers. the need of vets and the treatments available with connecticut's veterans affairs commissioner ner. then at 9:00 eastern we'll be live with the military times writer. we'll take your phone calls and facebook comments and tweets. the conversation has already gotten under way on facebook. the question is are you a veteran, what's opinion your experience with healthcare access and quality. we'd like to find out what your thoughts are at facebook .com/c-span. >> waiting, waiting for remarksm

, happening here in washington today. >> we are going to get started two minutes. while we are all gathering, a reminder there will be opening

reception tonight in the the continental ballroom, sponsored by the school of law at southern methodist university. we will have a short guest speaker, and not a short, short. maybe he is tall. he will be about the tax issue. he is a veteran policymaker. there will be all kinds of good food and drink, i am told. we will be starting with tim, i am told. >> again, we are a couple of minutes away from aol ceo tim armstrong. , let's go back to remarks from earlier today with the budget director david stockman and david walker.

>> we can get started. all right. , everyone and

welcome to the 50th anniversary conference. i came in this morning from chicago and it feels just as cold as when i left. i am very privileged to introduce our keynote speaker, this is going to be a give-and- take question and answer session more than a formal speech. it camey appreciate doing that because it allows us to get in more questions and talk more about his business. from 2009.esident i am an editor with reuters. i think the first thing i would say about tim armstrong, the ceo of aol, and he must have been overcome with insanity in 2009 when he took the job. he had a brilliant career prior

.o that at google juxtaposing that a little bit, that famousqyituote philosopher dolly parton, if you want the rainbow, you have to put up with the rain. i think that is what tim signed up for. i say insanity because some of your familiar with the aol story. back in the day, and when i say back in the day, a decade ago, aol was one of the names in technology that was was on -- was on the lips of everyone. it peaked at 35 million subscribers in 2002 and after

that it has been downhill. we have seen the industry transform. we also remember the blockbuster deal with aol buying time warner and we know how that turned out. was looking toward oblivious. and a lots stepped in has happened in the last, almost four years now. spinning aol off from time warner. we have gone full circle with this. he aggressively moved into content acquiring huffington post. we want to hear one story about ariana. he started patch, which many of

you know is a hyper local service. i looked on their most recent 10k and the company says it has 1200 employees, both of whom are journalists. it is very much a media company now. we welcome that. it also has an eclectic group of brands like techcrunch, a must read blog. and something that i think all of us use, mapquest. his tenure has been a race against time. can he reinvent the company fast enough to offset the decline in the traditional customers? we would like to hear from him about that. he got some good news at the end firstt year when, for the

time in eight years, revenues increased year-over-year in that quarter. that is how far this company has now an uptick. we are fascinated to hear not only about what you have to say also the, but direction of media in general. .> thanks for having me it is nice to be here. my passion areas. i just spent the last couple of days in d.c. in our dallas office. i was looking forward -- dulles office. i was looking forward to it. i was going to spend a few isutes detailing what happening at aol and what we

have invested in. i would start by saying my first of college was teaching. i did that for a summer program. to go intoi wanted investment banking. i realized it was not for me. . started a newspaper in boston i sold my car, sold my mountain bought a computer from apple and the learned pagemaker. i learned how to program my designs around the newspaper. we did all of the editorials and printing, did all of the ad sales. that was an incredible experience. overall, that was my introduction to content and journalism and those things. it wasreat product but a good learning experience. when you fast-forward to today

to where the internet is, i still believe fundamentally journalism is a very important concept to the future. in our invested heavily team. we have a good group of people at aol that are passionate about content and brand. i would say at the top level, i get this passed the law, -- asked a lot, is content a good investment? is journalism a good investment? i believe fundamentally the answer is yes. and they believe the answer is it is a good business, not just something for society. the way humans are programmed, whether we like it or not, most human beings are constrained by themselves and by our dna to

need brands and need journalists to carry the world of information to them. i think there is a big and robust opportunity for journalists and organizations and brands to have a material impact on people's lives. i doing that you can create great businesses behind that. that is the thesis of our content. we have other things we're invested in but that is the investment level of why we are investing in content. the second thing is for journalists, let me go down into that individually, one of the things that is powerful journalistslism is are walking networks. a lot of people that do not know about the content business of journalism always asks, what is the point of having journalists when you can have user generated content and everyone

can contribute? journalists are people that basically, not only are able to but moreowers importantly, the journalist is able to connect a network of people and ideas together in a way that a normal person is not able to do. i think that is a powerful part. there is a network effect that does not get talked about. i think it is a powerful premise of white journalist is really important. there is a science to journalism the does not discussed publicly. how do you unleash the power of in broader ways overall? that is important. i havestorical level,

read a lot about the history of journalism. in new york city when there was park row and more newspapers and more information and what the population could sustain at the time, what you saw was a creative content people in an open lane filled almost what we have on the internet reiterating very quickly to make their more attractive to the world. i think you look at what hearst did from san francisco to new york and when he brought new york journalism to san francisco. i think we are in that type of an era right now as a business. i would describe a business as an audience development audienceversus an

sustainment business. at a simple level, what that means, journalists and journalistic brands and companies need to innovate constantly. really what has happened is the distribution is changing. every time distribution changes, you have to figure out what type of content and programming and journalism is going to fit in that new curve the best. although there has been a lot of ande about the internet what it has done to journalism, it is also a significant and opportunities that -- to operate inside of that. i would finish by saying, the power of journalistic rinse is something that is in dna in humans. some of the folks from techcrunch are here.

-- f -- huffington post human beings want to rely on brands to help them get through their lives. look at the most sophisticated internet platforms, which you find on twitter, more people are following journalistic brands. facebook, content sharing. e-mail, content sharing. a lot of those is the power of brands. the huffington post is the number one shared brand on facebook. thereason is because huffington post does a great job andurating interesting society. it is something that human beings innately want. if i had one thing, possibly this is because of the public challenges we had.

i don't think people should be afraid to invest in content. you have to take a longer-term view of what that is. that is what our company has done. we have done a good job overall. -- eight innings, and the game will be tied. we will go to 15 in the future. >> speaking of investing in content, i think there is a lot of interest in this group in patch. there has been a huge amount of discussion over the last few years about hyper local and how that is the way to go in journalism. they are aol has said going to stick with it until the end of the year. what is the outlook for patch? you have hired hundreds of journalists.

what do you think? will you meet the goal? ini think we are heading that direction. what we would like to do is sustain patch and keep it running. if anything what we have been doing is keeping them in place in trying to figure out how to to tore revenue to get breakeven. hyper local is hyper human. from our standpoint, where we see the opportunity, most people tend to live in their locations. you have a naughty and that is in an area that cares about where they are. kids go to school. the largest investment is where they are. a receding have seen amount of local information. as more traditional media has struggled to make those

investments, the reality is, the audience is still there. the audience cares about local. i would argue when you put patch into towns, we did not do any marketing. it has gotten tremendous penetration and a lot of the towns we are in. from the standpoint of aggregating a hyper local audience where the vast majority people do is within 10 or 15 mile radius, even with the internet, there is probably 70% internet users use less than 15 websites a month. it is likely within that spectrum, local information is one of those things that is important. we haveughly has -- about 1000 journalists. i live in a patch town. i know the editor well.

in theseavel around towns, the impact they have this tremendous. during the storm, there was 329 towns that were patch towns. got theire people information from patch. whether or not you like the to really try to put good information in local towns. i think it has been helpful during those communities. patch has created a lot of noise on wall street. the only noise we were trying to create was to help human beings. i think patch has done a remarkable job overall. we have more work to do. you need to get cost more in line. how do you -- it is the age-old

problem making money. >> the average town is under 150 thousand dollars. the media market in the patch towns does not support other just addmedia, markets, about $900 million in an average patch down, if you take out houses and autos, $350 million of it is -- disposable cash floating around. in our model, running patch profitably essentially comes down to whether or not the cost structure is 150,000. model run a commercial around it, which makes sense to be able to monetize at that level? i think the answer is yes. theink we have towns where answer is definitely yes. we would like to get them to all

run that way. the real thing about the profitable towns is, do you have the content level and engagement level, do you have an advertising sales model who can work it out? there are other things we are looking at which are higher forms of monetization that are possible. yesterday in patch 40 towns across the u.s.. and model is journalism more international with the community. we have new ad models coming out this year, which are differentiated. i think we are taking a thoughtful approach to it overall. anhink patch has been investment that is a long-term investment in that environment.

not all of our investors like patch but from the standpoint of doing something really big and bold in a space where other people have given up on content. we are believers in content and brands carry it >> that is what your way of saying you're not going to pull the plug? >> i am sorry. just so we are clear, the plan never been to pull the plug. >> or get a partner. is to keep patch going in the communities profitably. i think the press writes a lot about patch and all of those things, our job is to try to million people

-- million people. internally we see over 20 million. thoseb is to keep consumers happy and build a business model around it. the plan has never been to pull the plug. >> let's throw it open to the audience. go to one ofplease the microphones, say your name and your affiliation. jonathan. >> nice to meet you. oneeptical question, buffett goes out and buys a newspaper. i am doing a column on a paper, they do 9000 with seven columns, three pages, full-color. . it is a beautiful publication. he prints it in his backyard.

how come this is not working for patch? when we say it is not working for patch, that is the media equation of what is not working. -- i wouldve seen bet if you looked at the start of that publication and how long it took them to build up to 9000 circulation and the revenue model, my guess it did not happen overnight. the towns that are profitable, my guess is we have towns that look like that place in maine but not all of them. at an aggregate level, you could say they are still and look similar to what you are describing in maine. warrenone, i think buffett investing is the same reason we are investing in

local. community news is important. people do not move. there is a lot of commerce there.cted if you're comparing a newspaper to patch, you may find similar attributes. at a macro level, we are investing more than we are making. investment is costing more than revenue revenue but on a per patch basis -- point,ously the larger is there an argument for scale gecko with dean -- scale? what do you need aol for? he has his own printing press. >> we are essentially funding entrepreneurs. if you look at if it is oneel, guy in maine. >> seven columns. you have never seen anything

like this. it kills the age, paper coming out of portland. it is on the newsstand. it is a remarkable story. when you look at what you are doing locally, it is like uhhh -- >> i think we are doing the same thing. aol has put 900 of those type people in all of these towns around the u.s. we are taking the same model. you think about patch in the investment we are making, we are making an investment in one platform that is used nationally. if you diversify the cost and divided by 900, number two you get to put one person in the town. there is towns that we are competing with people in other media forms that have 10, 15

people there. what we are trying to do is replicate the store you just told him that one town. >> thanks, jonathan. >> formerly of cnn. huffington post got a lot of criticism for not paying its contributors. a lot of people in this room are not on regular paychecks and depend on their freelance income. what is your feeling about that? can you give us any hard figures on how much huffington post content is paid for these days? we are probably the single largest payers of journalists overall. of whattandpoint companies have invested more in journalism, i think we are

probably it. number two, from the huffington post, it employs a lot of journalists. we are expanding globally. not just in the u.s. but in multiple countries. the blogging platform has allowed a lot of people, and patch as a blogging platform, to basically write, spread ideas, for free, and i think from that standpoint, from an empowerment standpoint, journalistic investment and giving people the opportunity to write in those spaces -- i do not know how many journalists are on the huffington post from a blogging standpoint. i know there are influential p will on the huffington post overall. but i'm not sure if your

question is aimed at our investment in journalism. i think we probably have the largest investment online or whether you do not like the blogging platform. if you look at every form of social media, facebook, twitter , everything. i think that is the way the world is. >> you are not considering those bloggers that do it to get their names out do not interfere with the opportunities for real journalists? >> no. , youu are a journalist have a choice to be a freelance or not. from our standpoint, our model has been to higher full-time journalists.

think there is a tremendous amount of publications in the world and online that pay freelance journalist. i think picking the huffington ist by form -- platform, think that is a stalking horse forward the world is today. with the distribution changing in general, journalistic brands, the number one thing we believe people should be doing is innovating as quickly as possible. i think from that standpoint, i could almost bet every journalist in this room has twitter, facebook, all of those other things. if you take a journalist and i took a snapshot of everything a journalist interacts with, they are probably getting paid by a freelance or a publication, my guess is they are putting their , notnt out on media types just the huffington post. that is the way of the world.

>> now that the huffington post has come up, can you tell us and arianna story? >> one thing i would say about arianna, she happens to be a really public [indiscernible] one of the largest content property is on the web. she is probably the hardest working person i know. is sheask me a lot, really plugged in day-to-day deco i see her on tv. e-mails sent per person and received per person, she probably has the highest ratio on the planet. one of the things people underestimate about arianna, she is very good at what she does. from that standpoint, the huffington post has gotten a lot but you tell me a

female entrepreneur who sold her company for hundreds of millions of dollars who has a pulitzer prize, who has the media format and has done other things around cause-related stuff. a whole bunch of initiatives for women entrepreneurs. i think it is easy to do the stories on her, the real story as she has done a tremendous job. that is the best story about her. >> he was answering e-mails from her as we walked in. a moment, patch for what makes the ideal patch town? if i understand, you are looking

and all of the towns you currently have. some of they may lose patch. you are also expanding. what makes the most successful town? what ingredients? >> there are 59 variables we look at. the taxerything from information, school information, how good the schools are. have engaged the community is. 59 variables. we ranked all of the towns in the united states. really what we're focused on is engagement. there are communities in the countries that have very high engagement levels. even though we have some patches, one full-time person is there, you could have tens of people around patch who are

doing content, putting up events, advertising. is biggest thing we look for how vibrant the market is in the community is overall. the places where we have not put patch are places where we think it will not have an impact. size of thee the community, there are too many applets, and in general we have tried to choose important towns that have important engagements that have an open opportunity to latch onto the platform. ok, mark. >> formerly of forbes magazine and now i teach journalism at depaul university. i wanted to shift the discussion and talk about, maybe not journalism, but revenue, which i know you are interested in.

the metrics to say that when you move from to digital, you get about $.10 compared to a dollar area and there may be a difference in your case, how are all ofg to recapture that lost revenue? only if we saying, could. is it scale? isit because the web, there so much inventory and there are so many places to advertise, there is no pricing power. dynamic? change the will it be the next great things? offer us some insight and possibly even some encouragement

same margins. there is a lot of profitable properties online. the belt gets wrung all the time about what is not profitable. all the timerung about what is not profitable. >> will it be three years, five years, what horizon are we talking about? >> you're going to wake up and it is going to happen. you are seeing more and more things translate into the new economic economy. it is not going to take 10 years. i think in 10 years you will have a vibrant -- 3-5 years. >> thank you. >> i would like to ask a couple of questions that were submitted.

.ne is a little offbeat what advice do you have for marissa mayer? >> i have been friends with her for a decade. she is -- we put an investment with pbs, documentaries. we interview 200 women that are the biggest leaders in the world in the u.s., she is one of them. i do not give other people advice on what to do and how to run companies. i think every situation is different. i think she is smart and good at what she does. i would not offer any. >> would you let people work from home? 1000 peoplewe have attached that work from home. i am pro-home.

>> aol was once so ubiquitous that you've got mail was the subject of a movie with tom hanks and meg ryan. that went away like the dodo bird. do you dream of getting it back? >> i would say we still have tens of millions of people who use aol mail. tens of millions use the homepage. i think it is one of the most important brands of our time. if you think about what a welded for the world, they did something that was not very usable, put a human inference -- interface on it and scaled it to the world. when i travel, where aol has had brand issues in the journalist in space, the space, the technology space, and the 99% has been related to the time warner merger. when i travel and i meet consumers, and people that use

aol, they love it. my guess is the amount of brand power aol has over a long time, we will be able to resurrected. i do not know if people will make movies about it, but i am pro-aol. i think it is one of the most powerful brands on the planet. it needs work. >> how can you do that with the perception being that it is older people? >> people with money? i joke about that. aol has one of the best fororming audiences online people engaged with advertising and content. a funny thing happens when you get married and have kids. suddenly there is an important withf things in your life

things that are going to be stable. i think we have consumers, the average age is 38. if you do not like 38-year-old, sorry. i will get you some 18-year- olds. from where i sit, on what we are investing in, if you look at brands like techcrunch and huffington post and aol and mapquest, we have some of the best brands on the planet. and all of that is fueled by aol. beould expect the brand to meaningful to consumers again. you are using aol. >> ok. >> i am charlie senate. -- cofounder of i wanted to talk about the

strategy internationally. and also the editorial perspective. how do you intend to build that global network you want to build? .here are great challenges i am wondering if you could walk through what you are thinking isut with them, language, this audience development for english speaking people around the world to connect? or are you trying to take it to the next level? two different languages. and business-wise, the ad supported model internationally, how you're thinking that through. e-mailing with arianna on the way in. stuff we are doing internationally. our premise has been important markets, english first, english first has turned into doing

market language overall. we just started france, a couple of others we are working on. that will be coming out. from that standpoint, we believe it is important to have the platform and for it to be localized. there is another example when the new pope got announced, the huffington post was one of the only people that basically had real-time work going on in english, italian, and that all of the other languages we were serving, with the reaction. it was interesting to watch. that is a big opportunity to have crossed light for media brands. -- cross five form immediate -- media brands. when you think about what is important in the world, the internet has wrought down the downl barriers -- brought

the global barriers. they have not had the same opportunity to go across a country as much as they possibly could. some of the cable channels have. we see this as a time to explain -- expand globally. if you go international and travel to any country, people read techcrunch, there is natural demand we have. i think you will see us expand our brand. we will also partner. both in the u.s. and globally. looking at important markets where we can have an impact and we would like to localize language over time. >> thank you. >> you said you were willing to be blunt about cost structure. he started to mention labor costs talking about and unions

-- talking about unions. can you elaborate? the pressure for us is to -- from a wage perspective, we are able to do it profitably. one of the things i think we have seen, which is great for journalists, we can invest which is good for the company overall. from cost structure, one of the things that is helpful for us and useful for us is the flexibility of being able to

shift two point different journalists from the limited amount of stuff i looked at. the question is not the cost question, it is also the flexibility, what is a journalist allowed to do? my guess is from a cost perspective, wages are not dissimilar. some of the cost structure from some of the constrained things morere people to be constructive in the future. it is probably not that different off-line and online. >> i think you pay 50,000? >> all over the place. i do not know with the averages. is.verage >> you said you would be blunt. i wanted you to elaborate more

on it. where it is going. >> i think pay for journalists is probably somewhat even online and off-line. wheress is in a world brands are going to get more important, journalism is going to get more important. i have a differentiated thought about this, i think journalistic brands are important. people who want to write and do content, all over the place, from a journalist perspective -- it is not something i worry about. the area i look at, i looked at an online publication years ago

where i was told journalists could not write online. i said, what? they said it is not in the union contract. if we had done a deal with that would have had to have off-line journalists and a similar suite of online journalists. that is what i meant by the cost instructor. that was not the case. >> i think we have time for maybe two more. >> i am from china. my question is, i think aol is in a better financial performance since last year. your income increased for the first time. for as your definition

comeback of aol? the comeback of aol will be when aol is profitably growing at industry rates over a long time. i think we have improved to the company dramatically. from where we are today to where we should be, i think we are just getting started. if you look at aol five years in the future, i hope aol is growing on a global basis at industry rates in terms of revenue and profitability. i think where we are right now getting back to growth, has been a huge milestone most people never expected us to get to. i think it under serves us to think we are at a success metric right now because i think the metric has to be broader and

more aggressive in the future. >> i noticed you started to area since content last december. kind of like driving traffic from your other content. do you think this business model can be using other websites or is it profitable? >> i think i have your question correctly. our thesis on content has been content everywhere. and basically have relationships where we are building content for ourselves and distributing content around the internet. i think one of the things that is interesting about content is the model, users come to your

website and we monetize them with ads, there is also big models we have been able to build where we have syndicated content out and partnered with other companies. up until recently we have the number to amount of video views after youtube in the u.s. we also syndicate our content out to 30,000 publishers across the internet. we have different areas and recirculating traffic and moving consumers around is an important part of the model. >> ok, last question. >> i'm with cnn money. innovation seems to be your buzz time i am wondering, at a

when our industry is being disrupted why these lean mean, upstarts, how are you trying to ?ncourage internal disruption i am thinking about all-night atker cons -- hack-a-thons facebook. how do you foster that type of environment at aol? on a fun note, how can i invent my employer do have a thursday afternoon beer cart? [laughter] >> i would say on the innovation side, one of the things that is really important, you have to have tolerance for failure. i have worked at big media companies before. i was at disney and news corp. and other places in my career. first of all, i think those companies do an amazing job. if you look at the risk at espn

for instance,, i think they do an amazing job of fostering loss of breakout ideas. when i was there, we launched espn phone and some other things carry it espn is pointed out as a success. i think the real success, they done all of these things. i was working for paul allen's company. there was this person that invented online fantasy sports. it got to the higher ups at espn and they said, let's try it out. let's see if it works. part of it is a leadership culture and part of it is actually encouraging people to do things. i just got back from dulles. he have a product that needs more work. i started the meeting off with those people and i said, before

i give you any feedback on the product, i want to say the first thing is i am proud of you and encourage you because you actually took a risk. .e have more work to do one of the things she has done recently, she gets a group of employees together that are opt in. it is not you are a manager and do the sings, she went out to the company and found people that wanted to do that. she organized a meeting every friday where they get together for an hour, about 50 of them. they will take one of our and in one hour they

will rapidfire break up the tables, rip it apart, or they will take a new idea and put together. and and then they come out with a coherent set of information around it. the other thing they did was bring entrepreneurs from the outside in to speak. everyone is in small offer and streams and tries to figure out innovation. we have a culture, when anyone comes into the office, we call -- we give people a microphone and let them speak. you have the general mcchrystal coming in, a partner of ours. -- team has to hear about if you do not think that drove -- i would take a bottoms up approach. then i think the year cart comes comes down beer cart this is a bottoms up also.

the person at aol that did that was one of the best natural leaders. did not have a crazy title. but the person basically said, i got another funny e-mail on the way at over here, he took over and got the beer cart out. i had just left to come here and the people on the campus did not know i left. wey said it is poker night, have a seat for you. will you come to poker night? we were doing a serious business review and somebody walked by into the building. they had, if you are not at aol , what question would you be wearing? there is a lot of people that were all wearing the same costume.

organized at corporate. [laughter] muchthat, thank you very for stunning time with us. will let you get to the poker game. >> we will be starting the social media session momentarily. don't go far. [captions copyright national cable satellite corp. 2013] [captioning performed by national captioning institute] >> live coverage of the society

of the american business leaders with a focus on the impact of social media. tonight at 8:00 p.m. eastern, a look at health care for u.s. veterans and the cost of taxpayers -- the cost to taxpayers. and after that at 9:00 p.m. eastern, we will be live with the military * writer talking about veterans issues from a national perspective. we will take your phone calls, facebook comments, and sweet. the conversation has already gotten underway. are you a veteran and what has been your experience with access to health care and the quality? you can let us know your thoughts on facebook. at the georgetown university marvin center. a couple of minutes from now we will bring you the panel on the impact of social media and media

coverage taking place at the american centers and business writers conference. -- the american business editors and writers conference. >> david stockman. >> thank you. a moment ago, aaron said that a lot of people are looking for an explanation, particularly journalists, of all that has happened since the crisis in 2008 and the massive programs and the big deficits and the controversy about whether wall street has been fixed or not or is it just the same old game and so forth. i have an answer in a 700 page book called "the great deformation." it goes back to the 1930's, 1940's, 1950's and so forth. i also have to confess that i'm

not really an offer. according to some, i do rans and -- i ran to and scream. i will have a debate with my friend david here today on the budget because i do not things -- i do not think it is fixable. and people ask, how you know that you are politically incorrect? and the answer is professor paul krugman told me so. he recently suggested in a review of my book and the "the new york times" this weekend entitled "sundown in america" at hand is going to damage the work of the economy is a cranky old man. there must be a lot of cranky young men in america because after the release of my town about all of that fiscal ales and so forth, this book suddenly

went to no. 5 on the amazon list. diet,were three books on and one book, which is a novel, "the walking dead." me was aook behind cookbook. i feel like i'm in the right zip code with this whole thing. i believe we will have a massive national diet if we're ever going to get out of the mess we are in, that we have been cooking the books for a long time, both fiscally and in the monetary system with wall street. in other words, it is all bubbles. it is not real. we are not in recovery. it is going to go down like the last two. and if we do not wake up that all this is artificial as a result of really bad fiscal policy, of a central bank that is out of control, a rogue

central bank that is one of many doing the same thing around the world, we will have some pretty horrible things to deal with the morning after when it happens. the book deals with many topics, but i want to hit two that are relevant to our discussion today. one of them, i call the fiscal doomsday machine. i call the serial bubble machine, which is what i think about the fed. the two archive the interactive to the point -- the point that i would make, and there's a lot of history that goes back into this in the book, is that when you get to the point that the central bank is so managed and manipulated, the entire financial market, the entire system, that -- money markets, debt markets, even stock and asset markets, then none of the prices and financial market mean anything. they are not price discovery in the old free-market cent of

supply and demand, discounting the future, cash flows, what does your contract say, what are your risk -- none of that is agent anymore. it has all been crushed and killed by a central bank that is printing money so rapidly that there are so many points in the market at all the rest of what , thearkets are doing today markets today are a work of a huge casino of players who are essentially frontrunning the fed, pricing every word, every nuance, every smoke signal that comes out of their statements month to month and in between, pricing through arbitrage trades the free overnight money that they are pumping into the system at a rate of about $85 billion per day. none of this is sustainable. all that would have been considered absolutely looney,

cookies? as recently as 19 -- cookie stopped as recently as 1988. but we are desperately trying to keep alive the group of people that run the fed who are basically running the u.s. economy, every inch an aspect of the financial markets. that has spread to the whole world and all the other central banks are doing the same thing. it is a race to the bottom to see who can destroy their currency faster. moss night, japan weighed in with the truly insane stuff they're trying to do. >> see all of our coverage on line at c-span.org. and now, back live to the conference where there's a discussion of the impact of social media on business. >> we welcome your involvement and highly recommend it. it is a great conference.

afterll have two days today. check out the exhibitor in the continental bagram next door. and there is a reception afterwards and -- the continental ballroom next door. and there's a reception afterwards and other good stuff. you can introduce yourself to me or any other member of the governance. you can identify them by the purple ribbons on their name tags. we have been talking about social media at these events for these five years, maybe even longer. by now i do not have to tell anyone about the importance of social media. i'm sure the media organizations represented here all have a strategy now. talk about to disruptive forces in the media

today, i would nominate facebook and twitter as two of the most destructive forces. people are no longer necessarily coming to our websites for the news. they are finding out from their friends on facebook. they're following headlines on twitter. i think journalists in particular, we see twitter as just a fantastic source of headlines and news. and tips as well as they wait to get out our own news that we report out there in the world. i want to talk a little bit , to bring you up-to- date about what we are doing their. microsoft just handled -- entered the digital news business for nearly 20 years. socially is central to our strategy for moving beyond the portal model that has been court to our success so far. to our success so far.

many would agree that it has critical to our organization, but breaking down social media and increasingly consumed apps like smart phones and tablet. we are transforming the business by leveraging -- one thing we are doing is leveraging the signals that we get from search and social and our own editorial in sight to pick up on trending topics that deserve coverage. you may be aware of a relatively new product called msn now. it does exactly that. it searches the social signals we get and has a staff of writers and editors producing original content that drives the tons of sharing traffic and improves the search results as well. work, weney, where i recently launched a new section

that produces dozens of original posts. ofre are a wide variety training topics. it has been hugely successful so far not only in generating traffic, but also in producing stories that are highly cheryl and likely to turn out on a search. and likelyly shared to turn up on a search. about working at msn and msn money, as i said, we are moving forward and revitalizing the business. we are hiring, looking for writers, editors and web producers. if you are interested, let me know. you do not necessarily have to move to seattle. although i do highly recommend it. i would like to introduce the

panel. on my right at the far left, we have fara warner, director of technology and entertainment group. she oversees strategy for a ton of brands. in the center we have chris o'brien, a technology reporter for the los angeles times and formerly of the hannas -- the san jose mercury in news. and closest to me is lee manages the partnership with youtube and is a trained lawyer, apparently thought better of it at some point. i want to start with lee, and if we do not think of youtube as a traditionally -- traditional network, i think we certainly recognize the power of youtube.

viral, and to go then for a viral video to action drive the new cycle, just look at what happened last week with the basketball coach at rutgers. iat is all i saw on tv when sneaked out for lunch a couple of hours ago. i want you to talk a little bit .bout what you do at youtube when you work with content partners, talk about developing strategy for a media company that produces video verses may be a smaller start up where youtube is a bigger part of the strategy. youtube, we have a platform and we encourage everybody to broadcast yourself. our mission is to connect the world through video, and that is happening more and more not just with what we're doing, but throughout the world with netflix with house of cards.

amazon is doing all of their original programming. you would not have thought a few years ago that amazon would be a video company. this trend is continuing across every platform type. our partners are to -- learn how to build their business bigger and stronger leveraging the community that we have built. youtube is a social media platform built around video. when it was founded, you could upload a video. there would be a static link that you could share with your friends, and the notion of it , isg viral, like many have built on top of the power of that social element. audienceto engage your on the platform. we try to help our audience understand that. brean down the

barriers were they are. youtube is a destination where the users are. we have over 1 billion users coming and watching the are now on a monthly basis. whether you are a smaller business, or a media publisher, it is important to understand that audience is looking for something from you. they want to engage with you. they want to have a relationship with you. youtube works best if you address them, provide them with a consistent experience. then we can amplify your audience and provide them with anywhere from 30% to 70% more eyeballs on it than you would get organically without the power of the social network and the referrals. ofis there a certain type video presentation that works better on youtube, and specifically thinking of our business, of course, it is business.

is there anything wrong with a , qualityighly polished example, or people looking for the iphone caught on the run video that might be more typical of egc. >> i think people are looking for both. that is the authenticity of speaking with the audience. one of our programs is an h.d.o. program that is 18-30 minute with a general in iraq, or north korea that is coming out soon. video. not a ugc type does this audience expect from you and/or your delivering to

them regularly? -- and are you delivering to them regularly? thisuld you say that strategy should be about building audience, building are there news business is making money with the youtube channel? >> it is both. we're still in the early days of what digital video and uniquely digital transmission can be. youtubeutting checks at for six or seven figures to thousands of content partners and channels every month. there are plenty of people making actual money today. cablest as the dawn of required people to build audience first and understand what their voice was, bravo did not start out at the place that was about design and fashion.

the clear i 43 gai help them to define their network. eye for the r helped them to design their network. now you can have reality tv hosted by people in the field. we are still in those early days on youtube in digital already. follows the eyeballs. you have to build the eyeballs first, but we're starting to see people make lots of money as well. i want to skip chris for one minute and talk to farrah about aol and focus of a bet on that question. a few years ago, we were all struggling to get a facebook twitter, get a

presence, and maybe half a dozen other social media networks that were still the bobbing of the time. how would you say that aol -- still evolving at the time. how would you say that a elwell's strategy has changed in the past year or two? >> even for me since i've been at a well since last july, for me, it is like peeling back and onion. every time i think i figured out the social media strategy i have to go deeper. i would say social media, social networks -- tim talked about audience sustainment. when you think about social media networks, it is using those networks to amplify your content as far as it possibly can go. that is the outward push. but then there is also the pullback in, which is using the network affect other people's

social networks. not just the 30 or 40 or 200,000 people that may follow one of my brands. but then how can we connect to -- a good example is aol music. did apublic, we just session with them, which is a beautiful but yuppies that we do. we can send that out on our networks, which are rather small actually. but one republican, or one direction, or others, they might one one or 2 million people their networks. we like to use those as well. we love it when justin bieber decides to treat a story that we have done on aol and music. in, buth out and people then there is an even deeper level that i'm coming to realize. social talk about

networks, at this like basic subscription. if you do not think of it that way, from an enterprise. the view, you probably -- from an enterprise. , youew -- a point of view need to the give it that way. at the back and at a l.l. -- at s.l, i watch my reporter' one of them is in the room today. it is a cat and paste job, right? you're constantly cutting and pasting into twitter and facebook and interest and suddenly, you have gone down the vortexes of social media hal. hell.

what i'm trying to do is to drive our content management to be able to publish immediately from it, not as an automatic feed. although some of my grand do that where they just turn on twitter automatically. every time we publish something to a site, it goes up on twitter. that might be ok for some sites or completely terrible for others. do is buildrying to a dashboard where my writers can go in and tweet exactly the facebook message, the interests, the fourth square, the tumbler, whenever it is. social media has evolved from five years ago, how do i get on facebook, what do i use it for? into howas evolved many followers i can get, how i

can get my message out. and the amplification that you can see from a social media network that you do every single day, every single our, every single minute is amazing. are you have to be doing it that way. -- but you have to be doing it that way. but you cannot jump in and jump out. you cannot treat 12 things one day at -- tweet 12 things one day and then leave it for five days. the same thing is true on facebook. is what i think of in terms of social media. >> i like the concept of the push and pull of social media. i think it is very applicable to our audience. a lot of us think about how we can get the distribution out of social media and get that content out there and get the amplification effect. it exists even if you only have a few hundred twitter followers because they have -- they may

have hundreds of thousands of followers. chris o'brien is a reporter for the "l.a. times." he is a working journalist here on the panel. you redella us about how your thinking has evolved around social media -- i think you could tell us about how your thinking has evolved around social media and how you developed your sources and interact with your audience. >> i'm going through a big transition and we calibration of how i use a lot of this stuff. i just moved from the san jose mercury news to the "l.a. times" back in november. rise of the social media era, i was a columnist. part of the way i approached a lot of these things came from

using a columnist boys. i had a lot of latitude in terms of humor and -- using a columnist voice. i have a lot of latitude in terms of humor and opinion and the things i said could get rich we did. . retweeted. in my new role, my job is more in terms of reporting on silicon valley. i cannot just pop on and say, the apple ceo is an idiot for doing x, y, z in a way that i would have a year ago. and in the process, trying to change out who i'm falling, making new twitter lists, finding new people who i can tweet to come out fighting those who are interested in apple as a company, has a stock, for their products.

interacting with this -- those people, replying to things, trying to get them to treat your staff. yo7ur stuff. i'm trying to make sure i'm getting the most valuable and effective feeds and tweets from people. i would say twitter in general is probably the biggest thing i use, followed by facebook. and twitter, mostly think of more than anything else has a great reader system -- as a great radar system. i think they're probably missing the opportunity to delve deeper into the search capabilities that twitter offers or some of

the other social media platforms. out there in silicon valley, are there other social media networks that are evolving or that we should be aware of, or just outlandish at? are there things that have popped up on your radar screen? this is what can make this stuff so maddening, beyond the big ones. a lot of us in the tech world use google + of it. use it in do not half. we talked just before this panel a little bit about linked in. i hear lots of stories about people getting traction there, or finding a lot of sources. i have used that somewhat, but -- i've been going through that

trying to find people who are apple employees or have some sort of apple background, or left apple in the past year or so. i thought about whether to pay for a pro account, because you get more access to people in terms of being able to communicate with them, send the messages, things like that. and below that there is a tier of things like cora, which is a question and answer site. phenom intactain circles where you have people posing questions with -- within technology circles where you have people posting questions and getting very detailed answers. for me, it comes back to your capacity during the day to figure out how to use all of those things effectively and figure out where you spend your time. and on top of that, they're

always changing. they are not static. anything you've got it figured out and then face of changes everything. -- you think you've got it figured out and then facebook changes everything. >> it sounds like you are doing things in the traditional way. i mean, you are not just tweeting and on facebook, but you are making a phone calls and doing the things that journalists do. >> i could hire a whole person just to spend a managing my own social feeds if i really wanted to get into it. but at some point, i've got to pick up the phone and call people and right and blog and all those other things. to a question of capacity for me, not just using them, but being efficient and effective in a manageable way. be on all cannot these platforms all day trying to figure that stuff out. us, increasingly, i've

taught in the past and i have continued to mentor. i will consistently say to the young people who come to me, i say, what do you want to do? and it was taken i want to be a managing writer with the new yorker and i will say, i do, too. [laughter] either you need to be in data visualization or you need to understand social media strategy from soup to nuts. people at social media leads because decreases. cannott, ie spend a lot of time pushing those things out. i spend time with our daily finance brand. we have someone who is a social media leader who is doing that all the time for us, and scheduling tweeds and facebook.

the individual writers need to brandtheir own brown -- down the network of fact. increasingly, you have to take social i think about dig. who uses that anywhere, right? that used to be the thing that you had to use. i don't know if you remember the time when you have 20 different icons and billions of things you can do with your content. w it is facebook, twitter, pinterest, google plus, and i would put youtube in there. >> to that point, i think that the difference between how we're structured and how you can use all of these, dig was traffic driven. you have a headline and people can vote it up and down and that was it.

you couldn't engage. there was not a conversation happening there. on every other platform that you mentioned there's an engagement and conversation happening. on youtube you can come in and post to youtube and you can spread the word and talk to people on these other social platforms. that is a large way in which people find out about the videos and come to watch them. pinterest, you want to be there if you have a female audience or want a female audience. on twitter, same thing, i don't know you have to put the same amount of effort into every single platform for every single brand. you have to find out which platform has the audience that you're going after and which one has the brand that you're going

after. i think google plus is also slightly for male and younger, if i remember it. at least when it comes to who is watching the -- sorry, who is sharing and watching the youtube content on it. >> how many people throughout -- how many organizations have a full-time social media person, that is all they do? close to half, i would say. i want to give the people an opportunity to ask questions of our panel, the best practices for using social media or questions about their businesses. so please introduce yourself and will trust that you are a member. wolf. ame is derrick there is questions on how to manage facebook. we had our corporate age but

some reporters had their own personal accounts that that use, some peep had two accounts, -- people had two accounts but i would be interested in where you mansion your facebook accounts for the reporter brand, not just the corporate brand but for the individual. >> that is a good question. of course, facebook encourages you to use our own personal identity and not everyone is comfortable with that. some people get over it. i'm curious about what policies you have in place. or how you handle that whole issue. >> i encourage my writers to all have their own brand on social media. but i will say that if your life outside of your work is critical to what you do on twitter or

facebook you might want to think about getting a different one for business. i mean, i think -- the tough thing is we'll hire in people who have big social networks and i want to retain that but i want make sure we're not -- that there is a voice that sort of tracks the brand that they are working for. but i think -- right now we're working through a social media policy and we have it down to the best words are don't be stupid. [laughter] we all know whatnot to do, right, on social media. we get it but you can get yourself in real trouble. chris to your point, you used to be able to say certain things because you were a columnist. now you're back to being a tradition journalist and you can

burn your sources and hurt your career by saying something on twitter that apple didn't like. >> yeah. >> i mean i would a assume that could happen and that's probably not what you want to have happen. >> we had a minor issue a few weeks ago. does anybody remember the story about the twitter service buying and the porn issue that came up? we were having a little bit bit of fun with that on twitter and i got an e-mail from my boss noting that our tweets were being streamed on the website. we did not say anything obscene but we were making jokes about it and it was a nice note to say remember, these tweets are showing up on the web page too. that's the thing, i tweet about my kids occasionally on the weekends being at their basketball games.

that is feeding on to the "l.a. times.com" website. facebook is the one that has driven me more crazy with that because they have -- they have -- they have changed so much. a few years ago when i was at the mercury news. they came to us with a new dwroo policy and said we want you to create a page for your column. so you have your personal column over here and you will get likes on your page. i thought it was great. personal stuff is over here on my personal account. then after a year they came back and said well, we're not doing that anywhere. we're going to merge your page back into your profile and we're going to create a subscription button. they would have your page set up to do subscriptions. so every time i post something i

set it to public, friends, personal. i'm too lazy to do that so i post something about my kids and i get a bunch of people from pakistan licking like about my kid's baseball game. my 20,000 facebook followers or whatever i have. i found that to be less effective than when they had the clear separation. >> google's policy? >> we don't have reporters per se. we don't have that policy but interesting to note, what this highlights is that you were reporters in the past, you were people behind a story. you were telling a story to others and with this you're the forefront of the story, you're the face of the story. many journalists saw themselves into bloggers and you have to think about what is that public

face putting out there, how are they going to gather support, how are they going to spread the word? you want your reporterers to ve their own personas on social media. who are you when you're telling these stories when it comes to business reporting. >> for me when i'm talking to my editors and writers about having their own brand out there, that is really their professional brand. how do they use that? as much as it can be difficult and i don't go around telling people you have to take things down. i don't have the time to do that and i don't want to set up a system where i'm big mother trying to tell people what to do. again, going back to the point about, i think as journalists this is one of the coolest things is you can get your story so far in the world on a social

network. wouldn't you want to do that? wouldn't you want to spend time doing that? and wouldn't you want to do that with your best foot forward? instead of having a twitter stream that is all mixed up with your beer goggle night on saturday then that great piece that you create on monday morning, i wouldn't want that for myself. what i try to do is be like, what do you want to look like to of the rest of the world? if you want to look schizophrenic like that, ok, i'm not going to like it that much but i'm not going to tell you to stop. i might push that idea that -- so many journalists, i think he made the point that many of the people in this room are freelancers. every time you move, every time you are doing something, building a brand in those social networks as that person who

covers this thing incredibly well you might be afreelance journalist one day, you might be working at the media company the next day. but that brand is going to follow you. >> personally, i just don't publish pictures of my beer goggles night. it is kind of a serious issue. you sometimes have to be more public than what you're comfortable with in the social media world. that is the decision i made just to keep some things a little more private and just try to err on the side of caution and get out the work and let it speak for itself and kind of keep the beer goggle pictures on my phone. [laughter] >> my name is john and i'm a columnist for "the street." i wonder if you -- can you talk

about that and you touched on, the notion of curating social media. i know when we go from client to client they have drastically different needs so it almost challenges like there is a social media brand. when you look at it, some clients want a lot of followers and some want a particular referal rate. so the trend right now is you have 10,000 followers, that's great. but what is my repeat follower. i'm wondering, is there a best practice, is there a number of tweets, is it three a day, just kind of talk about that decision in the real life newsroom. you would be shocked to see how disorganized it is. >> are you asking about specific twitter followers.

>> i have conversations that they want this and they assume we know it is "social media." but if you compare what one customer wants against another the needs are different. media company x does not find that interesting because they prefer something else and it becomes as curated as the story that you do for them as the social media extension that you have. i'm interested, what are those little specific examples or best practices that you can give us for that type of experience? >> i think that is a good question. part of that goes to the question when you -- when you have a brand and it gets big enough, is it big enough to spin . f a second brand a separate ght have

feed that i curate and edit. that may have a smaller following but hopefully, it had more targeted. i think it is a question that as media brands get bigger, you think do you have a -- just enough momentum here to spin something off and what does that look like, does it look like a blog, facebook page, does it look like a twitter feed? i think you have different milestone levels to when it rises to that. you probably have run more brands than -- >> so every brand is different. passed my hat i've social media leads to a brand -- what i don't want to hear when you walk into my office to talk about social media is, i heard

the other day that you should tweet six times a day, you should facebook four times a day, you should this and that. instead know who your audience is and how are going to reach them? if it is business news, we want to be on twitter from 7:00 in the morning to 10:00 in the morning. that is when -- the market opens and people are going to think about what is going on. then there is probably an opportunity to jump in back day and then as the markets close. if you follow that strategy for movie phone, you would never find people. when are people talking about movies on twit center thursday night because that is when they -- twitter on thursday night because they are interested in finding a movie. it goes back to who is reading our content for one thing and who do we want to read our content as well. so each brand is significantly

different. one of the problems that we can t into is, you know, "huffington post" a phenomenal social media -- but they what they do won't work for my brand because it is different from "the huffington post." your can't just do the sort of thing for -- there is no cookie cutter approach to it, i would say. >> i get this question all the time. people ask how often should i post? how many days should i post? how many times a week? i have a benefit from working everyone from abc news to bloomberg to "the wall street journal" to buzz feed to the verge and if i give the same answer to each one of them and they did the same thing they would all fail very quickly. it goes to what she was saying. each brand has a different

audience, each audience is looking for a different thing. hat is important the s the consistency element of it. he has a news show and he started filming it on a flip cam once a week and he has built a follower of two million sub scribesers. he has a second channel he launched under a year ago that has 700,000 sub scribesers and closing in on a billion video views in one year. they do slightly more than once a week. the associated press on the flip side of that, i think we have a.p. people here, they have videos hitting that are feed and they have a many views as well. they have a very different strategy. >> definitely, the timing strategy works. if you have a great story, push it out there in the social media networks, not once.

tweet that story and six hours tweet it again with a different headline and you will meet a different audience because it is a river that keeps flowing. final question. yes? >> i'm kevin grant from "global post." you've talked a lot about survey consistent best practices that you want to employ and connect to different audience segments and different brands. one of the fun things about the web is that sometimes things blow up. talking about ingredients and what kind of things have to come together for a story, a video, some pieces material -- in your experience, what kinds of things come together to create that perfect storm that something blows up and creates that exciting moment? >> anything come to mind and not

some fake corporate derived harlem shuffle? harlem shake, i'm sorry. >> kevin gave a talk about what makes a video go vital. you can find it on youtube. i recommend you looking at that. so when it comes to what makes it go viral, what happens is it is about the unexpected nature of the video. it is about connecting and providing an actual emotion with that video that makes people want to share it with their friends. buzzfeed started their business on can i create an emotional story that i want to share the emotion. it is not i want to share the content, i want to share the emotion. now what they talk about in the press is if they have extended the reach through that sharing.

it is an exciting tame but it is no longer -- exciting time but no longer something to strive for. it is not what your business can be built on. what we talked about when it comes to viral videos, you need to be ready to take care of those viral moments because that extends your brand to larger moments that has not been exposed to you beforehand. every video on your channel should be optimized, the story should be clear. when you do hit on one of these opportunities, people can come, understand what it is they are getting and decide they have to come back for more. because they have been missing out on a great trove of content on the viral video. >> i would come back to the word he used, which is emotion. when we tried to understand facebook better.

their media people would talk about it is emotion that makes things resonate and drive the shares. emotion and humor are the two big things that drive the shares and the reposting and stuff like that. you can't create that artificially but it is more about finding the right stories. as you said, taking advantage of that, there is a little bit of alchemy involved. we had a story that we were five days late on an expensive house that got sold in silicon valley it was a couple months ago. our reporter wrote up about it and it went crazy. it became the story to read. she went back and posted a slide show and kept it going for a while with other con teant follow-ups. that uld say that agree

it is an opportunity when lightning strikes. you better be ready for when somebody wants to buy your book, when you're on "oprah" you better have a lot of copies of your book. the concern i have is it is going to shade our numbers and we will have to do the same number of video views, we have to hit that lightning every single time. while i love the idea of it happening and i know, you know, my writers love it. i want to make sure, again, consistency, i want to have the home runs but i want to be able to keepize on the home runs while getting new audience members looking at my brand. >> our next session will be starting soon. thanks very much for a great

panel. [applause] >> we're going to get the vice we'll iced up right away start momentaryly. >> you may have heard janet yellen speaking next at the society of business and writers gathering. did want to tell you about the coverage coming up this evening tonight on c-span. a conversation about health care on military veterans. we'll look at the rising prices to veterans. that is 9:00 eastern. we'll talk to congressman who

sits on the committee. we've posted on facebook asking veteran what is their experience has been with the health care access and quality. that is facebook.com/c-span if you want to offer your thoughts. our program starts tonight and live coverage is at 9:00. >> back to the room now. we're waiting to hear from janet yellen. this is the first couple of days om the society of business editors and writers. a lot to cover here on c-span.

looks like it might be a minute or two before we hear from the federal reserve vice chair. in the meantime, we'll show you comments from an earlier panel featuring the former budget director from the congressional budget office david walker. he spoke with david stockman from the reagan administration. we'll show you as much as we can until janet yellen gets under way. >> from the principles that made it great under which it was founded. we face a range of key sustainable challenges that threaten our future position in the world, our future at home and the tranquility in our streets. this year it is 23% headed to 27%. 100 years ago, the federal

government controlled 97% of spending, now it controls 34% and it is declining. three things happened in 1913 that fundamental changed the united states. it caused the federal government o grow and expand. those three things as well as the the tendency of the supreme court to legislate rather than just interpret laws has expanded the federal government's reach. if you look at the numbers it the tough to follow trillions. last year, take off the zeros. if the u.s. government was a household, it earned $24,000. it spent $35,000. it charged $11,000 to the credit

card, which is now $167,000. if you add its unfunded obligations for social security, medicare, military pensions, it's real obligations are $720,000. so that's on a $23,000 salary. those numbers don't work. if you use honest accounting, which i believe in, i'm a member of the accounting hall of fame and a c.p.a. you have to add federal, state, and local debt to compare us to other nation, for example europe. there is only one country that has higher debt to g.d.p. and that is greece. we don't want to follow their example. now, we have more time. but not unlimited time. we have more time with the largest economy on earth, we have more over 60% of the global

reserve currency and we're the st-looking horse in the glue factory but we're still in the factory. you about can't spend more than what you're taking, charge to the credit card and that is what is going on. the federal reserve is self-dealing our own debt. we don't know what the interest rates right now. they are manipulating the interest rates. when you can borrow 10 basis points and buy something that is going to yield at least 1.8, that is a pretty big spread with no risk and a fair degree of certainty. that is why we don't have a lot of lending going on right now. you don't need to take risk when you can make 170 basis points by doing nothing. when the government ended up "bailing out the financial institutions" it did not add proper conditions and safeguards. it did not make the kinds of

reforms it needs to do. once they pay the government back, with low interest rates then the government has no more leverage on them anywhere. so what do we need to do? first, we need to recognize we're going to solve this fiscal problem. are we going to solve it before we have a debt crisis, which would be a dramatic increase in interest rates. 100 basis points to $165 billion a year in interest, for which you do nothing. we are 400 basis points below average, that is a lot of nothing. so how are we going to solve this, are we going to wait until we have a crisis at the doorstep, if that happens there will be a global depression. we can avoid that. nobody has talked to more americans than i have, all 50

states, college campuses, business leaders, etc. people are way aahead of the politicians. >> david walker. we'll take you back to the society of business editors and writers. hey are throughing janet yellen. -- introducing janet yellen. >> i was in the industry at that time. i don't think we saw anything go any further south than we did at that time. to put that in perspective and also to look ahead a little bit, we're lucky today to have two great guests with us. janet yellen, the vice chair of the board of governors of the federal reserve and all land sloan who is a senior editorer

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