insulate ourselves against it or slavishly following it. none of these is the right answer. so what is? race ton some sort of the bottom? absolutely not. that completely misunderstands the dynamics of the modern global economy. it is not simply a competition for who can produce the same goods at cheaper prices. it is about who can produce the new services, the new processes, the innovation that is why it is increasingly high skill jobs that are so essential to our success in the global race. so the right prescription is not to try to imitate developing countries, but to make this country more like great written, but simply -- like a great britain, but something to play invest strengths, and add to our advantages.

the city of london, the global hope of finance, our top universities are among the asked on the planet give inventiveness, innovation incredibility will be key to our success. we are the country that invented everything from the lightbulb to the jet engine, from the tin can to the tank. you name it, we created it. we are still added, whether it is the genome, isolating grapheme, or designing the chips that power not just nine out of the 10 smartphones in this room amount which i hope you all have switched off, but nine out of the 10 smartphones anywhere in the world. we have the scientists and technical expertise that is the envy of the world. this is britain, competitive, pioneering, creative, innovative. our success in the global race hinges on playing to these strengths and taking the country that led the agricultural revolution, the industrial

revolution, and the market-based revolution of the 1980s and equipping it once again to leave economic revolution of today. and as we do so, we should never forget this. our institutions, particularly our democracy, proper it -- property rights, civil rights of law before the law, these things are not incidental to our economic strength. they are absolutely key to it you they form the -- to it on the golden thread allows countries to thrive over the long term. to our strengths and make a success of our country in do global race, we have to something different. we cannot try to rebuild the same type of economy that we had before the crash. we cannot just go back to the way things used to be. we need to build something better. avision of a new kind of government where the benefits are shared all, north and south

alike, economy for everyone, where the right skills, the right jobs and the right rewards are there for everyone with the right attitude. and where all her children and grandchildren can look forward to a better future. what does all this mean in practice? i believe it means we need for things. first, an economy with a state that we can afford. second, an economy where everyone can take part. third, and economy that is equipped for the future. forthcoming economy based on enterprise at home and abroad. that may say just a word about each. first, the economy with a state we can afford. there are some people who seem to think that the way you reduce the cost of living in this country is for the state to spend more and more taxpayers money. it is as if somehow you measure the compassion of a government by the amount of other people's money it can spend.

at a time when family budgets are tight, it is really worth remembering that this spending comes out of the pockets of exactly the same taxpayers whose earnings standards we want to see improved. i hope the archbishop of canterbury will forgive me for saying that it is not robbing peter to pay paul but robbing peter to pay peter. the single biggest threat to the cost of living in this country is it our budget deficit and that's get out of control -- and debts get out of control again. if mortgage rates start to soar, the increase in the cost of living will far outweigh the impact of any increase in government spending or reduction in taxation. this government is not prepared to let that happen. we have a plan and we are carefully implementing that plan. already, we have cut the deficit by a third and we're sticking to the task. that doesn't just mean taking difficult decisions on public spending. it also mean something more profound.

it means building a leaner, more efficient state. we need to do more with less. not just now, but permanently. it can be done. consider these facts. compared with three years ago, there are 40% fewer people working in the department of education. but there are over 3000 more pre-schools and academies with more children doing tougher subjects than ever before. there are 23,000 fewer administrative roles in the national health service. but there are 5000 more doctors with shorter waiting times. you can have a leaner, more should -- more efficient than a formal state that actually delivers better results to the taxpayer. the second thing we need is an economy where everyone can take heart. that is not what we have today. consider this. 64% of children on free school meals don't get five gse's with english and

math. add 4000 children leave every e at all. non that is why we are radically changing the education system, overhauling the curriculum, introducing more aggressive apprenticeships. -- it ismany people not just a tragedy for the individual, but for our country, too. and the same -- in the same context, inequality is not just fundamentally disadvantages our economy. the look -- the u.k. has the lowest ratio in europe in stem subjects. sixngineering, one in graduates are women. that is not good enough area we by 20wedouble that

seven. an economy forever one means more than just a great education. no country can succeed in the long term if capable people are paid to stay idle and out of work. --went into the last russian the last recession with 4 million people of working age on out of work benefits. we know the most progressive way to tackle poverty is through work and yet, for generations, people who could work have in failed by the system and stuck on benefits. so we are doing away with the trap. ensuring that every extra hour you work and every job you do, you're always better off. i am

also very focused on supporting the voluntary sector to work alongside the state in fighting poverty and buildings economy where everyone can take part. for example, one of the best answers to payday lending is the credit union movement. as a government, we put 38 million pounds to double the membership of credit unions. they are a shining example of the free society in action. third, we need an economy equipped for the future. you can't have an economy for all if people in parts of the north or in some rural communities are left without the fast broadband that they need to take part. so we are investing in infrastructure that serves the whole country. it's hundred 80 million to make sure that we have a superfast core band in europe. the biggest rail investment since victorian times. we have crossed rail. the biggest in europe. in high-speed, two.

the first new train line running north out of london for how many years? 120. so yes, there may be some people who want to stop these changes or at least argue for them to happen somewhere else, perhaps away from their backyard. the meter you this. we have a plan for the long-term and we will stick to the task. finally come everyone knows that we need a bigger and more prosperous private sector. to generate wealth and toupees the public -- and to pave the public services and we need. we need to reward and celebrate enterprise. that would require a fundamental change of culture in our country. one that rewards people who make things, sell things and create jobs for others up and down the country. that is what this country is on a mission to bring about.

we want to make britain the best place in europe to start to finance and to grow the business. we are cutting corporation tax by 20%, the lowest in the g 20. we are savings business by slashing red tape and we are backing the industries that will revolutionize world markets. his thisw challenge of initiative where we are identifying those sectors were barriers need to be removed for new entrants and disrupt the i want toodel to -- make sure it is boosted everywhere. promoted in schools, taught in colleges, celebrated in communities, recognized on the honor system and supported abroad. so we are making enterprise the fundamental part of our foreign policy, two. since 2011, almost a billion of new export contracts have been secured for the u.k. business thanks to support for u.k.

export finance. i want us to build on that. the lord mayor and i will be leading from the front again in the coming months. this week, i am meeting for trade visits to india and the gulf. in early december, i will be leading another trade delegation to china. as china's new leadership sets instruction for the next 10 years, as their country's star continues to rise in the world, i will take ministers and as a slaves from every sector, large and small, to forge a relationship that will benefit both our countries and bring real rewards for our people. opening a way for bruce companies-- british to benefit and pave the way for a new level of chinese investment here in the u.k.. this is a relationship that is for the long haul, that matters for britain and for china and continues to strengthen in the

months and years to come. and we don't just need more investment from china. we want to do more to attract investors from the gulf, too. so we will introduce a new electronic visa waiver system. make it easier for companies to come here and do business. this will be up and running in the new year. we're doing something else to drive up that inward investment. my lordighted that mayor has agreed to renew the investment organization. this will act as a one-stop shop for our major investment opportunities with 100 billion pounds of possible projects on the table. these projects just want make new jobs in london on the southeast, but right across the whole country. in the first deal is just days away to beast regeneration in places like liverpool, sheffield

and leeds. so a state that we can afford and an economy where everyone can take part, and economy that is equipped for the future and an economy based on enterprise at home and abroad during that is how we will build something better. that is how we can build an economy for everyone. and by doing this, we needn't look at the global race with fear. but with confidence. confidence in the belief that britain can come through stronger, confident that, with the right decisions, our children can look forward to a better future. confident that, here in the city of london, the great innovator that has led the way in finance for centuries, we can support a great britain with innovation -- and creativity can lead the world for generations to come. thank you. [applause]

♪ [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2013] president obama continued the tradition of laying the wreath that the tomb of the unknowns at arlington national cemetery today. he also is book at the veterans day ceremony at the amphitheater. we will show you the complete program completing his remarks in a couple of minutes -- we

will show you the complete program, including the president's remarks in a couple of minutes. the house will consider a bill that will allow insurance companies to continue offering policies that do not cover the requirements in the new health care law. the house is live on c-span and the senate on c-span two. and join us wednesday for the latest budget conference meeting . negotiators have until december 13 reach a compromise as agreed to in the deal that ended the government shutdown and raised the debt limit. -- thatget limiting budget meeting is live on wednesday on c-span3. >> mrs. kennedy is very well known as a style icon. admiration of her fashion sense. she put an awful lot of thought into her wardrobe when she was representing the country, first of the white house and while

traveling abroad. she would think about what colors would mean something to the country i'm about to visit. so for her visits to canada, she chose this red suit by peer cardin as a gesture of respect for the canadian maple leaf. the advantages of choosing a color or a style that auld make her stand out in crowd. >> first lady jeff and kennedy tonight live at 9:00 eastern on c-span and c-span three. also on c-span radio and c- span.org. >> i spent a lot of time dealing with the sec in my life. important that the agency make decisions in a timely fashion. fore is nothing worse

investment, innovation, job creation, all the things that flow from investment than businesses not knowing what the rules are there >> kevin wheeler is absolutely right. with a ,low-moving agency like this that deliberates for months, even years on end, it really does create uncertainty. iswe all know, uncertainty the enemy of business. business needs certainty to be able to invest. if there is one thing that we ind in the united states terms of broadband and communications infrastructure, dispatchnvestment with , as chairman wheeler might say. >> sam guston on the challenges ahead for the new sec chairman. 8:00 p.m. on c-span two.

participated in the annual wreathlaying ceremony at the tomb of the unknown. longest war inhe american history was coming to an end soon, the war in afghanistan. this is one hour. [bells]

♪ [national anthem] ♪

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[playing "taps"] ♪

♪ ["america the beautiful"] ♪

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>> ladies and gentlemen,please welcome major general jeffrey buchanan, commanding general, united states army. mr. patrick hallinan, national cemeteries director. [applause] mr. harold fritz, national president for the congressional medal honor society for the united states of america. [applause] and the honorable eric k. shinseki, secretary of veterans affairs.

[applause] ladies and gentlemen, the president of the united states. [applause] ["hail to the chief"] ladies and gentlemen, please reme

ladies and gentlemen, please remain standing, please place your hand over your heart, or render the salute. ["national anthem"] ♪ ♪

♪ ["national emblem march"] ♪

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please remain standing for the prayer for all veterans.

>> let us pray. oh god, i am an american veteran, and ever with your grace and your strength to guide me, i have sacrificed for you and country. and you have made my heritage long, and proud. for i shivered that cold winter in valley forge, and spilled my blood, i am an american veteran. i came to france in the war to end all wars, i am an american veteran. i was there on that day of infamy, stormed the beaches of normandy, and i scaled the cliffs. i met battle on island after

island, and i raised the flag. i am an american veteran. i was there with macarthur in korea, and in the jungles of vietnam. i was there in desert storm, iraq, and today, in the mountains of afghanistan, and i remain ready to pledge my all, for i am my brothers' and sisters' keeper. i am an american veteran, and humbly i beseech thee to hearken to my prayer, and make haste to establish justice, freedom, and peace among men and women and nations. for this we humbly pray, amen. >> now i would like to invite mr. harold fritz to lead us in our pledge of allegiance.

>> i pledge allegiance to the flag of the united states of america, and to the republic for which it stands, one nation under god, indivisible, with liberty and justice for all. >> please be seated. it is now my distinct privilege to introduce the members of the veterans day national committee. the committee was formed by presidential order in 1954, to hold an annual observance throughout the nation. please stand when i call your name.

harold fritz, president, national congressional medal honor society. joseph johnston. norbert ryan junior. korean war veteran associations. vasquez, the national commander of the g.i. forms. national commander of the jewish war veterans of the usa. national commander of the exprisoners of war. james henkel. national president of the vietnam veterans of america. veterans ofvietnam

america. commander in chief of the foreign wars of the united states. national president, blinded veterans association. national commander, army and navy union of the usa. national commander, non- commissioned officers association. national vice commander of the american legion. senior vice commander, military order of the purple heart. national president of the reserve association. national commandant, marine corps league.

national president, paralyzed veterans of america. national commander, legion of valor, of the usa. commander in chief, military order of the world wars. cochairman of the board, national association of fallen services. the retired and enlisted association. the associate members of the committee are located in the boxes to my left. i would like to ask the president and national commanders to stand and be recognized. please join me in recognizing our veterans and national leadership with your applause. [applause]

it is now my pleasure to introduce our veterans organization host, the congressional medal of honor society. it was established in 1946, and was limited to the recipients of the medal of valor, the nation's highest award for gallantry in combat. today there are 78 living recipients of the medal of honor. the society is represented today by their national president, harold fritz. he was awarded the medal of honor for displaying extraordinary courage and selflessness while serving as a platoon leader in the united states army in the republic of vietnam in 1969. ladies and gentlemen, please welcome mr. harold fritz. [applause]

>> president obama, vice president biden, secretary hagel, secretary shinseki, fellow veterans, and guests. as president of the congressional medal of honor society, representing 78 of our nations'recipients, it is my privilege to represent all of those who have sacrificed in the name of freedom. together, we have made a difference, it is because of the continued efforts of our veterans, combined with the support of our people, that the foundation of our countries' resolve continues to be rocksolid, and allow the nations around the world to enjoy freedom.

they have displayed unquestionable bravery while serving this nation. within the breast of each of these patriots swells a level of peace and compassion for their fellow man. each of us also knows that we cannot maintain peace without a strong deterrent for. all americans must stand united for our men and women in uniform. let us stand proudly, and never forget the sacrifice of those who have served, those standing

amongst us, and those who have fallen in the line of duty. let us constantly be reminded of the importance of this very precious commodity we call freedom, and the very high price we must pay to maintain it. the men and women it remembers. thank you, and best wishes to each and every one of you. to the veterans among us, thank you for your service and sacrifice, to the families of the veterans, thank you for your everlasting support, may the sacrifices of your departed loved ones never be forgotten. we salute you for your ultimate sacrifice and gift of freedom to us. god bless america. [applause]

>> thank you mr. fritz. please welcome the honorable mr. eric k. shinseki. [applause] >> mr. president, welcome. thank you and the first lady, and the vice president for your leadership and unwavering support for the veterans and their families. veterans day is about celebrating and honoring our veterans who have given so much of the rest of us. on those occasions when people ask me about values, i often point them to va's budgets, and suggest that veterans day is not just a one-day-a-year event.

it should be every day, every year. they get it. that is what is reflected in those annual budget requests for the va. a commitment of every day, of every year for our veterans. medal of honor recipient harold fritz, we thank you. welcome to our other veterans service and military service organizations, who are important to our mission. welcome especially to all of our veterans, their families, and our gold star families, our survivors, who are gathered here today.

it is wonderful to see all of you. democratic leader nancy pelosi, other distinct members of the congress, secretary chuck hagel, vice chairman, other members of our defense leadership, colleagues, distinguished guests, ladies and gentlemen. 237 years ago, the leaders of this great nation penned the magnificent words that would become in time both vision and conscious for a fledgling democracy. you have all heard them. we hold these truths self- evident, that all men are created equal, that they are endowed by their creator with certain unalienable rights, that among these are life, liberty, and the pursuit of happiness.

in the centuries since these often quoted words became the bedrock of our society, each generation has done its part to pass a strong and free america to the next generation. last month president obama awarded the medal of honor for gallantry above and beyond the call of duty. during six hours of intense combat, the captain did everything expected of leaders, and then more. keeping his ambushed unit fighting effectively, directing all available fire as he evacuated the wounded, and repeatedly risking his personal safety to retrieve wounded soldiers, fallen comrades.

determination, decisiveness, personal toughness, calm under fire, a willingness to risk it all for others. he would tell you there are many more heroes from that day. the president understands what the recipients of the medal of honor mean to america. he values the service and sacrifice of all of the veterans to our nation. that is why he has provided such strong personal leadership and unwavering support for this department, and for veterans. with the help of congress, the va's budgets have increased. we have seen the increase of

resources by 50%, and this is what we bring to the mission. we have enrolled 2 million more veterans for va healthcare. veterans could not ask for a stronger advocate than our president. ladies and gentlemen, it is my great personal and professional honor to present to you our commander-in-chief, the president of the united states of america, barack obama. [applause] >> thank you.

thank you. please be seated. good morning, everyone. thank you secretary shinseki, for your lifetime of service to our nation. to vice president biden, and secretary hagel, major general buchanan, most of all to our outstanding veterans service organizations, our men and women in uniform, and to the proud veterans and family members joining us in this sacred place, michelle and i are incredibly honored to be with you today again. to the gold star families, and the brothers and sisters in arms who walked the paths of these hallowed grounds and cemeteries around the world, we join you as you remember your loved ones who

wore america's uniform. here in arlington, we have ensured that you can bring the medals of your loved ones to the final resting place. we honor the troops who have rendered the highest service one can render this nation. those who fought for our freedom, and stood for our security. with solemn remembrance in veterans halls, and parades throughout america, we join as one people to honor a debt we can never fully repay. across every generation, there are those that stand apart, they step up, they raise their hands, they take that oath, they put on the uniform and put their lives on the line.

they do this so that the rest of us might live in a country and a world that is safer, freer, and more just. this is the gift they have given us, this is the debt that we owe them. they fought on the green in lexington so that we could make independence. they fought in gettysburg so that we could make whole a nation torn asunder. we have emerged the most prosperous nation in the history of the world. this year we mark the 60th anniversary of the fighting of the korean war, and we honor them who served.

from the jungles of vietnam, to desert storm, they have answered america's call. since america was attacked on that clear september morning, millions more have assumed that mantle, defining one of the greatest generations this country has ever produced. this generation, the 9/11 generation, has met every mission we have asked of them, and today we can say because of their heroic service, our homeland is safer. the soldier i met a few months ago, deployed to iraq twice, and survived not one but two -- excuse me, three separate ied explosions.

when she was well enough, she deployed again, where she was often the only woman in our forward operating bases. she proudly wears the combat action badge, and today she is committed to helping other wounded warriors recover from the trials of war. helping the troops, she said, is what i am all about. my fellow americans, that is what we should be all about. our work is more urgent than ever, because this chapter of war is coming to an end. soon one of the first marines to arrive in afghanistan 12 years ago will lead his marines as they become one of the last major groups of marines deployed in this war.

over the coming months more of our troops will come home. this winter our troop levels in afghanistan will be down to 34,000, and the transition to afghan-led security will be almost complete. the longest war in history will end. [applause] as is true after every conflict, there is a risk that the devoted service of our veterans would not stay in the forefront of our minds, that we would turn to other things. part of the reason we are here today is to pledge that we will never forget the profound sacrifices made in our name.

today, we are reminded of our sacred obligations. even though this time of war is coming to a close, our time of service to our newest veterans has only just begun. think about it, our troops wear the uniform for only a short time, but they wear the title of veterans for the rest of their lives. as a nation, we make sure we have the best led, best trained, best equipped military in the world. we need to make sure we have as much passion for the best care, the best respected veterans in the world. [applause] so when we talk about fulfilling our promises to our veterans, we

do not just mean for a few years. we mean now, tomorrow, and forever. not just for generations past, but for this generation of veterans and all who will follow. that is why as commander-in- chief, i will keep making sure we are providing unprecedented support for veterans. [applause] even as we make difficult fiscal choices as a nation, we will keep making vital investment in our veterans. we will keep improving veterans health care, so they can stay strong. we want to make sure that the veterans not covered by the va can acquire affordable health insurance. we will keep at the backlog, so that you can get what you have earned when you need it.

[applause] we are going to keep helping our newest veterans and their families pursue their education, under the post-9/11 g.i. bill. we just welcomed our one millionth student veteran, and we are waiting for all of those who will come next. we'll keep demanding that the rights and dignity of every veteran is upheld, including pushing forward disability treaties, so that disabled veterans enjoy the same opportunities as everyone else. [applause] and, with the help of michelle and joe biden joining forces, we will keep fighting to get every veteran the chance to pursue the american dream, a fair shot at the jobs and opportunity you need to help us regrow here at home.

start companies, serve your communities, and serve your fellow veterans. that is our promise, to be there, to support you when you come home. as a nation we will strive to be worthy of the sacrifices you have made. that is what we owe all of our veterans. that is what we owe veterans like richard, who served in the army in world war ii. he was there -- [applause] i want you to know something

about him, he was there at pearl harbor when the battleships were still smoldering, he was there at okinawa, he was there at iwo jima. he headed home to a nation bitterly divided by race, and his service on the battlefield was not matched by the respect that he deserved at home, but he held his head high. he carried on with honor and dignity, he built a house with his own two hands, he went back to work in the furniture business, and in time he served as a courier in the texas state

capitol where he worked for four governors and made more friends than most of us do in a lifetime. today he still lives in the house he built so many years ago, and every sunday he drives one of the nice ladies in his neighborhood to church. [applause] this is the life of one american veteran, living proud and strong in the land that he helped keep free. earlier this year, the great folks at honor flight austin brought him to washington and he paid his respects at the world war ii memorial. then he paid his respects at the martin luther king jr. memorial, and as he sat under that statute, he wept and the others around him wept too.

they bore witness to the day in this nation he thought would never come. this american veteran is 107 years old. [applause] and we are honored that he is here with us today. let's ask richard to stand again, because he can stand. [applause] this is how we will be judged. not just by how well we care for

our troops in battle, but how we treat them when they come home, and by the america we build together. what we do with the security and peace they helped to grant us. they played their part in the american story. today our message to all of those who have ever worn the uniform of this nation is this, we will stand by your side whether you're seven days out, or you're 70 years out. here in america we take care of our own. the sacrifice has been made in our name, for this nation that we love, and we commit ourselves to standing by these veterans and their families for as long as we are blessed to walk this earth. god bless you all, god bless our veterans, and god bless this united states of america. [applause]

>> ladies and gentlemen, please stand and join the united states air force band in singing god bless america. ♪ ♪ god bless america, land that i love. stand beside her, and guide her,

through the night, with the light from above. from the mountains, to the prairies, to the oceans white with foam. god bless america, my home sweet home. god bless america, my home sweet home. ♪ ♪ god bless america, land that i love. stand beside her, and guide her, through the night with the light from above.

from the mountains, to the prairies, to the oceans, white with foam. god bless america, my home sweet home. god bless america, my home sweet home. ♪ [applause] >> ladies and gentlemen please remain standing as we retire the colors. retire the colors.

♪ national emblem march ♪

♪ >> this concludes the national

veterans observance. please be seated for the departure of the president of the united states. thank you for honoring all of those who served. [applause]

♪ stars and stripes >> we heard president obama ining that the combat role afghanistan is slated to end in late 2014. a story in politico said that a story on veterans day is traditionally signed in the back. at the new generation of veterans remind people that the

country must look forward as they return home after more than a decade of war in afghanistan and iraq. the holiday cannot be about rees s onravestones -- wreath gravestones. they must not only be about aging veterans in wheelchairs, but -- but about men in 20's and 30's. they are haunted by wounds which are sometimes invisible. you can see president obama at arlington national cemetery here on c-span at 8:00 eastern. >> mrs. kennedy is known as a style icon. mrs. kennedy put an awful lot of thought into her wardrobe when she was representing the country both at the white house and traveling abroad. she would think about what colors would mean something to the country i'm about to visit.

for her business to canada, she chose this red suit by peer cardin as a gesture of respect for the read of the canadian maple leaf. i really admire the thought mrs. kennedy put into our wardrobes and she also knew the advantage of choosing a color or style that would make her stand out in a crowd. >> first lady jacqueline kennedy tonight live at 9:00 eastern on c-span and c-span three. also on c-span radio and c- span.org. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2013] german -- chairman ben bernanke compared the crisis of 2008 to be panic of 1907. session ofthe final

the conference. the final discussion. this is a case where there's absolutely no need to introduce the speakers. we shall not do that. weis also a case in which can think of the longest of questions that should be answered by the panel. but we want them to take this seriously. meta- basically ask a few questions. the first is what we should -- what lessons we should draw from the crises. i suggested three, but the number can be negotiated. the second question is, are we ready for the next one? with this in mind, we will be proceeding in order. the first round of 15 minutes each or something like this. bernanke -- that in the first is ben bernanke.

>> thank you. i am very pleased to participate in this event and the honor of stanley fischer. in graduateteacher school and he has been a role model and frequent advisor ever sense. an expert on financial crises, he has written prolifically on the subject and has served on the front lines, so to speak. as firstn his role deputy managing director in the imf in the market crises of the 1990s's. hyperinflation in israel. he manage monetary policy to mitigate the effects on the israeli economy. upward andces moved advocate to pervert -- preserve financial stability.

he counseled his students to take a historical it -- historical perspective, but is especially helpful for understanding financial crises. i think the crisis is a classic thec transposed into context of the 21st century system. the appreciation of the parallels between recent and influenced howts i and my colleagues around the world responded to the crisis. besides being the fifth anniversary of the most intense phase of the crisis, it also marks the centennial of the founding of the federal reserve. reserve was created in response to a severe financial panic -- the panic of 1907. it led to the creation of the financial monetary commission.

because the panic of 1907 50 archetype of a classic white agile panic in many ways, it is worth discussing the similarities and differences with the recent crisis. like many other financial panics, including the most recent one, the panic of 1907 took place will be up -- the economy was weakening. a recession had begun in may of 1907. it was also characteristic of panics. money was tight. immediate trigger of the panic was a failed attempt to corner the stock of the united copper company. hadleaders of the scheme connections in new york city.

when the news broke, there were a series of runs on the banks, including a bank at which one of the leaders served as president. totry to restore confidence the new york clearing house, a private consortium of banks reviewed the books of the banks under pressure, who declared them solvent, and offer them support are in -- support. these were largely successful on stopping runs in the newer -- the new york banks. financial institutions that were less heavily regulated the national state tanks and were not members of the clearinghouse. on the truss company's worsen, those companies needing cash to meet withdrawals. leading financiers in new york decided they did not have

sufficient information to judge the solvency of the affected institutions, so they decline to lend. overwhelmed by a run, the knickerbocker trust company failed on october 22, underwriting public confidence in the remaining trust companies. to satisfy the depositor's demands for cash, a began to liquidate assets including loans made to finance stark -- stock riches is. and whatff of assets we would call a fire sale precipitated a sharp declaiming -- decline in the stock market. jpmorgan and other financiers, including the furniture -- future governor of the bank of imposed limits on positive withdrawals, including withdrawals by corresponding banks in the interior of the country.

these efforts can't be panic. by then, the u.s. financial system had been severely disrupted and the economy contracted through the middle of 1908. the recent crisis echoes many aspects of the 1907 panic. of like most crises, the recent episode had an identifiable cruder -- trigger. as the economy slowed, the housing crisis the signed -- climbed -- declined. active firm suffered credit largest ash losses that were large but hard for outsiders to pervasivey uncertainty about the size of losses in turn led to sharp withdrawals of short-term funding for a wide range of institutions. these predict the summit -- precipitated fires sales which

pirg -- contributed to further losses. institutional changes over the last century were reflected in the kinds of things that ran. retail deposits were more prone to run in 1907. in 2008, most withdrawals were uninsured wholesale funding in the forms of repose and securities lending. interestingly, a steep decline in interbank lending was important in both episodes. interesting was that the 1907 panic involved institutions, the trust companies, that faced less regulation that contributed to the rapid growth in the years leading up to the panic. panic was outside the perimeter of traditional regulation. the panic of to 1907 and 2000 and eight also provide constructive comparison.

the provisions of liquidity in the early stages were critical. in 1907, the united states had no central bank so it depended on private individuals like jpmorgan. the feds let not only to banks, but seeking to them the panic in a wholesale funding markets, it extended its last resort facilities to support non-bake institutions -- bank institutions such as commercial paper and after-tax securities. the --inpisodes -- so both episodes, they required the restoration of public confidence. three basic tools to restore confidence our temporary guarantees, measures to

strengthen the balance sheets of financial institutions, and part with disclosure of the conditions of financial firms. at least to some extent, morgan and the new york clearing house use these tools in 1907 giving assistance to troubled firms and priding -- providing assurances to the public about the condition of individual banks. all these tools were used extensively in the recent crisis. u.s., guarantees included guarantees of bank debt. guarantees of money market funds and the private guarantee offered by stronger funds over weaker ones. injection strengthened balance sheets. the publication of the stress test findings helped restore confidence in the u.s. banking system. collectively these measures helped and the acute phase of the financial crisis, although the five years -- five years later, the consequences are

still with us. once the fire is out, the public turns to how to better fireproof the system. is different between 1907 and the recent crisis. reform efforts led to the founding of the federal reserve. it was charged with preventing panics and an elastic currency to smooth fluctuations. beenm since 2008 have revealed by the crisis. oversight by the shadow banking system has been strengthened to -- fourhrough consolidation by the fed. revisions to wholesale funding's a financial to make

system safer, we must confront the problem of moral hazard. the action taken by central banks and other authorities to stabilize the panic in the short run can work against the ability in the long run if investors and firms inferred that they will never bear the consequences of excessive risk-taking. hazard has of moral no perfect solution, but steps can be taken to limited -- limit it. restrictions on certain activities can directly limit risk-taking. through the use of appropriate for example, the federal reserve seek our process. it requires that institutions have sufficient capital to weather extremes shocks and also

demonstrate that their internal risk management set -- risk management systems are effective. the results of the stress test portion are publicly disclosed giving investors and analysts the information they need to assess a's strength. strength. in the crisis, and an absence of leftequate process policymakers with the terrible choices of a bailout or allowing a potentially destabilizing collapse. an act created an alternative resolution that takes into account the need for moral hazard reason to impose costs on the creditors of failing firms and the need to protect financial stability. the fcic has been hard at work

fleshing this out. a credible resolution message -- resolution system will be important for reducing on -- uncertainty and reducing moral hazard. our continuing challenge is to less likely and costly. it is complicated by the reality that every panic has its own unique features that the term -- at depend on a particular historical context. as stan fischer has done with unusual skill without his career, one can, by stripping away the deal saying crist ash -- by stripping away the idiosyncratic -- idiosyncrasies -- fundamentally, the panics of 1907 and 2008

the challenge for policymakers is to identify and isolate the common factors of crises, thereby allowing us to prevent crises when possible and to respond effectively when not. thank you. thank you, ben. the next speaker? i would like to thank the imf for organizing this conference and for giving me the privilege to have a conference names in -- named in honor of me. and this actually being a great conference, lots of practical papers on lessons we have learned from recent crises and

from earlier crises, particularly comparison of the difference between the asian 's and of the late 1990 the crisis that began in 2008. i commend the papers from this conference to you who were not able to be here to listen to them. i would also like to thank ben bernanke for everything he has done, as chairman of the fed. i believe that when the history -- historyitten, books get written, the innovations made in this crisis will be recognized as changing the way in which central banks deal with the financial crises, askedwill -- olivia has us to speak about some of those

ways, and he told us three. i will talk about three features of the changes that will occur, i think, in our thinking, if we remember them. there is this line that those who do not learn history are condemned to repeat it. ofnk knight, the inventor uncertainty as opposed to risk, had a lot of one-liners which he used on everything, and his one- liner on that line was, "and those who do remember history are also condemned to repeat it ." [laughter] i hope we are not. when theyextbooks say write about the keynesian model

or the islm model is fundamentally right, but what we have learned this time is that monetary policy does not in fact necessarily lose its effectiveness at the zero-lower care of town, and there is a lot that the central bank can do to continue to support the economy, even when the central bank is june -- interest rate is effectively zero. that we know from what the fed has done in this crisis, the quantitative easing programs, in particular. there is controversy about how effective those programs are. there has also been a large amount of and her coworker done cle work about the effectiveness of the programs. then in a 2000 stage a list of

the work o that had been done on this issue, and it was hard to reach the conclusion that the on orthodox measures -- the unorthodox measures are in fact appearing to be effective, and do that, by working either by the liquidity, where it has dried up, or by changing interest rates other than the central bank interest rate moving, for instance, in markets where longer-term interest rates are determined. context,on, in this the fed try to invent -- to name easing.t called credit i am not sure what credit easing was meant to be, but it is very close to the concept of the

central bank as market maker of loss -- of last resort as opposed to the central bank as .ender of last resort and we saw the fed acting in that role in the commercial very market, verily -- early in the crisis when the market dried up, and a very important source of short-term financing for corporations appeared to be unavailable, and the fed went in and revived that buying effectively by commercial picker -- paper inappropriately large quantities. and there have been other examples of the fed as market maker of last resort, at least contributor to making markets in for instance its current quantitative easing emphasis on mortgage-backed

securities. the textbooks have to say something other than what they used to say, and this is to tell willhe 12th edition of appear shortly, and you will note that the previous sentence, when the central bank interest %, notaches zero entirely correct that you can keep going with fiscal holiday -- policy. second lesson, it is better to fix banking and debt problems rapidly than to rely on regulatory forbearance. this is a lesson that we knew crisis,ned in the asian and it was understood by policy makers in the united states.

it was understood in particular by the speed with which the united states dealt with system, of the banking by way of the stress tests which were undertaken very early after the collapse of lehman brothers. that was really very remarkably quick that those actions were undertaken. thought, when i read about it from a distance, that the fed was possibly taking a significant risk in undertaking those test and being willing to publish those results, because the results had been bad. i thought the consequences would be serious, but this in fact was not the case, as explained to me by someone else. tarp, the system

had the capital to recapitalize the banks. if that had been what was needed and what was revealed by the stress tests. and that illustrates a problem or the contrast between what was done in the banking system in the united states and what was done in the banking system in ,urope in which at this stage dealing with the problems of the banking systems has been left to national regulators, and they are only now moving now into the tanking union, and they are doing an asset-quality review, to say, an examines asian of the quality of the assets that the banks hold, which is an assessment of the quality of the capital that they hold. and then will move into the banking union. we all roll our

eyes and say how very slow, we need to realize that making a massive structural change like setting up a european banking same time as you're dealing with a massive crisis in the banking system, is not a trivial enterprise, and i do not believe that the schedule they are on is particularly slow, given the situation, but i do believe that the minimum slowness that we are seeing now is holding back european recovery, and that the quicker that can be done, the better that would be. lesson we haverd learned is that the financial system is a system and it needs to be regulated on that basis,

which is the underlying rationale for macro prudential supervision and for the concept supervision.ential that is, that the system, the regulatory system, needs to ask itself what are the interactions within the financial system that could lead to problems over and beyond those that would arise for individual banks that got into trouble, and, of course, the quintessential example is the lehman brothers crisis, a bank which was thought of being moderate size and possibly not -- possibly not being quite comprehended how extensive its interactions, how that event led to a very widespread global

-- it was followed by widespread .lobal financial crisis and there is no question but that in every country the , andsis has shifted now there has been an addition of discussion about how to do that group prudential supervision. this is very hard, because on in almost every country there are multiple to give lakers -- multiple regulators. in israel, there are three, and getting the three to cooperate was very hard. in fact, it has not been quite achieved yet. the united states has many more regulators, and the framework has been set up to get them to cooperate, and one very much hope that that will be possible. centralthe end, the

bank has a central role to play --most of these -- in night in that type of supervision, because in the and it will be likely if not possible that you will look as the central bank to act as lender of last resort, where that is legally possible. and so the central bank has to be one of the central elements in building the macro prudential supervision and the system of macro prudential supervision. always are, because when banks are insolvent, you begin to deal with calls on the public trust, and those typically require treasury participation. so those are two essential elements. the rest of the institutions to be supervised, and

the rest of the system, the shadow banking system, and even if we succeed in pulling the currently unregulated its vision into a neck or -- into a regulated network, something else will emerge outside the system as a way of affording relations and taking advantage of the avoidance of those regulations. it is going to take a lot more work to get the macro prudential systems working. i believe the way the bank of england has done this is -- and we will just have to watch how well that works. the anchor of england has a financial policy -- the bank of england has a financial policy committee, and the financial policy committee has a different membership than the monetary policy committee. the governor of the central bank is the chairman of both committees.

and the financial policy committee has the responsibility i law for supervising the entire financial system. and we are going to have to watch how that works. that takes me over to the second set of questions that olivia asked, which is, are we better equipped to deal with the next crisis? are betterwer is, we equipped in the areas we have dealt with and helped set up improved systems. veryhe harder -- is it is hard to know until you do the ultimate stress tests, and the ultimate stress test is what reality throws your way. it is hard to be sure. i think, for example, of the fact that the financial authority set up by the british

in 1997, which was very elegantly done, convinced many people that this was the way to do,that was what you should the supervisory authority outside the central bank, charged with responsibility -- and they were not taking macro prudential, but the idea was the same -- charge with direct responsibility would be the right answer. it was not subject to a test of 2007 or 2008 with it did not and succeed. it was followed by the first bank runs in britain in 140 years. we will not know for sure whether systems that have been set up are in fact capable of dealing with the tests they may face. what what we certainly can do is

stress-test those systems and set up a variety of exercises in which they are examined, under circumstances in which they can think up, outside experts can be asked to think up, or others can be asked to think up, and to ask come a how would we deal with this crisis, how would we deal with that crisis, what powers do we have that we need them a powers do we not have that we need, and i think we will have to stress test the regulatory systems as well as the financial systems. so that is one concern, in that area and others, the measures we have undertaken, we will not know how effective they are until they are actually stress- tested by experience. and there is of course another problem, which is as has been emphasized today, try sees have

many different -- crises have many different sources. and you know prepares for the last war. economists prepare for the last crisis. and sometimes the last war is --y similar to the current to the next war, and sometimes it is not, and i spend a lot of my time as governor looking in the direction my eyes could see and being sure that something was coming up right behind me and there was going to be some crisis which none of us had thought about and which would hit us with considerable force. the 2008 crisis was not like that, except in one sense. if you would ask me in 1997, and i know this because i read about it am a to i expect to have a major global crisis, financial crisis, start in the advance

countries, i would've probably said no. was a surprise. of course, as time wore on and we got to do thousand seven, 2008, the presence of that implausiblee less and eventually became a fact. but we will need to keep asking ourselves, and again we have to do this, by actually sitting down and asking how we would with a variety of problems should they occur. we will have to do those things and keep on doing them because financial crises originate in many different places, economic crises originate in even more different places, and we did keep asking ourselves, what else is it that we need to think about and deal with to make the economy operate with fewer crises and with greater stability? thank you. [applause]

>> our next speaker? >> it is a pleasure to speak at this event in honor of stan fischer and his many contributions as a scholar and policy maker i think all of us here who have worked with stan would recognize him both as an economist. let me comment on the first. when i was a graduate student, the rize war going on -- there was a war going on in macro on / economics and the new neo- keynesians. and we need to get into details, that they disagreed with each other. it felt like the only person that both sides respected was

stan. i guess, maybe john taylor, was also there. and i was aghast at that, at how he managed that. i was -- this was resolved by both sides resolving they were right, and continuing they were right. that is another story. talk aboutlot of stan as a policy maker's policymaker. i have added lifetime of experiences with stan. one thing i learned from him was -- and both as the staff, as chief economist, and also as a student -- is he is very engaged , but also has a very good way of balancing praise and constructive criticism, which is is a very hard thing to do, both as a boss and as a professor, and really shows his class in doing that. i will go on to take

up the topic. i am on the podium with four men who have that extraordinary experience in dealing with financial crises. they are all going to be historic figures, and rather than go on to a couple narrow lessons about that, which i think may be would be for another occasion and maybe other people said, i want to pick a couple points. i would say number one, if you think that you are dealing with the liquidity crisis -- and i will come to that ash but if you really think that is, and it might be systemic, this might be something that is really going to bring down a region, bring down an economy, you need to react very forcefully and very creatively, and i think -- i thank all of these gentlemen -- i think all of the sermon showed all of these -- all of these kinds of showed all o

creativity. larry summers dealt with the mexican crisis. one of the things that was done was they came up with money out of nowhere. the strange rate stabilization fund in the u.s. was used to dale out mexico. congress did not realize they could do that and had not stopped them, and they even generated some faux loans from across the street. i was talking to larry about it, and we are probably still in the he was90's, maybe sitting with me talking, and he said, you would have done that, right? i go, yeah. it was very creative. certainly, you can look at some didhe things that stan during the asian crisis, worth recently with alessi's with israel, where it is not just a policy of courage, it is a

russian of thinking about it that you might do it. hard sitting with ben bernanke, who all of his former academic colleagues have commented on just the extraordinary creativity the fed did during the crisis, doing things that nobody commanded -- imagine. span talk -- stan talked about it. i thought i was living in an alternate universe. , i am way out of the box thinking. olivia, i will not pick on you so much because you're still in the thick of it, but the 4% sign inflation target, people said were crazy, and now not so much. so i guess one of the problems that you have practically as a policymaker that all of them have faced is when a liquidity

crisis -- and you know it is a quick liquidity crisis -- the fact is there are very few crises that really fit the diamond model. we teach that because it is simple and nothing else is going on. there are other models, and i think of alan gale model, much were complicated, so people did not teach it so much. in the real world, they are. it is a question of house much -- how much is a solvency crisis, a liquidity crisis, and i was in the fund from 2001 to 2003 and involved in some of things, you go around these things, it is a liquidity crisis, it is a solvency crisis, and you reach different conclusions on what you're going to do. where veryhings difficult judgments are made. coming back to what jeff said earlier, very important, just

you have to have the diagnosis. you need some information. i must say there are cases where the patient arrives in the emergency room and has not seen a doctor for some chronic condition which has now become severe, it is a lot harder to treat the patient and there have certainly been cases like that. creativity isry ver\/ a necessity. you do not stop to wonder what is going to work. you do everything. i did we saw that in the 2008 crisis. user the kitchen sink. if that does not work, the cabinets, the chair, terra-cotta tiles, try to save your family, you do everything that is possible. ia frame the crisis, when is after the crisis?

you do not know when there are going to be aftershocks. in the case of the recent crisis, there were many things early on and then the euro popped up where it was very hard to know what was going to happen next. the perhaps of policy corrections that should have been made were based forecasts overly rosy of when it would be over. there was a triumphalism early on that it was all ok and some of the forecasts were too rosy. i would say it is not just about austerity, it is about what you spend on. i think as it evolved, it was clear if you had it would take a long time, that financial crises have a long after my -- after met, you might have thought about about doing long-term investment crisis, because if it is going on in five years, that

is ok, that you are not try to spend it all at once, but this is difficult. a very difficult decision and one that worries me the most when we look at the history books and try to draw lessons much do you how just bail everything out and how much do you have some write-d owns? that needs to be looked at, and two of the more concrete wings were in the case of mortgages, should the government had just bail doubts about the subprime mortgages with some kind of equity sharing? marty feldstein has a proposal. many about that. i think in the case of europe, , a lots some liquidity of liquidity, but some solvency in some places, and i think downsng at debt write- would have made a lot of sense. let me move on to say post crisis -- a huge issue -- i

think at the end of the day, e falling to a world where we have less plain vanilla debt is clearly what you want to do, because that is how you get that crises. helwig have papers saying banks ought to raise more of their money with equity. it is called capital, but they mean how you fund ranks. the spirit of that makes a lot of sense. author, who is a and paulf stan's klemperer have another version of this where they described it as banks printing their money to get paid in equity when things go sour him and i think these are very good ideas. retro, in terms of having forms of debt, bob schillinger has been evangelistic but having newer forms of debt linked to

gdp. not the greatest advertisement that added -- that argentina was the first of try. it is a good idea. it is linked to housing prices, linked to commodities, and these involve legal changes, they involve a lot of changes in order the able to do this. the general spirit of trying to plain vanilla debt is where you want to head. that may involve some regulation. he have regulation about the government having a monopoly over current say. but we allow these very close substitutes. the think it is good, but maybe in their way, it is not so good. abb want to had future where we have an atm at the fed, instead of intermediated through banks. there can be some service contracts there. you want better deals, if you want more interest on your money, then you can buy what is basically a bond fund