fed chairman paul volcker. he's the kind of person you'd think would have some pretty strong views on this. he actually stepped down earlier this year from his position as the head of president obama's economic advisory board. he spoke to jim bolden and jim asked him about the long term effects of near zero interest rates. take a listen to what he had to say about that. >> i don't like that it's low so long, but the explanation is that the economy is not behaving appropriately. so i'm not going to say it's inappropriate, but it is an uncomfortable situation that we have sechessentially zero inter rates for a long time. this has gone on for quite a while without much investment return. >> are you worried about deflation or inflation? >> i'm a constant worrier about inflation and i think there's been too much worrying about deflation. i think the chronic worry is the worry abouten nation. that doesn't say that the inflation animal or bull or whatever it is is lurking right over the picture at the moment. >> so yo

and eye a big man of paul volcker. the news that paul volcker signed off on that commission report on the utter failure of the drug war. [tone] i think we really need to start addressing this at a local level. as michelle alexander made clear in her book, which the reverend brought up, "the new jim crow" the disparities between sentencing are absolutely terrible. but it's also a huge waste of taxpayer money. thank you very much. chairman mirkarimi: thank you very much. quite agree about the drug war. next speaker, please. >> good afternoon. thanks for the opportunity to speak. i received the invitation from rob on your staff. i'm with the aclu of northern california. and we have been working with counties around the state as the realignment. legislation came down try to help advocate for really plans very much like the one that we have seen coming out of our probation department so we think it's a good plan overall. i think that the chief is still to be commended and the folks on the executive committee. we do have a f

. >> plus a former fed boss paul volcker has a blunt message for the ratings agencies. quit meddling in things you don't understand. we have that candid interview in full. but first, though, we begin with the tide of debt that is causing problems on both sides of the atlantic. this of course with the results of the european banking stress tests out later on today. now, that is seen as one of the -- one of the most debted nations, italy, is of course trying to fight to stave off a bailout to become the fourth euro nation if it were to do so to request one from the imf, the eu and also the ecb. this was the scene just yesterday as lawmakers approved a four year, $57 billion austerity plan. the lower house is expected to adopt some of these measures later on today. and newspapers have been having quite a field day with this situation. let me show you the front page of one of the newspapers owned by the prime minister berlusconi. they're on the bow of the titanic as that fated ship sinks. this is in reference to a comment made yesterday saying the situation of the country f

place all those guys in the face thrown to the curb bring in real as a responsible people like a paul volcker for example but instead he decided to just keep the status quo going into line the pockets of these bankers who now put a gun to a said and they've basically embarrassed him they want the election they want to recall the election it's like the recalling the presidential election by putting making barack obama appear as weak and ineffectual and financially illiterate as he now does is totally destroyed his career but it's good for these bankers but he really think that obama's and his own fronting and kicking those guys out of office that's just a handful of the significance of a much larger entrenched interest there could he really have done more than he had to it to change the status quo here. absolutely you've got well you have the example in the u.s. for example the savings and loan industry where you had a somewhat similar situation where a handful of corrupt bankers dominated industry and they went to the government to get six hundred billion dollars worth of damage essentially a

the first narrative, best articulate i think by paul volcker in the broadest form whole to money market funds as the culprit, part of the shadow banking system. that's where that term is used. the other narrative, i think articulate by paul stevens, president of the ici compelled to money market funds as victims, and to powerfully destabilizing forces in the financial market beginning with the subprime crisis and moving on to lehman brothers. and again which narrative you hold, and there's some truth to both, depends on where your outcome is, if your narrative of the first, then your first as paul volcker's volcker's was let's turn these things into bank obligations, they should be issued by banks, that, of course, involves extraordinary expansion of the federal safety net, deposit protection system to cover practically $3 trillion of assets in money market funds, and that would be a substantial change from the we money market funds are currently managed. the second, if this every other quiddity crisis created by and a number in the short term market that occurs once every generation or

. >> [inaudible] >> they want to keep doing what paul volcker did not want them to do. the activities volcker rule tells them not to do are things they can do. sometimes they do it for a customer. there has to be a certain margin for liquidity itself. they want to look at the amount they were doing. nobody thinks the law has to be changed to accommodate that. we negotiated that in the conference. people understand that the statute gives the regulators the ability to do things. >> you mentioned a couple lots of international influence. could you speak about that? >> the british are now talking about a resolution regime that looks a lot like ours. we're hoping that our resolution received is the model. on derivatives, there are examples where america has moved ahead but in a way that we think other people will join. there are examples where you will see this. i was interested in the article in " the new york times." european union will have now have a union-consumer law. in the resolution regime one of the things you have to do is what happens with a resolution at multinat

put together two blue-ridden panels last year, -- blue ribbon panels last year, one chaired by paul volckertting the tax rate, streaming the deductions in the code, and of course what we call the bulls-simpson deficit reduction commission. -- the bowles-since in deficit reduction commission. i think two of those proposals could have been a very, very positive step toward -- forward in brokering an agreement between the white house and republicans. host: an e-mail for you -- "rich people can write off two homes, a yacht, and in call a got a home for deduction purposes. with so many people not able to afford even the one home, is it time to eliminate the yacht or second house deduction?" guest: i think as we look at streamlining the tax code and eliminating deductions while we reduce tax rates, i think eliminating the markets -- the mortgage interest deduction should be part of that discussion. the mort -- the morgan is in -- mortgage industry is not allowed to help a lot of americans. a lot of other countries do not have a mortgage interest deduction, and get their home full ownership rate i

paul volcker, the former federal reserve chairman, has been doing work and i have worked with him onto overhaul the federal government. we believe, and i believe, that this is a terrific opportunity during this moment of divided government and the rancor that has emerged to actually get something done on government reform. it has been very difficult to do, and this is a great moment to do it. host: how can you get two sides of the government, or three sides you include the judiciary, to agree on the creation of a high-performance government if he cannot seem to get them to agree on how to solve the impending debt crisis? guest: i view government reorganization and reform as an issue that may actually bring the three sides together. the house republicans, the senate democrats, and the white house. this is the kind of issue that is not very exciting, to be honest. it is what my former boss, senator john glenn, once referred to as "my eyes glaze over" issue. this is a common ground, common sense. of work, and it may give negotiators a place to begin in building the debt package and perh

year so did the simpson-bowles deficit commission and the white house advisory council headed by paul volcker. but it has required no less a convert than bill clinton. speaking at the aspen ideals festival, the fortunatelyer president admitted he -- the former president admitted he once raised tax breaks on corporations. "it made sense when i did it. it doesn't make sense anymore. we've got an uncompetitive rate." he said "we tax at 35% of income, although we only take about 23%. so we should cut the rate to 25% or whatever is competitive and eliminate a lot of the deductions so that we still get a fair amount and there's not so much variance in what the corporations pay." the editorial goes on to say -- "anyone not in thrall of class war symbolism understands that the u.s. corporate tax code provides the worst of both worlds. it makes u.s. companies less competitive, even as it raises much less revenue than advertised. mr. obama and secretary of state tim geithner have acknowledged this in the past. the president as recently in this year's state of the union address. as for the debt limit po