Transcripts For CSPAN2 Books About The U.S. Economy 20240713

Archives the focus on the 2008 economic recession, trade and finance. All of the programs that youre about to see can be viewed in their entirety by visiting our website, booktv. Org and you can do for the search function at the top of the page. First and february of 2015, the American Enterprise Institute Peter wallace and appears on our Author Interview program afterwards. He argued that government policy caused the 2008 financial crisis. Hidden in plain sight pretty literally caused the world financial crisis and why it could happen again printed you remember the financial crisis. It was investigating the causes and oh seven and oh eight pretty and you said that not only in the democrats on the committee but also from the republicans appointees, what did you see that they did not. Ive been looking at the housing system in the United States printed donna frank ansari, fannie mae and freddie mac. For quite a while before i got in the commission. So i had a lot of background of what is actually been happening in the housing sector. So i was looking for the commission to look into what happened with fannie mae and freddie mac and what roles they might have played in the housing crisis. And ultimately the financial crisis and i found that the commission was not interested in that and they were not look at it. To the degree that i tried to interest them. I was just told that i was given ulcers of signals that that was something they were not going to do. So i decided that i would descend. My differences with the other pub republicans came from the fact that my view was that our responsibility on the commission was to make sure that the market people understood what happened in the crisis. That i was out side i thought the partisan differences between the republicans and the democrats. Im afraid the republicans felt that they just would not agree with anything that the democrats said they did not want to indict the Bush Administration. It. Peter some of them had actually been in the Bush Administration. I felt that i had to speak with an independent voice and that is why i did it. Host you wrote a lengthy one for that commission in the late stages of that inquiry that of course grow into your book and have a lot of unconventional views in this book which we will get into. But for people who are not understanding that this really focuses on the housing and mortgage organs in the United States and the governments role in it. When and why did the u. S. Government is so heavily involved in the Housing Market. Peter actually began in the new deal back in the 30s when the government attempted to assist banks in making loans by guaranteeing those loans and ensuring those loans and if fannie mae was established in late 1938 also part of the new deal. And this was to provide the quantity to banks. They could then sell the mortgage to make fanni fannie md then make more mortgages so is all very helpful in inducing more home sales in the United States. That was be the beginning. The government really got much more involved in the 50s when they actually started adjusting the fha fees the federal Housing Administration standards in order to improve housing in the United States or increase the amount of housing in the United States and and a desire to help the economy. That is when we sort of got off of the rails because once the government started using housing as a way to improve the economy and of course to improve the American Peoples view of their government and how successful it is, then it became a political issue instead of what it had been before which was simply a question of making sure that the market functioned well. Sudeep and this stretches across the democratic and republican sides and interest of housing having activity where do you see the more recent turning point in this development. Peter i think the key turning point here, at least from my perspective was 1992. When congress adopted something called the Affordable Housing goals, they were under a great deal of pressure the time to make sure that the borrowers who are the low medium income or low income borrowers edit credit for mortgages. Many activists in support of those elites in those communities pressured congress to do something that would provide much more credit to those groups. Congress then adopted the Affordable Housing goals which required fannie mae and freddie mac, these goals were only after them. And they required them when they bought mortgages from banks and other originators, to make sure that of the mortgages the bottom 30 percent had been made to people that are below the median income. And the authority had require a certain dakota was given to the department of housing and urban development at that point. In overtime, between 1992 and 2008, they gradually ratcheted of these requirements and added new ones. And so that for the example by the year 2000, 50 percent of all mortgages the fannie and freddie bought in any year had to be make and relive the median income, and by 2008, it was 56 percent that wouldve been in the Bush Administration. So was not a partisan thing, it was done under clinton first but then under bush and the whole idea was by hud. Sudeep it was designed to encourage americans to save money and to develop to build equity in their homes. Obviously part of this is to ensure the lower income and middle income people can have a home and have an asset of this kind. Is there something wrong with this idea in general the people should be able to buy home and find a home in america. Peter there are lots of good reason for why homeownership should be encouraged. But the problem with this system is that of course that freddie mac and fannie mae to induce and lure the number of people into buying homes to could not actually sustain the mortgages over time. And by the year 2008, and this is really important. By the year 2008, more than half of all mortgages in the United States what you would call, subprime mortgages. 31 million subprime a rather weak mortgages by 2008 and of those, 76 percent for the books of Government Agencies which to me, shows clearly that is the government who created the demand for these mortgages. Now what happens when underwriting standards decline is not simply that the people who have bought homes are unable to carry those moments, what also happens is when those homes fail, the mortgages fail, they affect all of the people around them and to all of the neighborhoods of the values of homes in all of this neighborhoods go down. So with the American People should understand after the financial crisis in which i dont think they really understand today, is that they are when underwriting standards are reduced so that other people who cannot necessarily sustained, do not have the proper credit, the relationships dont have the down payments are enabled to keep their mortgages. See what we have a couple of separate issues that intersected in this. And one was just the existence of freddie mac and fannie mae. And the other a congressional and political push to encourage mom more Home Ownership and we need these two combined, and of course fannie and freddie were there as the vehicle through all of this. What happened then in fannie and freddies existence and its relationship with lawmakers can lead to where we got into the crisis. Peter is really quite interesting because the person who ultimately became the president of fannie mae, jim johnson was his name, he realized he was very political operative before that. But he realized that fannie mae was under stress because it had a very strong government franchise that it would have to sustain over time and i think he recognized that if fannie mae and freddie mac of course, but if a man freddie mac actually became kind of supporters of low income housing, that would give them a strong backing in congress that would keep things in their superior franchise position when they were getting all kinds of support from the government and quite a lot of money both of those institutions. Sudeep and even though they were essentially started by the government, the became like private entities. Peter they were privatized in 1968. And 1970, they were given authority to go from where they are originally were which was only buying governmentbacked mortgages into the conventional no market where they can begin to buy regular mortgages. That made them very important profitmaking institution. Sudeep and they became publicly traded companies. Peter thats right, there on the largest financial institutes in the United States that time all of the time until they became solvent in 2008. But the political relationships became extremely important. Because as they grew and got bigger and bigger, the dangers were always that somehow the government would move against them would regulate them more strictly and there was a great deal of push in the Bush Administration for much more regulation of fannie mae and freddie mac. And from their point of view especially fannie, which was much more illegal. From their point of view to avoid more regulation, they had to rely the democrats in congress. The democrats in congress were very focused on making sure that fannie and freddie supported low income housing. And so even though they would beginning in the 2000 is to find that they were buying mortgages it would ultimately cause in separate tremendous losses, they could not go to congress or build to hud and say, we will not comply with these quotas anymore. Because it is driving us out of business. We are going to fail and it couldnt do that because if they did that, the democrats in congress would no longer support them. And the effort in the Bush Administration to place them under much greater regulation. This was in 2003 and 2004 and 2005. They would become successful in the would not have been so profitable. So they were caught in this vice, on the one hand having to keep the democrats on their side and on the other hand, having to comply with the informal housing requirements that would gradually going to drive them to insolvency. Is the coronavirus continues to affect the economy, we are taking a look at author programs about trade and finance in the 2008 recession. Next, henry paulson, former treasury secretary George W Bush demonstration, spoke with Warren Buffett in 2015 about the actions taken in response to the 2008 economic collapse. I have read various economist eloquent ones, David Ricardo and all that what he really had never heard of the more eloquent statement the distinctly sums up the economic world than george bush made in september of 2008 when he said in the memorable words, if money doesnt listen up, the sucker can go down. [laughter]. It was like the gettysburg address, sure but to the point. [laughter]. Is read the book, i gained an appreciation for becky understood what was going on and he understood what needed to be done. Was there ever a time when you went to him with proposals. Know because he was not, will he was always surprised when i was surprised. And i was that more than once. [laughter]. And i would say that i spoke to him and one of the things that i learned from my previous career is no matter what you negotiate, you have all kinds of relationship understandings but if i didnt have a relationship with the president , it would be my fault. And so, the year before the crisis to get to know the president , to work with him. And remember, he went to business school, he understands good fundamental understanding of markets and Economic Issues and he cared about them. So the conflict he dealt with was the same conflict i dealt with or anybody who watch the markets. He believed in the United States of america, that we should bear the responsibility and that so i didnt need to go to washington to do that and he certainly did not. But from day one, he understood that the Financial Markets were about our economy and jobs. So repeatedly, and come to him that i would not have to sell him. Halfway through the conversation, he would bug me up as a listening, well get through this. Were not always going to look good, things, this will be politically unpopular. But were not going to a economy go down. Were going to do whatever we need to do to save the economy as a jobs. And that was his way to view and he was talking about my mother and he would almost tell me like my mother. He would tell me you need to work out to get more sleep. [laughter]. Will and. It seems to me that going up to the election he thought barack obama, was more interested in what was going on in the financial crisis than john mccain. Its an affair assessment. It is no doubt that i had the conversations i had with john mccain which was as frequent as they were with barack obama, and as they were difficult and he certainly gave me more anxiety about all of that and now it was president obama was engaged and i felt comfortable that he was going to support what we would need to do. Given when quite grateful to john mccain because in amarillo respect for him because an election just six weeks away when we were at congress, there is no way in my judgment got the tarp with john mccain and come out against it. If he had played the populist card, we would have been left defenseless. This was a look back, im increasingly grateful of the way he handled himself during this. But during the time, unless a few hours of sleep. You describe the one place in there, that this is a threat and read what you said. [laughter]. Henry that was when he came back. There was quite insane. He interrupted his campaign to come back. And i remember i was testifying at the time. Michelle davis he was through with me today, sitting behind him. And he handed me a note. And she said to me, theres something i want to ask you. On mccain coming back just simply say that i welcome involvement of everyone in this and someone we can think she was afraid of what might come out of my mouth rea sh talke to me dow. But as it turns out, again it was a couple of days of anxiety late again john mccain wavered back and spoke with House Republicans and rallying them and it was silly. He did his part and even after we got the tarp. He did not jump on to criticize some of the things that we had done. Which again, we were very unpopular. The American People blame for the fact that on one level of the american, none of us like bailouts so, and at some time after the election and after we have done several things, and i think this may be slightly exaggerated but i recall that Something Like 3 percent of the American People opposed the bailouts. And 60 percent opposed torture. [laughter]. And yet 70 percent were worried that we would go into something much worse than a bad recession. They didnt anticipate how some things would be in the economy but the message you are giving them your expected things to step in, my room . Id ask you what you expected because i did not expect them on this, i knew when we went out, theres a scene in the book where we talk about chris cox and i went up to cover 18 from we tell them we were going to need these. The difficulty we had at that time is it was better than i could growth the Financial System were freezing up. I knew with certainty that business was going to turn down, you had companies to raise their shortterm funding, they are going to say i may not be able to have all the funding in the next 30 days so what does the company do . We start cutting back but congress hasnt seen this so they havent seen it yet in the district so i knew with certainty is going to get worse. Im not sure i knew theres going to be 10 unemployment but i knew it was going to be bad. So then, i knew if they didnt do something and it collapsed, they wouldnt be able to fund themselves or pay for the inventories and pay suppliers and let employees go it would ripple through the economy but then when the economy did turned down, we have this terrible situation of congress because congress sought though they American People would see it and we went up and said give us these authorities and if you dont, we are going to be in deep due to. Its going to be bad. They give us authority and its very hard to give credit for presenting preventive disaster that never saw or could seek. Weve opened our archives to look at all the programs about the economy. In 2015, former Federal Reserve chair then sat down with democratic senator brown of ohio to talk about some of the actions Federal Reserve took during the Obama Administration in response to the 2008 financial crisis. Used to sit on the front porch in charlotte with my grandmother and she would tell the stories about her youth in the 30s when she was living in connecticut and the stories she told me was that she was very proud because her children were able to go to school and where new shoes every year a lot of the kids and tom didnt get new shoes in some cases didnt even have shoes and she said the shoe factories in the connecticut town had shut down the depression and their fathers lost their jobs and pepper, not enough money to provide shoes for the kids. I was six or seven years old but i could see something wrong with us. All they had to do was open up a factory, produced shoes and the kids would have shoes. She said no, it didnt work that way. The real puzzle of Great Depression shes at the packers were still there and workers work but for some reason, its not happening. The system isnt working. As a real puzzle to me. I want to pretend i was inspired from six to study the Great Depression, but when i came back to it in graduate school, i found it to be what i would later call the holy grail of economics, the most important puzzle the congress has. I spent a lot of time researching and thinking about it. My guess it will growth down in economic history. Lets go to 2007. You had been in the chair for a while. I came to the senate january 2007, ours put on a committee called the sleepy banking committee, they finished with, they didnt have a lot of that on the agenda. My wife and i live in zip code 44105 it wont mean much to you but what it means is that in the first half of 2007, there were foreclosures, the zip code i living it seemed to me in 2007 and eight, until at least the spring of eight there wasnt all that much attention from the fed, the housing issues because the housing prices was more causing a lot of reasons, including theres predatory lending and synergism predatory lending and obviously what was happening with manufacturing and of the client is based on manufacturing right at the fed missed this in some sense . Why was the government overall cognizant of the places all over the country, in fact ohio was about the middle of this, more foreclosures every year and the year before all over the state, why did want not see that . I spoke about foreclosures a number of times before the crisis. My concern was that some foreclosures probably unavoidable but in some cases, it seemed like there just wasnt enough effort being made to modify mortgages and find a solution where people would stay in their homes and i did speak about that, we are very concerned about the Housing Market as early as 2006 and i talked with about foreclosures and the general problems in her testimony speeches as well so without about partly from our Economic Perspective the risk to the economy overall but we did worry about the effects on communities, for example, empty houses affecting tax revenues in the feds did Pay Attention to argue, i see that and i heard those statements but i also say that the Consumer Protections stop predatory lending in the response bodies and authority the fed had, particularly prior to you, im not casting aspersions on any fed but i think you are more in tune to some present assessors. I just dont know, i began to hear from people in cleveland and other cities that had Consumer Protections on the predatory lending and the regulator was particularly there for us. You use the word predatory, its critical. I talked about and linked in my book. The time, i had to go back even before the time i was there, i extended back to the 90s in a lot of these debates. One of the big distinctions was made in washington and are not blaming in particular one of them was between predatory lending which was illegal, except people in trouble almost immediately on right hand and on the other hand, legitimate subprime lending was counted as a good element because it allowed people of modest means, minorities and the like to characterize redlining. Participate in the American Dream and quite honestly, one of the reasons there wasnt more aggressive effort to have subprime lending was the fear of cutting off and again, strong distinction between predatory funding which was already illegal, is a question of enforcement. Versus subprime lending which is a different kind of thing. May take it from a different angle. Right, i also dont think he said, speaking about how good the staff was, i would agree with that, i dont think he said staff were captured by the third regulated innocence that they perceived to be in their own career or financial interest to go easy. They were, however to open to arguments that it should not be excessive in a competitive market worse took some extent for lending practices. I work in an institution where lobbyists are putting on the present with a different environment to regulators but regulars here from the same of people, you may remember the chief lobbyist for the Financial Service at that time from the car on the regulators and im in a place in the senate where lobbyists, you regularly over time in part because you and i and our staff and regulators back when you are a non civilian tend to hear from the most elite in society over and over and hear the same song, its easy to get socialized, linking you to say, when the war and preserve the union, i have to go out and get my Public Opinion back. That doesnt strike me as a place where people get the opinion from a pope francis said smoke like the flock, the fed doesnt strike me that way. It just seems to me less likely to be aware of the pain of how many regulators really know people who have their homes foreclosed on in our likely to see that and understand that. One feature of the Federal Reserve system from 12 reserve banks around the country and one in cleveland and the president of the cleveland thank reports trust about whats happening cleveland, your concern i think its not wrong at all but i think what was happening well before the crisis was that there was a philosophical perspective shared not just by the fed by others that the Financial System was less regulated so more dynamic. But the view was that if banks had capital thought you didnt have to watch that to carefully. Relations shouldnt be too burdensome. A look at the u. S. Economy continues with author aaron grant who spoke at the arctic president ial library in 2019 about his book records. It takes a critical look at the people and businesses that profited up the 2008 Housing Market crash. 8 million American Homes were foreclosed on during the Great Recession but then it all disappeared. Someone ended up with that. The wealth gap in America Today is bigger than its been in 100 years between thought top one tenth of 1 and the other 90 and the homeownership break is at its lowest level in 50 years and its important that people understand that it didnt just go down into thousand eight and 2009, it continued to go down into thousand 11, 12, 13, 14, 15 until it bottomed out in 2016. The book takes a few years to put together and are sitting there in 2016, watching donald trump with this populous insurgent campaign for president at a time when the economy was supposedly doing really well. Low unemployment, High Industrial average, many orders of growth, wall street is doing great but america is angry and Bernie Sanders is doing incredibly well with the same populous message. It seemed like housing would be a fruitful way to focus so i just basically started with this question, 8 million americans lost their homes, we lost our wealth, where did oracle . Who took it . Homeowners. One of the things i think about when i think about homeownership is that typical American Family has a lot of their equity in the home so when you lose a home, when your family cruises a home, you cant lift your child or grandchild, thats a significant depletion event so its not only 8 million homes but its going to have an intergenerational impact. Homeownership is the only way people america can save money. Either we follow the Dow Jones Industrial average on the 24 of americans own stock. The average american has only 4000 in the bank. We are a paycheck to paycheck society where most of our money close to things like transportation, Health Insurance premiums, closing, food all that disappears the moment we spend. Housing is our biggest expense. Either that is going to go a portion of it back into her home in the form equity that we can pass on to our children or enjoy healthy retirement or its going to go to our landlord. They are going to enjoy all that. So when you say homeownership is at its lowest rate in 50 years, we are talking about dispossession of peoples ability to live the American Dream. According to the census, the average homeowner in this country is worth 100 times more than the average renter yet 200,000 2000. This is not because homeowners make 100 times as much money. I make the same amount of money as my colleagues who rent but i am worth more because i own my house. Not only that but i live in a city in San Francisco which is rapidly gentrified, people are getting evicted, their rents are going up. They are being displaced. Meantime, im back with my 30 year fixed Rate Mortgage bank less than most of my friends who are fronting. And im saving money and cant prevent have a medical event that requires me to dip into that equity or cant afford to send my children to college i want to retire, god forbid like i may have that ability. My colleagues dont if they dont on their home. They dont have a about it. This story of Home Partners in certain parts of the story deals with reverse mortgages. How did you get into researching about those . I mostly was interested in the vale california indy. Some of you may remember it, it was the first big bank to fail in the housing flush. It was the biggest bank since the Great Depression. The government ended up having this disaster of a bank. This was a bank that had become famous not only for reverse mortgages but also for things like socalled ninja rooms that were popular, no job, no assets, no problem. They had disneyland loans, they called combat because there was using land cashier who came in they approved it without paperwork. The Housing Market softened, it went bankrupt in government ended up with the bank. Theres a dramatic run on the bank that was like out of the depression where people were pushing and shoving on the streets of pasadena but instead of being black and white, whose color, more channels and Steve Mnuchin who thousand the treasury secretary, he stepped in and brought the bank from the government for nothing. Then the government made this deal with him where we would subsidize his foreclosures. Guaranteeing he could get it. If you you shouldnt foreclose if you are a bank because you lose money but not of the government is picking up the tab. We agreed to pick up 90 of micro records revealed we paid his group more than 1 billion. To foreclose on people. He foreclosed on more than 100,000 people including 23000 meters. I have this bank seemed like foreclosed over 100,000 people, homeownership rate of the record low, its run by the treasury secretary who poses large sheets of bills under leica doctor evil kind of picture the world just apartment building, great story for journalists but also, he mentioned the reverse mortgages, i happened upon that somewhat oddly where i was kind of pulling this string as a journalist that i became interested in these private equity firms that had actually bought these houses after foreclosure and i found this house thousand South Los Angeles where the guy who was living in the house renting from one of these equity fund that happened to be owned by a best friend of donald trump, thomas j about 30,000 home and i knocked on the door of his house and for guy who came to the door was dying of cancer and stick with aids and facing a rent increase and i was like oh my lord, so a good reporter, theres a property record, what happened before he moved in and the Company Bought the house for 180,000 in 2013, thats when i found this house had been owned by the same africanAmerican Family that was during the great migration that had finally been able to buy this house in 1973 1963, the very year california banned discrimination in housing. As the year they were finally able to become homeowners they had been foreclosed on by Steve Mnuchin because of the reverse mortgages. Now i have this house that didnt just involve one member of Donald Trumps inner circle, dispossessing the family whose whole cloth was tied up in the home, he involved two of them. Then as i continued to pull this drink, i found this house had been bundled into a mortgage security by Jp Morgan Chase and now where there was this 514 milliondollar lien on this 834 squarefoot bungalow in south l. A. And then publishing that story in 2017, tom barrick, trumps best friend decided to get out of this company, he sold interest and another one of Donald Trumps friends, steve who is the chairman of black concern whose company knobs owned 80000 homes in the same house in the familys had a reverse mortgages for post on Steve Mnuchins bank bought by Donald Trumps best friend and they raised the rent on the guy whos sick with aids, it reminds of his of the worst part of the housing but on one of Donald Trumps best friend and now they take out another mortgage, they leverage to get more out of the house, others a billiondollar, i should write a book about these people. [laughter] thats complicated. Yes. At september 2014, Marion Cooper looked at how economic recessions exacerbated inequality in the United States. As a portion of that event. For the past few decades, inequality has been on the rise security has been on the rise. We now have a middleclass, families are losing homes, that story is mostly told through statistics. Academics look at past records and job report and what they concluded is that right now, have almost unprecedented levels of inequality and insecurity by some pleasures, things havent been as bad since the Great Depression and thats a pretty dramatic conclusion. But i felt like the dramatic part wasnt coming across in these tables and charts that so meticulously documented so i felt like somebody needed to talk to people about how they are coping with us. Underneath these hard numbers are people who develop these trends in the everyday lives. We know more about insecurity, we know more are on their own, to cope with it but we dont know how they are coping and we also dont understand how the divide between the haves and havenots in our Society Changes the way we experience security and insecurity. So lets start there. As you say, longstanding trends leading toward economic insecurity and further income disparity and insecurity for many families and hours happening in the 2008 happen in our possession. Why dont we talk about the Overall Economic trend, whats happening in the u. S. Economy . How does it affect us . The big story. I brought books and articles about it but three of the most important things that have happened for families is the decline of middle income jobs, what we call the dip in risk which i can explain inequality. Used to be that our economy was based on manufacturing and today its based on services to about 80 jobs are in the service now. In comparison to manufacturing jobs, service jobs pay class, come with your benefits much more insecure. Then layered on top of this is that workers no longer have the leverage they once did to collectively bargain for better wages and working conditions. Thats because unions are on a steep decline. So after world war ii the 1950s, a third of employed people represented by unions and its a new historical, 11 are represented by units. Its not that collectively bargain to get a better deal, its a this is a moral commitment even if you werent in a union from union so that weight and other employers receptor that and with that increase for a lot of other people working unions so we got a double whammy here. The other thing in whats called the shift interest, theres been a rewriting of the social contract between employers and employees that used to be based on mutual protection, so that means employers and people get benefits and they work really hard and used towns to build that company. But what happened is that increasingly risk has been by governments and corporations on individuals and their families. Everything about the movement from pensions to 401ks, check with us now on their own, for retirement and miscalculations to be made. All these things together i promise to place where the types of jobs created in this country are harder to find it harder to hold onto. Definitely tougher than it used to be and families are really experiencing that. The question is, how tough . That depends on where you are in relation because all this going insecurity and risk and then over here, you have this right inequality. Highly educated, they still have good jobs. They play out different families in different ways. So you interviewed over 50 families over long periods of time and you will find is that the information is detailed and intimate. Youre not just able to describe how these families are living and what the situations are but in great detail, how they feel. Why for feel and how they feel, thats what we are looking for. The underlying reason to lie. By these interviews, how did you conduct the interviews . How did you get so many families to invite you so deeply in their lives . They wanted to understand this more personal emotional side, i did interviews so i went out and found families, rich middle class and poor if you give them about the obstacles in their life but i wanted to add something to that, followed a Smaller Group of families around in an indepth way. Like really followed them around . Really followed them, like they went here, he went there. Yes. I was there to pick up the kids, went to soccer games, i really got to know them. The hardest part is recruiting families. Specifically, its hard for people research, he never ask you please say yes, its really hard. You pick up your kids. But what was extra hard, i needed to know what level someone was in. You dont walk up to a stranger and say how much do you earn . Had to figure out another way of doing this and i struggled with this for a long time. Mars starting this, she seemed really nice and i knew since she was a cashier how she probably got. I asked to interview her and she invited me along to her sons Little League game and i dont know if you know much about Little League, i learned way more than i ever wanted to know, they are really long games. [laughter] its really long. Sometimes you are not so sad when they lose because that means you can go home. [laughter] the parents are dying for something to talk about. They are. [laughter] so i was sitting in the stands with her and from the working class community, her son was on the team and am trying to get a plan and a kid hit a foul ball and it goes into the parking lot where the opposing teams cars are. One of them says i hope the car doesnt get hit because they are fancy cars. I asked where this came from and she said it was from a communi community, its one of the best affluent communities we have. I realized on the baseball field before pete was a miniature version of the story i was trying to tell. So i drove home with laura and she has a minivan and biker crack in the window and i said i wonder what it was like if i was in one of those suvs driving homes one of the opposing teams families into thats when i realized i could tell the level of income of september. The next few weeks driving around, all these games. [laughter] you see someone just sitting there, it might be one of them, yes. I got turned down a few times so a lot of people said yes. That formed the core of the family i ended up working with. You are wanting to be on cspan2 and we are highlighting author talks about the u. S. Economy. All of these programs are available to watch in their entirety on our website booktv. Org. Up next from 2017 from Washington Post reporter Amy Goldstein of the effects of the 2000 recession on janesville wisconsin General Motors factory was closed. In june 2008, when the announced General Motors was going to shut down production eventually here on employment rate was 5. 4 . In march 2009, a few months after the last of these jobs disappeared, unemployment shot up to over 13 . On the job loss, you are a winner or loser. [laughter] beyond that, i had a sense that i want to tell the story of what this big recession had done. It is important to me as a kind of place that had not previously been part of it, i didnt want to find myself writing about inoculation of economic decay, order to show what one that economic time did. It was an old story and i wanted to find a place where economic trouble was new and obviously the General Motors Assembly Plant had been drinking a little bit and more over couple of decades but they always got a new product. So this closing was really a different thing that nobody in town had ever experienced. I was very appealing to me, i thought i was happy i was appealing to me as a place to potentially do this writing, this talk about whats happening in the community. I have the sense that no place is exactly like everyplace but thought it would be interesting to find a community to write about where the job losses pattern matched pretty well the National Pattern of jobs that went away this Great Recession. If you think about what happened nationally, a large portion of jobs disappeared in the manufacturing sector, that was janesville. A lot of the jobs were lost jobs that paid pretty well has not required a lot of hiring education to get. More men and women lost jobs in the profession, i was janesville. So i thought that this is a community that had a number of parties and lost job other people around the country would understand and could identify with. I also had the sense that it fits nicely into the history, i remember the first time that then senator barack obama gave at the Assembly Plant in february 2008 if you are member in coming and i remember the first time i listened to the video saying the promise of janesville is a promise of america. That mine gave me goosebumps because i heard that Youtube Video a couple of years after the Assembly Plant closed, is an irony by then what the president ial candidate became president was saying. Of course, as part of the sit in the night and the Assembly Plant had been part of the domestic war effort in world war ii the plants making videos and started turning up until he shows and of course they have their moments in the 20th century history so i just got history. Of course before i knew anything about this community, if you met anybody here, i had the sense might find interest in politics. I just thought there might be Something Interesting about an old place in town represented by scott walker the state governed by paul ryan in the state i was led by scott walker. His attorney that i tried to bring all of my reporting instincts to bear to think about what might be a good setting and i decided i was going to make a visit to janesville. I first came here in july 2011 and i arranged to meet some people, a couple people in the room here part of almost couple of days are here and the very first person i met in town, i set up a meeting with them was an old time reporter by then had read the newspaper and was on a different radio show than the one hes on now working as a consultant, he hasnt office at the headquarters and now its renovated into offices. We talked and talked a couple of hours, we talked about the history of this community, what it was like when he was here growing up as a boy, with the Assembly Equipment and what was happening now and we just talk two or three hours probably nonstop. Finally he said to me would you like to seek the plant . I said of course i would. So i got in the car this man had never known before. [laughter] we drove down Central Avenue and turned left on delevan and there was the plant. Theres obviously huge, ive never seen it before. 4. 8 million square feet closed plant. As we were approaching, he said something that states that surprised me, he said i hate go by this. I said why . Is a surprise to me. If you know him, hes a pretty tough character, a veteran reporter, he calls himself a cynic and i tend to agree. [laughter] is not struck me as someone who would be hesitant to see something in town. He said his father worked at the plant as a boy, he remembered how proud his product was that his general corners wages left him by his first chevy. When he said that to me, theres something here in this community about the relationship between this closed plant and pupils work and what life ought to be like wasnt anymore. So i kept going back. For a lot of years. I have met and spoken with many, many people in town, many people can fit even into a book has a lot of people in it. Thats really what might gratitude comes in because ive learned from all of you who ive met with over the last 60 years. When i tried to do is get to know people in town from not that i know all of you but i tried to get to know people of various vantage points, people who are at the Assembly Plant, people other suppliers, people who were teachers who tried to figure out how to help kids, whose families are hurting, people with economic development, i wanted to understand how this looked from not the peoples perspective. I was slow to figure out who was going to be the main people in my book. I thought i could talk about characters and some of you are in the room, these are real people but you are also characters. I couldnt really pick was going to be the main characters in this story i wanted to tell until i understood what were the choices of different people made and what were the range of choices i could pick up might be good examples of each of those kinds of choices. I arrived in 2011, obviously two and a half years after the plant shutdown. I knew from the beginning that i would need to go back in time and i can tell the story from the moment the announcement happened that this was going to be changed. I knew i would have to find people to talk to who could go back a couple of years with me and explain what life was like before i showed up on the scene. I also had the sense that i needed to understand the history of this community. As renee said, i spent a lot of time reading, i spent sign at the Historical Society because i wanted to understand the industrial past has been. In order to understand where the pride in work that was done here came from. I wanted to understand what the identity and expectations but i can understand what it felt like when things were changing. I did a lot of historical work. One of the things that struck me when i started cheering up talking to more and more people is that when the paint closed, theres a lot of disbelief and denial that it was for real. I showed up to an a half years after he got here and i kept running into people who said just wait, its a matter of time before it comes back. Does that sound familiar . I thought, why was that . Is because the Assembly Plant aided tractor plants and started making chevrolets on valentines day 1923 and every time the product went away, another product eventually showed up. There is no expectation, no experience with it not happening again. So when i began to see people make choices about what to do next, i sometimes came to think about it, what traces the people make when the drops worked on. People began to make choices, a lot of cases it took people a while to settle on to what they were doing. Up next in our review of offers on the economy, doctor sondra, coauthor of the the body economics, 2013 discussed the impact of measures following recession paths on mental and physical health. In the u. S. , suicide spikes overall in these trends but theres very heterogeneous, even some of the cities massive on employment in some cities we see suicides and others we dont. It seems to relate strongly to a certain set that ill talk about. Those programs are the answer to a major question which is by an appointment correlate with this we talk correlation is not causation that is precisely why we want to investigate when correlation doesnt occur, unemployment rates in the u. S. Are closely a part by suicide rate. In places in finland when they have their own banking crisis, the suicide rate declined. How do we explain this . What are they doing . Its so robust . My swedish friends would like to think that but its not true. It turns out they would investigate a slew of people exposed to. What subprograms seems to be effective in preventing these recession associated Mental Health related and other Health Related problems. Its not in a position that i admit is healthcare these programs are part stick. When someone comes in whose unemployed, i get an unemployment check but only on the condition but they also enroll in this program. This program, is the part, involves a present to assist them to actively work in the firms who were also required to participate, the companies are to find parttime employment integrating them into the workforce. It turns out spending on these problems results both in economic seamless and ends up paying for itself and downstream costs but then theres a question of what if its just swedish . Maybe its the european thing so number of us worked on these in the u. S. Including detroit where people are minimizing standard programs and going off on their own like employment offices, good luck to you. Or this kind of program. All of the cities now in different continents, the same results have been found, reducing Health Outcomes, negative Health Outcomes as a side effect. We were seeing this implement it across the u. S. And in much of the he rest from the recovery stimulus for the country, the uk which had a recession around the same time underwent the program and they have their recovery and now they are starting to triple digit recession. This ended for us around the time were recertifying out in terms of our recovery and around the same time, they should a working paper major policy document and Public Statement from its chief economist which basically amounted to 400 pages and its a fascinating document. If you can get through the rhetoric. What it amounts to is the following. All the advice previously based on an assumption about a number and that assumption is for every dollar of Government Spending, how many dollars do we get back . They assumed the number was 11. 5. In a little footnote earlier, you can find the reason for. 5 is its a nice round number. Four different groups including us calculated it out and said during recessions, how many dollars you get back . Food stamps or job security programs, how much do end up estimating the economy in getting facts in terms of net job growth it is greater than one, a dollar 70 for every dollar you invest. At the same time, not wanting each other on the same number. The irony is that a while ago while they were recommending that they calculated a multiplier for themselves and decided to undergo internally while recommending opposite for grief. Texas figured out long time ago during the crisis of 1980, california massachusetts which found has remembered. So weve seen this manifesting out as changes in Government Spending during a recession have correlated to the changes in recovery over time across a number of countries. Of course this begs the question of, are we just going to spend forever . The multipliers go to the loan for example, 1997foot high fence a good time to cut back on the spending it argues for a data driven approach to undergo spending increases and what to spend on. Footsteps are good example. Anytime you do a program would be permanent, they would just ride the system forever. Well cheat the system and so on so if theres a very good park, the editor of the journal american journal and economics that found there was essentially no data to support this. Quite a bit of data was the opposite. For example, food stamps and welfare assistance, people would come off as the economy recovers. Furthermore, food stamps are particularly high because people who are eligible for food stamps are often not spending it on other things unable to get food stamps, a classic, called a conundrum in Public Health, people can spend on eating or it on food. Where they are able to get food stamps, people while spending are able to make the economy more than what the food stamps are. Even if you didnt care about Public Health just as a. Accounting, the net result is actually the opposite reduction. It is important to recognize its difficult to find funding during this period. Medicaid and other programs are classically programmed to where you have less of attacks faced during that. Because more people are unemployed. Are you going to fund that . Using deficit spending but is there a better way as well . Some of us have been working on this International Initiative of which the goal is to simultaneously fund the types of programs we need when we have the least amount of money, find another source for same time discourage the recession. We all know that risky investments led to our recessi recession, very few of us participated in the investments, i doubt any of you went out and bought a lot of securities so on. So the idea is to have. 005 , which is based on the idea that on the highest quality, those funds are accounts, incredibly small but when you are transacting hundreds of millions of dollars in surprising actually and more cost the stock market falls short and encourages heavy transaction and thats because of the pull of that money will naturally increase during the highest risk time, people are undergoing and engaging the highest transactions. The reason why i would want such a system is that its a unique time, its actually not that unique. If you look at periods of recession certainly over the last several years or decades have a counter recession for large but weve had a recession. Its somewhat surprising when we are not in a recession if you look at the number of crashes taking place in the last few decades. My favorite is the crisis of 1995 but it strikes me that we have price doubled in a variety of commodities so ill end by saying that essentially what ive learned from understanding this data is that if you were to adopt this mantra and apply it to your social and economic policy, we might be better against the economic shock and that we have quite a bit of data invested in with for us. Are look at the u. S. Economy continues with author and financial journalist who appeared on her Monthly Program in depth in april 2019. In this segment, she describes the relationship between Financial Institutions and the u. S. Government. What, that we have this 100 year history from 100 plus year history that youve written about, has there been a cost to the taxpayer . There has been a cost to the taxpayer and also the voter. When you talk about a major banker who can influence policy and ultimately for example, in the case of j. P. Morgan chase, diamond was someone who is on the new york fed board, class a director of the new york fed board he was actually head of j. P. Morgan chase so he happened in the height of the financial crisis when it first occurred, also director at the new york set which is the wall street located if this river system but he was one of the people who at the time was treasurer secretary who had been when i came in, tim who had a lot of relationships but he was a new york fed president and became the treasury under obama at the turn of the year after that crisis. You have all these individuals who effectively have the abutting to direct policy and money coming out of washington to institutions, is a public institution. These are banks that have stock exchanges that monitor by the Federal Reserve, one of their day jobs is to be the regulatory answer about the oversight body, they are monitored and yet, there individuals have a tight relationship with the central political powers of the country that they are able to get money effectively to themselves when they need it individuals able to galvanize to do that as a result, medicos from taxpayers to benefit them and not just when theres a crisis but even from the standpoint of the glasssteagall act which was in 1999 it was to protect the voters from any kind of weird products and speculation banks could do. Could choose but if they lost those, is something, on their shareholders, their private partners, however they were structured. It wasnt on people. I was repealed in 1999. They had this merging of peoples deposits, peoples cash and institutions that also could you all sorts of stuff with the, do badly but the infant from to the government for help. The fact that they had all of these deposits and they could say well, we have them, atm machines on board to work, people get their money back in this crisis unless you give us all these other things. That meant a different way of taking money from the taxpayers because they influence the policy that allowed them to have all the deposits. On multiple levels, they are extracting by their influence and when things go wrong and through rules surrounding their businesses from taxpayers their own pockets. Walsh tweets, can you explain how someone so brilliant, economically astute, hue, support economic systems always fails at tremendous human and economic costs dissolved into a dictatorship, she support progressivism socialism, is that true . Are you a socialist . I support the socialist policies. Because if we think about how economic divide into the needs of society, in other words how money that comes from Society Society and how government are used to appropriate used funds, i think about things like how expensive healthcare is for people in this country. I think about how expensive it is for student to go to university and to come up with 50, 60, 70000 with a bat which means they cant ultimately be the kind of participant in our economy that could happen without so much that. When i went to school, i started out in Public Schools and i went to a Community College and i ultimately went to a State College and then private nyu for all my education but i paid for all of it along the way. I could pay for all of it along the way because i was earning by working was enough to allow me to afford books and rent for tiny places at the time. Now that is impossible. As a economy as a whole, do think its better for an economy to be more level for more people . In order for them to contribute foundational throw parts of the economy and easier way i think about how we also have firefighters and post offices and Police Officers and a whole host of elements of our society that are meant to help more society than just their shareholders and banking institutions. Look at it from the standpoint of healthy society, thats healthy economically and educationally and physically they are protected, another level of our society has a lot of money that goes into it supposedly to protect everyone, the country, all those things, to me, our social goods. When i support from the economic standpoint and financially as part actors not to list the countries Financial Health and be mailed out to the extent that they were by the country by taxpayers by the Federal Reserve. Look at an economy as being holistic in that respect. So in todays current political environment, is capitalism at a tipping. . I think in general, we are a capitalist nation. We do strive as a nation to do Business Activities that create profit and the profits go in different ways either to the people involved in creating or peoples futures. I dont think that is going away but i do think using wall street as an example, the financial crisis as an example the fact that still trillions of dollars of assets on our books after what isnt an emergency situation, we should think anymore since a happened in 2008 and it still subsidizing wall street into larger banks, they are tremendous sums of money. So i think that capitalism has to recognize that putting too much money in one place where it actually cost for the general Financial System or the general economy is not necessarily good decision. There are places that do that that were ignored into the collapse we are still reeling from in terms of these policies. I think those need to be reinvigorated and we need to protect everyone. Before we go to calls, the fed, is, in your view, a fed bank necessary . Thats question number one. Then ill follow up with question two. I think with the fed does in terms of providing so much subsidy, its not necessary. I think the fact that the fed the lower Interest Rate is something that can be equally done within treasury department. I think that the fact that the fed is structured in a way that allows the private members of the bank, which is how its structure, the fed ultimately does provide intakes meeting the heads because they are the primary shareholders and theres a historic shareholders, they created the fed so wherever they are today, theres a major flaw how it was created and how it exists which is that it exists ultimately to benefit members and it says its to help the economy and the Greater Public but the reality is, if you look at the action, when theres a situation where a wall street Large Institution is in trouble or the necessary to help j. P. Morgan chase or someone who has an institution that the history and fabric on how its rated has benefited from health the fed is created and continues to benefit from this subsidy that not just the fed but all banks provide to the largest banks in their respective country and i think that is a flaw. The authors on the u. S. Economy concludes with the former chair and president of the u. S. Export import bank, fred earlier this year, he discussed the impact Free Trade Agreement have on the economy and workers. A few of the takeaways, in case you fall asleep or leave early, you have to take away. Winners and losers and politicians are very good at not acknowledging that. Some people win, some clues and we did a really bad job in this country taking care of people who lost out. People whose lives were disrupted, whose communities were emptied out and we didnt do up a good job because of acknowledging that. When the economists are creating million and a half tons a year, if some chaos by trade even if its 20 or 29000, its nothing compared. It is nothing unless you are one of those 25000 people. A lot of that was concentrated in places like ohio, wisconsin, michigan and pennsylvania. Those four states have in common every four heres, every four years, they have something in common. I think thats very much in our american psyche for such a long time. We are at miami beach, its not a surprise a lot of the human population is in miami and florida, in our cuba policy has to do with the geography. Geography has a lot to do with the training issue and many people enjoyed all the benefits, we havent had a firsthand experience of where it relief and, they disrupt the familys lives. Thats one of the things i talk about in the book, im not going to give you all the answers because ill run out of room and give you the ending. Another thing is, we have a lot of talk about trade deals, partnerships and usmc or the china deal, trade deal is really not about jobs. They are about legal rights, intellectual property, dispute resolutions and a lot of things. Ill give you an example. In the partnership, positive agreement between the United States and 11 countries in the pacific, 5000 page document, which i would not recommend it is not like a novel. The word jobs appears six times. Two of the six times the australian japanese labor department. So there are four references to jobs and 5000 pages. Actually, 11 dimensions. Theres not a lot, nasa was designed in 1984, jobs had nothing to do with that. Talk trade is about jobs, expert are not trade skills. One of the things are looking at now im happy to address this in the q a, weve taken from we the United States, who want to work with our partners and i remember thinking in italy and there was some fills films in the world were two, filmmakers came to look at the devastation of world war ii the United States took te leadership role in forming things that nato, the organization nomination, every to was not. All of these things were the ways we could Work Together make sure something as horrible as world war ii never happened again. We are in. Now where we are pursuing a policy in the United States you novel, your way or the highway. Close shop, take our if you are not. Its a different way operated for close to 70 years, it seems to work but is not what we used in the past to get things done. Let me give you a couple of products i use the iphone in this book but who did 10000 questions of a . [laughter] how many steps today . Fifteen . [laughter] so the iphone from talk about bilateral takeout, something our president is obsessed with. The iphone was designed in the United States, the rare minimal used for the circuitry and the democratic republican, what major steps comes from the netherlands. The scope that makes we can turn it this way or sideways and its always proper, but was switch open. The main mechanism of the phone comes from the biggest competitor in korea, the class, which i frequently crack comes from new york. So this was not existing without global trade. We would not have an iphone without trade. It is a symbol in china as a result, its considered by the world, not just the United States, chinese imports. It comes to the United States, apple is proprietary. Big surprise . 230 for an iphone. They sell it for 900. 230, 8. 46, something less than 10 actually goes to china. Yet, the full 230 a phone has 16, 18 billion a year of our trade deficit with china is the iphone and yet, very small portion comes from china. Use the example, this is not a very good way to look at a bilateral trade deficit which i say, i put in the book, i have a barber in washington, i took a picture of him in a put on twitter. I had a substantial trade deficit with him. He buys nothing from me, i am okay with it and he seems fine with that as well. So we cant get very hung up on a trade deficit. When you go to the gas station and put 20 or 30 gas in your car, its 20 or 30 worth of gas. We get a lot of products from china, it helped keep inflation down yet, china has not been a good doctor, yes, china takes advantage of the rules, yes, overly subsidized their Favor Company and we need to address those issues but they are not really evelyn, we have a Global Community need to find ways to put them in line. Theres a obsession about bilateral trade deficit. They will listen to or hear how this the best trade deal ever done, i cant think of too many to describe it but its a Purchase Agreement because weve been so concerned about the bilateral trade deficit. Having run with president obama, im all for 200 billion expert, doctor goodman what a trade deal is about so thats one of the things in the book to give us a better understanding of those kinds of issues. If you mse