Transcripts For CSPAN2 Book TV 20100417

bench and a federal court on the bench for life, so it's very important and it's a priority for any president democrat or republican and priority for them. i think the last president bush did an outstanding job of shipping the federal judiciary to what he wanted to be and what his constituents wanted that court to to represent. i think he did an outstanding job. .. >> you will be joined by shane harris author of "the watchers: the rise of america's surveillance state." p.w. singer author of "wired for war" and bruce riedel, author of "the search for al qaeda." the second panel will begin in about an hour and 50 minutes on the world of water. we expect the third panel at about 1:15. it will be on wall street. >> we're going to get started. can you hear me okay? thanks for joining us, and i wonderful thing because so many of you want to spend a beautiful saturday morning in a dark jim talking about cheerful subjects like al qaeda, terrorism, robotic soldiers and war was electronic surveillance. but welcome. i've been asked to remind you to turn off cell phones and to emphasize that point i'm going to ask if any cell phones rang that the camera turned on new. to be as humiliating as possible. i'm going to be very brief and introductions so that we have as much time as possible to talk about the books in question, which are all fascinating. to my left sets two of my colleagues and ask her sort of three colleagues. one of them sort of honorary. bruce riedel who sits to my immediate left is senior fellow in foreign policy studies at the brookings institution, and has been had a 30 year career as a cia analyst. he's the author of "the search for al qaeda: it's leadership, ideology and future." to his left is shane harris, who i think most of the biographical information you have in the little packet is now out of date. shame, since this was published and has moved from "national journal" to the washingtonian, where he is going to be doing expanded feature coverage for the washingtonian on big media issues like the one he is right about for "national journal." he's the author of "the watchers: the rise of america's surveillance state." and to his left is peter singer who is also a senior fellow at the brookings institution. and he is a great expert in matters of sort of the future of warfare, including the latest contribution to the come his book "wired for war: the robotics revolution and conflict in the 21st century." and so without further a due i would like each of the office to sort of talk about their books, give you an overview for about 10 as eight and it will go to questions from the floor. bruce? >> thank you. and i want to also read and to rate his welcome. coming out on a beautiful day and talk about and unpleasant subject is or how but for you to be here. 12 years ago in eastern afghanistan osama bin laden also where he and three other individuals declared war on the united states of america. and declared war on every single american, man, woman and child. in the 12 years since then their organization al qaeda which means the base in arabic, has waged a campaign of terror and carnage across five continents. from indonesia to washington, d.c., to new york, to london, to madrid, to virtually every city in the islamic world this organization has carried out dozens of gruesome terrorist attacks. it has become today the world's first truly global terrorist organization. and has headquarters somewhere in the mountains along the pakistan-afghanistan border that it has franchises in different parts of the islamic world, in yemen, in iraq, in north africa, in southeast asia. it has cells supporting its terrorist operations throughout most of the muslim diaspora. in the last year we've seen those cells in the united states. for example, in the attack on fort hood. and it continues to wage what it calls raise on america. it was foiled last christmas but we can be certain that's not the end of them. the first rule of war is to know your enemy. and, surprise her, we don't know very much about our enemy. we haven't devoted attention and resources in the cold war with the institutions of higher learning across the united states of america to so i didn't study the soviet union and china. but we haven't devoted the same kind of effort to try and understand the enemy we face today. when i retired from the cia three years ago, i thought i would try to fill the gap. and that's what "the search for al qaeda" is all about, time to give a better understanding for americans and for people beyond america as well, the nature of the enemy we face. why do they hate us? why do they attack us? who are their leaders? what are their strong points and what are their vulnerabilities? now, a book written about a bunch of murderers hiding on the other side of the planet who don't give a lot of interviews to journalists or to academics, and you really don't want to do an interview with them, given their declaration that they will kill every american they can find, is a bit of a daunting task that the research for this book then had to be a little bit unusual. fortunately, they are not rational. if anything, they are quite -- quite eager to put their story out. and in the 10 years since september 11, they have put out scores of audiotapes and videotapes, and several books explaining why it is they do what they do. these are not easy to read books that they are filled with allusions to islamic history. they are filled with allusions to the koran, and you have to have a pretty good reference point in order to figure out where they are going. but if you have that, they tell a very clear story. and give you a pretty clear statement of whether ideology is and what their narrative of history is. i've read all of those, and in addition to that i tried my best to interview people who, over the years, had an opportunity to meet osama bin laden or al-zawahiri, or to deal with some of the other characters in al qaeda like zardari, the leader of al qaeda in iraq. this gave me the opportunity to interview people like prince turki the head of saudi intelligence. or the indian foreign minister who dealt with al qaeda when it hijacked an indian jetliner in 1999. these interviews were a significant way of supplementing the record from al qaeda itself. i think, i hope, that what emerges from that is a relatively clear and incisive analysis of what al qaeda is, working from, and where it's going. it's organized around four biographies. osama bin laden, al-zawahiri, zarqawi and mullah omar, the head of the taliban. the man who is leading the war against us in afghanistan today. i tried also at the end to give some recommendations on how to proceed forward. but we need a policy for dealing with al qaeda that goes after it in every aspect. that uses smart weapons including drones, to target the leadership. but also uses of smart weapons in the battle of ideas. in order to wage the struggle for the hearts and minds of the islamic world. it's a nexus, it's a synergy of different strategies that have to be brought together in order to defeat this enemy. and, of course, we have to do it in a way in which we keep our heads sober. we need to ensure that we don't overreact, that we don't panic. that we maintain our civil liberties and our freedoms here at home. at the end of the day, al qaeda is a very, very serious threat to the united states of america. but let's keep it in proportion. al qaeda is not nazi germany that controls all of your. it's not the soviet genius that has thousands upon thousands of nuclear weapons train at the united states. it's a relatively small group of fanatics who are determined to attack this country, but i think if we keep in proportion the threat, we can come up with a strategies in order to defeat them. thank you. >> thanks. shane? >> thanks to you all again for coming and thank you to the key is cool for hosting us that this is a fad this event and i'm honored to be here. my book is "the watchers: the rise of america's surveillance state," and i thought i would try to give you sort of a sense of the sweep of the story because it is a work of narrative nonfiction that takes place over a 25 year period, roughly from october of 2003 to early -- on october of 1983 to early 2009 and covers a lot of ground in the area of sort of digital surveillance, electronic surveillance, people in government are trying to build a computer system to organize information in order to predict the future, essentially. but i thought it was worth giving you a bit of background how it came to write a book and how i arrived at the sort of central figure and rather unlikely hero of the narrative, who happens to be one of the most notorious political figures of the past quarter-century, and that's retired admiral john poindexter, who many of you all will know from his central role in the iran-contra affair in the 1980s. it sort of an unlikely bit of a path to making the centerpiece of this book, but just quickly, i was a journalist in 2001 covering sort of the intersection of government and technology, particularly in the intelligence community after 9/11 for a magazine in washington called government executive. and very quickly, a theme emerged after the attacks that the intelligence community and the government, the law enforcement agencies had all this information about al qaeda and all these various silos, and none of it was being shared and that one had wasn't talking to the other. and his failure to connect the dots was one of the principal causes for the surprise attack on a 9/11. so it came to pass that everybody was in the technology field at the time sort of came forward with what they thought was a magic ball solution of how we will organize the data, finally see what we can't see and achieve some huge level of awareness about intelligence. john poindexter had conducted government, in charge of one of these main projects at the defense department. is background of course was in the navy, but had a real proclivity for having technology for going back to the art 80s. and showed an aptitude for computers and design. he came up with the program at the defense advanced research projects agency or darpa which is the pentagon's big train under and brain trust which he could total information awareness to describe the system that would achieve what it is that the watchers, the people i write about in the book, have been trying to do for many years, gather up the intelligence about a particular organization or a particular threat and try to analyze and predict the future. the thing that was remarkable about poindexter's idea, which was not unique in terms of the people pitching these ideas at the time, was that he wasn't just looking to go find information that was in government databases that he proposed going beyond that. the rationale was that if the hijackers on nine 9/11 were moving about in the united states before the attacks, if they're opening bank accounts and communicating them if they were renting apartments, cars, traveling around, they were leaving electronic footprints with every one of those actions that require a transaction in the digital ether. and the government had to go out and find that in as well and hard as it did of course this would probably require a rather radical rewrite of our privacy laws, much less our concept of what privacy and individual privacy men in this information age. his second part of the plant which struck me as entirely novel at the time, was the idea of using the very same technology that he wanted to employ for sophisticated data mining camp or pattern analysis, if you like them if you like rather regular people internet system back on a very same agents were using it as sort of a constant eye watching the watchers to try to set up a system whereby ideally anyway it would be difficult for anyone to abuse this kind of power and system without being noticed. and to use technology to try and build a very strong privacy protection as well. it was a fascinating idea on paper, which might highly impractical in reality, and certainly suffered at the outset from a disastrous public relations effort. to say the least, john poindexter's role as the head of this project struck some as rather preposterous and somewhat scary. and that really kind of go down in the public's mind was a logo that poindexter had helped design for his new program, which featured the pure made from the back of a dollar bill on the great seal of the united states, top by a sort of all seeing eye casting a beam of light down on a picture of the globe with a latin inscription knowledge is power around the edge of the ring. so poindexter did not last long in this endeavor. and i tried many times to get an interview with him, unsuccessfully. i found out later this was because his old friend don rumsfeld and the pentagon had basically said under no circumstances are you to get anywhere near every border in your current role. ultimately, i had a chance to meet him after he left government, and through a series of sort of conversations, we came to this agreement whereby i was going to start writing something about him, and profile perhaps for the magazine i was working on at the time about his life after government and what he had been trying to do. he said that he would do this on one condition which was that i had to come out to his house which is not too far away in suburban maryland here. and agree that all the interviews would be done over the course of several weeks, lasting for many hours each time and we were to record everything and it would be on the record. he apparently considered as an onerous request. shows you how much he knows about do it that i jumped at the chance to really begin a sense of conversation that lasted for the better part of the next four or five years. probably close to 20 images in all in 14 exclusively for the book. so began my kind of tuesdays with morrie version with john poindexter. i mention this because it really does sort of form the heart and soul of the narrative character driven part of the book that poindexter is a sticky that shows up in many parts of the book and just to give the very quickly the brief narrative sketch, he enters the scene not in 2001 where the book begins in october of 1983, and in the aftermath of the terrorist bombing of the marine barracks in beirut. you will remember they were there for international peacekeeping force that is in aftermath of that event that just after like 9/11 was a sort of realization within government that there were various clues about terrorism in the area that were pointing to some kind of spectacular event, specifically targeted at marines but the information had been kept inside that's a poindexter has sort of been on this total information awareness vision since 1983. the book traces him in those early years, and into the iran-contra period where he is sort of the of course exits from the scene and then to find other watchers as well. specifically, a group of analysts working at a very low-level intelligence unit in the army and the late 1990s and early 2000 which was working under the project codenamed able danger which was argued technology to go into the public information name and put together information to map out the global presence of al qaeda and probably the preceding year, year and a half to 9/11. it traces the experience is that they have is what was trying to understand this very powerful new technology and its limits and inevitably, the collision course that is set towards privacy in our traditional notions of privacy and what it means to be able to go out as a government agent fishing about in the public space for information about threats when you have to look at innocent people at the same time. the book really find sort of its more presents kind of narrative hook, if you like him in the third and fourth i ask what i look at the national security agency's wireless wiretapping program. you might remember that in october of 2001 president bush signed a then secret order which is technically secret, we haven't seen the text, often to national security agency to intercept phone calls and enough communications international to negation of americans who were suspected of a quote on? mixes to terrorism. the book sort explores that whole program which was very much a parallel of what john poindexter was doing with total information awareness, but in an unclassified white at darpa and goes into some of the real interesting connections between those two programs and a pedigree that they share and ultimately charts out how the national security agency took over poindexter's program when congress finally pulled the public funding for it. the conclusion of the book sort of arises at the watchers have been on this quickly for 25 years and disability to connect the dots and see the future. they're not necessarily much better at making those connections than they were in 2001 or even in 1983. and old alike the governor has become very good at collecting information and gathering up lots of dots and is still not very good at connecting those dots. and so the book is sort of charged this out from the perspective of the watchers themselves. i think cast these people less in a political light and more as sort of techno- warrior geeks on a mission that is lasted for the better part of the past quarter century and they are unified by this passion. it was really remarkable thing to get to know them and to spend time with them, particularly poindexter. i think that what you find in the book is much more of a real story told on the ground through their eyes as opposed to what normally i do, which is worth stepping back as a journalist and trying to get you that objective view. so if you read the book, i hope you enjoy and i hope you find it entertaining and enlightening as well. thank you. >> peter? >> let me add my thanks to the organizers and all of you for to do. what i would like to do it again with a story from the book that i wrote, "wired for war." for this you have to imagine yourself in iraq. and ahead of you on alongside the road looks like a piece of trash. but that insurgent has hidden that ied, improvised explosive device with great care. now, by 2006 there were more than 2500 of these roadside bombings come every single month in iraq. they were the leading can cause a cache is among american soldiers as well as iraqi civilians. the team that is hunting for this ied is called and d.o.d. team. explosive ordnance disposal. if you've seen the movie that won the cannes award, it is about and d.o.d. team. a typical tour, and even the team will go out on just about 600 bomb calls. that is to be asked to diffuse about two bombs every day. a number that may be the better indicator of their fight to the war effort though is the fact that the insurgents reported 50,000-dollar bought on the head of and d.o.d. are prepared to kill one of these soldiers and get $50,000. unfortunately, this particular bomb calls wouldn't end well. by the time the soldier got close enough to the device to see that it wasn't a piece of trash that was a bomb, it exploded. you have to be as far away as a football field to escape death or injury from the blast frankly, at you at both the that even if you're not hit, the sheer force of the explosion itself can break your limbs that the soldier though had been right on top of that bomb would have exploded. so when the dust settled, and smoke cleared, the rest of team advance and they found little left of them. so the night the commander of the unit wrote a condolence letter back to the united states. they apologize for not being able to bring that soldier home. to talk about how tough the loss had been on the rest of the unit. but then they tried to talk up the silver lining they took away from this tragedy this is what they wrote. quote, at least when a robot dies you don't have to write a letter to its mother. that the story is a story of the very first robot killed in action. it is the soldier was a 42-pound robot called aipac bought. it was an office building just outside burlington massachusetts on the side of it says i robot. it is a real-world company named after the fictional and the not so great will smith movie in which robots started doing daily chores and move on taking life and death decision. and his concept of what happens when the techno- geeks do go to war against the terrorist is something that fascinate me, and so several years ago, i set out on a journey essentially to interview anyone and everyone who is working in this room of robotics and war, what is it like to be one of the scientists building more robust. what is the science fiction authors or inspiring real-world weapons up and allow them consult for the military. what's it like to be in a military? was elected to a 19 year old city in nevada flying a plane that is over afghanistan? what's it like to be their commander, the politicians? how does it affect when and where we go to war. the opposite side of the coin, what do insurgents think about our robots? what do they think about you and me sending robots to fight them. the war of ideas that bruce talked about, how is this being framed not just in our media, but any medium places like lebanon and pakistan. and in the right and wrong of all this. so interviews with jack officers and the military but also lawyers at places like human rights. the gathering together of all those but what i think is interesting is the stories shine a ripple -- shine a light on the ripple effect are playing out and everything from our politics to our laws to our ethics to that we fight wars. and what i'd like you will be the is just walk through where we stand right now with robotics and some of the question i think that it coming out of this. the technologies, these predators, they seem like science fiction. but we need to remember that they are after the very first generation of all this. they are the quote of the model t. for pathetic world of the wright brothers flight. we're using them a lot more than most people recognize that we have over 7000 unmanned aerial systems in the u.s. military inventory. that's up from handle when we invaded iraq in 2003. we now have over 12,000 unmanned ground vehicles, ground robotics. that's up from zero that the invasion force used during 2003. and, of course, we are arming them and that gives the term killer app, short for to application of entire human. killer app doesn't describe what the ipod has done the music industry but when you're arming a robot it takes on a whole different significance. and when people make the comparison of where we stand right now, they are pretty fascinated. the scientists say that we are where we were with automobile or the horseless carriage back around 19 to nine, 1910. other folks like, for example, bill gates made a different comparison. bill gates describe what are with robotics right now is where we were with a computer around 1980. still other people make a darker comparison. they say that we are weber with the atomic bomb in the mid 1940s. and incredibly eloquent technology with cutting edge but also a little bit like a genie that we're not going to be able to put back in the box. i think what's interesting is some of the ripple effects that those technologies have on our world that we're starting to see the robotics as having as well. and they have huge implications. one is the question of where is the unmanned military headed? i remember interviewing a u.s. air force at centcom and he said the problem is it's not this is his go, it's not better, it only gives me more. that is, we've gone from using 02000 of these in a blink of an item but we haven't had out things like our doctrine, how to use them in battle? which ones who would buy? which ones would not buy? to something that change often about how do you ensure that digital security of your weapon systems so that insurgent in iraq can't download your view, can't hack into your communications using a 30-dollar piece of software that they bought off the internet. true story. already happened. how to deal with the new stresses that these remote operators are dealing with? that is, there is combat stress and fatigue even when you're sitting outside las vegas and flying a plane 7000 miles away. the second issue is one that bruce touched on, but go beyond it. are we in gaged in three wars right now? iraq, afghanistan, but also pakistan. that is, we've carried out three times as many robotic airstrikes into pakistan as we did in the opening round of the kosovo war. but we don't call it a war. we don't view it as a war. why is that what is it because congress hasn't had a vote on e.u. to support it or to go against it? is a because it's being operated by the cia, not by the u.s. air force? again, you've had over right now we're at 119 airstrikes. or is it a fact of the technologtechnology itself we view it as costless and we don't have to think about in the same wakeup or is it that war is changing? the third issue that comes out of this is something that they worked on as well as how do our laws keep up with all the change that is going on? this is a 21st century technology that's being used against 21st century actors in war like al qaeda, but yet the prevailing laws of war date from the mid 1940s. and i remember doing an interview at human rights watch and asking them who do we hold accountable when predator drone strike goes awry and the two leaders in organizations i was meet with got an apartment at one of instead we turn to the geneva conventions of course pick the other one said no, no, no. that's not going to be useful but we should turn to the directive for guidance. [laughter] >> i love trek, but i can't call captain kirk as an expert witness in a real court of law. this goes to also question of who can use these technologies which is something shane touched on as well, which is the militaries using them, but so is the apartment and homeland security. so our local police department, miami-dade. so are the board of militias, these vigilante groups. . . soldiers to speak that has made in china written on the back. and their software is increasingly being written by someone sitting in india. so in in an think of others to simmered would make out of this. in all these questions about this ripple effects will tend to financers. we can debate back and forth we have issues at five minutes caboose at an exponential pace we've got to figure to keep it because the distance between technology and are human institutions is actually going greater. and in the second half, everything i talk about totally sounds like science fiction. and yet, it's all reality. it's not futuristic. it's actually in the present or even in the recent past order. that's why it's so exciting, but also so interesting and fascinating. fun, but also the carry. thank you. >> thanks very much. without further ado let's go to questions that people have them. there's a microphone over there and -- cattlemen get enough right now. >> good morning. i appreciate the area of expertise that you will represent. there's a big myriad that was not mentioned and so i like to address this to the core. and that is the area of cybersecurity because there are many areas of battleground if you will. certainly one of those, if you haven't experienced it toilers to creat, and we certainly have experienced it to a lesser degree is via cybersecurity. it can cause tremendous impact on our entire network, which means her overall system. i realize this is a black subject. i really there's not a lot that can be said about it without violating security. i certainly don't want to push it over the border. i would like to see if you can address where you think we stand, particularly not in the offenses, but in the defense area. >> well, none of the books in question have that as a central element. however, you're in luck because at least two of the panelists have fairly extensive expertise in cyberstaff and cheney is here if you want to talk about that question. >> in my mind, if there's a sequel to the watchers, and something involving exactly what you're talking about. i kind of divide the cyberthreat if you want to talk about the defense side of it into two categories. one is the risk that a nationstate or other organization or terrorist group perhaps could actually use a cyberattack to disable systems that do things like control electrical power facilities or some of these are connected to the internet, control facilities. or some sort of an infrastructure. the second category is what i would call sort of rampant cyberespionage directed mostly against u.s. by china and russia and the intellectual property for u.s. government for the purpose of building up economic development. in terms of what is the greater real threat right now, i do think it's the second because i think it is happening all the time. the recent case of google coming out and say it hasn't been hacked the civic groups in china is now only because google admitted that it happened because this kind of thing is happening every day and of course there were 30 other companies that were attacked allegedly in the same operation and had their intellectual property stolen as well. the cyberwar, if you like, component of it up one night due to another to disable the structure is a little bit of the last of it there because of a politically thinking that some people believe could happen the pla, the people's liberation army went into seybold a power assist them in some major city and we were able to authoritatively, not weekly come but authoritatively traced it back to china would be pretty quick escalation into a full-scale war. i do think the term has any interest in doing that. so i think there is some sense of mutually assured self-destruction in that realm, not necessary that we would engage in a counterpoint cyberwar armaments, but that would engage in a conventional war on anybody who tried that on this. but this is in my opinion the next vanguard of national security, right? this is sort of the next great frontier and we're just beginning to even come to grips with the total strategic shift and change that this puts in place for a military, for intelligence intelligence committee, foreign policy and for businessmen. become a big big way. >> peter, do a good idea to? the >> shore. the first is the introduction of all these weapon system raises the stakes. but as it allows you to do things you couldn't do before. and i called us we're entering an era of battle's persuasion, where michael is not just to destroy the enemy tank, but if it is remotely operated, if there's autonomists i can accomplish my goal simply by hacking into the communications, taking over its away in persuading the thing to do something that its operators don't. i imagine the old movie top gun. antarctica recall that tom cruise, maverick. and we say maverick, recode all the american f-14 fighter jet as russian mid-29 and recode all the russian-made 29th as american f-14. you know, concord would tackle and go nowhere man. i cannot tell a digital system to recode american planes as enemy and enemy as american and you will do that because it doesn't have the principle awareness. and so that the idea of battle of persuasion. the second and that comes out of this is the ease of penetration and the actors that might do it. it's not just large state powers, you know, it can be kids. in this case that i cited the people using $30 software, literally it was software that was originally created to allow college students to legally download movies off the internet. and the insurgents figured out, hold it, i cannot use this to illegally download american surveillance footage of iraq, of them trying to watch me. he went able to call the drones, that hollywood movie at that point. but they were able to see what we were seeking. it was a lot like being a criminal being able to listen to a police radio scanner, and it's useful to them and we would love that out there. the third thing that generates ideas of cyberespionage and it's something that we're had no robotics, but one of the reasons we might fall behind his back. an example attack i talk about in my book is a leading robotics company that is representative go to the young show, the singapore arm shows, the big trade we look at weapons. and they go to one of the booth and they see one of their robots they are. and they call for head office and they go, we don't remember ever selling one of our robots to the 13 nation. and they're like no, we never have. it was a cold version. and so, they lost all the fruits of their labor to basically calling it. >> hi, my question is for mr. riedel. i was wondering if he gets a little bit about the relationship between abu asad zarqawi and al qaeda and also what you think about the phenomenon of local terrorists emerging in aligning themselves with al qaeda. >> were the chapters chapters in the book is about abu asad zarqawi entitled the stranger. abu asad zarqawi was so violent, so brutal that even in al qaeda she was regarded as kind of pushing the edge and that's why they called him the stranger at the end. zarqawi is a jordanian. he got in trouble with the law in jordan growing up, got involved in petty crime, drug addiction, things like that, was put in prison and in prison was further radicalized. in prison discovered the koan and was influenced by several radical islamic sheiks were also in jordanian prisons. he then, when he was released from prison in the general amnesty, went to afghanistan and started fighting in the afghan wars, as i was taken associate, not a member of al qaeda, but an associate of al qaeda. he was more closely connected to the taliban, in fact, than he was to to al qaeda at that time. he continued though to have an interest in working outside of afghanistan against the broader crusaders and zionists enemy, which is how al qaeda refers to you in any and all this. he was involved in 2000 in what is called the millennium plot, which was an attempt to stage simultaneously on three continents, terrorist attacks on the eve of the start of the current millennia. his attack was to take place in jordan and was to blow up a very large hotel in downtown of mind called the radisson hotel as well to attack several targets in the jordan river valley, which are tourists facilities, which he knew would be attracting western. that was spoiled by jordanian intelligence at the last minute. after september 11, abu decade zarqawi did something different. rather than going to pakistan but most of the rested, he he moved to iraq and he began building, in 2001 and 2002, the infrastructure for terrorist underground. we knew he was doing this. if you go back and reread secretary of state colin powell's i would say infamous speech now to the united states security council on why we went to war on iraq, where there were weapons of mass strikes in there, he mentions zarqawi and he mentions the fact that this terrorist infrastructure was being built. but i think we grossly underestimated the character of the nature of what zarqawi had in mind. zarqawi had it eerie deadly plot. he was going to do two things. he was going to bomb everybody also correct him united nations, every other country that is foreign mission there, the international red hot, although nongovernmental organizations that were essential to try to rebuild iraq after the american invasion. then, leave us alone there what he did the second of his talk, which was to incite hatred between shia and sunni arabs in iraq to create a civil war. and he's got that going going after shia religious sites and major shia figures in iraq. and we have to give the devil his due and he is the devil. he brilliantly succeeded aired over the course of three years he brought iraq to the brink of civil war. he did it in such a violent way that he actually created the backlash against al qaeda in iraq that i think was the key to the success of the surge in the last several years. without this violent backlash, against al qaeda, i don't think the surge would've probably succeeded. we were smart enough to take advantage of it. not only did he continue to carry out these attacks in iraq, but he also went back to attacking targets in jordan. and in 2005, the radisson hotel was finally attacked. one of the bombers was a suicide female bomber walked into a wedding party on the third floor of the radisson hotel and blow it up, killing literally dozens of people at a wedding. that had a backlash, too. and the jordanian people who until then had a zarqawi is kind of a heroic figure who now songs for what he was. we finally tracked him down with the help of the jordanian intelligence service and others in the use of predator drones and were able to kill them in 2006. if not the end of al qaeda and iraq, but it was a very serious program. initially as i said i'm a zarqawi was kind of an associate to al qaeda. but by 2004 he became a fully declared member of al qaeda. he pledged loyalty to osama bin laden. and when he was killed, osama bin laden gave him extensive eulogies and audiotapes. but it's also pretty clear from the record that even they thought he was a little bit too extreme, even for their taste and we have remarkable document, which i referred to in the book, which is a letter from i'm an owl that was yuri the number two to zarqawi and it's a fascinating document because that was yuri is saying you are god, you're the commander of the battlefield and were never going to question what you're doing. if you think it's really smart to attack the majority shia population of that country coming to think it's a really a bright idea to blow up mosques? you're in charge, you do what you want, but we have some valid. is it really smart to behead people on television? don't you think that's going to cause a counter reaction? well, in this case he was right here at zarqawi was gone. it's a very important illustrative insight into how they do franchises in different parts of the islamic world are built and developed by al qaeda and the relationships between them. tonight yes. >> taken upon admiral poindexter's point that information is power. another to ask a question to any of you who would like to respond. since the analysis in this case, the gis have no land, no air force, but they are like metastasize cancer cells all over the western world. is and the fact that our intel apparently does not have a whole jury of language speakers in arabic and other necessary languages and they don't have penetration agents in the cells has not the instrument in our globalized electronic world become their primary means of communication and surveillance of the internet, the best way to protect ourselves and our country. >> i mean, i think ikea, the internet and chat rooms in the so-called jyoti websites have become a primary means of website of recruitment also now for terrorist groups. i mean, bruce i think you speak to more of the evolution of al qaeda targets the revolutionary ideology that is now finding a cure and the new recruits by sort of defusing out through his different kinds of channels. one thing i can speak to us there is a debate ongoing within the government now that i think probably breaks out between the intelligence community and the defense department over what to do about these communication channels geared on the one hand, they are very potentially rich source of intelligence on what terrorists are saying, how they're recruiting people, where they're going, what they might want to attack what they're thinking. and on the other hand, it is in fact the tactical communications system that allows them to swap notes, trade videos, trade messages. so there is this kind of constant tension between do we leave or take them down. because we have to take them down, but is has to take them down there going to up someplace else. this is something more tactical and strategic that you can work on the fly, but it seems to me altogether that is kind of where it's going next if you'd like. and i think the government recognizes that. and they're quickly trying to figure out how to stay ahead of that evolution. speak not definitely. the al qaeda uses the internet, the world wide web has its means of communication not only to its own collaborators, its own operatives, but because they can hide messages and e-mails. they can use encryption. but more importantly, to spread the idea because al qaeda today is more than an organization, it's an idea, concept, the concept of the global islamic jihadi appeared to use the internet to radicalize those who will never have any face to face contact. major had died, the killer at fort hood is a classic example of this. he radicalize himself on internet and then he began to communicate with the ammonite cleric using it. and there is an ongoing war as shane has indicated. i give you an example. every september 11th is 2003, al qaeda issues a major statement. it's kind of the state of the jihad statement from al qaeda, which is that here's what was done in the last year. user things are going in his solo thing to do in the year ahead in the broadest terms. in 2008, the statement was delayed from being rented by our intelligence community basically taking down she hottest websites. and i turned up i think four days later when they finally got one of their websites up and operating. last year was taken down and they were back up and operating four hours later. so this is an expensive war for the web that's going on every day. we have on our side the national security agency. i can't tell you how many people work there, but if you've seen the buildings would you go up and down the bwi, you've got nobody time for thousands of people if you just looking at the parking lot. al qaeda is suspected probably got a handful of those very, very smart pakistani i.t. kids probably in their twenties who are waging the war against us. >> i'm going to say something, maybe not the best setting, at a book festival to say this. but the internet is the most important tool for spreading both knowledge and hate since the printing press. and that is an indicator of what i call a revolutionary technology, that it has a ripple effect beyond just their capabilities. it reflects the changes, the way people think, changes the way people operate, raises very deep questions of law, including in this issue of privacy. and one of the misnomers that i tackle in my book is how we have this perception of insurgents of terrorists as being, you know, guys hiding out in caves who have no connection to modern technology and that iraq or afghanistan are wars that don't involve technology. and yet there's a very sophisticated back-and-forth, you know, takes the example of the ied, the improvised thick explosive device, even improvises is that's just not all about good. actually insurgents have come up with 90 different technologic ways to explode these because there's a constant back-and-forth. our cameras, their counter jammers. in one of the things that we've seen is global ieds, unit in iraq came across basically imagine a jury rates skateboard that was loaded up with explosives. and so all of our tools but were designed for finding bombs buried along the road definitely don't work against what is a robotic insurgent weapon. and part of the spreading of this is both the spreading of hate that my colleagues appear on the panel discussed, but also the spreading of knowledge because when i invented, i can quickly share of others. a manchester reality. i'm not saying just like the printing press was a force for good, he created knowledge, created our modern concepts of citizenship, et cetera. also elected the 30 years war. same thing internet is the same sort of ripple effect, which led to massive amounts of advancements in our world, spread of knowledge, but of course people use it also for darker deeds. >> are there questions? if not, then i will get each of the panelists a moment to wrap up and then we will be over on the website of the room or from our left side of the room, you're right side of the brain signing books for the 15 minute starting five minutes from now. bruce. >> well again, thank you offer coming and i want to thank the organizers for putting together this spectacular event. sorry we didn't have a somewhat more uplifting subject to talk about this morning, but we are engaged in a war now that's been going on for 12 years rid of the impact on our country has been enormous. it is the to to other wars and may lead to additional campaigns in other theaters. the financial cost has been in the trillions of dollars. the very structure of our government has been more transformed by this war than any war since world war ii. we created whole new set yours, the department of homeland security, national counterterrorism center, the director of national intelligence, that didn't exist 10 years ago. that's why think it's vitally important that we understand our enemy better because if we're going to win this war it's only going to be taken inside the heads of our enemies and beginning to figure out what their vulnerabilities are and defeat them by understanding them. thank you. >> dissecting her thought it was really good or bad somewhat more uplifting remarks, but thank you for questions as well, which i think really reflect just a great interest in this, but also the great awareness of the public is spreading about a lot of these issues to that you take my topic of surveillance and just close out one point. it's important to remember how this evolution of technology has fundamentally changed, not just the way we communicate, but are very concept of what privacy is and what anonymity is. there's a telling quote at the end of the book from an official who was banned in 2007 when he gave a speech, the number two man in the intelligence community, the deputy director of national intelligence. for too long and i say the propriety have been treated is that the same thing may just no longer are. i mention this quote as to say that if there is any group that has really come to terms, i think, with this sort of disconnect now, privacy and anonymity is the united states intelligence community. i often joke if you were to jump in a time machine and go back 30 years and say to somebody working for the nsa or the cia, the 30 years from now and the future there will be this and called the facebook, on which we have photographs of people in ripple to see what they're doing and what they're thinking and who they're talking to them what they're reading them how they're connected to people. that official at the time would have never turned anybody in this country could've come up with that. that would've sounded so totalitarian. an hour giving that information blend better selves and the government recognizes the strategic shift and is going to take advantage of it. no amendment in the course of reporting this book discounted value of privacy. nobody was out to launch a war on the constitution. but at the same time, they are fighting a war. i think bruce has articulated that quite well as the respect of the people in the community and they are not playing by the same constructs as they were before, either of the enemy or in terms of how they have to operate amongst society at large. >> i want to thank everyone again. i think i'll go to a different point which is something we didn't talk about, which is the responsibilities of writers who work in fields of policy and nonfiction. and i think what you see in this panel tried to do, which is what i see our responsibility is to take very complex, very important issues and be able to communicate about them in a way that doesn't just speak to those only within our field and that our job is to communicate. and i'll differ little bit and it may just be the approach of the book a row, but i see a part of that is to come you know, not hide behind acronyms and not ride in a stodgy way, but right in a way to write people want to read. and you know, for me i wrote a book about robotics and more, but it's a book i think maybe the only book in history -- actually i know it's the only book in history the preferences but the battle of ash and cool and the science of tesla, but also paris hilton and the tv show gossip girl. i mean, and that's the deliberate choice. it reflects my personality, but also the choice because these topics are very important, but they're also darn interesting and we shouldn't only make them dry. and so i think that's been one of the fun things of this deal is that we've taken, you know, topics that are tough, but i don't think anybody walks away from this discussion not a lot smarter about it and so i appreciate all of you coming out. thank you. >> of the great note on which to them. thank you offer coming and the office will be on that side of the room for the next 15 minutes. [applause] [inaudible conversations] [inaudible conversations] [inaudible conversations] .. [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] you're watching booktv coverage of the 2010's annapolis book festival wrapping up the first panel of the day on global security. it will take a short break and return with more live coverage and about 20 minutes and when we come back a panel on the world's water situation with mark kurlansky author of the "the last fish tale", "cod", end orrin pilkey professor emeritus at duke university and author of "the rising sea". [inaudible conversations] >> we're here at conservative political action conference talking with jerome up, tell us about your new book. >> it is in the america for sale and it was a new york times best-seller and i'm pleased with it. it's an economic analysis of globalism and the need to preserve u.s. sovereignty and very strongly supports the two-party movement and it's predicted a lot of the economics we're going through. unfortunately we're not to the hard times yet to and talk about a coming debt crisis that i think is next in the book, but is comprehensive. a lot of solutions and emphasis on things people can do to solve economic problems. >> can you give us examples? >> i recommend to people for their personal lives even look to consolidate families. if someone has lost a job, son or daughter, move them into the home. parents get older, forget about nursing homes, expand your home and bring them home into the house. go back to consolidated family is here to make sure your press residential real estate is paid off. and then in terms of the larger issues we need to have the federal reserve audited and transparent federal reserve. a very strong suggestions for job creation. i think reduced taxes would be a good idea private small companies, they create the majority of jobs so we are aiming at trying to get the private economy revives and get people back to work and that's what america for sale is all about the. >> to spend time talking about the relationship with china right now? >> an extensive part is on china and i predicted that china was not going to continue buying u.s. debt and that china and that is what the book is about. if we continue to have data in cycles unmanageable as we are headed for, but countries like china are going to say what assets. in other words, public-private partnerships and maybe we can manage some of your roads, maybe we could have guaranteed investments in various u.s. businesses so china is coming and i think we've got to be very concerned that we don't get too reliant on china. both economically and politically. >> you've actually been rather prolific these past couple years, can you tell us your other work? >> thank you, the obama nation is on paper back and i still think it was really a comprehensive biography of a critical biography but certainly now it predicted that president obama was going to be leftist it is politics by his history and his training and intellectual development, his work with people like william a. errors and his work with the weather underground bomber, reverend wright, i go into sol kolinsky, the rules for radicals and intellectual training. it's a paperback now at a reduced price which i really happy because i think you'll get a much wider audience and then i also -- go ahead. i also went to israel and spent three weeks in israel, in tribute to the top israeli leadership i meant the president perez, meant president netanyahu and why israel can't wait is about the coming war with israel and iran. israel is saying that the final analysis of self-defense israel would launch a preemptive attack. i wrote the book to try to prevent that. i think that's the worst possible solution but i had to -- i think the israeli government or through me to communicate to the world how urgent the situation was. the best opportunity is right now. if we would just from the white house supports the green movement within iran, we might actually get a peaceful change from within. that's what i'm hoping and praying and wrote the book to try to promote as the best solution. and my first novel will be out. simon shuster is published in my book on the shroud of turin, the shroud codex. i guess it is somewhat my answer to dance round. i am catholic and very supportive to the catholic church and supporter of the christian position but i argue that science and argue the history of the shroud. world that daley were i was senior staff writer, we are organizing to do a tour in teheran during the sean exhibition in april and may. i just got back from rome and presented the book prepublication to the radicand, let them know is coming out and on public -- excited to have it appear in april. >> with the time is spent writing to get much time to read? >> i've been gifted to read quickly all my life and my constant reader. i read all the time. one of my currently reading? i remain a couple different things. this new book on hiroshima the one that cameron is interested in making possible a movie on, i've gone into that, an extremely good book. i have been reading michelle malkin culture of corruption which is a very good book. another good study of president obama that is very valuable. so i read very generally and i read fiction as well as non-fiction and some older fiction. recently been going back and reading a lot of the old crime books. maltese falcon and those forties' novels. i love that riding. i read very broadly all the time. >> to you know yet for sure next nonfiction project will be? >> talking with simon shuster about a couple different projects. i'm thinking very seriously about another book on oil. remember i wrote to a stranglehold, very controversial where i said it will is not dinosaurs soup, it's not -- it is abiotic not made by fossil fuel. i like to a dance that in another book. and simon shuster is talking with me about a book on obama, maybe another kind of comprehensive book on obama after a couple of years in office. evaluate the biographical details and how they actually played forward with the administration. >> thank you very much for your time. >> thank you. [inaudible conversations] more live coverage of the 2010 annapolis book festival on booktv. coming up next a panel on the world's water situation with mark kurlansky author of a "the last fish tale" and "cod", howard burns, author of a "fight for the bay: why a dark green awakening is needed to save the chesapeake" and orrin pilkey professor emeritus at duke university and author of a "the rising sea". [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] starting surely from the 2010 annapolis book festival, panel of the world's water situation with mark kurlansky author of the "the last fish tale" and "cod", howard ernst author of "fight for the bay" and orrin pilkey professor emeritus at duke university and author of a "the rising sea". [inaudible conversations] >> good afternoon, welcome to the annapolis book festival and our panel titled the world's water. my name is brian michaels and among faculty member at the key school, i teach a college environmental science and direct the school's outdoor program a quick note i'd like you all to turn off your cellphones so we can limit disruptions for our conversation over the next hour. it is my pleasure to introduce the three is seen the authors joining us today. first howard ernst serves as a sosa professor of political science at the u.s. naval academy. and as a senior scholar at the university of virginia center for politics. dr. ernst received his ph.d. from the woodrow wilson school of government and foreign affairs at the university of virginia in the spring of 2000. in his research focuses on the american political system with special attention given to citizen influence on a sub national politics and environmental policy. dr. ernst is best known for his work in the area of environmental politics and is considered a leading author on the chesapeake bay restoration program. beyond his words academic impact, his findings have been highlighted in numerous media outlets including the national public radio and the pbs frontline documentary titled, poison waters. his most recent book is "fight for the bay: why a dark green awakening is needed to save the chesapeake". also we have a orrin pilkey professor emeritus of earth sciences of founder and director emeritus of the program for the study of developed shorelines. within the nicholas school of the environment and earth sciences at duke university. as a result of the destruction of his parents' house, and wav land, mississippi during hurricane camille in 1969, he began the study of coastlines. dr. orrin pilkey, his research is centered on basic and applied coastal geology quote is an primarily on a barrier island coast. "the rising sea", his latest book, co-authored with rob young focuses on a sea level rise. he has received numerous awards among them the francis shepard medal for excellence in marine geology in 1987, public service awards from several to logical and societies, and the priestly award in 2003. and finally we have a mark kurlansky, a best-selling author and journalist pierre from 1976 to 1991 he worked as a foreign correspondent for the international herald to bran, the "chicago tribune", the miami herald, and the philadelphia inquirer. over the years his has worked of variety of jobs including commercial fisherman, dockworker, a paralegal, cooked, and pastry chef. [laughter] he has worked plays, novels and many nonfiction books that spans such topics as baseball, history, writing, environmental issues and food. his books, "cod", "salt", 1968 and food and a number land were all maritime is best sellers. finalist for the nosh angeles times book prize for science writing and a winner of the day to literary peace prize he lives in new york city. he should also be sure to visit marks to p.m. presentation about his new book, eastern stars which is held in the barn at key school. i also want to said that i'm personally excited to hear from our panel today. each of these authors has made me a better scientist and teacher over the last decade dr. ernst books are texting my ecology of just a big day class. i was talking to dr. orrin pilkey, his research was foundational for my own graduate work in coastal geology and sea level dynamics and studying mr. mark kurlansky approach to history have shifted the when i teach environmental issues at the key school. i thank you all for that impact and that excited to hear from you all today. i will now turn it over to mark kurlansky who will be our moderator for the panel. today on the world's water. thank you very much. >> thank you. is a pleasure to be here. i write a lot about fish. [laughter] one thing i find in all of the debates about what's going on with fish is there are two things that nobody really likes to talk about very much: pollution and global warming. fishermen tried to talk about these things and environmentalists say perhaps inadvertently making this bad pun and say they're just trying to let themselves off the hook. [laughter] so i'm very happy to be on this panel with a couple of guys who want to talk about pollution and global warming. >> you have an order? >> howard, why don't you? >> sure, think very much, it's a pleasure to be here and an honor to be on this panel with these two distinguished authors. you have to forgive me in it fancified talk alas. i have hundreds of people to offend and a short time to do it. [laughter] so i'm going to get right to the heart of the matter. i want to talk a bit as they do in this book about the environmental community or as my good friend, fred thompson, refers to them as this: he calls it the cozied dysfunctional group masquerading as environmental community. in the chesapeake bay area its 692 environmental groups. each one of them divided themselves differently saying that their tactics are better than the others' competing for membership, competing for resources and competing in a way that isn't necessarily a very profitable or productive. chief among those in our area, of course, is the chesapeake bay foundation which for a regional environmental group is a phenomenal success. if you forget that the chesapeake bay is in disasters shape. 200,000 members and bring in 30 million a year, a full-time staff of 165 employees and so on and so on. so in this book i ask a basic question: how would these groups be 692 environmental groups behave if they believed that clean air, clean water, vibrant natural resources was a human right? if they thought this was a civil right? not just another civil rights but the civil-rights movement of our generation. if, in fact, this was our summer of 1968, what would they be doing? how much urgency would they bring to the issue? what kind of moral indignation when they bring to this effort? where they engage the political process as fully as their legally allowed to? would endorse candidates? advertise the voting records of candidates? with a march on places like southbury maryland with a chicken processing plant or with a large and other places may be at the maryland homebuilders association which constantly fights to water down the state's storm water regulation? would they engage this process with all the tools and other civil-rights leaders have in the past? and i think the answer is, yes, there probably would but they don't. so here's the problem. the problem that i outlined in the book is not a chesapeake bay problem, is a human problem and go something like this. we are going to die and we know about it coupled with the race to improve ourselves in a short time that we're given a and usually define improving ourselves as becoming wealthier or growing our wealth. added to the fact that we can easily escape the environmental impact of our short lives, leads many of us to grant -- adopt what i call it renters' mentality and rhianna with the ranchers mentality is. the ranchers put a premium on short-term economic benefits, they make it very difficult to envision ever mined plan for a future beyond the next year or very best election cycle but certainly not a generation or millennium. given a choice between living in a world of renters and a world of owners we would probably all jews to live among the owners, but we are given that choice. and the role of government whether we like it or not is to force us to act like owners, to force us to act as if we were going to live on the land we currently occupy for the end of time. that environmental bureaucracy is the property manager that none of us like that we all quite frankly can't live without and our job is to make sure that our government acts like a wine steward of the enrollment rather than a greedy slumlord. what i was undergraduate at went to an engineering school and in that school i had a political science professor who was fond of saying that earthquakes don't kill anybody. he was a nobody was never shaken to death by earthquakes. [laughter] then he would go on to say that engineers kill people. imagine how popular he was. [laughter] the attention is buildings are of inappropriate and fall on people and that's how they died here and i'm here to tell you the chesapeake bay is not dying from pollution. the chesapeake bay is dying from politics because we have a political system that allows the cycle of pollution to go on unabated in unacceptable manner. i've come to believe that environmental politics represents an irreconcilable conflict. it's a conflict between those with the values of owners who believe that to environmental protection is worth the cost and environmental restoration is also worth the cost and those with the values of renters. renters benefit from exploiting the bay in one way or another. they exploit as a cheap and giving a place to expose of unwanted byproducts and what economists and political scientists would call externalities'. chicken latourette, pollution from sewage treatment plants, what ever it might be. and exploited by over harvesting the bay's natural resources. those resources that live within certain natural laws weather over harvesting oysters, crabs, rock fish, shad, sturgeon, whenever it might be. i don't argue that these renters are evil or ignorant, i don't believe that. i believe that acting like a rancher from a business perspective is often the only rational choice and that the business of business is to minimize production costs so as to maximize profits and that's the responsibility of business leaders. taking steps to reduce your externalities' voluntarily can increase the production cost of a day from a business and make them less competitive in the march -- larger market. in rental programs were cheap or if they were profitable we wouldn't be here today because we would be implementing them. no amount of wishful thinking can overcome this basic fact and the thousands and thousands of conflicts that its bonds. restoration is a continuous effort to change human behavior and there's nothing more controversial and unpopular in been trying to do that. it's an attempt to make as i flight owners and my friends it is a political problem. the basic question that guides my research goes like this. how can it be that the chesapeake bay has so much support in the general public based on more than 40 years of environmental education programs and have to be the chesapeake bay is so deeply supported by our elected officials, every one of them regardless of party or pro chesapeake bay, ask them and they remind you come november. how can it be that we know so much about the chesapeake bay from a size perspective? is often been said we know more about the chesapeake bay than any other body of water and the face of the earth. the truth is we know more about the chesapeake bay than human beings have ever known about any body of water the on the face of the earth. huckabee that we have so much wealth? huckabee that we have all the pieces of the puzzle wealth and environmental ethic and will from our elected officials, guidance from our environmental scientists and yet the chesapeake bay is in such miserable miserable shape? make no mistake, the bay is a colossal disaster. i can go through all the usual numbers but they won't mean much to you. .. fact of the matter is that they is downright gross and i want to make a point. last summer there was a phd biologist in my area and she tested the water quality up and down the river. she does that because their local officials don't do that very well. i asked this person. i said chile, the day you click collect these letters able to take if you treat extras will you test them? i didn't say what the samples were. the first sample was from my not so clean toilet. the second sample was from a not so clean toilet that ipc senate and a third table was my not so clean toilet that he sees, that it's out there for an hour as swirled around a little bit, really, really gross stuff. to her surprise, not so much to my surprise will be found is that all three of those samples came back with readings that were less than a readings from the river come the average reading from the river for that week and by the way all three of those samples were within the epa's level of acceptable spending levels. that's gross, but the state of the chesapeake eight and it's a major, major problem. so the question obviously is how did we get into this disaster? how did this unfold and i make the argument of the book that if you really want to understand this, you do have to understand this dysfunctional coalition which recall the environmental community. and i make a distinction between the light green to the dark greens with other groups group that people commonly referred to as cornucopia. i want to owlet and very, very quickly. first are the dark greens. darkrooms believe we are in a web of connections with nature. the distinction between nature and man are official and of ultimately touch up pencil to both man and nature. they believe that a world without wilderness is a world diminished, diminished for human beings. they are writes pace group at heart. the belief we have a way to clean air, clean water and fiber natural resources are public spaces. another way to say this if they believe nobody how powerful or profitable have the right to bear our public water, our public air or the natural resources that are public spaces. and they insist that these rights deserve the same protection as other human rights, even if protecting them is expensive or inconvenient. they believe the role of science is to identify that the carrying capacities nature from the limits of nature in the public policymakers have to play with those limits and we cannot compromise because those limits are not able to be compromised. and i have a central tenant of their understanding. it's called polluter pays approach. polluters holzman are responsible for the pollution that they create, not the public, not anybody else. on the other side of the environmentalists section are grouped by called for the light credence. their responsibility-based approach. they believe that we have a responsibility to protect the environment. as a gardener may protect your garden path. they are the favors that save the manatee, save the oceans and yes of course save the day. they believe involuntary consensus. they believe we don't need rules and regulations. but we really need our goals informed by science and promulgated through the education system. they believe that compromises a good thing because compromise the two steady progress. the darkrooms of course reject this approach. they believe that environmental advocacy must move way beyond environmental education and moral arm-twisting. they insist the environmental must use every legal tool at their disposal in order to fight this fight and certainly must use the tools that the industries are using that i so often find themselves in conflict with. their model for action is not dr. seuss's heartless for experts martin luther king and it's a civil right movement of the 1960 in the 1970 this sense of urgency and outrage that quite frankly doesn't exist among the light cream had quite an honestly scares the light cream through the dark greens are not interested in compromise. and by the way, they deeply, deeply resent those light green environmentalists that are willing to compromise away what they believe are their environmental rate. beyond the light credence in the dark greens, there's this other group, the cornucopia. and as different as they are, the difference is no comparison between the greens and the cornucopia. the cornucopia believed that all greens, regardless of their few are nothing more than closet socialists. that's right, closet socialists. [laughter] picture using the environmental movement as an excuse to increase government control over your lives and that's what you really want, by the way. they believe the government environmental programs are bad for business because more often than not government environmental programs are expensive. they also are your rights-based approach, but they don't prey upon the altar of environmental rights. they prey upon the altar of property rights and they believe that your property right chomp my environmental rights. their holy trinity is that of the technology free markets and economic growth. they believe that the free market can give us more quickly and more efficiently with the government promised to enfield to deliver, which is a clean environment. they believe pollution is simply a phase and we're going to outgrow it and it's a trick to environmental protection is growing our economy, that we will somehow grow ourselves cream. the dark greens reject this. they rejected out of hand. they believe that no industry has the right to pollute our environment even if that pollution is temporary so they seriously, seriously doubt that it's temporary. they point out that should the whole developing world go through his dirty face, but the cornucopia of talk about it would be devastating for the planet because the bulk of the world's population is still in the developing stage. the dark greens live in a world with limit that cannot sustain this assumption habit of the west. the dark greens point out that the west, with its advanced technology and its efficient markets have not solved its environmental problems. they still grapple with clean air cover with water, not the nation's carbon emissions. i may also point out that we have a folder pollution problems. we simply exported them to developing nations and we consumed the bulk of the worlds limited resources. and i'm going to wrap up by just asking the obvious question. the answer is, who is right? who is right? the dark green, light green or cornucopia with? you might be surprised by my answer. the answer is it doesn't matter. it doesn't matter at all. each one of these groups is able to play in the larger political ecosystem do we call environmental policy. the dark greens bring a sense of urgency and outrage that is fundamentally necessary and by the way missing from the day restoration effort through the light green service for diplomats, the middleman between the dark greens of the cornucopia of in the cornucopia is recessed environmental policy as if it was their job. but they will cave in when faced with the uncompromising demands of the dark green and little other choice is. what is made the chesapeake bay the ecological zombied is today, not quite a lie, but not quite dead is the inflexibility of the cornucopia and the triumph of the light green paradigm. by marginalizing the dark greens, the light greens have guaranteed a series of sub optimal policies that might be able to slow the base general and slow decline, but are incapable of reversing the downward trend. the trick to environmental restoration, not just for the day, but for the country or the globe as a whole is to change the political course of least resistance, that the chesapeake date and rivers flowed this rake politics while. imagine where an elected official care about absolutely nothing but reelection. not that difficult to imagine. [laughter] what's harder to imagine is that politicians voting in favor of good environmental policies, not because he cares deeply, but because it's in his political interest to do so. when we have a situation, we will have hope for the chesapeake date. that will require a dark green awakening that quite simply hasn't happened here yet. thank you. [applause] >> thank you aired while you're all trying to decide which category your blog and, [laughter] was speaking of sub optimal solutions, you're in the chesapeake bay have given up a solution in much of north carolina that is a disaster for our shoreline. you haven't been here in maryland a type of shoreline stabilization called living shorelines, yeah. and living shorelines does a very good thing for producing a salt marsh behind a rock revetments and if allows for a decade or two or three. but after a decade or two or three, but those that do not have left are the revetments and no salt marsh. so we're trying to stop desperately your invention here, but no one is funding us to put in more living shorelines. so at any rate, i came here to talk about the sea level rises. sea level is rising additional controversy about this or at least there shouldn't be. we can measure it in a number of ways. nothing is happening now that hasn't happened for several billion years. we have just 18,000 years ago, the sea level was 100 feet below what it is today and it came up to about where it is today, about four or five dozen years ago and now it's rising underneath of an inch per year. but what was in eighth of an inch per year, who cares? it looks like sea level rise is accelerating and a number of state involved of experts on sea level rise have concluded that they've all concluded just about the same thing, maybe it's kind of a bandwagon, i'm not sure. but it every day concluded with a 50 or 2183-foot sealevel rise, a minimal three-foot sealevel rise. right now the sea level is rising at about a foot, close to a foot and a half% jury rate and the evidence for this is we have 150 years of measurements that shows us pretty well what's happening. for the last 18 years, we've had a satellite measurements and both come up with exact or very close to the same sea level rise rate. we can also look in nature. we have a lot of dead trees along shoreline and especially abba moral, south atlantic on the dead tree and old marsh is said they weren't eroded away. they were there and i haven't fallen in. they've just been downed by sea level rise. we have a cemetery and portsmouth island, north carolina, which is a fascinating one that is sitting in a salt marsh when other people didn't bury their dead in a salt marsh. however, i should point -- the tombstones have fallen in now due to shoreline erosion. why is the sea level -- why the sea level rising? it's rising because the main sea level rise right now is the thermal expansion, the expansion of sea water as it warms. but coming on board here and according to the intergovernmental panel on climate change and most agree with this, the big players in this 21st century will be deny she's peered at the potential of 29 feet of sea level rise. producing more water now than the west antarctic ice sheets, which has the potential of 16 feet of sea level rising. in user in the east antarctica sheet coming of the total potential of 220 feet of sea level rise. that's not likely to happen. i'm not claiming that's going to happen by any means, there just gives you an idea what's happening. the green ice sheets started melting about 1995. melting is a difficult thing to determine or contribute to monitor the sea level rises difficult because you have to know how much is coming every winter, how much is being done at an outcome how much noise has been produced and how much ice is an lost every. so it's not a simple thing to measure. west antarctica jesus probably became important in 2,542,006, something like that appeared in 2090 of the first technical paper that seem to show that the east antarctica sheet, the big ones, besides that the united states is reducing -- is starting to produce its starting to melt enough loss of water. the ramifications of this rising sea level are first thing and the canaries and the mind which are the asphalt and particularly carbonite asphalt husband abandoned which are the two adult nations that people are slowly moving to new zealand have a first-rate australia and been turned down. the indian ocean has more 100 of people are debating what to do. they've have the same government council meetings where everyone is worried subic are signing documents, pointing out, making the point that the sea level is rising and they recognize they have a very severe problem. in the marshall islands, sea level rises and they'll problem is validation and start something site that. they're now going across the 50 l. in droves where they put the soil into the drones. drums left over from world war ii, both by the japanese and the american spirit in the arctic along the coast of siberia and the north slope of alaska and in parts of northern canada and also scandinavia, we have a different problem. we not only have sealevel rise, but we have melting permafrost. so the beach is becoming more easy. the sand is looser and more easily with by race because of the melting permafrost during the summer and then we have a much longer summer, ice free summer along the shores of the goshen. and that means the waves are striking the shorelines that and much higher rate. and for a much longer period of time. so we have a very severe shoreline retreat problem in these places that are going to require moving villages back, but they're no longer live in an igloo is where they're no longer -- although they are such system societies and match cases, they require sewer, water and everything else we required in our houses. in fact of the federal government insists on not. what around the world, in and bangladesh to a 14 million people living below one meter, below three feet so to speak elevation. but the country that has the most to lose in terms of the percentage of population, that will have to be moved when the three-foot sealevel rises is vietnam on the mekong delta and the river delta, in large part of the population was there and a large part of their rice production is there and that will have to be removed. in the u.s., we have the most -- the most attended by image by far of the barrier island and we have 3400 miles depending on how you measure the mass of area from the south shore of long island all the way to the mexican border. a three-foot sealevel rise means that barrier island development is toast. there is no more barrier island development unless you build a massive seawall around both sides of the island. but the problem there is at the time of the barrier islands are threatened and they really need to do something, that the same time that manhattan is spreading and so forth. so who's going to get the money? we have manhattan, boston, philadelphia, d.c., miami at who's going to get the money to say that? is it going to be the ocean city maryland or manhattan? of course it's going to be manhattan. at the barrier islands, and excite the barrier islands will be in trouble. development will be in trouble and we should be responding to this now. one thing we can do immediately is not to build any more high rises to high rises take away all flexibility and any possible response to sea level rise. miami is the most an arresting situation all. in a u.n. study of sea level rise impact, it takes use it as a measure the amount of property that will be flooded by three-foot sealevel rise if you don't do any thing, and miami leads the world. there is no sea that is more valuable property that under three feet in elevation. but miami has two serious problems. number one, they're sitting on top of the miami limestone, which is a very porous rock. so was palm beach and sewer hearts of fort lauderdale acting. the problem is you can measure this in some of the ponds in the city of miami. they can actually measure a very slight pie in freshwater ponds in the city. that means that there's a lot of porosity. that means you can build a massive levee from the ocean they are on the floor line plus skates at the entrance to the among the less the, but it would make any difference because the water can discover it up and flood the city, not to mention what's going to happen from behind. the second problem that miami has, the mayor doesn't believe in it. the most political system in miami is really lagging behind in getting on board is a really, really serious problem for the city. but a serious problem for many cities. while typing to sum it up and think we don't have to look at this as a catastrophe. we can look at this as a huge opportunity for us to respond to a process of nature and are both. we recommend that we consider that in future planning and very around us although we plan on a seven-foot come at two-meter sea level rise. that's a little bit higher than a foot than most people would ask for, but were not predicting that sealevel rise. we're saying we should plan for that in terms of putting buildings upcoming terms of putting infrastructure roads and so forth. so i think you summed it up, the truth is very exciting in terms of sea level rising. thank you. [applause] >> okay, well i'm certainly very excited to learn that we're not going to have to worry about the florida vote for much longer. [laughter] i just want to ask you to do a couple of questions and then much better questions will be asked. i guess there is one might care about stuff up to the microphone and i'll take your questions. let me just ask you, oran, i'm going to make you ayatollah of the world you can do whatever you want and you're not an elected official. you can anger everybody. what are you going to do about this problem? >> zero man, what i like to do that. >> who wouldn't? >> yes, politeness buildings. i first of all would do some studies on how to do math and destruction on buildings of barrier islands in florida were the hundreds of miles, hundreds of miles of highways and shoreline. >> and what exactly is the problem with the high-rise? >> good question. the problem of high rises you can't move them. you can move them but it's far too costly. at a flight house cost $12 million to move it 12,000 feet. in many places there's no place to move the high rises. yes, i would definitely plan on moving. i would definitely plan on moving back. and i would try to do this mercifully as they could to my subject. like, i would not allow rebuilding. they always claim that come you know. i would not allow reconstruction after a storm. notice the assumption of this when hurricane hugo came by and they just couldn't do it. it was just too hard to do it. a lot of wealthy people who lost their houses, so they made a rule if you can find the roof of your house, will consider to be rebuilt. so everybody explained the rules of course. so we have to move and it's going to be difficult. i think we have to recognize that we're not going to hold the shoreline a place in any event. we can put a gauge, like the dutch have done. the dutch but it gave. they're a very small country all sitting on the delta and at a very adult elevation, much below sea level. overnight holland. and when it comes to the mississippi delta i would move back east communities. get new orleans out of their and move back east communities on the lower delta that louisiana is so important. well, they are important, but you're not going to save them. we can save them ultimately and were talking about billions of dollars and we should not be spending billions of dollars for small communities in louisiana. i can say more, but -- >> okay, howard, i wanted to go legalistic on this notion of right. now, i think you could make it pretty clear case that a lot of environmental issues ultimately have to do with their survival. and we have a right to survive if we make it comes to shell argument about it life, liberty, pursuit of happiness. at least two out of three. but what i wanted to ask you is beyond survival, because we supposedly have a level of environment in degradation that is not for survival aired and is there an intrinsic, is there an intrinsic right to be saved from any abuse of the environment? >> i'll put it this way, that yes there is. but the problem is that every day we determined that it's not. and so, right now there is somebody in the epa that doing a mathematical equation trying to figure out what the value of a human life is. if you don't believe me that they do this, they absolutely do this. and so they want to do a cost-benefit analysis may want to say what is it going to cost of upgrade the brand ensures power plant in glen bernie right down the road from here? i say will cost a billion dollars. though how many human lives are required to extend? , it will be saved by doing not admit to figure out what the value of human life is in order to figure out if it's good to do that. i am outraged by that question. you're given to polluting industries a permit, which equates to a right to kill. and i don't think anybody has that right. i like to look at the other way, not that we have rights. i want to know whether or not these polluting industries have a right to reduce the life expect to have my children. and the answer is no. >> why is there no one at the microphone? they are not believing me. [laughter] i can go on and ask the questions. if think you need to go to the microphone because they're being filmed and they will pick up your voice unless you speak into a microphone. >> thank you for taking my question. i know in the environmental community there's an idea of value being the ecological value and they're doing it right now. they're doing a scientific study to say how much it would cost to set the value of using weapons for getting redneck church in and they put money on values like clean air. , tried a cost to clean the air? inputs and economic value. i want to be a dark green, i really do. but i think unfortunately i'm a light green because you have two -- everybody doesn't put instead of having number one on the bill of rights, the bill of rights having another one saying freedom of speech. i went for a bill of rights number one. if you can't read indicator in the water, you don't have anything to say. so i'm just saying if you put economic value on their habitat and how much they're worth and how much will the dollar value based. you can say they protect from hurricanes, whether, clean the water, they would be habitat for fish. i mean, there's ways to put a value wanted him to put into dollars and cents. i wish life wasn't this way. so that's my question. i mean, do you think that's a possibility? perhaps we should just stop funding any kind of federal insurance on flooding. good i don't want to pay for it. i mean, somebody is putting on the outer banks in florida and people that live on florida on the main peninsula really are annoyed with the people in the outer banks. it's always the people want the barrier islands because they want -- they want bridges and make it wiped out every year by a hurricane. and what happens, the entire peninsula is pained because they live on the water and have their beautiful view. and who wouldn't want to live there, but you should pay for it yourself if you live there. what about you, question, but it's mostly a question about putting them dollars and sent in making everything in terms of that. i mean, you put the price of clean-air, it would be too expensive than tupelo. >> is a classic light green perspective. congratulations, you are a light green. [laughter] i don't entirely disagree with that, but i don't buy it entirely as well. i'll give you an example of how it can work. right now the chesapeake date we have this little disgusting fish but nobody catches. and it's valued economically is relatively small. its value ecologically is phenomenal because without the fish you can't have a vast population. [inaudible] and it falls at the last for the chesapeake aa. and so we do a cost-benefit analysis right now, the simple approach is to say, you know, how much should we spend to restore the men hated and we don't take into account the ecological value. you're saying we should. flipside of that is in a aroma county, where worsening right now there's a prohibition against women in the spotters for 48 hours after he won a train event. info, rmi tuned officials will calculate the cost of what is off. and that's how they're going to do it. the little place like sandy point parkway have to go one of those that were with the average person pay to go into that part? well, maybe if tunnelers dicarlo. how many people go in a day? okay, 100 people. they run their numbers and they say the value of being able to serve in public hard-faced but we just calculated. so if you can't go in the water after a rain, they'll say that's okay as long as the cost of fixing that is greater than the economic loss of actually being able to swim. and i say no, we have a right to swim in water, not just when it not raining, but when it is raining. we have a right that our rivers and streams don't become as dirty as the toilet bowls. [inaudible] >> until you get at their people look at dollars and cents. how was he going to get it solved? my dog got sick from sort of the river. [inaudible] >> when you apply a value to something, relates to your personal values. what it's worth for clean water and cleaner to me is far greater than for some of your people. and so was value do we look at? we look at my value? you know, what's the value of being able to catch a striped bass are not having to work kevlar gloves because it's infected with disease. economically it's a very small value because if you cook the fish you can still eat it. they tell me is relatively safe. but you know, you have to tell your 7-year-old child not to handle the fish. at the end of the day, those people have a right to diminish those things or they don't have a right. and that's what it comes down to. [inaudible] >> my children don't remember. i swam on the day my entire life. when i was a kid i wear white bathing suit. there were seagrass everywhere. it's not that way. now their memories are lost or they don't have a memory of having a normal ocean and city. it's the artificial beach. it's not the white sand. [inaudible] >> exactly. but heidi make it work? 3% of the population votes for the environment. if you look at the voter's comments 3% double vote for the environment. until you get the last of the world living like uni -- [inaudible] >> i would take exception to the 3% because i studied this stuff. in more than 50% of americans today will describe themselves as having an environmental ethic, has been an environmentalist heard and even beyond that i studied statewide issues for my dissertation i want to look at environmental initiatives that cost people money, right, but bring in an environmental good. a billion dollar bond in california for high-speed trains, semicommercial netting in the state of florida, having humane treatment of chickens in california and so on. the highest passage rate of any type of initiative well over 60% were environmental initiatives, regardless of whether it costs money. the public has an environmental sentiment that is far greater than that of elected rituals today. >> and it cuts across politics, too. there's conservative environmentalist. >> absolutely. >> people forget about teddy roosevelt and that it was richard nixon that gave us both the epa and clean water act. you know, it wasn't until ronald reagan that environmentalism became coming to know, you dirty work among conservatives and that is kind dirty or interfere with global warming. but it is not be that way. environmentalist your dealership stewardship to be based on whatever you want. the left-wing -- >> how do you get the chesapeake a foundation to be darker green? of >> i've been poking them in the eye for nine years now. last night how do you get the chesapeake a foundation to be more dark green? steady pressure gently applied doesn't hurt. and now, they're like any other group. they have their own institutional interests and that they have their actual advocacy interests. and they happen to be at odds with each other. if more people said, you know, i'm going to give my check to this dark green group, whether was the river keeper group for the conservation voters or whether was sierra club comic or to disengage and the process. cbs would have no choice but to follow the money. but they're not doing it out of ignorance. they know what the problem is. it's been a very, very clear to them, but they've made a strategic decision that they're going to be a 501 nonprofit department of education grew. they're going to be the elementary school teachers from the day. you know, the problem is from the poultry industry wants to buy regulations, the number one political strategy is not educating schoolchildren and it should be the number one strategy for the environmental community. >> another question for howard. you really got me what they have the right to shorten the life expectancy of my children. you know, it's absolutely right. and that's the kind of lured me over into the dark green and we must think in terms of rights which cannot be violated and compromise is the wrong word. violated is the right word. then, let me drive your imagination. i don't have enough imagination to see as a dark green, when i have an idea that there are rights that cannot be violated. i'll compromise, but not violated. what if we just rolled out -- i heard orrin talking about deconstructing or moving thousands i suppose of high rises on hundreds of miles of shore's. your program has to be more extensive than the orrin's doesn't it? >> it's not a matter of if i broke them comes into existence. it's a matter of when, right next at some point we have to achieve a sustainable existence, whether it comes to shoreline development, whether it comes to curbing emissions or whether it comes to live in the chesapeake in such a way that we don't poison ourselves good so it's not a matter of if, it's a matter of when. why not now rather than later? does it mean that we're going to pay more for food? yes. does that mean will pay more for energy? yes. does that mean we have to make the sacrifices? yes. it's a public going to do it? i don't know because they've never been after they've never been asked by her elected officials. let our elected officials say listen, these policies continue down this course is going to lead to the death of the chesapeake bay and all these things and we have a choice. and pay more and go down the scores and it's going to be a choice. were not given a choice. what we've been told is that it's evolution. we were told for 20 years that the bay restoration was making steady process, that we were improving, that were that were moving along at a rate correction aired when i first came on in 2003, the chesapeake a restoration championed around the globe as the world's premier restoration effort. that's been debunked and thank goodness i hope i have imparted not. it's better soon or than later. the changes we have to do are expensive. it's billions of dollars for storm water, billions of dollars for sewage upgrade, regulating agriculture and developing wife here and we know it is to be done. there's never been a bigger gap between what do we do about were actually doing. that's the achievement. [inaudible] >> we consider this an environmental right and we fight like hell. >> i have a question for dr. pilkey. imagine the problems with them in the charlatans i think i understand is the long-term problems with them. my understanding is they were an improvement over both heading. so, what would you -- how would you solve a living shoreline problem? over to implement in place of eroding shorelines? >> my solution would be trying to construct marshes without the bulkheads and put a foundation down there without the rock revetments. or use some oyster shells or something like that, or use some biodegradable wet out there and said that the rock, which is a permanent feature. something that takes -- to look 30 years the future and maybe could be offered 30 years from now. by building big rock rivette and south there is a permanent thing and it's really the wrong move to make in a time of rising sea level. those rock revetments will soon be -- in 50 years will be underwater, most of the ones i've seen here. so i think the thing -- the salt marshes are so important. we think it's important in terms of the larvae of various marine organisms and there's either some questions of whether the salt marsh behind a rock revetments is the same as the salt marsh with no rock revetments. >> i like to answer something about the question of theory or islands and getting the federal government ought to bear your islands. you forgot the federal government of the barrier islands tomorrow, much of the problem would disappear. we are maintaining shorelines with beach nourishment, for example, which import had just the development of high rises and they brag about it or used to brag about it until they realized that wasn't quite the right wing. but getting the federal government off the island would be a good first step. we tried that with the cobra system, where we does the needed certain barrier island segment as we would have no federal presence on the segments. well, as soon as the storm comes by as happened in what council beach, north carolina, everybody felt really sorry for them and also we had a very powerful senator in jesse holmes, so we just been in there and fixed everything, even though we were not supposed to be federal money. so these things are difficult. fundamentally, i think what howard is saying i really agree with. we can do something at least in my -- on the coast. we can do something now in a strategic way or we can do the same thing later in attack at full way. records respond to a natural disaster. but if we do something now, we don't have to necessarily respond to natural disaster. >> professor orrin, four years ago lake erie was a disaster. there were fires on the lake i gather. today you hear that they cleaned up. i don't know scientifically how well, but arthur series of lessons that can be drawn from what happened there? >> they benefited from a species called the zebra muscle. i'll be honest it's what cleaned up the water more than any other fact weird to cuyahoga river caught on fire and has gotten better. everything we know needs to be done is clearly identified by the scientific community today. in fact the we know most of us that for about 15 years. you reduce nitrogen can reduce phosphorus, the oxygen bubbles in the day will come back and make sure the sediments don't inundate the day and you harvest no no more resources that will replenish themselves in any given year. a social scientist like myself can understand that. are we capable of doing it, you know, in our political system? will see. i hope so. >> so you're seeing there was no political deal or arrangement with lake erie. it was the buckles and other fact your. >> yes. it was not enlightened management. >> there is also a decline of industry in cleveland. [laughter] >> the black sea has refined it but it wasn't because of management there either. >> okay, we have time for maybe one more question. there's actually a mike -- sure. >> hi, howard come i read your book and it's great and i recommend everybody here read it. everybody in that they should read that and i consider myself a dark green. i've always said please don't call me a liberal, commie anything else but a liberal. a socialist come a communist is okay, but not a liberal. [laughter] anyway, when you mention the price of the cleanup, i'm heavily involved with storm water. the billion dollars would just be the one county. we could spend millions in the community. but here's the question, i know one of the ways they can get the money and that's by stopping spending it on all the wars in afghanistan and iraq. [applause] and that's the monster in the room that nobody's talking about here and we're spending all this money on stuff instead of making our world a better place with water we can drink in soil and another we can breathe. were we to make killing people and destroying the environment on the other side of the world. and i think your comment on that. thank you. last [laughter] >> ray finally, someone asked the question. my comment is i appreciate your perspective and i share much of your concern. you have to look at where the money in a federal budget is spent. the adults really say you showed me your budget and are also showing me your priorities. a great deal of money spent on the military. a great deal of my is also spent on social security and medicare and medicaid and other vital services that our government provides. so the question ultimately is is your government reflecting the values? from her question i suggest that it doesn't. >> the military to meet is basically don't live up to the laws that we have evoked to the rest of us to go by and environmental care of the land, it never appeared in fact, i read a number of places are considered the biggest polluters in the world, such things as airplane cleaning fluid with waters down and was it for the june or camp lejeune in north carolina. and you consider that to be really part of the problem that we allow them basically a pass on these environmental things? >> the law of the land is at the federal government is exempt from state laws, right? and the supreme court has ruled that the ability to even packs the federal government is the ability to destroy, therefore exempt from taxation. thousands of acres in the chesapeake bay region are controlled by the federal government and many of those properties, averaging brown, edgewood arsenal's and others are highly contaminated and very dangerous places for decades and decades of military training, including chemical weapons training and other things. aberdeen proving ground by the way also was the largest sites on the atlantic coast. so it might not be safe for us to walk around, but bald eagles sometimes prefer bombs going off periodically been living in an urban area. the [laughter] my experience has been this. military officials are very good at following orders and instructions, right? they are. if the restricted to do the right thing, they'll do it. but they have a mission, which is different from or not entirely consistent with environmental protection. that they have a training mission another mission that was in a odds with virus protection and it's a balancing act and it's a difficult thing. >> okay, thank you all very much. thank you, orrin. i think were going to be signing books over there. thank you for your questions and thank you all for coming. [applause] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] >> if they get the right information and their past behind, they'll do this because they're decent people. [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] >> hi, let me get this for my husband, harry. thank you. [inaudible conversations] [inaudible conversations] >> thank you. [inaudible conversations] [inaudible conversations] [inaudible conversations] >> i think you can raise the elevation of florida. you can't raise the elevation of what's sitting behind us. [inaudible] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] >> newly out in paperback. it came out in hardback about a year ago. [inaudible conversations] [inaudible conversations] [inaudible conversations] >> i think they have it in the manger where they're selling the books over there. [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] >> from the 2010 the 20 annapolis book festival is wrapping up a panel on the world water situation. we'll take a short break and return with more live coverage in about 20 minutes and the next panel is on wall street, features william cohan, on wall street. from the key school this is live coverage of the 2010 annapolis book festival. next weekend, life on the tv >> we are here at the conference talking with paul kept very. can you tell me what was your favorite book to write? >> boy that's a good question. i'd say probably the first one i had success on the faith of ronald reagan because it was a shock. i started off writing a book on reagan and the cold war generally and never intended to talk about his face. and i started going to the primary sources, the letters, the handwritten speeches, interviewing people can interfere in people who knew him, i can do this really, really deep pervasive state that i did not expect at all. a lot of people were suspicious as to whether reagan was really religious him including a lot of conservatives because he was an astrologer. he didn't go to church on a regular basis. as i went to the reagan library, i read speeches like the evil empire speech and looked at the actual document. i saw greg and pam oliver. there's a big file at the reagan library called the phf, presidential handwriting trial which is document that have reagan's handwriting on it, not just a signature. and that's where you really see a president's role. and i saw this week, at least half of it was richer by reagan, including the very theological portions. and i relist right there that i was dealing with somebody much more substantive than the character -- caricature suggests when he was president. so i ended up with a couple chapters on reagan's face and three or four chapters, have a book on reagan's faith. i made a manuscript among my colleagues. they said you need to splinter the soft. so that became god and ronald reagan. in later about three years after that we released the crusader: ronald reagan as a communist, which was margin about reagan's role in the end of the cold war. in that term, the crusader come was also a surprise because i found out in reading soviet archives, soviet media archives that the soviets called him the crusader. and they called him out because they knew that he wanted to crusade some freedom, crusade in a sense of how fdr used the word and eisenhower used the word. so that -- i would say that was a guest one of my favorite books good and the other one would be probably the one on ronald reagan's closest adviser, the judge william p. karp, ronald reagan's top and. here is somebody coming he still alive, he is 78 years old good it will be 79 this year. he has parkinson's disease and he was really reagan's, sounds dramatic, but secret weapon so to speak. he's a man who throughout 1982 and 83 work to reagan's national security council and laid out, considers a paper trail of this, very explicit directions with the intention of these police taking a soviet union to bring down democracy are as they put in the document, political pluralism through the soviet union. that was a joy because myself, my family, we spent a couple summers saying that karp's ranch, interviewing him daily, getting to know him and his family. and that's the case where he was in a matter of just looking at documents and looking at books and other things that people have written. i actually got to know the figure and spend a lot of time with him. .. hillary clinton would be president frankly. i really did. so, that came out, and god and hillary clinton in 2007. another fascinating -- i really enjoyed studying that as well. >> what is your next project? >> i'm working on a cold war book and will be out this fall through intercollegiate studies institute. jed donahue is the new editor and has really ramped up their offerings and so that will be out. it is kind of a 20th century history books of the communist movement the united states and in particular how the communist movement tried to get noncommunist liberals to support communist causes. >> just remind us the latest book on the shelves of stores is? >> i guess the last one would have been in 2007 the judge william p. clark and the gaudy and hillary clinton also came out in 2007 which by the way was too much at once and i've got to slow down. i've got five kids at home and enough is enough. >> what are you reading these days? >> boy, there is a book out by it lawrence reece called world war ii behind closed doors, which i am reading. i'm fascinated by that. clarence thomas's book, very interesting. i'm always reading about half a dozen different books at once. i went back and i am digging into thomas murphy's book, the seven story mountain which was published in 48 or 49 so it's a little bit old but timeless, great spiritual autobiography. right now basically those are the three books and working through. >> thanks very much for your time. robyn stone who was boyd? >> he was many people, complicated man having grown up in st. louis, he was growing up in poverty raised by his grandmother after his father died and his father left for the vehicle for new york city. he came up in poverty and worked his way up. he decided he wanted to be a newspaperman early on in his teenage years in the 11th grade and pursued that through a scholarship at the university of missouri working at the post-dispatch in st. louis, his hometown. very early on he thought about to be a journalist and be good enough to work at "the new york times" and that tenacity enabled him to overcome all of the barriers he faced. so he was a mix those people as well as a young man who was mentored by the jewish shop owners in his neighborhood so he had some influence as well as on the campus of the inner-city misery. he had new-found black power in the 70's and walked around with a big afro talking about power to the people in all of that including the manager ravee eventually ended up at "the new york times" rising in the ranks having covered reagan in the white house and bush in the white house as a reporter for "the new york times" and as a reporter for the st. louis post-dispatch as well so he was all of these factors. >> and your husband? >> and my husband. >> how long were you married? >> we were married for two years. it's a love party because story that is part. it's about journalism, the new york times. there is some juicy stuff about the times. but ultimately i call this book a success story because it's about this man who as a young man was on a mission and he ultimately achieved that mission but he was also in search of not just professional excellence but a family, the family he had lost as a child and he wanted that so much. some of his personal growth story as well as professional growth story and i was fortunate to see a part of both because at one point he was my boss as well. he recruited and hired me at the new york times. i worked with him for awhile. >> when did gerald boyd died, what was his final position at "the new york times" and why did he leave? >> he died in 2006 november, thanksgiving day actually. >> unexpected? >> no, he had lung cancer -- >> smoker? >> he was a smoker. he been diagnosed about february so it came quickly. he died three years after leaving "the new york times" in the wake of the jason pooler page prism scandal and when i go to universities and i talk about his story to journalism students i ask how many people have heard of him and i see a lot of hands and then i ask before you heard of me coming here how many people heard of gerald boyd? very few and that is one of the reasons i'm telling his story because it is a fascinating tale, american tail but also journalism in many respects. so he was the managing editor of the times. six days before 9/11 to leave the paper it was a tragedy international terrorism so they are thrown into covering the terrorist attacks the war in afghanistan and iraq and they are pushing to establish their mandate on the paper and put their people in place and it is they are tired and pushed and all kind of productions and all of that kindling capitulation environment and then along comes jason blair who plagiarized those from other people's stories and makes stuff up out of it and he was discovered and i call that the match that with the fire come that ignited some unhappiness. so ultimately he was asked to leave the times. >> the fact that he was african-american, was that important? >> absolutely. it was important in how the story played out. i don't think it was important in the fact that he was a plagiarist. he acknowledged that he had the emotional difficulties and that all played out at the new york times. but the fact that he was black led some people to assume that the african-american man who promoted diversity was in some way aiding and abetting this journalistic criminal when that wasn't the case, and in fact jason did not like gerald as he wrote in his own book because he could not get the support that he needed from gerald said gerald didn't hire jason. he didn't supervise them directly. but the assumption was that there was a connection between the two. and i think that affected joe's tenure quite significantly. >> your husband died in 2006. four years later your publishing the book with his name on a in the introduction by you. >> i did the after word. my times in black and white is gerald's book. he wrote a draft, to draft actually be read the first one was 800 some odd pages and i remember telling him nobody cares about the kids from the old neighborhood, take some of that out. then he brought a shorter version, 250 pages and i thought it was too truncated. it started with entering the news room and i said what about the rest of the story? after he died i finally gathered my stuff together and i knew that this was a story that needed to be told so i married the two versions and put on my reporter's hat and interviewed some folks, like the jewish store owner from back in the neighborhood. i interviewed on it was no longer with us and i interviewed his first wife, who gives some color with the abiding and fills in some of the blanks and also to describe emma, the woman that he left his first wife for and she was on her journalist had and graciously answered my questions. so why did a little work. but it was for the most part his book. these are his words and his story. >> sounds a little tricky what you had to do. >> it was -- they were a challenge but all in the name of good journalism. >> tell us about yourself. >> well, i'm a journalist about 20 some odd years and that new business, and gerald used to say i couldn't keep a job. i've worked at several newspapers including "the new york times," the "boston globe," the detroit magazine including essence magazine and health magazine, developed essence's web website, heineman author myself, how black families can heal from sexual abuse which came out in 2004, and now online and editor of my late husband's book. and by looking forward to doing more good journalism in the future. >> what should people know or remember about gerald boyd? >> i think they should come away from his story with a true sense of the depth of his character and humanity that he came from nothing growing up so poor they couldn't afford lunch, they had breakfast and dinner and they felt incredible odds to do what i call social justice through journalism eliminating the situations people live in, eliminating what's happened on the national level and also that he cared about ethics, about diversifying the the news room and he speaks something called diversity of thought, not just people of different colors around the table, but people who came from different backgrounds and grew up poor like he did, people who had jewish mentors who connected with people from different ethnic and racial boundaries. that is what he was about and i hope people get a sense of the man and his character and humanity. >> some viewers are going to hear the word social justice through journalism and have an adverse reaction. >> and he would probably never describe it that way. but that's what i saw and the stories that he was intimately involved in and he was most pessimistic about the series races lived in america through which the time won a pulitzer, one of line with which gerald was connected in his 20 year tenure at that time. that is one of the furies the describe the interracial relationship that led to misunderstandings and frustration and anger, and his colleagues led reporters and editors to believe that what really explain the in the eliminated the dynamics in a racial interaction. so in that sense i call that an act of social justice to get in there and explain. children of the shadow the series that eliminated children growing up in poverty across the country and that wasn't a black or white story but how kids are living and making it, who is failing them, and again this is something that he was intimately familiar with having grown up the way he did. but also he pointed to shed light on that so in my mind that is an act of social justice, journalism to make people aware respected the sulzbergers participate at all in the editing of this book? >> no. sprick gerald boyd is the author, the original author of "mai tais in black and white race and how were at "the new york times"." his widow, robyn stone is the editor and the author of the afterward. >> book tv coverage of the 2010 annapolis book festival continues with a panel on wall street. it features william cohan, author at "house of cards." [inaudible conversations] >> good afternoon. i am the president of the board of trustees for the school during indianapolis maryland. it's my pleasure today to introduce williams cohan, the author of "house of cards" detail of hubris and a wretched excess on wall street. at the beginning of march, 2008, the monetary fabric of bear stearns, one of the world's oldest and largest investment banks began unraveling of. after only ten days the bank no wonder existed. its assets sold to jpmorgan chase. the effect would be sold nationally as the country suddenly found itself in the grips of the worst financial mess since the great depression to read in his book, "house of cards," william cohan exposes the corporate arrogance, the power struggles, the deadly combination of greed and inattention that led to the collapse of not only bear stearns but the very foundations of wall street. having been a wall street banker for 17 years, william cohan has in-depth inside knowledge of investment banking. in addition to his years as an associate and then vice president, at lazard frères, mr. cohan was a director in the acquisition eckert but merrill lynch and a managing director of jpmorgan chase. he left jpmorgan to write the last tycoons, which received the 2007 financial times goldman sachs business book of the year award. he probably wishes that was the to those of seven just financial times business award. [laughter] after today's wall street journal report on the sec problem. the last tycoon also appeared on the best-seller list of "the new york times," "the wall street journal" and usa today. mr. cohan writes regularly for "fortune magazine," the daily beast, art news and the financial times. he is a contributing editor and writes an opinion column on business for "the new york times." mr. cohan is a graduate of phillips academy, duke univ. of the columbia university graduate school of journalism and the columbia university graduate school of business. he lives in manhattan and in columbia county and york with his wife and his two sons. please welcome williams cohan to the annapolis book festival to talk to you about "house of cards." [applause] >> thank you, speed. it's a pleasure to be here. i didn't realize how over educated i sound. i don't know how many of you were here for the previous panel on water usage and abuse. it was very interesting and i just want to refer to howard earnest who said that he had to speak fast because he had a lot of people to offend. i agree with him. i will be speaking fast because i have a lot of people to a friend as well, and also or in velte who says as the water levels rise the will be a temptation to think about saving manhattan and supposed to other low-lying cities like miami or places along the chesapeake bay and i think after i get done you will agree we won't want to be saving manhattan. [laughter] if he were here you hopefully get comfort from that. i started writing "house of cards," didn't have a title for it and my wife came out with that epiphany one time in the middle of the night and i will explain to you how that came about. i started on march 17th, 2008 which was the david jpmorgan announced that there was bodying bear stearns for $2 a share and then because of a legal drafting error it got increased to $10 a share as well as 100 cents on the dollar for all the creditors which is an important distinction because as i'm sure you all know that when lehman brothers piles of bankruptcy six months later when, the stockholders got wiped out and the bondholders and the creditors got 9 cents on the dollar so there was a huge distinction made between the two firms. one firm of shareholders were given a small amount and creditors were saved and the other firm of shareholders got nothing and the creditors got next to nothing. so i started writing it the day that the deal was announced and finished on december 1st of 2008, which must be some kind of crazy riding record. i don't remember sort of compared to what child birth must be like. i don't remember along the way, i don't remember doing it and yet have this thing out there in the world. people after what happened in september of 2008 when merrill lynch was sold to banc of america and lehman brothers failed and aig was risky to the tune of $85 billion all of the advances we know about the creation of the t.a.r.p., the t.a.r.p. funds and the changing of the agenda repeatedly before the proceeding people said you can just write about bear stearns any more because the whole dynamic is changing. the story is bigger and more complex. don't you have to change direction or shift towards this and the answer in my mind was not only know because i have so much interested in having written about bear stearns. so to change the direction to change horses in midstream or not particularly easy as the expression goes. but more importantly is the fact that the truth was what happened at bear stearns is the same thing that happened at lehman brothers and the same thing that happened at merrill lynch and at the same thing that happened basically at aig is a chronic problem of cancer is chronic problem across wall street. by the way which has not been remedied, not even the slightest and neither of the two proposed bills the house or the senate version will do anything to change that unfortunately. that is another story we can talk about if you like. and so because the characters at bear stearns were so fascinating and my access to them was a gift and i was able to talk to them all about what happened, one of the few places on wall street i didn't work was bear stearns so i knew of these people but i didn't know, i hadn't worked with them so i was fortunate they opened up to me and really bear stearns became the canary in the coal mine of the crisis and i figured if you understood what happened at bear stearns you could understand the rest of it. it doesn't mean it's particularly easy to understand but i think that i leave out in the book in a way that makes it compelling along the way and exciting meredith and interesting narrative and people have compared it to an awful which is a nice thing and unfortunately it is true so therefore it is not a novel nor could i ever hope. but what i thought i would try to do today is help you all understand how the 70 and by at least the bill cohan version of what happened and why. other people have other versions and i have mine. i'm sticking to negative two years out now more than ever as they say especially with the events that occurred yesterday with the sec lawsuit against goldman sachs. so i think that you have to understand how this all started. and it's been going on for a long time. it's not something that just may be keen to hit in the last few years, but i think the dynamic and the ethics of wall street has been changing for probably close to 40 years which is when the will street started transforming itself from the series of private small partnerships undercapitalized by the way wall street has always been a dangerous place and firms go in and out of business all the time said the weakness is a we were organized whether you are organized as a partnership or corporation doesn't necessarily protect you from bad decision making and the calamitous waves because wall street has always been darwinian and the interest and people forget that. but i think the whole ethic and a dynamic began changing in 1970 when a firm which was a small private partnerships or of the google of its time decided to break the conventional rules and go public and basically substitute for their partners' money to public funds from shareholders and money from creditors said you had a situation where partners the wall street firms had their own money invested. they shared the profits of the firm of gush firm made money and if they lost money they shared in the liability of the firm. the losses of the firm up to and including their entire network said you had a situation if the firm made money they did well and a lot of them did do very well and if the firm didn't make money lost money and didn't do well. i can assure you that created a high level of consciousness about what the partners were doing on any given day and a fairly good understanding of the business lines the firm was in which is why wall street really until 1970 and beyond and 19 eda and beyond wall street stock to the meeting that a new well which was underwriting debt and equity securities raising capital for corporations all across the country and the world and taking a little risk in doing it most of the time and making money along the way as well as providing advice for takeovers and sales of corporations. but what happens in the beginning of 1970 when the doj went public with the substitution effect that i talked about, the transfer and risks from the individual partners who worked at the firm to shareholders and creditors and once the doj went public of course the rest of wall street quickly followed suit with merrill lynch following. bear stearns went public in 85, goldman sachs went public in 99 and where i worked in the subject of my first book went public in may 2005 after almost 160 years of being a private partnership. most of the firms on wall street with their big banks or investment banks or small boutique firms are public companies and that has changed dramatically on wall street and the funny thing is when i first started writing this book there was a conventional wisdom that was established quickly by the ceos and alan schwartz was the ceo from january 2008 to march of 2008 he was the shortest lived ceo in history he bid up the firm a long time but he only became ceo after jimmy kaine had been a long time ceo of bear stearns from 1993 and decided to retire as he says even though the writing was on wall and there was time for him to go when allen schwartz testified in front of the banking committee in april 2008 literally several weeks after the firm imploded he said, paraphrasing but basically a once in a lifetime tsunami hit, i don't know what i would have done differently. i scratched my head every day wondering what we could have done that would have saved the firm and i come up basically with nothing. the ceo of lehman brothers said pretty much the same thing in october of 2008 weeks after lehman brothers filed for bankruptcy and he said go to the grave wondering what he could have done differently. the conventional wisdom was established by the ceos and is the was the conventional wisdom to this day and what i discovered in the reporting of this book was of course the conventional wisdom has nothing to do with the troops which is often the case in these matters. it has a lot to do with the truth but wall street would like you to believe but not the real truth and so what i discovered is wall street did this to itself and part of the way wall street did this to itself was the transformation of from being private partnerships where they shared in the risks and shared in the liabilities and they were cognizant on a daily basis of the risks being taken in the firm and to the dynamic on wall street where other people were taking the risk and the rewards call what i call secret less risks or been taken and the rewards went to the people who worked there for and how do i know this? i worked on wall street 18 years and even though i was a mergers and acquisitions banker didn't risk a penny of my firms capital the only way i ever got paid year in and year out was a bye generated revenue for in the business line i was in and if i didn't generate any ravenel i didn't get paid so if you can imagine what it's like in the business line where you are actually risking the capitol like mortgage-backed securities to concede the incentive is totally skewed to generating as much revenue as you possibly can and making the case to your boss the you deserve a bonus and by the way what other industry in the face of fear of ps of between 50 to 60 cents of every dollar of revenue in the form of compensation to the people who work there? the irony of course is the firms went public and to other people's capital to run their business is you would think the firms would be run in the interest of the public shareholders. unfortunately that is a big fat fallacy because 50 to 60% of every dollar of revenue gets paid on the form of compensation to the people who work there. they are not run for shareholders as we discover. nor have they ever been run for shareholders as we've discovered or should know by now. they are run for the benefit of the people who work there. in addition to having this transformation of partnerships to public companies you also have another dynamic on wall street which is wall street is very good at financial innovation. innovating products that they can sell on what is wall street really. it is a massive selling machine. it is an army of salesman who get rewarded if they sell and generate revenue so the need products to sell like although companies need cars to sell, like general electric needs refrigerator's be readable st. needs new products to sell and the good news is the higher a lot of smart people and pay them a lot of money to do just that and guess what they are very good at doing that and sometimes the innovation they come up with are really valuable and helpful and what i mean by that is valuable and helpful to what i call the democratization of capital and what that means is allowing companies to get access to capital who never would have had access before for example mike mulken who is a convicted and rehabilitated phelan was the person who came up with the idea of junk bonds, high yield securities allowing companies who didn't before have access to the capitol markets to have access to the capitol markets to the issuance of bonds that investors could buy to pay the higher yield and the phrase yield securities to pay a higher yield and say the bonds of general electric. that only made investors who were willing to take more risk would buy the securities because they got paid more but more fundamentally allowed companies to didn't previously have access to capital to have access to capital the public market. that in itself is a valuable innovation and mike mulken is to be applauded for that. unfortunately in the typical wall street fashion as is the transformation of the system from one where everybody shared in a pretax profit as well as the liability to one where people only care about the revenue they generated, people to try to figure out what mike mulken did on wall street for, the constricted what he did and figured how they could do it themselves and then try to out compete him and then massive effort of all competing because of the revenue that was available if you sold junk bonds to people you have the creation of what became a double in 1987, 1986 and 1987 which exploded in the crash of 1987, 22.6% in one day literally a month after mr. good working on wall street lysol and grown men cry for people have computers on their desktops and could get real-time quotes that quote some machines and i saw grown men crying looking at portfolios destroyed one day at a time and allowing this kind of thing would never happen again as the result of the brady commission that together an inch and a half thick report on quote on quote market mechanisms to help give a guide to prevent this from ever happening again and of course we all know within years it was all happening again and whether it was the internet global when the internet firms who graduated college in a lost stayed on market street in san francisco had an idea where they were going to have peoples of labels on screens and there's a paradigm shift onshore you can remember that the was ten years ago and we had the nas-daq 5500 until the blue what in march 2003 precautions for that were filled for a long time so wall street is good at these innovations. unfortunately they are not good at having coverage on their own behavior so the doubles after the innovation and people figured out what everybody's doing the bubbles and sleet and the only explode when people take it one step too far which is what happened to in the high-yield crisis of 87 and the internal crisis in 2000 and lo and behold what happened in this crisis in 2007 and 2008 and the innovation this time was with a fascinating innovation at salles and brothers in the 1980's who came up with this idea of securitized in cash flows for which was another way of saying aggregating, bundling up these cash flows that people had when they paid their credit card bills are paid their car loan payment bills or surprise surprise they pay their mortgages, so you had people once upon a time would go to your local community leader, he knew you, you knew him, he knew your family, he knew where you work and decide if you want a mortgage she would give you one based on your reputation and credit quality and in command all those things and you have this jury symbiotic relationship he kept the asset on his bank balance sheet if you're a good customer and paid for mortgage his asset was worth 100 cents on the dollar may be more depending on interest-rate changes. if you didn't there was no place for him to sell it, he kept it and lost money and you were no longer a good customer but that relationship existed among homeowners and banks for a long time until lubrani rican along and he had an idea you could buy these mortgages from all these local banks and package them into securities to slice them up and get them printed by you to seize and sell them to investors as securities to investors all around the world and that was a pretty nifty little innovation. unfortunately it got out of control as we all know yet there are a number of other factors for that besides just the that the compensation system that was a big factor because a huge mortgage-backed security something like 85 to 90% of the revenue in the profits that bear stearns had from the last two decades of existence can from the mortgage-backed securities business the firms had built so this was no small innovation was major and the mid-market dwarf to many times the size of the treasury market or the corporate debt market so inadvertently it probably wasn't his fault other than he introduced and least this monster on us because wall street behavior so now another element to this that has been discussed is the role of public policy and creating this crisis and one of the things that both of the clinton administration and bush administration did over 16 years basically will push for home ownership we all want to own a home because that is considered part of the american dream and for the longest time something like we may have this numbers of but something like 62% of american families own their own homes. the clintons got it in their head and so did push's that would be a good thing if more people own their own homes and they became good politics and also pushed for the reva riding of something called the come emt reinvestment act that pushed banks to make loans and mortgages available to people who wouldn't ordinarily have them available to them who had previously been printers and now had money being thrown at them so they could buy their house and participate in the american dream which was great politics but unfortunately a lousy economics. by the way i have to say it's lonely appear when you're sitting on a panel with the people to deflect you that's more fun so let me just take a -- [laughter] >> there's no one to disagree with him here. >> which i like. i like that. we will give you a chance of a little while. so as a result of pushing the community reinvestment act on all of us and the banks making more loans to people, mortgages available to people who otherwise had been renters, you have a gradual increase in home ownership in this country from something like 62% to 67% and people watching on c-span of course will know the real numbers and i sure i will get a lot of e-mails telling me what the real numbers are but i think that is directionally correct. unfortunately, what that meant is a lot of people got access to mortgages who really couldn't afford faugh the house the for bonding and afford to pay the monthly interest payments and principal interest payments on mortgages and how we know that? we know that now for obvious reasons. but scientists -- i researched this in december this was happening as we all know pretty much along the way and i spent a day when i was writing the book in baltimore actually a center that existed in the inner-city baltimore to help people who couldn't pay their mortgages they would come in and meet with people there and they would give advice about how to work all their mortgages because they couldn't pay the mortgage payments and other houses were in danger of being foreclosed and i went through a bunch of documents where the names of the people had been blacked out by you could see that all of the information on the documents about where these people worked, where they live, the amount of money they had in the bank come every key aspect of the document where you wouldn't think it would be fictitious was in fact fictitious. more to the point, you wouldn't think that the borrower on the loan, the mortgagee, would sign the document at the bottom even if it contained all of this fictitious information about this person. unfortunately that is what was there at the bottom of the loan document repeatedly was the signature of the bar even though they knew and the mortgage people making the mortgage new the information was fictitious. you have to ask yourself why they would do that. none of us in this room would do that. nobody bulging on c-span today would do that but unfortunately a lot of people in this country did that. i'm sure they did it perhaps as a one-way option. maybe they didn't think of it that way that they had been renters before. if they could own their home and be part of the american dream and it worked out, great. if it didn't work out which the suspected in the back of their head then they would go back to being from terse and they were no worse off for it. unfortunately because of the way that wall street works, all of these mortgages that turned out to be not such great mortgages are packaged up and made into securities that were sold as investments all around the world. and in fact the demand for these investments will supply in part because after 9/11 alan greenspan lower interest rates so dramatically, was a very scary time and interest rates were lower from like 6% to 1% by the way they are even lower now which is a whole nother problem. as a result investors aren't the world were looking for higher yields and wall street was the too happy to be there when the mortgage-backed securities offering all sorts of yields depending how much risk people were willing to take and the then blessed by the rating agencies that once upon a time we had about ten triple-a-rated companies in the country thinks to wall street and the rating agencies paid by wall street for their ratings they got. next you know you have thousands and thousands of mortgage-backed securities rated aaa which investors all around the world were more than happy to advocate doing their homework were not more than happy to buy and stuff into their portfolios and think they were great. unfortunately, because it's hard to tell a story when everybody knows the end, but unfortunately what happens as we all know, people stopped paying their mortgages they probably couldn't afford in the first place and all of the securities tied to those mortgages, you know the underlying mortgages started to lose value because the cash flow that was supposed to be generated and paid to the investors wasn't being paid and wasn't being generated. is that was the sort of fair to strand of dna. just to review we had a crazy changing the way bankers on wall street were compensated and the amount of skin the cat in the game. there was dna number one. that began in 1970 and continues to this day. a dna strand lumber to is how good wall street is that financial innovation and how good they are about rewarding themselves for financial innovation and taking big bonuses as a result of that. strand number three was the change in public policy which pushed for increased home ownership at the same time that greenspan lower interest rates dramatically and kept them low for a long time which created a huge demand from investors the world over for higher yield, securities they could get more money for in interest payments with wall street people and lead to happy to stand in the breach and provide those securities and investments blessed by the rating agencies that were paid for, bought and paid for by wall street. now, to really get things cooking you need one of my favorite aspects of the crisis and that was agreed and shortsightedness. and one thing about wall street, they've got a lot of greed and a lot of shortsightedness and frankly nobody had more of that than the people what bear stearns and my favorite character i write about in the book, jimmy kaine, the longtime ceo of bear stearns from 1993 to january of 2008 when he quote on quote retired. so just a little bit about jimmy who is the central casting and was a gift to me as a writer and i thank him for that all the time although i'm sure he regrets tremendously speaking to be spending any time with me. we spent about 30 hours together all told all on the record transcribed tapes and interviews. sebelius a real gold mine for me. but jimmy came from the north side of chicago he went to perdue and stopped participating in perdue relatively early on and dropped out one semester short because he had already given up. he pledged bridge all the time of his fraternity house and told me he may and i know this is a family channel but a family defense, but he visited the house's of the ill repute in west lafayette indiana and he told me that was a great deal of pride. and he worked for his first fall there and all's business in chicago to was a scrap iron salesman. this is the guy that was the future ceo of bear stearns. he decided he would rather spend time playing bridge the and being married to his wife were selling scrap iron so he moved to new york as the pursuit of a bridge player and believe it or not there are people who are professional bridge players even though there is no money in bridge it's not like poker where you have the world series of poker and its televised and people make millions if they win. when you play bridge either professionally or tournaments' that happen all round the country and all around the world regularly winning as a prestige thing to read and believe it or not before there was facebook if you can imagine a time in our lives before there was facebook and the internet, bridge was like the facebook of its time. it was social networking at its best so you had jimmy came both into new york and playing bridge and bridge clubs in manhattan getting paid he hoped something like $500 a week and he -- wall street, the big waves would come after work to the bridge clubs and want to play with people like jimmy kaine. jimmy came by the time it was a nationally recognized bridge player me give one infected the championship or two by the time he came from chicago to new york and he would meet people like larry tisch who ended up running cbs as many remember and at that time was one of the largest single investors on wall street and somebody who was a big bridge player and although not very good and he played bridge with jimmy came on a regular basis until eventually jimmy came that the woman who became the second wife and she said if you want to continue to have me as a girlfriend you need to get either a real job or a new girlfriend and whatever reason he chose to get a new job and he used the connections he made on wall street, got interviews at lehman brothers, bear stearns and goldman sachs and ended up not having good interviews of lehman brothers or goldman sachs and didn't even have a good first interview is there stearns but then he met a guy named ase greenburg who was the number two partner at bear stearns and was a bridge a fiscal model also not merely in the league of jimmy came that he had heard about jimmy. so during the interview they talked about bridge and the is the reason that jimmy goff hired under stearns because he wanted somebody to play bridge and teach him how to play bridge. [laughter] now shimmied into a lake and a broker at bear stearns and got the permission to have larry tisch as one of his clients and he was a great client to have. jimmy had about 12 clients most of them from the bridge world and he built a business at bear stearns out of this but the skill that he had at bear stearns was the ability liked and bridge to create a political coalition with the people around you that could help or hurt you been able to read the cards on the table that could help or hurt you so he was able to put together coalitions of people in the firm that would promote his career and eventually he rose through the ranks of the firm to become the ceo and when he became the ceo of their stearns a 93 eliminating ase greenburg at ceo but not from the ranks of the organization ase greenburg remained at the firm on the executive committee and on the board which was a little odd because when you decapitate the king he should get rid of talents to of keeping him from but he made the decision to keep him around which didn't really help things as we move forward here but when jimmy took over the firm and 93 this bear stearns was creeping around $30 a share and its peak in january of 2007 the stock was worth $172.69 and jimmy kaine was worth more than a billion dollars and his own stock. the only ceo on wall street more than a billion dollars in his stock and for a guy that didn't graduate college who told me that his life's ambition was to become a bookie i think this is a pretty good accomplishment. he doesn't think he accomplishes the ambition of becoming a bookie. i think he did because he certainly was a good gambler especially with the shareholders and creditors at bear stearns. now where the shortsightedness comes in especially bear stearns is as i said before bear stearns is wholly reliant on this mortgage securities business that grew and created and was extremely profitable as it was a lehman and merrill lynch and other firms. jimmy canfield to diversify. the firm had a small investment banking business that could have made a bigger and diversified some of its earnings and it chose not to do that. it could have diversified overseas and chose not to do that. you could have bought a asset management businesses and time and time again he had also opportunities to make the firm bigger and less reliant on the mortgage business and he also spent a lot of time as i mentioned pleading bridge, playing golf and according to "the wall street journal" although he denies it smoking a lot of pot which is not the usual course of action for a wall street ceo. not that there's anything against being a certain age but by the time in 2008 rolled around he was 74-years-old and when he would go to play bridge he would go off for a week at a time in these tournaments which were very intense, intensive and he had no cellphone, not that he used one or blackberry not that he was one that he was hard to reach so for at least three weeks of the year plus the time he spent on vacation and leading by helicopter on thursday afternoon to go to his house on the coast of new jersey to play golf he wasn't as focused on running the business and understanding the risks that ran in the business as he rightfully should have and one of the reasons was you would think that if he had a billion dollars on the line in his own stock would be plenty of incentive to remain focused but what is forgotten and that is that he had over the years taken up something like 400 or 500 million in cash that he had in other accounts that because the wall street had transformed itself from the series of partnerships it all comes back around. you've got to love the way wall street transformed itself from a series of partnerships to public companies he didn't have any skin in the game so i would ask how does it feel to lose a billion dollars in your own stock, how did that feel and he said it didn't really affect my life. it only affected the life of my hair is and it's the comment but he's absolutely right and in fact that embodies the whole problem of the loss of alignment between the people who, wall street and work on wall street and the people who are financing the wall street, the shareholders, the creditors, complete and utter loss of alignment and as a result of that you have a situation where toxic securities can be created in huge and vast amounts without anybody realizing the risks being taken. now all of this would have been bad enough without what really caused the decline and fall of bear stearns and lehman brothers and merrill lynch and every other firm on wall street including almost morgan stanley and goldman sachs and that is the little dirty secret of wall street which is the way wall street finance itself. this is something nobody knew, not even on a new. i spent 17 years on wall street and i had no idea how the wall street firms finance themselves so what of the biggest revelations in a long series of revelations, trust me there were thousands of revelations but the biggest single revelation was how wall street finance itself. the way wall street finance itself which was essentially in the short term financing markets they would borrow money on a short-term basis and use that money to create long-term assets and that mismatch which some people tell me what thinking is all about, you borrow short and go long. unfortunately because the wall street greed in the way the executive committee of bear stearns and other firms compensated they were rewarded to maximize profits which i guess they should do using as little capital, new equity capital as to do that and one of the ways they did that was by borrowing what was called in the short term repo markets which is wall street lingo for overnight secured financing. so no wall street banker would ever tell their clients, noble street banker would tell general electric or macy's or any big johnson & johnson or any big company to finance themselves this way but wall street finance itself this way because it was cheap to do it. so places like bear stearns did is they would use the securities on the balance sheet as collateral for short-term overnight loans from people like federated investors or fidelity. we've heard of all these people, although i'm not sure people would come after me that big asset management people who had a lot of capital available who would lend on a short-term overnight basis to places like restaurants secured by the balance sheets. by march of 2008 the assets that bear stearns has on the balance sheet were billions and billions of dollars of mortgage-backed securities that they were using as collateral and the overnight markets with fidelity and federated for financing. and how much did bear stearns made in financing every night? he needed 75, i will answer that come $75 billion in financing every night to run its business. it had 18 billion cash on the balance sheet just to have the round but it needed $75 billion in cash on the overnight basis to run its business. so in march of 2008 it was the rest of what i described to do wasn't bad enough, if it hadn't been for the way wall street chose to finance itself because it was an expensive so they could have gotten long-term loans they were much more expensive they got this short term over term financing which would have been in march of 2008 is the essentially gave every night to their creditors a vote on whether to do business with them anymore and in march of 2008 the creditors voted no, a resounding we know to do business with bear stearns. they said we are not going to roll over these loans anymore. there's nothing you can give as collateral that will induce us to get to these loans and the more so when that happened the deed was up and the firm had not been rescued by the federal government on that friday morning would have filed chapter 11 bankruptcy and been liquidated so that's what happened to bear stearns. the same scenario and over that weekend in march it was only because jpmorgan cantelon and bald bear stearns that was saved the reason lehman brothers went under is because there was no one to come along and body it in september of 2008. bank of america bought merrill lynch instead of by a lehman brothers but the regulators in london and england wouldn't allow barclays to bye lehman brothers so no one was there to buy it. if no one had been there to buy bear stearns it would have been filed chapter 11 and had been liquidated as well to read by the way, i believe now after a couple of years of thinking about this and then i will stop people can ask questions had a light beers durham still in the first place in other words had they not rescued their restaurants which was by the be the first time in our history that the federal government decided to save the security firm every other time before that all of these securities firms had gone in and out of business had been allowed to go in and out of business without being faced. it was only until bear stearns can along they decided to save it. had they let their stearns go out of business and not saved it in effect had we, the american people, and not subsidize jpmorgan acquisition of shares durham to the tune of $30 billion have a field, got into bankruptcy and be liquidated by believe a lot of what happened in six months later would have happened very differently. it would have prevented the crisis because it was over long before march 2008 came along but lehman brothers probably would have sold itself. merrill lynch would have sold itself. these other firms would have raised a lot more capital than the into the freezing and they would have cost the american taxpayers a lot less. it's easy to say that in hindsight, 2020. along the way they thought of the saved bear stearns then they would have saved the rest of it but of course now we know that didn't happen. with that i will stop and turn over to my fellow panelist which is you guys. [laughter] .. last panel asked that. he said if you were the ayatollah of the day. >> that was on the panel earlier. >> to meet the problems on wall street are like the ones in your card. follow me here. if you come along with the weed eater and rip off the top it looks like the problem is gone. unless you pull them out by the routes you are not going to get the full we'd gone. what this legislation does is comes along and wax off the top but doesn't go to the root of the problem which will prevent a week or this kind of crisis from happening again. we may be on our way to having it happen all over again. 1 thing wall street is good at is not repeating its mistakes in the same way. 3-peat plenty of mistakes over and over again. you can't get away from greed or shortsightedness because that is human nature but there was a period of time from 1933 on, lexus say from 1933 to 1983, 50 years, basically kept these firms from doing stupid things. but over time as we all know the rules that governed got watered down. we became part of a laizzez-faire regulatory environment beginning in the reagan administration continuing through all the other republican and democratic administrations and we had a total breakdown in the way wall street is regulated and one thing we learned you have to regulate wall street or it is prone to these crazy behaviors. until you fix the fundamental problem that began deteriorating in 1970 which is the lack of skin in the game and accountability you are not going to fix the problem. as it stands no one is talking about having these wall street guys have their entire net worth on the line like they used to when it was a private partnership. if you could do that and i don't have an idea i can propose, people talk about the poker rule and our esteemed gov. paul volcker has come up with this idea but i believe paul volcker was making a lot more sense on the outside looking in than when he was brought to president obama's side and is on the inside looking out. his proposals make no sense whatsoever. he made much more sense before obama up brought him to his side but he is proposing proprietary trading and private equity operations that have nothing to do with it. they are more a symptom of the problem rather than the problem itself. these firms are being run by people who get rewarded for taking risks with other people's money and have no accountability for their behavior. if you want to change that you have to create what i call the william cohan rule. if you take for lack of a better number the top 100 people at these firms and create security that is representative of their entire net worth and the 500 people at these firms would be a large number, very big security and you put that at the bottom of the capital structure on the right side of the balance sheet. the first thing to get lost at any time is that capital. including people's entire net worth including their homes so they lose their home and everything else if they screw up again. if they mess up again they are going to lose everything and i assure you that will make them a lot more focused on the kinds of businesses these firms are running. you don't have any hope of making goldman sachs a private partnership again or j. p. morgan but what you have hope of is making these people more focused on the kinds of businesses they are in or the risks they are taking spending less time playing bridge or golf or smoking pot. >> we will have people ask questions at the microphone so the audience outside annapolis can hear us. if you can line up behind a microphone we will take the first question. >> wonderful presentation. previous renters when describing what i think of as the tripwire. my question to you is will there be a second boom caused by those who overbosh? i know people who bought $8,000 homes when they could afford $5,000 homes. is that part of the current boom? >> you mean the washout of those people who bought homes they couldn't afford with money that wasn't theirs? >> yes. does he have an adjustable-rate mortgage coming do? >> waves and waves of people lost their homes because they couldn't pay their mortgages and that will continue. the real big issue that has yet to play itself out is in commercial real-estate. to me, trillions of dollars of commercial real-estate loans are piled on the balance sheets of banks outside of manhattan who will allow that to continue to exist. banks outside of manhattan are in the country that have preponderance of commercial real-estate loans which are mostly under water. >> as i saw in florida year ago, families who had moderate incomes and huge houses, the same feeling of sympathy for the guy who loses a shopping center. >> we won't have sympathy for them and i am not sure we should have sympathy for someone who bought a home ey couldn't afford or couldn't make the mortgage payments. if you enter into a contract to sign on the bottom line you should have enough integrity not to enter a contract you can't pay back and you can make sure you make those payments and i don't have a lot of sympathy for people who don't do that. i am sure as people claim they didn't understand enough that they could get something they couldn't afford. people have to start taking responsibility for their own lives and their own actions. >> thank you again for that night's presentation and i like the way you talk about different threads that contributed to the crisis. you may have left out a few more. >> probably true. >> and i am surprised you are focusing solely on getting all that skin back in. it seems like that is a very good start but there are so many other things that need to be done as well and i am afraid our political system is such that you can't handle anything like this complexity. my guess is we would have a hard time getting your suggestion past so i am pretty pessimistic. it sounds to me as i do various readings and listening to you in many regards the banking industry itself doesn't get it yet. they are sort of isolated master of the universe mode and you wonder what will wakethem up. >> ron emanual said something like we have a great crisis here and you should want to change things. a year-and-a-half later we have wasted a crisis because the political logjams down the road, in washington, so political that it is just so distressing. as a citizen who loves his country and believes in it to witness what goes on when there are such huge problems is distressing. wall street doesn't get it either. basically the american taxpayer to the tune of something like $12 trillion subsidized in a huge way the revival that occurred in 2009 on wall street, the profit these firms make in 2009 were done on the backs of taxpayers. i will give you one example of that was done. by keeping borrowing rates lower than alan greenspan lowered them to 15 basis points so these banks that are all banks, no security firms, the three that went out of business are gone, lehman brothers is gone and bear stearns is gone and the two others, morgan stanley and goldman sacks are bankholding companies. they can borrow something like 50 basis points and treasury securities for 300 basis points so they can pocket the difference in pure profit every single day and in terms of billions of dollars and that is pure profit on the bottom line. whether they barrault from the fed or not they can turn around and buy those treasury securities that help with our deficit and recycling helps the bank and they have huge profits and pay out $140 billion in compensation. the most ever. the rest of the country is struggling through a 10% unemployment or 18% structural unemployment and the economy is still in shambles wall street is taking $140 billion in compensation and not thinking twice about it. at the same time, if we look at the savings rate on your bank account i look at mine, 15 basis points, that is platinums savings and i am one of there good guys. 15 basis points. a few disconnect. i am shocked by it all. >> if i could ask one quick question. have you heard much about this idea that the chinese building construction market may collapse? do you have an opinion? >> there is a very smart guy who you should listen to what he says. he was on charlie rose talking about the boom in chinese construction that he has figured out a way -- a version of what john paulson did in mortgage securities in china and makes a persuasive case with cranes everywhere and big problems. they have problems in their economy which will hurt us. they are buying the vast majority of our debts at the moment. if they stop doing that somebody else has to or we will pay higher rates at, we will go from being a triple-a-rated country to a junk-bond rated country. >> i apologize if this has been covered because i was unavoidably detained. thank you for informed criticism of wall street. there's a lot of an informed criticism. i happened to work on wall street as an it guy before they slaughtered everything and one of the things i noticed or part of it i noticed that made this crisis different from others is the large pockets of money that was not directly out of control of the federal reserve banking system. the artificial inflation and derivatives, a large amount of money that went overseas which is not directly under control. when they started to raise interest rates, long overdue, it was inverted and i watched this and my colleagues tell me we are heading for a recession. how can we be heading for recession? everyone is building everywhere in sight. what i began to speculate as foreign money was being dumped on the long end of the curve because it is easier to do that. i was wondering about a much bigger risk that the federal reserve system isn't up to the task of controlling the affective money supply. >> the federal reserve is certainly out of options. they went as low as they can go. using monetary policy to solve our problems, that is no longer a quiver. it is clear rates have to go up if for no other reason than favors get rewarded with savings as opposed to banks getting rewarded for getting huge profits. i am not an expert on the fed, but i do think that history -- history will end up being kind even though it is hard to believe, to the men, henry paulson, ben bernanke and timothy geithner who, through some kind of haphazard throw everything against the wall with a fixed approach managed to pull us back from the brink and part of the reason they were able to do that is ben bernanke was a professor of what happened in -- that caused the great depression. he made it his business to make sure that never happens again and one of the things he believes worsened the great depression was the fed's failure to pump money into the economy. you can say a lot about ben bernanke but he pumped huge amounts of money, trillions of dollars into the economy and it is what got us back from the brink. the questions is use our yesterday with goldman sachs not indicted -- it is nice to see them backing reality again. under kris cox they were out searching all the time, joining him as a surfer in california. no one heard from kris cox is beyond me at the moment but we saw that the markets fell 140 points and $12.4 billion was taken off of the market cap as a result of the civil suit where they made $15 million. there is a huge disconnect, how quickly things run up in the next few months. don't forget a year ago the dow was around 6,000. now it is 11,000. we have this huge run up where the economy has not recovered the same way. we are in a very jittery time not help that all by what ed at going on in washington. my new book is about goldman sachs and is halfway done. >> the great vampires. >> that was not needed in that. >> yesterday's the sbc announced accusations against goldman sachs. >> you may have seen that. >> pushing toxic waste at the same time trying to hedge against it on the other side. i am curious to know what you think about that and what is going to happen. are we looking at some fundamental change on wall street? all that is left is morgan stanley. what do you think of that? >> i could stipulate that the question is not for me. my answer was to that question on the editorial page of the new york times, for all of you to read, to summarize we spent yesterday afternoon riding of my shots in case someone asked me this question today and the new york times was kind enough to publish it in the morning paper. the answer is slicing $12.4 billion off of goldman's market cap seems to me like a bit of an overreaction. the problem with writing that kind of thing in the new york times or having some video taped coming back to bite me in short order but it seems to me that this was a civil complaint. certainly doesn't read well. the complaint makes goldman sachs look terrible. the first thing that makes them look terrible is there has been a drumbeat of bad publicity since march of 2009 when they appeared at the top of the list of counterparties who got this windfall from a ig in november of 2008 and wasn't disclosed until march of 2009 so since that date people literally for the last year they have had a big target on their back. you have the vampire squid, the new york magazine writing about them, they have rpr problem as big as any kind of problems that they have. certainly the case the sec put forward yesterday doesn't make them look very good, ethical or smart. what you have to remember, what i wrote in the paper today is we only heard one side of the story. i am not trying to defend goldman sachs, but it is important, i have seen this movie before. since i wrote a book about bear stearns and fully expected there to be some criminality involved in the hedge funds of bear stearns. i wrote about it extensively, two hedge fund managers were indicted criminally. there was a trial last fall in front of a jury of, quote, their pincers in new york. they were not their peers but they were a jury in brooklyn. it wasn't the sec, it was the eastern district of u.s. attorneys, took pieces of e-mail that were the most inflammatory pieces of e-mail and package them up and tried to sell them off as criminal indictments. sounds like what wall street was doing with mortgages but in fact when the jury heard the full e-mails and the context and saw that it wasn't black-and-white their case failed miserably. there was much more evidence they could have used and failed to use so as shocked as i was by these guys, that jurors said things like i wish i had my money invested with these guys, things like that blow your mind. i have to say to myself is very easy for the justice department or the sec to write up a civil complaint and coal from its damning information and e-mails in a very damning way and doesn't look good for goldman sachs and people reading that decided they would ask questions later so you have $12.4 billion of shaved off goldman market cap for a deal where they made $15 million in fees and may have made other things we are not privy to at the moment but you have to ask yourself, was this done because the sec wants to show some teeth after ten years of being toothless? is it because we want to blame goldman sachs and they are the easiest target because we don't have anyone else to blame? nobody has been indicated. there has been a wave of revelations about what other firms did and nobody is being held accountable. at least with the enron crisis there were people who were held accountable. they were sitting in jail because of their behavior. we don't have anybody who has been held accountable and it is very frustrating. i understand why the sec has moved to do this but nobody can rush to judgment because until you hear the other side of the story how can there be a conspiracy with only one person involved in the conspiracy? the fact that john paulson who made billions of dollars from this was left out of the lawsuit and he was supposedly goldman's partner boggles my mind. how can that be true? goldman has said normally these things get settled. this same time they get announced, literally the day before you will notice quadrangle group settles with the sec and andrew cuomo, the attorney general, their problems with trying to influence the people who make decisions about giving out money to private equity funds and pension funds and former car czar who was involved in doing that, they chose to settle rather than fight. goldman chose to fight rather than settle which means goldman thinks it has a good case and if it has a good case, as much as they are so easy to hate and everyone wants to hate them i suspect there's another side to this. >> i have a two part question. the first part is do you think this goldman thing is the tip of the iceberg and in the next couple weeks or months we will see other firms coming out with this casino approach that we see on wall street where it is nothing but a bunch of gamblers? and i did read your article and i do debate just because something is not against the law has to be brought up civilly, does it make it right? my interpretation was if you by someone from someone selling you a product, you put your faith in to what they disclosed and the transparency of what they are telling you. henry paulson is a criminal because he selected for goldman the securities he wanted bundled to tel so he could short against it knowing they were all bad loans so that he could make the money to put in his pocket and just because i use the word criminal that there is not a law. when something smells, it stinks. goldman do. they had him as the innovator and selector of the securities and they did not disclose it to any of the institutional investors. it was a lack of disclosure. all the other firms are doing it. >> you touch upon a very important point which is this whole thing stinks to high heaven. it stings and it gets back to the deterioration of ethics on wall street. maybe wall street is a reflection of our society as a whole. it might very well be. there has been a deterioration of ethical behavior certainly on wall street and it stems from the desire to make as much money as you possibly can as quickly as you can. i went from being a journalist working in north carolina in 1983-'85, where it would take me ten years to make as much money as i did in my first year on wall street, it would take me ten years as a reporter at a time when people were not getting paid that much. you can imagine not only were we sucking out the best and brightest of our american youth who for some crazy reason going to wall street to push paper around and deceive investors and create securities full of opaque as that no one can understand, even the lawyers, alone people who run these firms, yes, mr fabulous fab may have understood these securities and may have understood what he was pushing on people and seemed to be jesting about it. it is terrible and i was really hoping this crisis would reorient our best and brightest back to doing things where they manufacture or doctors or scientists or those things that can help make things and add to society as opposed to pushing paper round. unfortunately because wall street made $140 billion of compensation to spread around everybody in business schools, best and brightest in colleges and universities want to go to wall street again. it is a terrible deterioration of ethics and responsibility and good behavior. my father's generation didn't do that. people who lived through the great depression would never be paved the way people are behaving now. >> do you think it is the tip of the iceberg? >> every firm was doing this. goldman probably had people just that extra bit smarter to create -- if you ask what they created, they created a security called synthetic collateralized debt obligation that wasn't even made of other securities. it was made of the risk of other securities. you can't make this stuff up. even if you were the best fiction writer on the pace of the earth you couldn't imagine security like this. was goldman doing it? yes. innovations come along and other firms deconstructs them and copy them because of the opportunity -- $15 million in fees even though it is meaningless in the p and l of goldman sachs with mr. fabulous fab so he can show $50 million of revenue. his bonus is going to be pretty big. >> since there is no law presently on the books that they are breaking that make it right? will they get away with what they have all been doing with the argument that they are going to use as their defense that we didn't break any laws? >> my greatest moment in life after getting married and being present at the birth of my two sons was going on the john stewart show a year ago. so john stuart, when you go on that show your just a procter. you are not informed of the questions he will last before hand. no way to rehearse. you have to think fast on your feet. it is taped live. the stress level is very high. the nice thing was he said a lot of nice things about the book. i wasn't sure he would treat me like jim cramer. it was right after that. he treated me very nicely but one thing he asked me was he said to me so in your book you talk a lot about bernie madoff. the first thing is i don't mention bernie madoff once in my book. first thing i have to decide whether or not i am going to correct john stewart and decided to not do that. i decided to roll with it. yes, i talked about bernie madoff in my book. he said answer me one question. what is the difference the tween a ponzi scheme and an investment bank which was a great line which he couldn't have used had he not mentioned bernie madoff and thinking quickly, i said something like the truth is obviously bernie madoff was a criminal, went to prison for 150 years in north carolina or wherever and what he did was against the law but what wall street does isn't against the law. they helped write the rules and regulations by which they live. there is a revolving door between the sec and congress and wall street and the money goes back and forth and we all know how this works and it is no surprise, the only indictments are these hedge fund guys. there are no other indictments. wall street has written the rules you live by. when it violates the rule, what goldman does is come within a hairsbreadth. that is my point. it is not to say the sec will have a hard time proving that goldman sachs broke the law but they didn't break -- they did break the spirit of the law. you shouldn't be doing what they did and they are clever enough and have the best lawyers and will be very hard for them to prove that goldman actually didn't make the disclosures they claim they didn't make. i think bolden place it up to the edge of the law. they know the rules perfectly because they helped write them. >> we're running out of time but we have time for one quick one. >> i will make my answer quick too. >> my question is with the it revolving door and inappropriate -- will there be a reduction in funds? i am nervous about investing in wall street. until there are more regulations i am not sure what the next thing will be. >> wall street seems like a big black box. of big casino. part of what i am trying to do with this book is open the black box that is goldman and show people how they make money, what their culture is like and how they have done it for so many years and let people decide whether they are to be trusted and admired or hated and feared. i think wall street has a huge credibility problem. i don't give my money to a wall street broker because they are paid to sell. they are paid to make money from your money. how is that in my interest? there are money managers around who are not wall street brokers who have a very different philosophy and those are the people you should seek out. most people don't have the time or inclination to manage their own money. they may not be good at it. it has to be a very frustrating time for people. washington doesn't do anything. what they choose to focus on in terms of regulation. the only good aspect in this bill is in this push obama said yesterday, you have got to regulate these derivatives. people sent -- see what they're made of and what they're bought and sold for. that is hugely important. we don't have time to get into it but the credit default swaps market and creation of these derivatives exacerbated all the problems we faced. >> we could have a daylong seminar on these topics but i want to thank william cohan for an informative presentation. [applause] we have a few minutes until our next panel. william cohan will be to the table to the right and you can purchase a copy of his book and he willign it for you. the next panel will start in ten minutes. thank you very much for coming. [inaudible conversations] [inaudible conversations] [inaudible conversations] >> they want me to -- >> that is fine, thank you. thank you so much. >> my pleasure. you will see how day did it. thanks for coming. >> could you do to emily and alan? >> do you think john stewart knew whether bernie madoff was in your book or not? >> yes. i think he knew what was in the book but he was obviously setting up the joke which basically a i love the guy. that is what he does. >> both of them -- >> okay. >> k r i s t i n a. >> is there any hope for wall street? >> michael again? is there any hope? >> any hope for anything? >> i know. if i were a politician running for office i would have to say yes. i think we have been deteriorating. i am doing a book called 1963. the day kennedy was shot seems like -- you know -- i think obama is trying to do the right thing. at least he is trying. he is not getting much cooperation. [inaudible conversations] >> thank you for your kindness. [inaudible conversations] >> david. >> starting shortly the last panel of the 2010 and apple was book festival. it features the new america foundation's barry lynn with his book "cornered: the new monopoly capitalism and the economics of destruction". >> they threw the woman under the bus. >> read my article. >> when was the article? >> it was last summer, june or july. >> they need to be excoriated. >> do you have some more in the boxes? >> yes. >> ok, great. >> my name is dan. can you do me a favor? are enjoyed your lecture. >> twoi enjoyed your lecture. >> two days after that day. >> deuce started out at the journal? >> believe it or not. i started out as a journalist and i was there for two years and went to wall street for 17 years. [talking over each other] >> early in my career. >> i was and and and a banker too. in grad school i went there. >> peter. >> what industries? >> mostly sports illustrated. we are selling our business to work with goldman to our embarrassment. actually i thought their image was on amendment to yesterday. >> goldman guys -- the others set up shop. >> they would say that. they always say that. >> you are stupid enough to go with a broker. >> make that out to you? >> no. >> on booktv, the 2010 and apple was book festival. up next hour final panel of the day featuring the new america foundation's barry lynn discussing his book "cornered: the new monopoly capitalism and the economics of destruction". [inaudible conversations] [inaudible conversations] [inaudible conversations] >> good afternoon. good afternoon and welcome. welcome to the annapolis book festival. of beautiful day. i am the president of the maryland capital advisers and cast a trustee of this great place. to date we are pleased to have barry lynn join us to have his latest book entitled "cornered: the new monopoly capitalism and the economics of destruction". after our collective experience of the last few years we are more interested in finance and economics and that is a good thing. barry lynn's book makes an important concentration of market power as well as today's megacompanies and how affects us all. it is a great book. it is a book that will resonate with any of us as we go out and shot for good and services at the nearby malls. by way of introduction, barry is the director of markets enterprise and resiliency initiative and a senior fellow at the new america foundation. his previous book was "end of the line: the rise and coming fall of the global corporation". he has presented his books to the european commission, the white house and the u.s. treasury department. as well as many corporations, labor industrial unions and academic groups. he published several articles in the times, harper's magazine, just to name a few. we will have time for q&a after the discussion but now let's learn more about the monopoly menace as the title of our forum is called. >> thank you for coming. it is a pretty day outside and i would rather be outside myself. i was up on fletcher's boat house of a couple weeks ago in d.c. and there were a lot in the water. what i want to talk about today is not fishing but another thing that happened in the water which is the tea party. there has been a lot of talk about the parties in this country recently. it is important for us to give the story of the original tea party right. a lot of folks say that the tea party was a rebellion against high taxes and that is not really the case because actually the tee that was going to be landed was going to be considerably cheaper than the tee people were drinking at the time. some people say the tea party was against the principle of taxation without representation which is true. except for long time people thought the tax had been rescinded and they still planned to rebel. the boston tea party was a rebellion against monopoly. the folks in america back then did not want one company governing their trade in tea and all kinds of other goods. not only when the company brought lower prices. what they wanted was liberty to trade. they wanted liberty to make their own markets with each other. the original tea party years, the founders of the country, they accepted taxation within reason. what they rejected was monopolization and they rejected that completely. america was in many ways a rebellion against monopoly. it was against monopolization over our souls by any one church, rebellion against monopolization over land by anyone or few awards. it was a rebellion against monopolization of trade and commerce and our markets. for 200 years we used our anti monopoly laws to protect us against concentrated economic power hence concentrated political power. that was the purpose of these laws. we can look at it as a way of extending the concept of checks and balances into the political economy. in some ways the one great misfortune about power and time monopoly laws or antitrust laws is we got the word anti in them. makes them seem little bit negative. at the heart of them is a very positive and important vision and did is a simple and elegant position. an independent republic made of an independent citizen. it is important to talk about what that means. independent republic, that requires us to use our government to fight all of these efforts by a monopolies in other countries to dominate trade over some activity in this country. the founders understood the word free trade. it didn't mean protection but it also meant you wouldn't allow another country to dominate another fishing. the idea of an independent citizen is every citizen in the country or as many citizens as possible would have property and liberty to work that property. the liberty to bring that property to an open market. you have to understand the word property is not just real property. is not just land or machines. the concept was property included labor itself. this was something james madison made clear in his writings. he reviewed labor as a form of property and you had a right to exercise it free of control by other people. one of the great things about james madison was he was very realistic. he understood that not every individual would be truly independent all the time. his goal was to distribute power as much as possible. he wanted to enable as many citizens as possible to make themselves as free as possible at any one moment. over the years a lot of folks called madison and jefferson and naive. they said their vision of property competed specialization but madison's view was very practical political. he understood that those who preached specialization actually wanted to concentrate capital. they wanted to concentrate control. what he also understood was independent citizens who saw themselves as independent, he saw these people as essential to the preservation of liberty. he said these people are the best basis of public liberty. they are the bulwark against the would be lord's. he expressed this in a simple equations. this is an equation they can't capture today. the greater the proportion of this class of independent property owners to the whole society and the more free and independent and happy must be society itself. it is very important for us to remember that this vision is not also a vision that was isolated in time. it is not something only of the nineteenth century. there was a long period in this country when that vision of an independent property holder was erased. that long period in the nineteenth century when the clue the cracks were in control and in the twentieth century when the corporate guests were in control. the independent property owner was shunted aside. but this vision was resurrected in the 1930s. we actually resurrected this vision in the second new deal. the people, the populace in the new deal prevailed again. at a time, early 1930s is a time when germany, japan, russia were falling deeper and deeper into a foreign carrier terry and even totalitarian horror. in the united states the people resurrected a democratic republic. during the second new deal. to understand what was accomplished, this is after the corporatetests were in control. i will turn to the words of supreme court justice william douglas. half a century ago he said these words in a case in which big oil companies were attempting to capture control of independent gasoline stations. when independents are swallowed up by the trusts and the entrepreneurs have employees of absentee owners the result is a serious loss in citizenship. local leadership is diluted. he who is a leader in the village or the town becomes the pending on outsiders for his actions. clerks responsible to a superior in a distant place take the place of residence proprietors behold and to no one. in the 20th-century in the middle of the twentieth century we recreated in this country a republic of independent citizens. those of us who are somewhat older remember it this. we remember growing up in a country in which power was really distributed throughout communities and states. two years ago i started writing this book, i told people i was writing about monopolization in america people said you are crazy. there are no monopolies in america. this is cowboy capitalism, the most competitive system the world has ever seen. as mike suggested we are less serum of that. we had the experience of what happened with lehman brothers and the meltdown and the experience of what we learned from the debate about health insurance and learning how much power is concentrated in private hands. we had the experience of watching films like food ink or reading michael pailin's books and learning what is going on in the food system. most of us think we live in a free market system. but it is important for us to take an honest look at what is taking place in our republic today. one way to do this is to start with books. you guys are here because you actually really deeply loved books. this is a book festival. i spent a lot of time talking to people in the book industry in recent months and the reason is because last fall there was as some of you may remember a big price fight between amazon and walmart over books. .. in front of the press and both business and united states right now we see fear. let's think about to be here for a second. when you go to the store you see all these different beer brands and one of the greatest success of the country, all these new bottles and it's true in 1970 there were four pure was in the country now is about 1500 approvers in the country. the difference is that to foreign trading corporations fell about 90% of the beer. two of them. all of those little tiny breweries, all of them have it together total about 4% of the volume of beer in this country. last weekend i was speaking at a brewing conference in chicago. one of the borough worse stood up and said she was speaking to the people who were on the craft brewers association and he said i looked around and i see two foreign corporations running of the year market in this country and what these people said, with a told him is we have to be gentle with these folks. we have to go gentle with these giants because if we disturb these giants they will disturb us a lot bigger and a lot more effective ways. and i was talking to another guy afterwards. one of the biggest most successful independent craft brokers in this country and he told me how does he get into a market, into a big box stored in america today, how does he do it? does he call wal-mart and say i want to take my year and put it on your shelf? essey call kosko and say take my year, but it on your shelf? no he calls anheuser-busch and says will you use your trucks and distribution arms to carry my beer into the wal-mart to carry my year into kosko and the place you decide to place it. that's the open market system in the united states of america today. and the beer brewing we see thir. the same in manufacturing. there is a law to change -- there's an effort in the congress to change pricing policy in this country. it is an arcane subject and i'm not going to bore you with issues of pricing policy in this country but it's a policy the way this could benefit taxable real manufacturers, producers in this country none of them will go out and speak of in favor of this law because they are afraid. they are afraid that the powers that controlled the trading companies will take retribution against them. they are fearful. johnny and manufacturers are fearful in this country. before i go on we talk about this country being a sort of paradise of entrepreneur should of small business. we should understand exactly what has happened to small and medium-sized business in this country. the oecd recently came out with a study looking at the sort of number of people in this country who own their own business is actually the 22 richest nations of the world, the 22 richest nations. where did america come out in that list of the 22 richest nations? we came out second to last about only luxembourg. meanwhile, wal-mart, one company now controls in some cases upwards of 50% of the various lines of business in this country. 50%. often 50% plus. but let's get back for a second to this issue of fear. let's take a look at the sort of our independent workers because not everyone has the ability to run their own business obviously. the salary workers in this country let's look at white-collar employees and what is happening to people in this country. just one good example think is what is going on on madison avenue in the advertising industry. not long ago you had the couple dozen large advertising agencies, independent agencies and if you were a worker, if you were in executive you could go and you could compete the different potential employers against each other. you could sort of get a good salary. there's a market for your labor in that industry. recent years, three giant holding company is about up almost every single one of those agencies. they control those agencies. the relative bargaining power if you are an executive in advertising today is coming your bargaining power has gone down a whole lot in the people who control the system. you live increasingly and fear. not to mention the fact your chance of getting a better salary and more benefits has gone down. we have a fancy name for this. we call the labor monopoly that is when you have a single wire essentially in cahoots with each other. we can also express in a more simple way which is that when we left them, a bank monopolies, we see to them the power that governs the power to dictate terms. this is true as we just learned about doctors and nurses. here we are worried about creating some kind of a government control over medicine yet we already have a hard doctors and nurses already been consigned to government by private governments called insurance agencies, insurance companies. it's true in silicon valley just last week in "the wall street journal" there was a report the antitrust division in the department of justice is looking at a buyers cartel for labor in silicon valley. they said google, ibm, apple, intel and a number of other countries have, quote, the have agreed to offer each other's employees, the buyers cartel in silicon valley. our independent republic you know many of you have heard of the battles between hambletonian's and jeffersonian speck in the early days of the republic. they fought on 2 million from whether this was going to be an aristocratic republic in which a few people use in chile are system would be mumbai a few words in charge of industrial and land is states, that was the hamiltonian vision or what everyone would have property. then the second front was they fought over what kind of trading relationships we would have. what we've essentially be dependent on the british, that's what hamilton wanted where we fit into the system, or what we have free trade which was understood to mean we would trade with anyone with a spanish or french or dutch, whoever. it took 20 years at the beginning of this country to work that out. the sedition act, the embargo act, the war of the t-note wealth. these are putting ourselves free from the british trade system. eventually them addisonian spawn didn't come won and we managed to keep ourselves free of other people's trading systems for a long time. and after world war ii, we had the power to engineer an international trade system structured around this strange but kind of weird lee perfect amalgam of interdependence and independence in which the nations of the will what kind of brought together in a system in which they could pursue their own sovereignty yet there was just enough industrial interdependence to insure that there was really hard for them to go to war with each other. our postwar trading system hammer together in short peace and prosperity through interdependence for many decades. so what have our free traders and over the last 17 years? since the clinton administration came in and signed the uruguay round of the general agreement on turner was on trade? the essentially sold the keys to this entire. it is a beautiful, this liberal, cosmopolitan entire that so carefully structured imperialists systems. they sold those keys. it turned over the control of wall street and wall streetúúúúg these different practiced phyllis to preserve the packaged foods. vitamin c was first synthesized in the united states, first mass-produced in the united states. we are now 100% dependent chinese vitamin cartel for vitamin c. 100%. drugs from the ingredients in drugs, the actual ingredients about 90% come from china, the weekend trade with china tomorrow we don't have jobs. when the obama administration looks at china what do they feel? fear. that is the beginning. i won't belabor this, but just, you know in my books one of the things i look at just to make clear because we do conserve results primarily consumers to this point, variety is down. for ideas down. i tell stories about the company, there's one company that dominates our eyeglasses business in this country. those two countries that dominate the toothpaste business in this country. there's one company that dominates pet food production in the country. we go to the store and see choices but increasingly it is an illusion of twice with the quality of our products is going down. the safety of many of our product is going down. our health if you measure by say diabetes rates in this country, if you measured by life expectancy in certain groups of people it is actually going down. prices? they are going up. vitamin c cartel, what they did to the chinese after 100% control of vitamin c they raise the price of four entered%. beer, last year was a bad year for beer in this country. people are of jobs. beer consumption went down. price went up. inputs and you're went down. price went up. why? to companies that work together in other parts of the world control 90% of our beer. job creation, that's gone down. monopolies don't have to create jobs, they just tax more. innovation, that's gone down. destructive speculation will that wind up. manipulation of choice within our political system, that's gone up. autocratic control in the country, that's gone up. vital systems, this ability of vital systems of finance, of production systems, that has gone down. two interconnected to fail it's not just true in the financial system is also true in our industrial system. pretty much every economic market in this country has been in some ways monopolized. i go through and i won't go through here but whether it is grains, metals, energy, retail, services and production if you look at high-tech you about microsoft, intel, ibm from cisco, half the company's role the systems. i haven't even mentioned the folks that have their hands on our brain like google, at&t, comcast, news corporation. just to sum this up actually i will turn to an outside expert a guy named jim cramer some of you know from msnbc. when the justice department a couple of years back approves the whirlpool, maytag merger that gave will pull 75% control over our washers and dryers and various other things in our houses this is what jim cramer said. if there was ever any out in your mind that we have a government of, like, and for the corporations, if you thought for a second that we were not right back in the gilded age, if you have the least ounce of faith in the regulators to do the right thing, you should give that up right now. then he went on and he goes on tv i play a guy who's out to help you make money. but when you're not trying to get rich, feel free to get mad. so how did this happen? there is the simplest answer, the simplest answer is that we were taught to see ourselves differently for 200 years in this country we saw ourselves as citizens for most. and what the citizens value? citizens valued liberty for most. a generation ago, however, we were relabeled or allow ourselves to be relabeled consumers. what do consumers tell you? consumers value not liberty, the value of stuff, lots of stuff, cheap stuff. it is important i am not making some kind of a hippie ranch. this has to do with law. strange as it may seem americans are not citizens but we are consumers was actually used to refrain how we apply our antimonopoly law. again for two centuries in this country we store and a monopoly law to protect ourselves as citizens from concentrated political power and from purgation in the marketplace is. there's part of an anglo-american tradition that goes back 800 years. practically this meant a couple of simple rules that we would use the balk in pos competition just for the sake of competition a matter what because competition means that there is not collusion. and we would use the wall to protect our markets. then and 1981, the ronald reagan administration came to power and they changed this frame. they said from now on, rather than using these laws to help us as citizens we are going to have them help us as consumers. we are going to use these laws to promote lower prices because that's what consumers like to read and they did so for a simple reason, to promote consolidation. because the consumer welfare test the put in the places is simply a thin cover for the cold efficiency argument. some of you may recollect this is what -- back in the gilded age, john d. rockefeller, jpmorgan, people would say how is it you should have so much power they say it's more efficient as we. competition is wasteful, competition is wasteful. but all the power in my hands and i will dictate what happens in the system in a way that helps create a more efficient system. it's good for all society. it is a seasonally of course what we khator said. it is the same as many people who run the biggest corporations now. people run wal-mart say the same thing. let us use the power. it's good for you. in 776 in this country return from subjects into citizens. in 1981 we return from citizens back to consumers. this is not a partisan thing. when the reagan administration started to put in this idea of a consumer welfare test a lot of people from the democrats to believe in this consumer movement, they said a man. but we have to be -- we should understand the basic logic of consumers this is the basic logic. consumers are served best by lower prices. lower prices are achieved through economies of scale, our goal monopolies are our best friend. to accept this efficiency argument has always been the and this is true in the 18th-century france, this is true in nineteenth-century america and in 20th century soviet union it's always been to accept a straight line trip to concentrated political power. and in the three decades since that happened in this country, market after market this has already in place to what i said before the market after market trading companies run by wall street financiers have inserted themselves into the relationships between american citizens. i will give you an example of how this works. one of the things i did when i was reading this book as i said i'm going to go find out -- i'm going to find myself a farmer, one of the last jeffersonian addisonian farmers they went to this place and in eastern tennessee the but haugen valley. and i found this fellow named ronnie hazelwood. he has a dairy and 70 cows. and he says you know, mr. hazelwood, where do you sell your mel? he says that's become the problem. i used to sell it in the local community but now i can't. now why depend -- there is a guy on the other side of the blue ridge that sends a truck over every day and picks up my milk and there's a couple other surviving very spirited what about the people in your community? they buy their milk at the wal-mart. so i went to the wal-mart and one might find out where does wal-mart get their milk if not for mr. hazelwood. so i went to this wal-mart in elizabethtown tennessee. i went back to the cold case and i looked what was inside the kuhl case and it seemed to be all of these choices in their. you could buy milk that had a label that said pat garrey on the label that said mayfield another that says great value, that's the wal-mart in storebrand. well, what i found out the little research after the fact was paid to dairy and mayfield are owned by a company called dean foods and they also provide all of the milk in the southeast at wal-mart puts into its stores. and dean foods probably controls horizon milk which is the organic milk that was in that store. basically for plans, one company and they didn't feel like they had a deal with a 70 cow farm in the valley even though it was about 3 miles away. so the united states in 2010 farmer and a dairy farmer he's locked out of his own community. he cannot sell to his own neighbors. so when you and hear the word consumer i think we should swap in the word from now one of the work like peon. we should swap in the word like tenant or maybe like proletarian let's go back to the word subject. that's what we are now. we are subjects who once every four years are patronized by one of the other factions of our elite. when you hear the word consumer think concentration of power in the hands of someone other than you. indeed we've seen the greatest concentration of power in this country than we have seen in more than a century. i wrote cornered for many reasons. in part it was simply to highlight the degree of concentration that we have seen. no one has done that. i don't know why that is to read the indoctrination of power people just really believe the myth. i didn't tell few years ago. i wanted to show how this power affects people. i wanted to show how this power of six companies and systems. i want to eliminate the political arguments that they used to concentrate its power. i want to make clear the stakes, what are the stakes? the stakes are we increasingly see in this country a combination of private and public power blurring together private and public power. it's all ready corporatist and nature and increasingly futile and nature and authoritarian and major. so what to do. a kind of seems a little hopeless, doesn't it? you know it ain't going to be easy. but i am absolutely completely certain that we will prevail. we will break up and harness these goliaths. we will redistribute this power. we will resound our american republic if their time. now why am i optimistic? first, we have no choice. in my previous book and this book elkus systems have been made to interconnected to fail. it is a simple engineering issue. nothing complex about this. look at the systems and you can prove that they are fragile and they can be made safe. so if you look at you can understand it did have to do it. you cannot live in a system set are going to be -- they're going to collapse. the sec brings i'm optimistic is we have a very powerful tool that we have not been using. this is called common sense. and the language if you read the language and read madison and hamilton, if you read brandeis they speak in the words of common sense. they don't use the words of the academic economists. they don't use the words of the social scientists. they don't use mathematics to describe political systems. you know what takes place in this country every single relationship in our political economy is political in nature, political in nature. there's nothing fancy about it. it's just like the end of the wizard of oz. most of you have seen that. it pulls back the curtain and what did they find? they found a little short guy pulling a bunch of letters. the academic economists in this country what they do, what they serve, they are the ones who leave the curtain that hides the people pulling the levers. so just stop listening to them, use our common sense. the common sense does not all of your aides in one basket. academic economists until you put all of your eggs in one basket. the third reason i am extremely optimistic is that we have this very, very powerful political philosophy. it's an hour passed. the books are all there, the documents, are there, bill walz are there to be dustin off. for 200 years, most of 200 years this was a space republic. it can be made so again. the models, are there. we have a model in the second new deals shows exactly how to distribute power. this is a deeply conservative philosophy. it's based on the idea that we should never have faith in any tiny elite to lead us in one direction or another. it's based on the idea that the only we can move forward is by dispersing power as so that the very slow wisdom of the people can figure out when someone is doing something bad and block it. fourth reason i am extremely optimistic is that we have the power. i've spoken recently to all these different groups. i spoke to the booksellers and i've been speaking to farmers and to the brewers. everyone is in their little corner and they are looking up and they just see the local bad goliath and they feel like they all alone. when we bring all of these people together with the opticians, the pharmacists the software engineers, the scientists, with the advertising executives, with the doctors and the community bankers and the veteran capitalists and all of these people who've been excluded from the system we have a really big numbers. we have the same enemy. it's very simple. we need to come together. and there's a fifth reason aye delivery optimistic and that is a lot of them are going to help us. we kind of about them to do what they did. so when we stand up and organize and say that what you are doing is really dangerous physically. it's dangerous politically. it's dangerous economically a lot of these people were going to help us take part this concentrated power. i know this. there are people who really believed in the democratic republic of america. but it's not going to happen until we organize. now the good news and here is more good news that it's already started. it's starting in the u.k., starting in the tory party, starting in the liberal democratic party. i spent a lot of time talking to people in both of those parties the last few years. to stuff some extent it's already happening in this country. there are pockets within the congress. there are pockets within the administration. there are people, individual people in the congress and administration doing a really great things. i can't say unfortunately the adminiti

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