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tv   Book TV After Words  CSPAN  November 29, 2009 12:00pm-2:00pm EST

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the average politician. after the election in november she will say i have enough people out there that thinks like i think and why not? i think she can. . .
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>> my grandchildren are going to wind up having to pay for this. >> work with us. thank you very much. >> thank you. >> thank you very much. >> from loveland. >> and you just came down, getting a book signed. what is it like? >> it is amazing. i just drove from ohio state. am a student there. got my car instead and came down. it is amazing. >> do you have a lot of fellow students that like her? >> yes. i am part of the college republicans club. we have a strong following. >> what is it about her that you're attracted to? >> i think she is a strong woman, a family, a great mom. she is just a down-to-earth nice
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person. . p gh did . did she say anything see of there? >> that it was wonderful, really nice to meet me and glad i came all the way from columbus. thank you very much. >> thank you. >> in cincinnati. we are about halfway through the sarah palin book signing. >> it is still very early. so just having them come in and is situated. working everything through. people are incredibly excited. they have been going right through there. a lot of people who are very, very passionate about ms. palin. it has been a remarkable experience. >> thank you so much. thank you so much.
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thanks so much for being here. thank you so much. >> thank you for being here. >> the book officially released this past tuesday. the signing yesterday and friday. skipped a couple of days in between. pre-order the book by a voucher. when they bought the book there would get a line like a, b, c. so we call people up in groups of 50 that lineup that allows people to browse the store and sit wherever they're comfortable and only actually stand in line for a relatively short amount of time. we bring them up in groups. they go right up and get their books signed. shake ms. palin's hand and are free to shop or go home. and if it is a unique situation. we are fairly familiar with alomar cincinnati incinnati meda partners, but the national media. network media we have quite a bit. we are thrilled to welcome
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german tv, canadian tv, some of the network entertainment programs that have been following ms. palin on tour. of course different entities. >> finally for people who don't know joseph best booksellers, how could you describe it? >> we are a regional book company. in lexington. in lexington and cincinnati. after the first couple of years the women who started in memphis and nashville decided to retire. their succession plan was kind of selling to the owner of the company. and then he has expanded into cleveland, his hometown, and charlotte and pittsburgh. so seven stores. yeah. we kind of focus on being regional booksellers. [inaudible conversations]
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>> sarah palin served as republican governor of alaska from 2006-2008 and was a republican candidate for vice president from 2008. to find out more visit facebook. >> coming up next book tv presents after words. this week nomi prins former managing director at goldman sachs and current senior fellow talks about her book "it takes a pillage: behind the bailouts,
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bonuses, and backroom deals from washington to wall street." she discusses the book with the senator bernard sanders of vermont. a u.s. congressman for 16 years before moving to the senate and the author of the memoire "outsider in the house." >> host: let me begin by thinking c-span for the opportunity of me interviewing nomi prins who is the author of "it takes a pillage: behind the bailouts, bonuses, and backroom deals from washington to wall street." while i was in the house for 16 years. answered on the on the financial services committee. needless to say i have been actively involved in the last few years in the senate. let me thank you very much for being with us. >> guest: thank you very much and thank you for taking the time to be here as well today.
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>> host: nomi, let's begin with a little bit of background about you. where were you born? what happened in your life to have you and up on wall street and write the books have written? >> guest: of i born in upstate new te new york in poughkeepsie where my father had at one point been a professor and was working on research at ibm there. very much an ibm town. we were very much a m athematical-type family. a lot of work with numbers from a young age. i ultimately wound up going to the state school to study a little closer to new york city. getting closer to wall street to some extent where i studied mathematics and minored in music. my father said math is the way to get a decent living and find a job. as it turned out, that was true because ultimately that was what was being hired first.
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a lot of math and engineering and computer science really was degrees that wall street was looking for. so what i really just wanted to do is move to new york, as you do when you graduate college. about getting my first job at chase manhattan bank before it was part of j.p. morgan chase when i graduated -- actually before i graduated. i was 19. >> host: 19. >> guest: yes, i was. i started there doing a lot of analysis and computer work. >> host: what was wrong with you? the partying and ending up on wall street? >> guest: i was way too serious. the only child and the family. some responsibility and independence and everything else. i somehow wound up over there. i figured that was only going to be there for a year or two and work in musical theater or something else. as it turned out i wound up staying there a very long time through a number of different
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firms. i think it just became easy to some extent with all of the hardness that comes with wall street and within wall street firms. you did make enough money to pay rent in new york city and everything else. nothing like the kinds of sums that are being made today, but certainly enough to live on your own. >> host: let me ask you this. you read the book in the belly of the beast, so to speak. so what impact on your views, life views about wall street occurred as a result of your work with goldman sachs? how many years did you work with goldman sachs? >> guest: three years. it was the end of my career from wall street. i ejected myself from wall street after having worked for goldman sachs. >> host: and bear stearns. >> guest: bear stearns as well. that was really the crux of the workout was doing on wall street and internationally, and then i came to goldman. >> host: so what impact did
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your experience on wall street have on your views? you were on the inside. most of us -- >> guest: and one of the things that you learn of the inside is there is such a tremendously competitive environment, which there are in a lot of other places, but on wall street it is almost like you come in every single day and the higher you move up and up from the more this is the case, every single day trying to figure out how much credit you can take for a particular trade, if you can beat someone on another desk or on another area of the firm. the race to the office to senior management in order to be able to tell them what you did to take part in a deal or transaction and it very much becomes a this immediate environment where if you don't do that you don't succeed. if are someone who wants to succeed you get involved in the scheme. i ultimately found that very distasteful and quite empty. but the environment is very much like that. it is very intense from a gamesmanship and a power sort of play as well as it is really
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like a military strategy almost every day going in literally from whose name he put on an e-mail first to his office you go into first to hear you tell about the surge in trade before someone else knows. >> host: let me ask you a question. by now we were in the most serious decline since the great depression. if you add up the number of people that are unemployed and underemployed 17% of the american adult work force is in that position. they have lost their hopes and the savings and pensions all because, in my view, the people on wall street. the first question i want to ask you is, some people say, well, nobody could have predicted this. by god, it just came out of the blue. it was just amazing. totally unpredictable. how do you respond?
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>> guest: it was absolutely predictable. one is that mentality in the street. the reason this crisis happened was there was a desire to find products and create assets within wall street that made money. they don't really care. it doesn't matter to wall street firms what those assets are. it turns out that they created assets out of this small amount of some prominence. i look at it at an upside-down pyramid. 1.4 trillion loans were issued. but wall street does is it takes them and creates new securities, this whole other band of security. from those it can make trading commissions and a lot of other profits. they made $300 billion just on creating securities out of these loans, not on even trading them back and forth, it's just the sheer creation of these securities. then what they do is they take the securities and borrow against them to create new ones
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and to merge and to acquire and trade and speculate. so that is why this whole thing fell down. it wasn't it sometimes fell from. it was that all of the securities and trading on top of them toppled over. >> host: you know what, most people stress their head. when they went to school somebody taught business. maybe they sold automobiles. maybe they sillcocks. maybe they sells shoes. here is my really tough question. what the hell do they do on wall street? what did they make? what to the produced? >> guest: they produce as says that only have value because they choose to say they have value. >> host: how does it improve my life or your life? >> guest: it absolutely doesn't. that is a good analysis. wall street exists, and particularly investment banks and the most speculative components of banks exist purely to create, to engineer -- that's
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with the call is coming engineering assets. is that engineering train tracks. it's not engineering and building. its engineering something that only has value because they say it does. and have a "in the book which is great from a senior nior partner at goldman sachs who left the firm to go to morgan stanley. one finance is one of the only cards that is predicated on the creation of absolutely nothing. and it is only by pushing that nothing for something throughout the system because people continue to buy it that this continues to turn and you create the sort of upside-down pyramid of risk to and assets that don't truly haven't transit value. >> host: so at that time when our manufacturing capability is declining and we've lost many of manufacturing jobs, our infrastructure is in major does repair. we desperately need scientists to help us deal with illnesses
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we are seeing some of the best minds in the country going into a sphere of activity which produces virtually nothing that is useful to the ordinary person. >> it is not useful to the ordinary person. it is purely the amount of profit. you look at a company like goldman sachs, they pay almost 50 % of their profits out and bonuses. in any type production company or even retell the amount of money that is paid in terms of commerce, its compensation is 20% or 22%. all that is about moving transactions goes directly into these extravagant bonuses and extravagant compensation. this is right there. >> host: it seems to me like we are in two separate worlds. >> guest: yes. >> host: something like 40% of
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the profits in america is now being made on wall street. rather an extraoridnary number. >> guest: it's an extraordinary number. in new york city it is an even greater proportion of what revenue comes into the city. it is an obscene number because it is really not predicated on the creation of a day. we arm still talking about assets that pretend to have value and that are rated to have value. all these other agencies like the rating agencies and moody's that come in and set values by deciding that these assets are worth a certain amount of that they have certain quality attach to them. if you call something aaa it sounds really good, and investors buy it and pension funds buy it and individuals hear about it from their local bankers. and so basically this i nfiltrates the entire system. >> host: i remember the budget committee. we had paulson. i said paulson, back in my state the middle-class is in a whole
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lot of trouble. people are struggling. people losing their jobs. their income is going down between the rich and everybody else. he said the economy is doing really good. year after year we heard from the bush administration that from their perspective the economy was doing great. now, explain to me how they could believe the economy was doing great when the middle-class was collapsing and we were getting closer and closer and closer to the edge of a major global financial crisis. >> guest: because for them it was great, and that's the problem. 2006 was the record year of bonuses on wall street. 2006. between 2006 and 2007 foreclosures in this country to between march 2006 and march 2007 increased by 20%. it isn't like there wasn't information coming in that would indicate there is a tremendous problem brewing.
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it's not someone like treasury secretary at the time paulsen who had been as ceo at goldman sachs and understands numbers, but the fact that goldman and other firms were paying out record bonuses. there were manufacturing as things are getting weaker they were manufacturing in even greater amount of assets because they would have wanted test take profits as much as s they coulds soon as they could because they actually knew things weren't going to continue to stay. wall street new. there was less trading going on which is why they were creating these toxic assets because wall street knew that the game might be up. so they paid themselves well and created these assets and paulson should have known this. the fed should have known this. on the other side of all of this was increasing foreclosures and increasing defaults. this was real de. >> host: i have to tell you something sitting in the congress hearing these guys talk, it's like there were living in another world.
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you had bernenke himself who is now chairman of the fed to for a while was a major economic adviser to the president, i didn't hear anything coming from these guys. wait a second. we have to do something. if we don't act we may have the collapse of finance in the united states and the rest of the world. where were they? >> guest: i don't think there were looking at the data. if they were there were choosing to ignore it or act optimistic because that serve the political agenda. you don't want to be the party in power when the crisis happens. if you can sort of push along and will it to not happen and give this, this is how i look at it from the outside, but give a positive spin you can push it on to rally the next guy or the next administration. >> host: he almost got out. >> guest: he almost got out.
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>> host: he almost made it. >> guest: if it happened at the beginning of 2009 it would have changed. >> host: talk about this whole business of deregulation. during the ten year period wall street spent $105 billion pressuring congress for campaign contributions to deregulate. what impact did all of that deregulation have on the ensuing financial collapse? >> guest: the repeal of a glass-stiegel was the catalyst for what became the collapse and what became a few years later some enron and other scandals that we like to forget about. they were all predicated on the idea of merging in acquiring. banking institutions becoming not just bigger, which they were doing, there was a record merger spree as well leading into the repeal which have been almost a year ago today. >> host: i voted against it.
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i voted against it. >> guest: not only did he vote against it. he said all the things that would happen to consumers. >> host: the issue. >> guest: it did happen. all of the warning signs unfortunately came into fruition. and the reason for that is that when banks merge and when concentration changes so that the more powerful ones have more deposits and control more loans and control more actual capitol the concern in traded and speculate because it is there. so that is what altman the causes ely causes the crisis. you had extra capitol an extra access to consumers. you can turn them into something that ultimately became a crisis. >> host: let me ask you a question. during those years i was a member of the financial service
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committee. god had walked into the chamber. you cannot believe. greenspan, the philosophy that the best thing that they could possibly do was do away with all government regulation and allow these guys on wall street to do anything they want. somehow they would do all the right things and would create great wealth. some of us did not believe it. unfortunately the majority did. here is what a dank and says a lot about our political system. the president who originally appointed alan greenspan was the first president bush. he was reappointed. he was reappointed, greenspan is an extreme right-wing guy, by a liberal democrat named bill clinton. then you have years later mr. bernanke is appointed by a
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right-wing republican george w. bush. a liberal democrat wants to appoint him. people generally believe that there is a difference of opinion between a first bush and the clinton and a second bush and ann obama. how does this happen? >> guest: first of all there has not been a change in any of the regulations that come on to the financial world between any of those to administration changes. we hope there will be. >> host: let me back that up. this raises a very interesting point. not a democrat or republican. what you are essentially saying, are these kind of key financial issues of how we do with wall street into is head of the fed? >> guest: it seems like one of the least partisan things in washington because if you look at just the two regulations that were passed, the continuation of fed chairman under the changes
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of republican to democrat both times there is not a tremendous amount of difference. in fact there is more financial deregulation done under clinton than there was under the first. >> host: and the secretary of the treasury. >> guest: yes, who happens to also be a cozy zero of goldman sachs which is this whole whole, the revolving door from wall street and ultimately into the presidency. whether or not there is a democrat or republican south. he was head of goldman sachs, became treasury secretary. he was republican. but bob rubin was a democrat. but there were both for the same deregulation. he could have almost entertains and at any point in time. >> host: where was tim geithner? >> guest: if we talk about
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where he was, he was head of the new york fed which had a very tight relationship with wall street. it has had a relationship and a revolving board door. he runs a large bank. so there is this constant revolving door. if you are running or our president you have perhaps the closest relationship that almost the chairman of the fed. >> host: while we are on the fed let me mention something. last year i had ben bernanke before the budget committee. this was during the whole bailout. as you know i want to get into this. at the very least we know that
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they lend out over $2 trillion in 0 inches loans to financial institutions. so i said, you know, can you tell the american people who get the money to back the putting their money at risk. most of us would like to know. who got the money. he said, this is pretty amazing, i'm not going to tell you. $2 trillion you're not going to tell the american people. by the time that day was over we introduce legislation to make can tell us, but talk a little bit about that. how can the head of the fed say with the straight face and i'm t going to tell the american people where $2 trillion of their money at risk has gone. >> guest: it was astonishing. at the same moment for a few minutes later he said it would actually be counterproductive to tell people. i remember the word counterproductive. how do you possibly get to that
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term. i guess the reasoning besides the fact that there are a whole lot of banks that don't want that information disclosed because that would indicate how we say it truly is with the bailout. i think earnings he was basically using that face and trying to somehow justify it by saying if people actually knew how weaken their banks might be we would have a catastrophic run on the banks. redlines, 1933 all over again. the world would totally collapsed. i think whether he believes that are not. i personally think that had we disclose this information from the get go and before the panel of became as expensive as it became, no one trusted anyone. and we actually have full disclosure back then, and that was back then. what the fed might have been looking at back then we could have avoided spending a whole lot of money. by the time he got to that moment he was so entranced in
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the at get that if anyone knows what actually went on to it would create and it would commit would create a lot of anger. he acted as if it was. >> host: that is exactly what he did. we took that constant of the need for transparency on the floor of the said during the budget discussion, and we won in a bipartisan vote. it's very hard for the average member of the senate or the average american to say, excuse me, you're putting $2 trillion of my money at risk and not telling me who got it. maybe we need a 1800 number for everybody in america to get zero interest loans. >> guest: exactly. but we would have a very different america. alitalia one thing on the back of that, the new york fed actually is extending more money and had more open plans to the banking system. we are talking about the 2 trillion on the defense put. altman the there was 6 trillion
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worth of facilities created much of went through the new york fed book, and they don't necessarily aggregate them. their is a lot of other stuff that is nowhere near being looked at. >> host: who knows about this? >> guest: it is not what collateral has been posted and what banks have received how much money, that we are trying to get to the bottom of that information, but when does facilities were open, when they were created it was like there was a big media press release. there is information that you can see from digging through the web sites. i did that this the one you can do it. you can write a book. >> guest: there is no way you can go on the fed website to say how much is it worth. >> i'm > host: i'm going to putu on the spot. based on his record as head of
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the new york state -- let me get to bernanke. do you think that president obama forced bernanke to be reappointed? >> guest: i think bernanke made a lot of mistakes leading up to this in crisis in terms of not looking at the information that other people could have looked at. there were economist telling him. more than that, more than that the fed has the ability to reject mergers. the fed has the ability to deny applications for banks like goldman sachs to become bank holding companies which makes them more publicly accessible to the fed in terms of receiving funds are receiving any sort of subsidies or percs. it is the fed's jobs to be prudent about that. when ben was in that seat he did not say we should not have a merger.
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he did not say any of that. you can't become a bank because you have too much risk, and we don't want the government's money to bank risk. he was in the position to do that. that was one of his jobs. he didn't do that. i believe by not doing that he actually shoved a really big second coming of the crisis, may be delayed a little bit, but created a much less stable landscape and even had before last year's crisis. ..
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>> host: as we speak, when president obama has indicated that those financial restitutions that were bailed out, he's going to cut back substantially on the ceo compensation, but the other financial institutions like goldman sachs are running as quickly as they can back before the crisis. tell me about this, how do a group of people who call this terrible crisis, the suffering for tens of millions in this country, after getting build up by the taxpayers of this country go back to huge compensation packages and bonuses, go back two exactly where that came from? >> guest: they feel incredibly ridiculously entitled to doing that, they go back to their offices, great, bryce is a bird,
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let's go and make money which they are. goldman sachs is on track to make $20 million in bonuses, that's a couple more billion dollars than they made in the year before the crisis. they're doing better than they were before. and it's really this mentality of what we do here is intense and important in this moment and the trading and the transaction and what happens on the outside is their fault for not being us. >> host: as an elected official people sometimes criticize appropriately people in congress living inside the beltway mentality not knowing what is going on. i can tell you that in my state of vermont there is a theory, there is rage against these people and apparently there is interested. >> guest: they don't care because nothing has happened to them. the rage and the righteous rage of the public doesn't affect what they get paid and has not affected how they operate. they said at their last
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quarterly earnings they're going to continue to do what they do. they're very open and are even trying to hide this information. >> host: on that note we are going to take a break with nomi prins his excellent book "it takes a pillage" explains i think a lot of people what has happened in the last. likely in future. we will be back in a minute. >> afterwards and several other c-span programs are available for download as podcasts. were with nomi prins and senator sanders in just a moment.
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after words with nomi prins and senator bernie sanders continues. >> host: we are continuing our discussion with nomi prins who is the author of "it takes a pillage". in it seems to i think many americans and that we are living in a world deeply divided, a nation deeply divided. you have wall street up there. you use the trade -- freeze a sense of entitlement, they make hundreds of millions a. occasionally a billion, hedge funds operating, they are doing that thing and you while you have the rest of the country which has seen in many instances really deep declines and people standards of living increase in poverty and losing health insurance. you have wall street and main
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street. what is the connection between the two? why does wall street get bailed out and richard, what people on main street lose their jobs and health insurance and get pour? had we turn that around? >> guest: for one thing wall street has a tighter connection to certain people in washington and much more money to lobby and everything else so there is more of a sense of keeping what they have in getting more. there's no such thing as an ethical wall street right now and stop ourselves from making as much money as we possibly can because that is their issue. >> host: to me it is astounding but that is the way -- might have thought the people on a wall street who caused the severe economic crisis, that one of these guys might have gone on tv and said americans i'm really sorry, our greed get away from us. i am sorry and we're going to change it. i haven't heard that. >> guest: there has been no contrition or awareness, no connectivity to the rest of the country because the people that
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really run these firms have almost no contact, literally don't have a lot of contact with real individuals, but the results of the crisis we saw last. the bailout and the decision to open a lot of federal funding and subsidies and cheap loans and everything to wall street that would somehow trickle down to the rest of main street, it almost have the opposite effect and kind of fortified the standing people in wall street and the banks that survive to continue doing what they're doing. >> host: which you said is exactly true, i should be clear i voted against the bailout, but the line was this is not a bailout from wall street, this is a bailout from a street and working day and night to save mainstream but you don't agree with that assertion. >> guest: not only do i not agree but i also don't agree with any of the numbers we have shown that have legitimately indicated this has been the case. credit did not listen and impact when the bailout -- emergency
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economic stabilization act there was a tiny piece of that that allowed the fed to pick up more interest on reserve money that the banks are keeping some of the banks are getting money they are incentivize two not do anything with its wild the treasury secretary and others are saying this will somehow listen credit for the american people. credit is tighter now. and as a result of unemployment is higher now, there is a direct correlation between credits, not crazy credit and people running up the basically the idea of credit for small businesses and individuals because once those companies can't make payroll piccolos, they fire people, they don't have it anywhere else to go. and also add of this the smaller banks are continuing to fail in sizable numbers, 99 closures just this year of smaller banks of the bigger banks are getting all this capital so even in the banking system there is a wider gap in the smaller banks been a lot of the smaller loans to the
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individuals so there is tova gone -- knocked out the fact of the bottom part of the country and that is why foreclosures are at a record quarter again not last year, this year at a record quarter. this year there is more involved in this year people are struggling more. >> host: after the bailout. >> guest: in unemployment was 5.8% proceeding that time of the crisis last fall and now it's almost 10% and that doesn't even include the fact that most cities and urban areas 139 different urban areas have double-digit unemployment from 15. before the crisis. not only has this crisis not health ministry but it's hurt me street with some of the bailout has hurt mean streets. >> host: what do we do? what we do that for people that
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don't have illegal behavior? what are we going to do too have financial institutions play a role in providing credit so that and entrepreneurs and business people can create real goods and services and create meaningful jobs? would you suggest we do? >> guest: first of all, who have to look at the money given to the system because we didn't put any strings attached to its. we have to start to attach some strings and say you said you needed this, you said you're going to loosen credit and here's what you need to do -- take a portion of your capital and this discussion is a bad banks having more capital so they can actually control the risk so the government doesn't have to subsidize but at the same time i think some should be divided and more capital should be given to the small businesses and made available and renegotiations should be much easier. what is happening now is not only credit not listened but if someone wants to negotiate a home now about to be foreclosed on you can't get anyone on the
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phone. the process is so exhausting and cumbersome and documents get lost because there's no accountability. these little loans became these assets and sell a. you can find where the deed was to a property and i thank you need to basically find that and make institutions more accountable and there's a good reason to do that now because there are sitting on capital funding. there's more reason now to come in and say you have yours and yours which need to do. >> host: you use the word accountability. on wall street that is a four-letter word. >> guest: they don't like it but it will never, openly. lloyd is going to come to washington and say we are paying out 23 billion and bonuses this year, and going to cut that down to a measly 15 billion. i'm going to give the rest of that money into some fund that will help small businesses or that will give credit for advisers or help people renegotiate their mortgages -- come to do that because i feel
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bad. that will never happen. >> host: we should . >> guest: and particularly because they have public assistance. its almost -- to be easier now to ask more on wall street given its received so much more from the standpoint of the role government even and then before hand. >> host: i will tell you, one of those things is the center i hear about. people literally can't understand how they are bailing out these financial institutions in the end of paint 25 or 30% interest rates on their credit cards which in the old days used to be considered in q3. but now it is just the cost of their doing business this racket is the fees on credit cards, the arbitrary fees the gets slapped on checking accounts and savings accounts because now it is really a byproduct of the glass dingell repeal to go back. >> host: explain, and not sure all the viewers know what that
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repeal meant. >> guest: in 1929 we had a tremendous stock market crash which was followed by the great depression and in 1933 when fdr was the president and came in but in 1933 took office in the first couple days the close the banks because it was noted it was the bank's vaults, it was a white people spontaneously stopped paying. the credit tightens even back then and speculation was rampant and products were created with nothing in sight of them back then in the same thing's happening because banks could take the deposits of consumers and the population and borrow against them leverage on wall street to speculate and trade and they did. so what the glass-steagall was about was saying you cannot have a financial institution that both has the right and the access to population deposits and makes loans to the population and have them use that to bed and gamble and
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speculate. that doesn't make sense and particularly the federal government can possibly be able. >> off at risk. it's a black box and so glass-steagall separate banks in this and if you want to deal with customers and get those of deposits you go over here will back him and the fdic was created in order. >> the deposits of consumers and individuals in the united states. investment banks are on your own, you can do what ever you want, maybe not totally but you can speculate and trade into what ever but we don't have your back. we are not going. >> at risk this mac the taxpayers of back you out. >> guest: the fdic won't be there. >> you are ensure your debt which is kind of what they're doing with goldman sachs and morgan stanley. it just won't happen because it makes no sense. >> host: then we came to the 80s and 90s and people like alan greenspan and bob rubin proceeded to tell the congress my dad was glass-steagall was a terrible destructive idea.
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>> guest: for years before the repeal robert rubin was talking about this notion we could be competitive in our banks are allowed to do whatever it is they do, that the 1933 glass-steagall act was integrated into that work in today's modern world of finance and who we are going to be at a loss actually. the u.s. will decline in financial supremacy if we are not going to allow our banks to do with the other banks are doing. >> host: so the congress against my vote repeal the glass-steagall and what was the meeting results? >> guest: a wave of mergers that preceded glass-steagall such as citigroup and travelers. an idea where insurance companies could be a part of commercial banks could be a part in everything started merging together so there was a first wave of mergers that happened right after glass-steagall and lobbying when down the year because it was up here before. that was a small temporary respite on that, and then what
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happened is there was more consolidation for a decade. of the banking industry so that you read from a situation where the top banks had 20 percent of the assets and deposits to have the topping's hundred% so you continue to concentrate the industry and and concentrate with more risk added to it and how you have these banks using deposits again as capital to speculate and trade just like in the 20s. this track that takes us to the issue of too big to fail. one much too big to fail means is that if a huge financial as a tuition goes under is going to take half the economy with it and then invest the justification for having to bail them. it seemed to me and i said this on the floor of the senate that institution is too big to fail in seems to me that it's too big to exist. but since the bailout we have not seen a breakup of these barges a titians, quite the contrary. paul volcker among others have
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raised that issue. what you think about too big to fail? >> guest: i think we should go back to the current glass-steagall. we should separate the banks back out again. we shouldn't have gone from a crisis into a situation where there are a rare base control and more assets in the country. which goes back to what the fed was doing in terms of the merger so we have a situation where we need to separate them a separate the consumer deposit loans and assets from the speculative investment banking and trading because what we have right now not only are the banks bigger, jpmorgan used to be jpmorgan chase which had a lot of mergers to begin with but then having achieved the acquisition of bear stearns as a risky investment bank, washington mutual as consumer deposits other is a bigger animal floating on more risk and that risk is what we saw their profits last quarter. again, no secret about this. the only reason they made money was not because consumers are doing better, consumers continue
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to post losses because they continue to hurt. were they made money was in trading. so i think we have to totally take that risk out of the government's responsibility to that which means you have to break up these banks. >> host: if people want to speculate they can on their own. but they aren't going to get bailed out by the government. and if banks want to make loans to people who, real people, we will back them up as much worse than. >> guest: that makes some sense because not only back them up you will understand the risk. you know exactly what you are dealing with. i don't think there's a lot of people in washington that said and looked at what an actual credit derivative perspective or transaction in is -- you don't and it's complicated and i think to some extent is not as complicated as made out to be but certainly arcane and two anyone who's not in the trenches. that's why did gets away with
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trade in the securities it creates. releases the lack of understanding to its benefit. >> host: let me switch gears for a moment. i think the average american after the bailout during that time wanted to understand how the crisis occurred. who was responsible for it and how do we hold those people accountable? who is going to jail? who is apologizing? we really haven't seen a whole lot of that. in fact, one of the issues that we do not for, i-5 four was -- explain the investigation in 1932. >> guest: 1932 pour a who was the assistant d.a. in your basically was asked to undergo investigation of the banks in the u.s. by the senate banking committee. two basically look at how what the practices of the base that were contributing to the crash and contributed to the depression. and that was -- and what he
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found was this idea of speculating on the back of nothing. >> host: jpmorgan and these other guys. >> guest: and he basically really hammered them to explain exactly what their practices were. and exactly how they inflated value in exactly what they used, with deposits and money as they used to do that. it was so clear from that so clear that this was something that was a direct contributor of the crisis. it wasn't an foreclosures were high and then to. historically that. but that wasn't the prices, that was just a manifestation of one wall street was doing. the little individual home and in vermont or stock to california or wherever, the foreclosures on those are very difficult for the individuals, but they are not what brought the system down. what brought the system down was all the speculation that wall street's most investment banks. and on the back of those loans.
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>> host: but the american people really have not gotten that explanation of what happened. they haven't had the leading guys to cause this in front of the cameras answering hard questions. >> guest: that is really a good thing to do appear to some of these guys have been in front of various committees also talking about their bonuses. there's a good thing in a bad thing -- certainly the bonuses or a breach is particularly now after the crisis with federal funding beneath them. but if we just focus on the bonuses we lose sight of the practices that can shift into the bonuses so you need to do both. it would be really nice if you even got is an affront to say they were sorry, but . >> host: in addition i think the american people are owed an explanation of what happened. and then the understanding that the congress is trying to make sure that this doesn't happen again. but what i thank you are implying is these guys are moving very aggressively to bring us back two exactly where we were before the financial
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collapse. >> guest: absolutely because one of the things that contributed to being able to create these assets out of lawns is money was cheap under greenspan actually in 2001 and early 2002 and as a result you have more as an era close been given out because banks are getting this money cheap and the need to figure out how to get more as of the extent to from subprime or extracted by trading assets or find some way to create money from nothing more money from cheap money and now have the same situation. rates are low and banking systems are getting 02 1/4% bonds from the fed. so we're in every region of that's an area just on a much grander scale. >> host: let me ask you another question changing gears again. there is growing i think interest in the fed itself and which as you have indicated today is an enormously important institution but a very secretive institution. you can argue that certainly in
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particular moments ben bernanke the chairman of the fed is more powerful than president obama her. >> guest: he controls money actually. he controls the ability to create money, that's a very powerful ability. >> host: talk a little bit about that, have a summit like the chairman of the fed get all of this power? what we know about the lead? should there be more transparency? 1i have to admit i'm the author of the senate bill which calls for gao audits to do all they so i'm prejudiced in asking this question but i think whether you are conservative or progressive as i am, people and just kind of shaking their heads that an institution with so much power can operate in so much secrecy. what do you think? >> guest: and also subsidize so much of a private sector. and reside in washington. i think to a large extent the lead in the situation totally overstepped even its mandate when it was designed to do. the fed is supposed to on a regular working day control or
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basically said interest rates, monetary policy. to raise rates and lower rates depending on whether money is easy or harder to flesh into the general system in use for businesses or what have and they do that. is also supposed to oversee these commercial banks, supposed to make decisions as to whether they are allowed to become bigger. and they are supposed to go in and say something. the practice it doesn't because it has such a tight relationship with wall street, with the banking system that is like telling on your brother. >> host: how many people are in the vetted? how are they appointed? >> guest: there are 12 federal reserve banks, appointed basically through the banks. for example, the new york fed the sort of appoints people from its back door which is wall street and therefore you have a board of the fed which controls to some extent how this money goes back to where they came
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from. two what extent last year stephen friedman chairman of the board of the fed at the new york fed where tim geithner was president was at the same time on the board of directors at goldman sachs. so you're basically -- you have your foot on the place you can get money from and you have in the door of the place that its benefits from that. >> host: that is an enormous conflict of interest. >> guest: from day one of the fed was a conflict of interest particularly the new york fed. the relationship is the most powerful of those, but from day one that's a conflict. there should not be members of that board on the board who are in any way related to the base that receive any kind of money from the then. will otherwise call it a private bank. but don't let it have access to the ability to be public money. >> host: how do you -- how to in your judgment these guys with so much power plan literally
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with trillions of dollars get away with the public scrutiny? i make the point when you're on the floor of the senate fighting for $20 million there will be a six our money meanwhile reply lead these guys we will provide trillions of dollars and zero interest with no discussion, nobody knows who gets it -- what is going on there? >> guest: i think to some extent love for some reason the fed will allow us to do and there was and as much question. there was so much debate over the $700 billion and there wasn't any questioning of the time over what has been going on and a the fed balance sheet and to some extent their needs to be and certainly the auditing bills of the way to do that and opening what they're doing to the public as a way to do that, there needs to be a required
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accountability to congress because it's public money. >> host: how to live in a democratic society where public officials are supposed to be held accountable without any kind of knowledge? >> guest: it's wrong. i think we have seen at of the scenario in particular is that the invention not be an isolated private secretary organization and is going to be involved in huge raising of public funds in order to subsidize the private industry. a means to publicly disclose what it's doing. it is bizarre this so much conversation is given over $20 million additions to help anything. >> host: it's almost like a shell game that we will have all these debates. >> guest: look over here. >> host: on the force of about $100,000 earmarked that goes on our after hour and then you get trillions of dollars being left out here with no discussion whatsoever. >> guest: one point the amount
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the fed had offered to the banking industry was a trillion dollars and out is six. with an open possibility and i saying the bank has used on that, we don't know but there's an open possibility of $6 trillion worth of money. it's staggering and then you also debate over stimulus package or extending and apply the benefits and the numbers aren't even in the same zip code. >> host: let me -- we're rapidly running out of time, a fascinating discussion and i'm glad you're father made to major in mathematics. it sounds like you used that background very productively why do we conclude our discussion. where do you think the president and congress should go? what would you like to see them do right now? >> guest: they should have a real debate over the idea of too big to fail by simply increasing capital limits and having these too big to fail banks watch better is not the way to go
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because you are watching something you don't understand you're going to bring them up, reinstate glass-steagall, make them smaller and i think that will have the added benefit of reducing risk because we know what we're dealing with. then you can control compensation images created out of the risk-taking and bonuses that cover the profits because you are some doing the risk in the system and bankers on make as much money. but that's okay. >> host: we're running out of time but the main point that you have made me be the most important point of many good points is that we can't look at wall street as something separate from the middle class and working families of this country. that we can continue in process with these guys live in their own world, we do not invest in anything productive value mall the middle class shrinks and of women goes up your mother got to play a different kind of rule. >> guest: and we can't make it up to them. that's the key thing. president obama is talking by raising small business loan caps
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and that's good of the banks don't want to extend the loans it doesn't matter that the caps are higher so there has to be an attachment, there has to be an actual legislative attachment to make in this behavior occur. >> host: on that note, let me think nomi prins were being with us. the book is an excellent book, and i can't think of a subject matter which is more importance for us to be engaged in. thank you very much. >> guest: thank you very much. ..
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>> i am john o'leary, and i'm not from these parts. [laughter] >> but i do love awesome and i'm not just saying that. 10 years ago i started dating a gal living in austin. nine years ago i popped the question while dancing at the broken spoke. about six weeks ago we welcomed our third child, and his name is austin patrick o'leary. [applause] >> when i say i love austin, i really mean it. we are delighted to be here to talk about our new book, "if we can put a man on the moon." if we can put a man on the moon, how many times have you heard that phrase? why can we end homelessness. if we can put a man on the moon, why can't we fix our schools. >> if we can put a man unknown why can't we put metal in a microwave? [laughter] >> noaa didn't start off as a goucher of course. at start off in 1961 as a
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challenge issued by president john f. kennedy. i believe that this nation should commit itself to achieving the goal. [laughter] >> before this decade is out. of landing a man on the moon and returning him safely to the earth. no single project in this period will be more impressive to mankind. pass the chowder, bobby. [laughter] >> it was an impossible challenge. but america pulled together. and in july of 1969, neil armstrong planted that american flag on the moon and was an achievement that for anyone who saw it was just an amazing accomplishment. it was like flying solo across the atlantic, climbing mount everest, reaching the north pole all wrapped into one. the young people who saw were especially impact, especially one young man in hawaii named barack obama. barack obama as a young boy remembered sitting on my
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grandfather's shoulders and watching the apollo astronauts, sure in hawaii. i sat there and i know, my grandfather explain how we americans could do anything we set our minds to accomplish. >> who could argue that american government was incapable after putting a man on the moon? >> we have won world war ii, helped rebuild europe of its barack obama. we had won world war ii, helping rebuild europe through the marshall plan. we done the national highway system. we had split the atom with the manhattan project. america was a can-do nation, but now are we still justifiably out of our accomplishments? can we still say the same about our government today? do we still have that pride? and the question of the day is, is our government capable of executing on our most important challenges? and in recent events are not likely to lead to any ticker tape parades.
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>> we have iraq, katrina, boston's own big dig and it's collapsing tunnel, the brutal economic meltdown. political observers know when the crisis right now in trying to accomplish big things that the man industry knows we have a big problem. so do public officials. we surveyed members of the senior executive service, and 60% said the government was less capable today of executing large projects than it was 30 years ago. president obama even made note a couple weeks ago in his radio address when he said, he raised the question, whether or not we as a nation are capable of tackling our toughest challenges if we can still do big things in america but we didn't ask him to say that but that is what he said it is a question everyone is thinking of today. >> and answer really depends on who's side you're on. >> everyone is asking who's to blame for our current crisis. some people come up with answer
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of george w. bush. >> barack obama. >> newt gingrich. >> nancy pelosi. >> the union. >> michael moore. >> rush limbaugh. [laughter] >> familiar, right? who is to blame but it's what everybody asks and it is a natural question to ask because whenever something goes wrong the normal instinct is to find out whose fault it was. all you need to do is visit a bookstore and go into the current events section. it is filled with villains. they're some of the titles up here. very inspirational titles. bookshelf full of blame. >> i of course want to appear on the cover of our book in a short little mini black dress. i thought it would generate a little buzzed by john talked me out of it. >> i have my limits, yes. >> instead of who is to blame, we ask a different question. why do big initiatives fail and why do some succeed? so the answer to that question,
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we studied 75 major undertakings by the end of world war ii until recently. looking for patterns of success and failure. we were looking for journeys to success in. >> we look at everything from the success of the marshall plan and the struggle of immigration reform. >> when we began trying to reduce 75 major undertakings, to really understand them we realize we're going to require a small army of thoughtful, intelligent people who understood government. and yet were willing to work for nothing. >> well, we needed grad students. [laughter] >> so we actually had over 70 grad students participate in helping us with this book from the lbj school to columbia from harvard to berkeley, and we could not have done this book without their help. >> and with their help we sought to understand the pattern of success and failure to get under
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that essential question of why can't our government sometimes do great things and why other times it struggles mightily to do things that we wanted to do. we were looking for a path to success. we each bring a very distinct perspective to this issue. john here is an mit engineer by training. and he does process mapping for coastal. so like any good engineer i look at this as a process that got broken into its component steps and look at these initiatives, and while they all were very, very different, i mean, the war on poverty is different than the war in iraq but all of these large undertakings exhibited a pattern, step by step that they all had to go through. >> we call that journey to success. there are lots of giveaways, but to achieve success certain things need to happen. you need to have a good idea.
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>> then you need to have an intimate design. design is going to work in the real world. you need to then go through the moment of democratic commitment, which we call the stargate. guess who came up with that term right there. [laughter] >> and then you need to go through effective implementation, and then you need to achieve your results. those are the basic steps. >> we use this map to guide our angry. it was helpful in helping the pattern of success and failure, make itself clear that you can see the real positives of why they succeed or fail. he comes at this as a consultant so he is doing a swot analysis before he goes grocery shopping. and he doesn't because he he doesn't like unpleasant surprise. he is often called into project when they're already gone wrong. this naturally leads me to look for all the potential problems and all the systemic barriers to
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success. because failure and problems can look lord from every idea to result. we identified essentially a set of traps that most government initiatives in the facing. we call these the seven deadly traps on the journey to success. and the heart part is that these traps don't announced themselves with trumpets blaring. the challenges are often hidden and it is a lot different than the private sector. there's a difference in trying to do big things in government. is like trying to get to the top of mount everest that it's helpful to have a map but just because you have a method doesn't mean you're going to get to the top. to what our book is really about is trying to explore the journey, trying to help people understand what they will see throughout the journey. >> don't worry, we're not going to go through all of these seven traps today. to know all about the traps you have to read our book.
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they will be available, sign copies at barnes & noble can't afterward that they make for very good holiday present for you and your loved ones. [laughter] >> so let's start by looking at the idea phase. we all know that not all ideas are created equally. the pogo copter wasn't a good idea. the pogo copter? never mind. the new coke, the electric ford was never really caught on, and with inflation, president ford asked us to wear in order to curb inflation, not a good idea. but ideas are the first days in the public-policy journey, if you cannot have a successful result if you begin with a flawed idea. so we try to look at how ideas get talked about. one of the things in washington, ideas get mixed up with ideology. questions about how your worldview and basically argument over whose intentions are the purest. >> now a few years ago a professor named drew weston
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studies how the brain works. he decided to do an experiment. he had an ardent republican and democrats watched the debate between george w. bush and john kerry. but there's a twist to a. what he did was he wired them up to an mri machine. i wish you could see what this looked like, or maybe you can. [laughter] >> that's available on ebay for $29.95. weston found that republicans thought that bush won. democrats thought that kerry won. no big surprise there, right? but what was surprising and very interesting was that the part of the brain that was working was literally not the analytical part, the thinking part it was the emotional part of the print of the analytical part of the brain was completely turned off during the debate. those viewing the debate were nothing at all. they were just pulling for the guy.
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that this phenomenon is called confirmation bias and its when we are not open to new ways of thinking. with our brain to shut off. >> we call it the tolstoy syndrome. the fact is that everybody has their own biases. i am from boston but i still think they won the 1986 world series. [laughter] stomach if you want is a confirmation, just ask john about the red sox hatred. >> that's the way it is. and everyone has those. what do we do? everyone has a. the key is to purposely expose your ideas and your way of thinking outside forces, the different ways of thinking. people who from different political parties, political philosophies or even having a consultant and engineer look at the same problem brings out more from the problem when you have those different perspectives. >> so we will look at a little bit of a case of how do you overcome the tolstoy syndrome. i grew up outside of lake michigan. were going to go --
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[laughter] spirit i grew up outside lake michigan and we've lived literally about a mile or two from the beach. we absolutely love going to the beach as kids, my family was crazy about the beach yet we never got to go to the beach throughout my entire childhood. the beach was covered with dead fish. that look like that. and so why would the states did? because of something called acid rain. do you all remember acid rain? it was one of the biggest environmental problems of the 1980s. killed lakes and rivers. it killed a lot of his wildlife within it a horrible problem. but nothing ever got done. why, because there was an impasse. a central unit on one side of the debate he had environmentalist. the environmentalists wanted basically to get rid of all the pollution. then you had on the other side of the debate kind of the coal producers and businesses and others who believe that
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regulation would kill their industries, and really hurt the economy. so these two sides didn't just disagree with each other. they hated each other. they didn't have just debates. i had screaming matches. i mean, it would be like a yankees fan and the boston red sox fans talking about. that kind of issue. so there's a logjam. seven bills were introduced in congress to do with acid raintree the 1980s. 70. not a single one made it out of the house. into this quagmire step two senators, senator tim wirth of the democrat from colorado, senator john heinz, a republican from pennsylvania. coal producing state. now what they did is they brought into this room a business and trust and environmentalists a new voice. and that was an economist. essentially. what they wanted to do was break
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people out of the kind of stranglehold that they had what they were looking at their point of view. >> you know what they say about economists, don't you? because our people are pretty good with numbers but lack personality to become engineers. [laughter] >> by giving the problem to an economist, what they did, they took the absolute out. their solution was created. they cap the amount of pollution at half the amount of which was what the environmentalists wanted but instead of a command-and-control approach, they would leave it up to the market to determine how to make those limits, not the u.s. department of environmental quality or california epa. but it was left up to energy producers to find any method they could to reach under the cap. it was workable. it was simple.
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it was acceptable to both sides that the result? 40% reduction in carbon dioxide emissions. >> sulfur dioxide emissions. 40 to one cost-benefit ratio. spirit overcoming confirmation bias of the tolstoy syndrome is all about opening up new avenues of exploration, opening up the debate and new voices and new ways of looking at things. now were going to talk about the design based. all right. so we will take you to california in the 1990s. california had a problem back in. somethings never change. and what they wanted to do is they wanted to cut their electricity costs by introducing competition and choice to the electricity market in a tizzy is usually done through either monopoly, public the novice or public regulated. so the idea was to use competition and choice.
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competition and choice work very well in trucking, and airline deregulation. so they tried to do this in california. the success or failure would all depend on the night at the use in the legislation. what they came up with was very complicated. it had the best teacher of electricity production and it had caps on prices, and it was very, very complex you know who figured it out? right. some very smart engineer types from a company called enron. and enron began with the system and it was a heat wave of inversion took place that you don't need to know the details, but imran had schemes like death star and ricocheted. cute names, you know. for ripping off the public that they would ship low-cost electricity out of california in the south, run it around the grid and sell it back in to the
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northern california and make huge profits for doing nothing. is electricity comes at the speed of light. the same electricity was leaving california and coming back in. what was the problem? the problem was that in the design, folks who are doing the designing of the legislation were concerned about getting something that would pass and make everybody happy. if they only listen to the industry insiders. they never took the steps or took the trouble of putting themselves in a position of people who are going to try to game the system and take advantage of it. so one of the things that we talk about uses the need to do that. because the result if you don't do it, look at california. massive blackouts. billions of dollars in cost. huge spikes in prices. businesses fleeing the state. led to the recall of governor reed davis. this phenomenon is one of the things we call the need for design for execution.
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>> california electricity design and a survey that we have done pointed to a really important problem. i love these big implementation date that you hear about an government actually aren't the result of implementation problems. many of the so-called visa design problems, when you ask, you ask who is to blame. who is to blame, right, for the problem. well you will find that politicians will say that it's the bureaucrats and the civil servant will say it is the politicians. but what we found was the real problem was that gap between the two. the gap between those who design and those who implement our policies. and figuring this out is really important thing that we have to figure out to be better if we're going to have better public policy. >> and one really scary part of the california story is that the legislation passed unanimously
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that there was not a single vote in the legislature against the california energy redesign. and yet it was a massive spectacular failure. so we talk about the next phase of the jury now which is stargate, which is the moment that a bill becomes a law. the moment of democratic commitment. for those of you who are not coming with the stargate, do we have the picture of the stargate? is a big structural rank. you step through the stargate. you go from one universe to another instantly. and getting a bill passed into law really does the same thing. it takes it out of the political universe into the bureaucratic universe. it taken out of the universe of discussion and maybe this entity that. once it becomes law it is set in stone and now it is up to the bureaucracy to really execute on it. the key moment in the democratic process, and as we have seen with the health care bill which is sort of just lingering right in front of the stargate now like getting beaten on and more
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fat and all the lobbyists are doing their best to make changes to it, it is a really special in the democratic process. nothing like it in the private sector. it's a big moment. >> it is a critical step but it is not the final step. it guarantees nothing because there is still a long way to go. nowhere is this more than in our fourth decade-long quest for energy independence. 1974, president ford signed the energy policy conservation act. the goal, energy independence. the result, by 1980 oh imports were higher than they had been in 1973. 1978, president carter signed a national energy act. the goal, to derive 20 percent of all the energy we used directly from the sun. result, wasn't quite 20%. missed it by that much. by 2000, the sun was giving us
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0.007 percent of our energy. 2005, president bush signed the energy policy act in 2005. the goal, energy and economic security. the result, the energy independence act of 2007. who had the goal of providing energy independence and so on ad infinitum. so getting to the stargate is a milestone. but you don't get the ticker tape parades until the results run in. and if you look at the map, if you don't do this right and to try to go straight to, you know, the price right here, you end up in the river of failure. as you can see that the river of it is not a place you want to be hanging out. >> so the next phase is implementation. that this phase right of your. and the biggest trap there is overconfidence. implementing initiatives are a lot tougher than you would think. the key to avoiding failure is
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to take failure seriously. that if you're like me, your blood literally boils when you're sitting in traffic. really frustrated. when i get out on anytime from 7:15 a.m. and 8:45 a.m. it is a parking lot that it doesn't move and i get so upset. i should go back home again. icon around. and so there's one proven way to reduce traffic congestion. during congestion that it is to charge people to use the roads during rush hour. stack a bunc untenanted. >> one of the challenges is getting into the political stargate. because nobody wants to politically sell their constituents guess what, you get to pay for something that's always been free. driving on the road. it's been a good idea, never taken place except in london a few years ago. they made it happen. >> london was one of those cities that it was really
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difficult to ever get anything like this through, but by the late 1980s the traffic congestion in london had gotten so bad that the traffic streets were slower than in the days when they have horse-drawn carriages in the victorian era. >> and in a convergence of events happened to change the political dynamics. the most important thing, the election of a new candidate for mayor. can livingstone. who had committed to the congestion charge during his campaign. red ken livingstone and renting it is making, is unapologetically a man of the left. he counts among his close friend fidel castro and hugo chavez. and he made great sport making fun of margaret thatcher when she was prime minister here k. told me a story when i was interviewing him about margaret thatcher used to set up and she would look across the river and ken was a member and he had a building. he put up a giant, giant anti-thatcher banter so every
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day when she would look out tranthirteen should have to look at this. [laughter] >> and he would just be reveling in it. but she got the last laugh because she would abolish the entire london city council. so she didn't have to look at the banter anymore. two-story. >> so he had about the most unlikely profile you could imagine to adopt a reform that was favored by free market economist like bilton friedman and folks like that. but embrace it he did because it conformed with his environmental views. he knew that cutting congestion that cutting traffic and pollution. so he decides uses market reform to achieve his environmental goals. >> the thing to understand about this is there were so many ways this could blow up. think about what happened when taxes putting some of the tollroad and some of the opposition to that. this initiative was a pop or controversial. this was going to affect everyone's life that they had to do it all at once that they couldn't do a street by street.
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and no city had ever done this before at this scale. ever anytime in the world that it could blow up in a million ways, if it blew up he could kiss the second term of his beloved city absolutely could buy. political adviser said ken, do not do this. don't go anywhere near it. he didn't listen to them. the media, the fleet street media, and he'd been battling them for years, well, they said would be an un- mitigated disaster. this quote from a rabbi at a synagogue said my synagogue was bombed during the war, but livingstone is going to do more damage than the germans. with the congestion charge that the livingstone didn't panic but we did it was he took failure seriously and because he took it seriously he took a number of steps to make sure that everything would go right during the implementation. >> what he did was kind of the equivalent of going up a mountain with a full mountain
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climbing back, oxygen, three days of supplies and everything else. they tested, plan, they tested again. they were fanatical about mapping out and mitigating every possible risk that could occur. they decided to do some more gaming. two weeks before the launch, transport from one got everybody together and they would do a dry run of the first day of the launch. they were going to get calls that would come in during the day to test them when things went wrong. their day of war games started at 7 a.m. the team had just sat down for coffee and suddenly, a call comes in. there's a major traffic accident that's causing a huge bottlene bottleneck. the team is ready for it. they are electronically flagon sent to an alternative route. they will not be charged. then at 8 a.m. another call comes in. communications between the cameras in the center commuter hub have broken down. the team determines there is a
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break in and outside fixing it would take a few hours but they've got a backup computer system that they can go to and a majority of drivers should be detected. smack some has jumped up the tower bridge. smack it went on like that. that was a real call. all day long this happened again and again. but they were ready for everything that was thrown at them. the weekend before the fonts they had like a 26-mile race around the charging zone. she walked with a notebook and pen. she walked off the 26 miles all the way around the charging zone to make sure there was no construction, no surprises, anything going on in that they were not aware of. >> so 5:30 a.m. the day of the launch. and ken livingston walks out from his flat, and all of a sudden you hear click click click click. lights are all on and pick the media has not. they are all around him taking pictures, hoping to catch a bigger budget picture of the
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mayor on the day they all believe will be his waterloo. >> by the day did not end up in disaster, but in dry up. everything went completely smoothly. not a single glitch. the streets were completely clear. >> and here are the headlines. remember the headlines from before? let's look at the headlines from the day after the launch. so why did this story has a happy ending? because redken knew it would have a tragic any. nothing has ever done in public life turned out better than he had thought ahead of time until now. and the mayor has been having a fight with the newspapers for decades, and he says that those headlines the next day were one of the very best days of his entire life. >> so that bring us to the very last stage of the journey, and
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it means we are near the end of this talk. we will be happy to take questions afterwards and hope to talk to a lot of folks. but the last phase of the journey is really getting results and the people who work within government to get those results. and i think that a lot of times our anger and frustration that we have with government today, a lot of which is justified, spills over to anger and frustration for those who work within government. we need to remember that people working within government are teachers and firefighters and nurses and managers, bureaucrats. most of whom are trying to do a good job. we need to separate our frustration at government with our frustration of those who are working. because those working within government is like rolling a big rock up a steep hill. sometimes it can get very discouraging. so i will go on until you a story about a little inspiration a guy named dwight. . .
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lyndon johnson turned to the 1964 after the alaska earthquake to hop lead the recovery effort and remember that was the biggest earthquake in north america's history. now, he was also the guy that lbj turn to to help launch the war on poverty and into permanent housing. on he was in charge of the new
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federalism for president nixon. and president carter he was the one who brought the civil service reform. ronald reagan, reagan came in and put dwight in charge of shutting down an agency. now for a civil servant shutting out an agency is about the most unpleasant thing you can never asked him to do but he said time to do this because i want to prove that a civil servant will do what the president asks of him. the white shut down the first federal agency in 50 years since the depression. now he was even kidnapped by colombian drug lords while leading the war on drugs with the state department and soon after a white retired from that. [laughter] >> i think i would retire to after being kidnapped by colombian drug lords. the story of survivors that in a
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democracy we are all participants in shaping our future. one story about him that i love it is early in the kennedy administration he was pulled over from the eisenhower administration and he was arguing for a nuclear test ban treaty and he got in an argument with arthur/anger. the noted harvard historian close personal advisor to kennedy and here is dwight, a respectful bureaucrat going at arthur/enter arguing we need to have this test ban treaty, this is the way to go and he is going at it thinking maybe this is and that's my to be arguing with the kennedy -- like this when he notices in the back of the room is watching bobby kennedy. he sat there and said i thought my career was over, but the courage to show that they paid out because it turned out that arthur/insure didn't attend any more nuclear test ban treaties and i went with his suggestion and president kennedy signed the nuclear test ban treaty with russia that was a major
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milestone in the cold war toward peaceful resolution of the cold war. so what is the point? the point is in a democracy we all play a role in making a difference in our nation today and faces serious challenges of president really. there's really only one way out of the mess we're in and adds to choose wisely what we ask government to do and then to execute on the joyces effectively. our book is about trying to get done to achieve what we set out to do. so we hope that that book, the hope that our book weaves you all better rick went to work together, help us create a better future. thank you very much. [applause] i think we have a few minutes for questions so i'll be delighted to hear from folks. >> any questions -- comments on the robert marquest? >> moreover norquist there and i don't, do?
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>> you now. >> for the folks who don't know grover, who advocates very limited government and wants to make government strength. i would say that our book is about achieving come it's separate from the debate to a certain extent over whatever men should do. that's a very important debate and central to our democracy but our book is more about actually doing what she set out to accomplish that can be used both to introducing things that grover might like school choice or things like that, stronger border control as well as things that post from the other side of the aisle and i like. and so in the book we don't ask people to put aside their ideology necessarily. but we do ask people to do is look at the facts and look at the evidence and be willing to look at the press from the other side and to bring the other side in in many cases. when you look at these ping
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initiatives it's hard to find really successful initiatives in america that were essentially very partisan kind of initiatives. most of these a big iconic initiatives had a lot of support from other sides and there was a lot of interesting give-and-take intentions that led to rethink a more attractive over all public policy initiative. >> what did you learn after studying for a king katrina and the government's reaction to it? were there any themes usada? >> there were two things. first is that the biggest failure associated with katrina was not necessarily the response but a hurricane had headed to new orleans in 1965 it named betsy. they have put billions of dollars into a civil court of engineers to create a levee system that work. in to protect it from another hurricane, 40 years later katrina head and the levee system was not up to snuff.
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the corps of engineers put up a 6,000 page report that is a clearing house their failure so the first failure abroad was they were there to protect new orleans from the hurricanes. the second learning was that one of the challenges in a democracy unlike a business is that governors don't report to the president and mirrors to report to the governor. we have separation of powers at different levels and one of the things that happen during katrina that was very challenging was the different levels of government didn't coordinate their efforts well in the recovery. >> and that is one of our big themes of our book because katrina was very easy after words just to play the blame game. we either blamed fema or we blamed the mayor, the governor and was all that. >> would you plant was depending on what political persuasion you are. >> essentially though the real problem was certainly there are human failings but the problem was the system and in this case
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the system of constitutional checks and balances in the system and perform like a system. whenever you see lots of different failures i think that system of things occur again and again and they're usually not result of people failures but system problems and that is what we found in our book that we need to look back -- we've been having problems and execution now for decades. they did an all-star in the last eight years or anything like that and we need to fix those problems in order to do better moving forward. >> one of the biggest government boondoggles i think in texas was the super collider -- was that a taste of a underestimating of the cost. what you think of that going belly up? >> i wouldn't say that we spent a lot of time examining that in the end. i don't think we can answer that. very well. >> on you're subject of
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achieving energy independence, back in the thirties in the fdr administration and the federal government built these massive hydroelectric projects which now provide about 7% of our electric power. when do you think of it the possibility of today given that there's such a strong growing interest in the wind and solar of the federal government doing something like that for wind and solar, especially for solar on federal land that the government already owns in the southwest? >> [laughter] you are the energy die, bill. >> you know, i think what we did in our book was we looked at a lot of these things from the process perspective, without coming down strongly on one policy proposal or another. but certainly energy is another example of one of what we have done time and time again. have these energy bills that ended up satisfying a lot of the
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different energy interests and kind of put money around to a variety of them yet in the end they didn't work together as a whole and i think we need to spend a lot more time now really understanding what is going to work or not before we put huge amounts of money into these because i think there are some interesting things going on. alice in silicon valley a few weeks ago and most of the intellectual energy and a lot of the technology is around clean energy and so forth and google is doing some really fascinating things in the google foundation so this is one of those things we talk of a book about the x project. the ex prize is essentially where other founders have said we're going to pay money for results and one of the things in the next prize is a car that goes 100 miles per gallon. essentially i think it's a payment of a million or $10 million for whoever is able to get a car that does that. we think more of that sort of
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thing where we're actually pay for results of putting the price is out there because the men would you do is get lots of fun to benares and people coming together to come up with a solution. those are outside of the political realm very often. >> at seymor? >> would use as our last large successful government project? >> you know, i would say that the 1996 welfare reform was a major public policy success. there have been smaller ones but i was a 1996 welfare reform potentially and there's a lot of lessons learned from that when you look at health care reform and other areas because what happened then was again you have republican congress, democratic president, there was some tension there which probably led to a better bill. but also by the time they pass that federal bill we had experiments in wisconsin and states like texas and wyoming and others over the course of a decade or more so we have a good idea of what worked and then
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didn't work so they were taking a shot in the dark. when we into the office of the welfare reform legislation they send all we did was by then riding the waves of what was already working throughout america and as a wonderful thing about our country, we have with the laboratories of democracy or we can try out some of these forms before hand. a lot of the successful ones involving behavioral changes it's hard to impose that all of the federal level in a one-size-fits-all solution. something that works in texas won't necessarily work in new york so it's an important lesson in welfare reform. >> is there a certain class or category of challenge, at a societal level that government fundamentally is not good at? >> i would argue that the activities were government tries to shape human behavior. a lot of the the things where it tries to all her people's
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behavior in joyce's that they make. it's really hard to do. it's not impossible but it's the next level of challenge. i talked to the superintendent of schools than in louisiana. louisianans has long had challenges in public education and he took over after katrina so you double the challenges for new orleans and a lot of those districts and i asked, what you think it's harder, of fixing the schools in louisiana were putting a man on the moon and he said no question, putting a man on the moon is easier. were just fighting gravity there. you have a culture of despair in those who work in the public-school and the superintendents supposedly knew what he was talking about as a former senior official at nasa. so i felt good asking him a question and he said dealing with the human elements of things can make its an extra level of complexity and challenge to a public undertaking. >> a member of our staff were your pushing the boulder up the hill, in this case you are both
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pushing it up and having to carry a lot of people with you at the same time and whose behavior is may actually be pulling back the other way again. so the hill is very steep in those respects. we have had some successes but very difficult to do. >> in one of your previous works, revolution of the routes, one of the models or templates that to look at is outsourcing. and how you plan and tried to deal with that. in light of the recent contract that was i think indiana decided to cancel its contract with ibm, i think it involved in killing welfare or certain benefits to a struggling in hungary, what do you see in your new book that might give rise to better use of outsourcing or with outsourcing not in an area that can actually work with? >> i think anytime you are doing something significant with in-house people in government
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are trying to outsource three contract you have bill years in the indian a contract with problematic but one of the reasons they contract out indiana is existing system was extremely problematic in dinow was collecting and a fraud. they were hoping a technological shift in the changing management in terms of what they're doing with help things out. it hasn't worked out but i think the idea of trying to embrace competition smartly still continues to be a useful tool. the governing by network and area were bill has expertise coordinating with non-profit and other extras all agencies to try to achieve public good is always a good thing to do. there's no magic bullet, is not as though it's always going to work for a voice mail so i think any technical approach needs to be approached with caution. >> so the one big lesson from all that i see again is a lot of those who favor a smaller government, one of our arguments this is not enough to just have
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that idea into a kind of a market oriented idea over the wall for the people in the bureaucracy to implement in the execution and implementation is just as important if not more important things that are actually involving try to make government smaller than it is for making government bigger but those are as complex to do as with california and electricity deregulation and the oftentimes essentially the barriers and opposition is even greater. and so people on both sides of the i only to really get a lot more serious about this notion of actually executing it. >> they are waiting it out, they want us to come and legislate again. [laughter] let me give one announcement first. we are having a reception after and were all invited, i got in fights here but it's all going to be at west 14th street bridges just a block away and we will have -- this is your reward
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for sitting and listening to us on a beautiful sunday day. it will start right after we do our book signing in the book and in a few minutes. 208 west 14th street, just up from the book where. >> will also do a book signings, we want to thank kevin bacon from the lbj school protected booker for hosting this and thank you all for being here today [applause]
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>> michael jason over saint, is there a media bias against barack obama? >> i would say that it is not borne necessarily from the media but i think there is a perception out there that the information stored somewhere and we're led to believe that the media is generating it so i don't know if it is the media per say but i think that my book says that because that's the wrong place we can get our information from there must be so i think the answer is, yes,, i believe that there is a media still on obama. for the 71 days my book covers from the democratic convention
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to election day ago there was a misinformation out there that was completely unacceptable from him being a domestic terrorist to i don't want to get into quoting individual people from various networks but there was just information allowed to float out there and i absolutely think it did damage. and despite that you want and have not the book have been better but i think history will show that there were a lot of things said during the 71 days that a problem, had to overcome. >> what is an example? >> one of the examples is i am a big fan of chris matthews. unlike chris matthews. one particular day i was watching them come in was a story about an immigrant and i think the person on the panel didn't know he was born in on why they said this is a story about an immigrant and he's not an immigrant.
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the casual viewer makes an information and say they will not vote for him because he's an immigrant and that the sleazy journalism. i was a broadcast journalism major and i think the question i think the idea of the concept of iran's floating out there is not responsible. granted most of us knew he wasn't but i don't think it was a story about an immigrant. hawaii is a state, were restored and then come from? if i'm correct his father was an immigrant, he was an exchange student. so it is the words that are used that are informed. it is not in your face like fox news, obviously that is an assault. that is an in-your-face barack obama is this, this in the. is the casual subtle stuff like may be showing republican added that shows obama with a photo of children behind him about a sexual education concept that went on during the election and
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then cnn iran that actual and a republican party had a right to put out. i don't believe cnn or any other networks -- it's not responsible journalism. >> that advertisement to may showed obama looking like a pedophile. he is standing there like this, there are children behind him and it is barack obama wants to teach children about sex education. well, fine. show that. if you are the republican party but cnn, and as nbc, fox, no, don't show that and i think that was very damaging. >> you self published this book. what was that process line? >> i had to because the idea came to me from watching al gore debate george bush actually previously and i watched the debate and would think george bush really didn't do well, he really won that debate. al gore was very purpose oriole and at the end of the debate away for the posted coverage and
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sure enough they would say that george bush was really funny, he did a good job on that. i am looking going, did they just watched the same thing. the media is telling people. i get calls from people saying it looks like george bush won that debate and they're getting that information from the media so i got the idea then but then once i saw obama at the convention give a speech packin 04i thought, wow, if he got a chance to run i would be interested to see how the media tries to sparse what he says in take one man in the book just road itself apparent from the first day of the democratic convention and the first chapter called these people because every network i will check i kept hearing that the income of these people -- to of these people? i said it would be interesting to see it next week the republican convention they say who are these people, john mccain but i never heard that these people appear and i am talking about how i heard it from judy woodruff say that and i love judy but i heard her use
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the words of these people. for african-americans i myself am biracial, my father is black and my mother is white, and i consider myself a black man, but to hear that word these people, i don't want to hear that. so it definitely was a passion a project of mine. so when i woke up the morning of the democratic convention i said this is the first day and will write and write for 71 straight days and i can tell myself out because i had a right for 71 straight days in each chapter in the book is a day. they have a different name and a lot of people remember the lipstick on the pig is the theme for the day. so it is a very fascinating interesting project. i haven't self published i don't think i could it got out in time, most wanted me to wait for a least three months. >> explain in the self publishing process for us. >> for me i would say it is an easy process at first because i went through what book search
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which was very good in the allow me to really be creative with and then i would send out a hand on my e-mail via e-mail etc. and they would get back with information. that process went back and forth after i finish the book on election day. then after that i was able to go through an editing process with my editor pour another month so all in all i was able to get the book out by late january early february online at slowly there has been this growing momentum for the book and people are very interested in the book. is in some local bookstores in l.a. but the more i hear people of the festival here i realize this is a hot-button issue, people really remember the specific case like i remember that, i remember that. so it's a history book and it's fantastic because years from now people will look back and say, you know what, maybe i shouldn't have said that. maybe tom brokaw should have
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said that. no one has ever taken on the media. i'm not a member of the media and if i work for cnn i doubt i would have written about them but i don't work for anyone so i wrote about anyone from the l.a. times writing an article with the headline that said stars want to see sarah palin, of course i open of the l.a. times and i said who went to see her? there was john boyd i think in than two others that i did not. three people in an l.a. times articleç and the headline is stars walk to see sarah palin? when these three people a flock? that is misleading the headline itself. that's the kind of stuff i read about, cox news is in a hard turn. out of love to go on the show and talk to them but that was my sell publishing. if there's anyone out there who wants to self published be ready to do a lot of work because i've been a lot of respect for
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publishers. the amount of editing. you can find any mistakes in my book please let me know, but there are probably six or seven ending processes. i would encourage anybody out there who has an idea their passion and out don't wait. >> help us out, you have a booth here at the l.a. times festival. you have to put this together, it cost. how much have you put into it? >> all in all it is probably been a couple, two or 3,000 to get to this point. in -- i would say if i had to do over again how did it the exact same way. i prefer to sell published this. in the book are referred to myself as a political activist. in south publishing is part of the political activist process. so i would encourage people out there if you are passionate you have to go for yourself and not wait. >> was a political activist in your new? >> someone that stays involved in current events come in daily
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events and is poised to us about it. i have 20 people coming into my boots and i talk loud enough for the people around me to hear to bring the man and i can disagree. there's a book out called the slobbering love affair. i read the book, is a good book, bernard goldman about two or three chapters of my book, it's about that book. my book is this thing so you have to tell the whole story. i talk about how the media love obama but the next day now so you have to tell both sides. bernard goldberg did a great job there is a much more to tao then just a part or the media loves him. the american people love him. i don't know so much the media loved him. i think barack obama would argue that there are certain members of the media that love him i don't agree with that. >> what you do when you are not publishing books? >> i write screenplays. i live in los angeles. my girlfriend, kathy, is someone who is very supportive of everything i want to do and she has been someone who has really
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pushed for it. she was a big part of a part of the self publishing publishes is having some support you in terms of emotionally and push you in keeping going. that's a very important thing so between my writing screenplays and onto a buck and hopefully doing a lot of talking on talk shows about my book, i'm very passionate about this book. that is my life. and i love it. >> if someone is interested in purchasing your book, work in the final? >> right now at and actually people are getting it there and doing well. the local bookstore in l.a. that i love, diesel, a bookstore, is a great store. is probably going to be in book soup. those are local bookstores, nationally i haven't been able to get anything but that is going to change i'm hoping. >> michael jason overstreet, "71 days: the media assault on obama". itself published book. >> in his book "scroogenomics" a
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business professor joel waldfogel says that americans waste billions of dollars on presence during the holiday season. he says that the worth attached to the kids by those who receive them is less than what the gift cost. the university of pennsylvania bookstore in philadelphia is the host of this event, it's about an hour. >> thank you very much, it's a delight to be here as an oasis to be in philadelphia. the stock about my book, scrooegenomics: why you shouldn't buy presents for the holidays". you might wonder why i am criticizing christmas. after all what santa claus ever do to me? i have nothing against santa claus or maybe a little. but my view is that the way we celebrate christmas and gift-giving holidays with an orgy of value destruction. in fact, i'm going to try to make the case this evening that around the world we waste, not spend, but waste $25 billion per year. it goes up in smoke,


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