dr. bergsten has testified many times before the budget committee as well. we also have with us this morning, dr. adam lerrick, visiting scholar at the american enterprise institute, someone who is deeply knowledgeable on european affairs, having spent the last two years there. we look forward very much to your testimony and welcome you to the senate budget committee this morning as well. i'd like to begin by briefly reviewing the situation as i see it in europe. to be clear, what is happening in europe has ramifications across the globe, certainly including the united states. here's the front page story in the "washington post" last week. "imf fears european crisis poses risk of major recession." the article highlights the international monetary fund's concern that the turmoil in europe could have serious consequences for the global economy. yesterday, we saw reports that european leaders had agreed to new measures to address the debt concerns in their countries. here was "the new york times" headline on the agreement. "european leaders agree to new measure

dr. bergsten. i believe it will drive europe to a stable financial union. we have many more summits to go but they'll get there. i believe. but there is a large risk. one of my colleagues uses an analogy. he said this is a dangerous operation. you could have the most skilled surgeon in the world but things can go wrong. and so something could go wrong. i believe that the europeans will manage this process. i think the germans have now found the tools do that, which are just to keep interest rates really high on all the politicians that are of the weak countries and that will force them to do what german threats and pleading and reasoning did not succeed in doing for two years. and secondly the new strategy, which is if you agree, that's great and you'll get our support. if you don't go, with god. you're on your own. >> that's basically the same discipline that will be imposed on the u.s. our creditors will increase our interest rates to force us to do what we need to do. >> that will be what will happen in the end. >> thank you. >> just take a moment, senat

dr. bergsten. okay. i always like to attribute to it the right place. thank you all. i know we committed to ending at noon. somebody's got to make a plane. but we appreciate very, very much the testimony. i think this has been an outstanding hearing. >> thank you very much. >> federal reserve chairman ben bernanke will be on capitol hill tomorrow morning to talk about the health of the u.s. economy. he is also expected to be asked about inflation and economic growth. live coverage at 10:00 a.m. eastern here on c-span 3. >>> u.s. manufacturing continued to grow in the month of january. up next, a conversation with ohio congressman tim ryan about manufacturing jobs and the economy. and then house and senate republicans talk to reporters about the federal budget. congressman tim ryan joined us on washington journal to talk about u.s. manufacturing jobs. this is 40 minutes. >> congressman tim ryan, a member of the house budget committee, and also the co-chair of the congressional manufacturing caucus. thank you for being here. we'll get to manufacturing and the economy. b

dr. bergsten. what's your assessment of bazel and the capital requirements sufficient, insufficient? do you share dr. johnson's view of this? >> i very much share his view. i do think capital adequacy is at the heart of restoring financial stability here, europe, everywhere else. and we should err on the side of caution, going to higher rather than lower capital requirements in order to achieve that outcome. there's a fascinating implication from the events of the last three or four years, we should keep in mind. this last crisis, of course, was rooted in financial instability in the united states and europe. it turns out there was very little spillover to the emerging markets and developing countries. they got some effect from the recession and the weakening of trade flows. their financial system stood up much better than ours. why was that? well, they had crisis in the past. the asians had crisis in the late '90s, the latin americans in the '80s, and in response to those, they did to a large extent get their acts together. they opted to have financial systems that were not as exoti

dr. fred bergsten, director for the peterson institute for international economics. i would note that after 13 years of ably leading the peterson institute, he'll be stepping