u.s. financial system. they will require firms to change the way they do business and with a change -- treat their customers and manage risk and change the way they wear their executives. these reforms will be tough but there will be toughest on those who took the greatest risks and those who operated closest to the edge of prudence, on those who chase the market down and compete in a race to the bottom on standards and practices, and those who made the most of their products in the most unsustainable of waste for these reforms will benefit american business and people by requiring a stable source of financing for investments that will drive future gains and economic growth some of you today are students of this great university and you have come -- you will come out of university at a time of great national challenge because of that, you will bring to the world not just a greater appreciation of risk and responsibility but also a recognition that what we each bring to the world depends not so much on how m

u.s. financial system. that will require financial firms to change the way they do business, to change the way they treat their customers, to change the way they manage risk, and to change the way they reward their executives. these reforms will be tough, but they will be toughest on those who took the greatest risks, who operated closest to the edge of prudence, who chased the market down and competed in a race to the bottom in standards and practices, and on those who made most of their profits in the most unsustainable of ways. and these reforms will benefit american business and the american people by providing more stable source of financing for the investments that will drive future gains in income and future growth. i know some of you here today are students at this great university. you'll be coming out of university at a time of great national challenge, and because of that, you will bring to the world not just a greater appreciation of risk and responsibility, but also a recognition that what we e

u.s. economy and financial system and would pull money out of this country,s therebyush down the value of the dollar. that is one of the risks of fiscal crisis. but it is worth remembering during the recent financial isis money came into this country for all of the problems in our own financial system, many invest worried about other systems more. and u.s. markets a treasury securities in particular were viewed as a safe haven from those risks. so, we don't think it is likely the dollar will suffer a large drop. we think over the next decade there wl be some gradual decline in the value of the dollar because of the large trade deficits we are running now. but we don't think i is very likely >> today, on north "washington journal", called trysgstad. from afghanistan, major general michael ward talks about the u.s. and nato forces training program for the afghanistan national police, security forces and afghan border police. charles hopkinson, univ. of florida discusses his report that says that a% of world from the gulf spill remains. we begin a week-long series on defense issues with reti

u.s. economy and financial system and would pull money out of this country,s thereby push do the value ofhe dollar. that is one of the risks of fiscal crisis. but it is worth remembering during the recent financial crisis money came into this country for all of the problems in our own financial system, many invest worried about other systems more. and u.s. markets and treasury securities in particular were viewed as a safe haven from those risks. so, we don't think it is likely the dollar will suffer a large drop. we think over the next decade there will be some gradual decline in the value of the dollar because of the large trade deficits we are running now. but we don't think it is very likely there would be a bstantial drop soon. host: i want to show one illustration that came with your augu report. for folks at home, the light blue line here are average outlace by the federal -- outlays and dark navy line is average revenues and y see 2010 they really reached their farthest dance from one another. what -- farthest distance from one another. at doe this graph tell us? guest: last year, j

u.s. has dropped itself into a deep financial pit the financial system is broke in its coal lapsed and it died so it's a walking zombie they call the japan the zombie economy they call japanese banks zombie banks now in america designed the economies up with dead zombie banks citi group is a zombie bank the stock is just uses a whipping post a whipping boy for enshrines to manipulate up and down twenty five cents one day and down twenty five cents the next day pure inside information pure market manipulation going or bernanke and the head of citigroup unveil they're involved in a wholesale market operation every single day the lord nobody doubts that. just a very now it's time on t. now of all the places you'd expect to find american style diners or glossy provocative magazines an arab state in the heart of the middle east might not be your first guest spot jordan is fast becoming one of the most westernized countries in the region on his policy it looks into why the younger generation are shelling tradition and policy. a men's magazine that shows off female flourish and leaves little to

u.s. economy and financial system and would pull money out of this country,s thereby push down the value of the dollar. that is one of the risks of fiscal crisis. but it is worth remembering during the recent financial crisis money came into this country for all of the problems in our own financial system, many invest worried about other systems more. and u.s. markets and treasury securities in particular were viewed as a safe haven from those risks. so, we don't think it is likely the dollar will suffer a large drop. we think over the next decade there will be some gradual decline in the value of the dollar because of the large trade deficits we are running now. but we don't think it is very likely there would be a substantial drop soon. host: i want to show one illustration that came with your august report. for folks at home, the light blue line here are average outlace by the federal -- outlays and dark navy line is average revenues and you see 2010 they really reached their farthest dance from one another. what -- farthest distance from one another. what does this graph tell us? guest:

financial world. >> it has been almost two years since the u.s. investment bank lehman brothers went bust. what followed was a worldwide banking crisis and unprecedented spending by governments to keep the financial system afloat. and it was the taxpayer who ended up footing the bill. germany's new law aims to prevent a repeat of that situation. the banking organization law will include a bank levee, which will be paid into a crisis fund to finance emergency aid to banks. the law also regulate the closure of failed banks, even allowing the state banking watchdog to close down banks in extreme cases. the government wants to get the law through parliament by the end of this year, well ahead of the european commission, which presents its reform proposals next spring. good news for europe's largest economy, germany could end the year with its lowest unemployment level in almost two decades. that is according to a forecast. it estimates that the jobless total could dip a to 3.2 million in 2010. that would be one-quarter of 1 million less than last year. that group cites the strong economic recovery in germany. the organization recently raised the economic growth forecast to to 3.4%, and it expects small and

u.s. is it prupt investing to focus on the return of an investor's money? >> well, investors are so-- still shellshocked from the global financial system on the precipice in the end of 2008, that risk aversion and fear is a powerful motivator, and the return of money is much more attractive right now to many investors. >> tom: so with all the people that have been piling into the bond market, and we've seen with interest rates continuing to move lower almost every day, what's the message that you would have to all those that are piling in to bonds? >> well, we try to tell investors rye the now it's time to try to put your emotions in check, even though that's extremely difficult given the loss of wealth we've seen over the last few years, but looking forward instead of looking in a rearview mirror will probably indicate 2% on 10-year bonds, 2.5% on 10-year treasures is not really going to keep up with purchasing power should we see the return of inflation over the years to come sgloim imagine you're not in the deflation camp? you don't think prices will enter that kind of spiral? >> i would say we are still in the early phases of deleveraging and so this will

dealer firms, whose ability to provide liquidity rises and falls with the help of the financial system. in the u.s. equities market, liquidity is provided by a broad base of participants. this was brought home to us during the most difficult weeks of the financial crisis. our exchanges performed admirably, from small market makers, to competitors to lead us to a broad base market. we have build safeguards into our trading processes, and have human oversight of them, important steps for protecting client assets. on may 6th, our trading staff noted early on that the market was potentially disruptive and shut down our equity trading. we avoided trading at a dislocated prices and were able to retain the majority share of portfolio transactions for that day. nevertheless, this revealed a trading ecosystem that needs to be managed. i would like to highlight three issues. first, questions remain about the causes of the plash crash. -- flash crash. we know that there was substantial demand for liquidity of dollars, trade reports that appeared to be erroneous, and liquidity providers who feared they were f

financial system is broke and you cannot have inflation if the financial system is not working. >> mayor bloomberg, let me talk about the tax cut debate gripping washington right now. political stupidity u.sstyle is the headline. can a nation remain a superpower if politics are stupid? start with taxes, he writes. in every other serious democracy, conservative political parties feel an obligation to match tax policies with spending plans. david cameron, the new conser conservative prime minister in britain offered a budget that includes severe toughbaccutback. alongside cuts he added value to the tax. imagine a fiscal conservative who really is a fiscal conservative that could never happen here because the fairy tale supply side economic insists that taxes are too high especially on the ridge. the administration says economic growth won't be affected if you let the tax cuts expire for the wealthiest americans. >> i don't think you want to run the risk that they are wrong. i would say let's go on with the tax cuts for another couple of years but you couple it with long-term solutions. and you have to look at what's politically possible. >> governor rendell, that's not the position of admin

liquidity is provided by dealer funds, whose ability rises or falls with the help of the financial system. in the u.s. equities market, liquidity is provided by a broad base of participants. this was a benefit to all investors during the worst weeks of the financial crisis. our exchange traded markets performed admirably. those responsible were small electronic market makers and regulators who led us to a broadly democratized market structure. they should be proud of this achievement. we build safeguards into a trading properties and have him and oversight of important steps to protect client assets. on may 6, our staff noticed early on the market was potentially disruptive, and shut down our trading. we did not suffer. we avoided trading at discounted prices. we were able to complete the share of portfolio transactions that day. nevertheless, may 6 revealed risks in infrastructure that need to be managed. i will highlight three. first, questions remain about the cause of the flash crash, but we know there was significant negative macroeconomics, heavy trading volume, substantial liquidity, trade rep

financials will continue to be pressured by the weak housing market. white house adviser and former federal reserve chairman paul volcker rolled out options for fixing what he called a deeply flawed u.s. corporate tax system. the 126-page report is aimed at improving corporate taxes, cutting the corporate tax rate and limiting businesses' ability to deduct interest costs. >> tom: still ahead, hundreds of people showed up for this foreclosure prevention event in florida today. we'll hear some of their stories from the recession. >> susie: the bidding war for data storage firm 3par is starting to feel like a tennis match. things heated up again today, as hewlett-packard volleys with dell, lobbing another offer at 3par. h.p.'s bid now stands at $30 a share, valuing 3par at $2 billion. that tops dell's most recent offer of $27, made early this morning. dell has the endorsement of 3par's board, but analyst michael holt says h.p. is better positioned to make the deal work. >> first of all, they're much larger in the enterprise hardware and services business. so, they have a lot more cross- selling opportunites. secondly, they also already play in the high-end storage space, and so they can-- where they already

financial system and that was not popular. he prevented a total economic meltdown that would not have only affected the u.s. but the worldwide economy. think about it, many people have forgotten. on we were not talking about the bank's reorganizing, we were talking about them closing the doors. i remember the first meeting we had a chicago when we're putting together a new government. paul volcker headed a group of 50 economists the president and myself asked whether or not we would have to declare a bank holiday on said yuri 21st. the president acted remarkably well. the banks have 40 paid back 200 billion and they will pay back every single penny the taxpayers let them. we change the health-care system in america was broken. we gave texas to small businesses this was long term over hundred billion dollars in the first 12 years we've helped people who lost their jobs survive. people were lying down the foundation of the 21st century. we cannot lead the world in the 21st century the same basic policy as we did in the twenties century. we need a new economy. the results of all of this, more than 3 billion am

u.s. treasury. what will come out of the agreement, the unfortunate, is very little by way of the needed capital raising standards. the capital will be relatively low. low, so the financial system will have to absorber losses. given the political on come, i do not expect much additional capital to be in this. i think we should score the liability that this creates, relative to the risks that it poses. that is standard procedure. this is 40% of gdp, so it is a big one. not scoring not one would be a mistake. >> just quickly, you do not ascribe to the view if you put more pressure on the need to increase capital -- which i accept it is necessary to keep the system sound for you will end up with contraction in credit. >> it depends on how to raise capital requirements. the way that we did things after the stress tests -- you can have your reservations about those tests, in general -- but raising capital is the right way to do this. you do not want to tell people you must change your ratio of capital to assets tomorrow because certainly you will get a contraction. there are ways to make the banking sector. banking becomes less sexy, less of a high-risk, high return activity. that i

u.s. treasury. what will come from the agreements, unfortunately, is little in the way of raising the needed capital standards. the quality of capital is going to be relatively low, so the financial systemhave to absorber losses. given the political on come, i do not expect much additional capital to be in this. i think we should score the liability that this creates, relative to the risks that it poses. that is standard procedure. this is 40% of gdp, so it is a big one. not scoring not one would be a mistake. >> just quickly, you do not ascribe to the view if you put more pressure on the need to increase capital -- which i accept it is necessary to keep the system sound for you will end up with contraction in credit. >> it depends on how to raise capital requirements. the way that we did things after the stress tests -- you can have your reservations about those tests, in general -- but raising capital is the right way to do this. you do not want to tell people you must change your ratio of capital to assets tomorrow because certainly you will get a contraction. there are ways to make the banking sector. banking becomes less sexy, less of a high-risk, high return activity. that is okay

u.s. treasury. what will come from the agreements, unfortunately, is little in the way of raising the needed capital standards. the quality of capital is going to be relatively low, so the financial system will have to absorber losses. given the political on come, i do not expect much additional capital to be in this. i think we should score the liability that this creates, relative to the risks that it poses. that is standard procedure. this is 40% of gdp, so it is a big one. not scoring not one would be a mistake. >> just quickly, you do not ascribe to the view if you put more pressure on the need to increase capital -- which i accept it is necessary to keep the system sound for you will end up with contraction in credit. >> it depends on how to raise capital requirements. the way that we did things after the stress tests -- you can have your reservations about those tests, in general -- but raising capital is the right way to do this. you do not want to tell people you must change your ratio of capital to assets tomorrow because certainly you will get a contraction. there are ways to make the banking sector. banking becomes less sexy, less of a high-risk, high return activity. that i