Transcripts For CSPAN2 Today In Washington 20110902

shoving and throwing tickets at each other and there was one clerk that was a small body and so he hired a bunch of people behind him whose entire job was to hold him to the trading floor so this is so cool that is what made me write rigged and we are working on that movie as well with summit i think so we will see if that gets going. >> yes, ma'am. >> i just want to actually read something funny to you based on the conversation about recreating a dialogue. >> sure. >> this is tonight's program. ben mezrich porter for thousands of pages of court records, fpi transcripts and documents and has interviewed most of the participants in the crime to reconstruct the ocean's eleven style highest the story of genius, love and duplicity. already, the mall for has been snatched up by hollywood to create film. [laughter] >> yeah, that happens. so i think -- yeah, people use the word novel interchangeably now. it will always be a controversy but most people are coming around to this form of new nonfiction. it's funny when i tour in england and europe they have no problem with it. there's not even a discussion of it. they are like why are american journalists so upset with your writing and i don't know what to tell them, but it's -- it seems to be more controversial that "the new york times" than it is anywhere else. >> yes, ma'am. >> i wanted to ask you on your next big project when you are looking for that story, do you prefer to write about it unfolding like bringing down the house? >> that was the idea. >> or like the social network. >> i love the idea of getting inside the story right when it's happening but it's hard because at that point you don't know where it's going to end and you don't want to spend years of your life chasing something and then it doesn't happen but yet that would be the idea of the story where you are in as it is happening. both of this and accidental billionaires' happened a number of years ago. so that was a little bit different. and you can try to recreate it itself, but yeah, i would love it if it were actually happening but you have to know the ending. >> any other question? >> can you share with us what -- i hope i pronounced this right, thad is doing right is a criminal? >> thad got out of prison and then he went back to the university of utah to get his phd. i think he just recently left utah and he really still wants to go to space. that is his dream still obviously not at nasa but he's as maybe in the private sector one day. he is a smart guy. it's a question of if he can overcome his own demons. he has issues to read his very spontaneous and he doesn't -- me he needs to control himself. but i hope the best for him. he served his time, he paid his dues and if he is smart she will study and he is brilliant and he will get his ph.d. and move on that we but, you know, she is a good kid that did a bad thing. >> how has he responded to the? >> she liked most of it, he didn't like the idea that this guy was rewarded for taking him down. he didn't like some of the ways he described as being a little delusional and the fantasy aspect of it, but he also said it's hard to see yourself from someone else's eyes phyllis and he let a lot of it. he felt like after being at nasa and all that stuff in the beginning very well. so overall he liked it but, you know, there were things he didn't like. .. to see these things they advance the human species, just by existing i feel. i feel like the race to mars would answer some ways we can't tell you. so that is my very pro-nasser's speech. i hope that we find a mission to mars. >> what is nasa's response? >> they weren't happy i was writing this book if this was a guy from the inside. they didn't want me to make him into a hero, although thursday things. i feel like they haven't responded since the book came out. when people do actually read the book, they're going to love it because i think it looks now for very cool. i think they will like it, but i thought they spoke would like a social network and eventually they did come around to his bn. but you know, it is not a hit job on nasa. >> let's do one last question in them will call it an evening. yes, ma'am, right in the middle. [inaudible] >> he took the fall for them and he said it was entirely forcing him to do appear to fill him him in this other guy were involved in finding the guy went to jail. they got probation and never spoke to him again. but with that. you know, they've known each other three weeks. it was his quick love. when she was in the courtroom and the judge of the prosecutor asks her, you did a skit for three weeks. why would you do it? she said i'm still trying to do it. they've moved on with their lives. they were not happy about this book. she asked me to change your name. she wanted nothing to do with it. i think she's in texas, but she politics & prose bookstore in washington. this is just over an hour. >> good evening, everyone. thank you for coming. this is clearly a standing room only audience and i know we are eager to get into this and have lots of discussion because we are here to celebrate and celebrate francis fukuyama is the major contribution, "the origins of political order: from prehuman time to the french revolution." before we begin, i want to just say that this is a momentous time for politics & prose. as you know, i am trained to come it was carload cohen's house band and she and barbara meade, together with the stellar staff here at politics & prose and need to be engaged and lovers of books and ideas in the community of writers, publishers, editors, agents have made politics & prose into more than a bricks and mortar bookstore. it's a setting for the discussion and dissemination of ideas and it's a hollowed public space where people meet, talk, and disagree in a civil way. and i will continue to have way in the leadership of its new owners, brad graham and melissa muscatine. so, i just want to -- continuity will stand and appropriate changes will be made, to. but not around what is a community institution around ideas. i very much wanted to introduce francis fukuyama tonight because i respect them, even as they told them to my thai civil society activists in asia and africa work on civil society and we have a lot of vigorous discussion about the end of history 10, 15 years ago. so that's one reason. the more important reason is he is an open-minded scholar who embraces big ideas, is not encapsulated by silos or artificial boundaries. he clarifies as he pursues nuance and complexity. to be fooled by the fact that this book as the colin says, from prehistoric times to the french revolution. professor fukuyama takes us through the relationship of the state and accountable government. he wants to know what is the origin of state law and accountable government. and having one of those in place doesn't presuppose that the others will have vibrant and alive institutions. he discusses failed and failing states in his ratings, provides probing questions about the united states as well. i love the fact that you defend the necessity of politics, even if you take us through political anxiety, political decay and it makes us think about her of society here the united state. i have not read the whole book yet, but i've already been made to think for me, i'm not reconstruct it and i'd like to thank an open-minded liberal can you help me realize there is more to friedrich hayek demarcate absolutism. so let us welcome francis fukuyama. [applause] and let's also pay tribute to the good work of c-span, which adds to public discourse in this country and the folks who work the camera can make it happen. [applause] >> thank you. it's really a great honor to be here and have this wonderful audience. i'm very grateful that you are all here at politics & prose. one of the nice things about speaking at a new book is to go to real brick-and-mortar bookstores and there are still people that like real books and come out for events like this because of the intellectual challenge and entries. i'll get straight into it. see no huntington was my teacher when i was a graduate student at harvard. he wrote an important book in 1968 called political order in changing societies, which rereading it now in light of the arab spring actually is probably one of the best guides to what is going on in the middle east at the present moment. it is a book that needed to be updated. i thought of a project is doing a revision of this book. among other things, on the very first pages is the soviet union and united states are equally developed political orators. that didn't seem quite right after the fall of the berlin wall. the other major issue is when i was just referred to. i've been thinking about iraq, somalia, all of these foreign policy analogies we face. i may have the solution, the problem is getting to denmark. denmark is in quotation nice because denmark is actually not a real country. it's a mythical place that is low corruption, democracy, stable government, the services delivered very efficiently and so forth. we have this vision of denmark in the back of your heads in we go to a place like afghanistan and how are you going to get afghanistan to look like denmark? part of the reason i began to realize is that we don't understand denmark. i had a visiting professorship at the university in denmark. i'm going to denmark for the past two years. most danes have no idea how denmark got to be denmark. it starts he has a political scientist at the basic book you can go to and say whether political institutions come from. i didn't see one and so i decided to write it. so i also didn't want to write a book on the politics are told this traditional eurocentric or an go centric story. not because i am the poster in england the west, but i think it's a distortion and this one that's been taught still in a lot of the discourse that really begins with karl marx, this is england as modernization. england's present is everybody's future. this is something the karl marx said. while we realize that you learn something about the history of england is that it is a very peculiar country in the number of ways i will explain to you. to expect other countries to replicate england's modernization path i think is highly unrealistic. in fact, in my view it was china. china did not establish the first day. that happened a lot of places, egypt, mesopotamia, valley of mexico. the chinese established the first modern state, not based on hiring your cousins and friends who in the government, but based on civil service examination, centralized administration. they did this in the third century b.c. it's a historical achievement that i think a lot of people would not adequately recognize. instead of starting with england work reset realm and i'm going to the magna carta and demise of democracy in england, a maine license to certainly china. china created the first modern state. where their societies differ from china? that's the basic background. there are three important baskets of political institutions that we need to think about. the first is the state itself. the state is all about power. the stake is the ability to concentrate power in a hierarchy and use it to enforce rules over a particular territory. in the developing world and this again is why i think we sometimes take politics for granted. we assume that things will have been. you know, long-term i lived in fairfax county for 20 years and the pothole scape filled every spring. why did they itself not in papua new guinea. turns out there's a hidden social structure that provides services and does a pretty efficiently, at least in a rich catholic fairfax. not so well in this district, but it's interesting why those differences have bid. i think all of the antigovernment act events of which there are many, especially in our society, don't understand if you want the country that doesn't have a strong government is able to enforce rules come ui to move to somalia or afghanistan or less developed country that actually cannot enforce rules on its own territory. somalia come if you want to own not just an assault rifle, but an rpg or shoulder filed, but it's not a happy society because it does not institutions. second is the rule of law. the rule of law is all about community rules of justice that i regard it as superior to the will of whoever happens to be running the government about whether that is a president, prime minister, king, marner, whatever. the executive and the society doesn't feel that he or she can make up rules on the fly whatever they want. but they actually have to implement a lot if someone else makes. so that is a second set of important institutions. the third is institutions of accountability. today we associate those of democracy, with elections. but that is not the only form of accountability. in any event, and accountability institutions were first put in place in 17th century england, the king was accountable to parliament but only represented 10% of the english population. so you can now you cannot accountability without democracy. i believe in china you can also have moral accountability. a government can feel obligated to take the interest of its citizens into account, even in the absence of elections. the question is where did this come from? stated that the concentration of power. the rule of law and accountability or means of limited power and the miracle of modern politics is that you get the president of the united states was the most powerful individual in human history knute what if he wants to, but he doesn't because it's all limited by the end by accountable political institutions. it's the kind of miracle of modern politics. i'm going to totally a few stories from the book in each of these baskets. to begin with the state. the state in some sense is in my view a big struggle against the family. human nature to do a couple things. there's a universal human nature. they're a couple of dialogue vocal natures, where we get this notion that before you had people clubbing each other over the head and a gnomic war of all against all. that was actually never true. human societies never went to die. here they were all social because they are born researcher touristic set allow them to cooperate. one of them is a principle called gems selection are inclusive biologist which means your altruistic to people in proportion of the number of genes to share with them. in other words, nepotism. you're going to favor relatives. the second principle is reciprocal all treason. you scratch my back, i'll scratch yours on a face-to-face basis. no human child growing up anywhere has to be taught these mechanisms. these are inbuilt forms of sociability. there are default leads to relate to each other. friends and family. in the absence of a modern institution that forces you to hire somebody with qualifications rather than your cousin or brother and not, that's the way you're going to do it. that's the kind of politics that will insert itself. this is a rose in societies that were organized tribally, meaning people were the marsh king groups. spirit groups. they believe they're descended from a common ancestor that they are basically third and fourth and fifth cousins. how do you get from the state based on kinship is a form of social organization to one based on citizenship in which it's not a matter of who you related to come up in a city said that the state of finance for japan or whatever. that's why there is a constant struggle, against especially the biological urge to protect your children. had this happened? in china, it unfortunately have been as a result of centuries on military conflict. charles tilly was famous for arguing in the case of europe at the state makes war and war makes the state. it's really military competition that drove people out of tribal societies into the more organized hierarchical unit. if you look at chinese history, that is exactly the story that unfolds. at the beginning of the western qin dynasty and conquer the shame peoples. they are split up into maybe three dozen tribal groups. in the spring and autumn. they fight about 1200 words with one another. in the warring states. they fight about 450 words. the number is reduced because so many states have been snuffed out in concord at this point, that they're in as many states to fight these wars. finally, the process has seven surviving states in the warring states period and finally in the year 221 b.c., the state of chen manages to conquer all of its rivals and establishes the first unified chinese dynasty. as in europe, another 1800 years later, the process is driven by the needs of warfare. first, you are fighting with aristocrats commemorating chariots. they find it if you can strip presents increasing and the tree are lot better. you need to tax, need resources and that requires cadastral surveys. you create a bureaucracy in order to tax and you need an administrative hierarchy to run this whole machine. this is what the chinese do. they figure if you hire your cousin to be a general as one can develop these patronage appointments early on in the civil war, you're going to lose the war. so you need a different principle. you need and personal merit-based principle of us is that the chinese did. they're the first to come up the civil service examination as a means of entry into the government. they did this in the third century b.c. unfortunately it didn't last. the great han dynasty that defends chinese visualization for centralized high-quality government. it falls apart in the third century a.d. for a number of reasons. and what happens is we patrimonial ice, meaning aristocratic families, people with wealth and power recapture the government. this continues through this week and pollen dynasties in this state they been established in the third century doesn't get put back in place until about 1100 or so in a northern song period. the struggle against the family goes on for a very long time. now the weirdest institution designed to create a powerful state and to beat back a family is the system of military slavery that developed during the abbasid dynasty, the second big arab dynasty and was carried to its logical conclusion by the ottomans. what the ottomans did every three or four years is they would send out a group of people into the balkan provinces of the empire, like football fans they would look for young men between the ages of 12 and 18. they would forcibly taken from their families and raise them as slaves in the palace or in haiti or nay. but treatment not for life of degradation, but to be senior military officers and administrators. indeed the grand this year, who is the prime minister of the ottoman empire. now why did they create this strange institution? by the way, people recruited in this fashion were not allowed to marry in not allowed to have children. if the children, they were either expelled from the janissary core and their children were never allowed to rise to positions of status. why did they do a? again, all because of the family. to know what you allow people in a weak position to have children, what do they want to do? they want to secure positions for their children. the ottomans understood a monument in the station has to be based on promoting people by merit and therefore if you allow them to have families, you would be able to do this. they created a one generation aristocracy. the whole ottoman system began to collapse the moment these entrenched groups took the opening cause by cnn and rising inflation and the 17th century to start to demand that their children be allowed to assume their positions. this is a general problem in france. overshooting france, before the french revolution, they faced exactly the same problem. wealthy elites potentially could depose the king. so what did they do? what does the french monarchy do? they felt the office of tax collector were finance minister to wealthy individuals. this actually had an import and impact in breaking up the opposition to the centralization project of louis the 14th and these other great monarchs. you can come at this desire to turn public -- first of all, there is desire to publicize private office. you want to grab as much of the public sector as you can. in the early 1600s, and enter an institution came permissible for wealthy individuals have bought public offices to turn them over to their children as heritable properties so why does the château of multistate spinners and everything, you'd also get disoriented from sports another public office. so by the time of the revolution, the entire french had been sold off to wealthy individuals. this constant struggle, you know, you can't create a modern state under these circumstances. one of the things the revolution did was divested these old elites of not just their property and offices, but their heads in a flood of cases. it took a violent revolution to eliminate assistant. now let's talk about the rule of law. this is a second really important basket of institutions. as i said, the root of our limitations. they are rules that limit the discretion of rulers to do as they want. where does this come from? in my view, historically it's come out of religion. if you think about it, which it is the only source of roles outside of politics, where rulers are limited by rules that they themselves don't need. this is true in many civilizational conditions. it's true of ancient israel. it's true the christian tradition. it's true in the world of islam than is true in india under hinduism. and every one of these societies, you have irreligious lot that is made by religious authorities, interpretative by hierarchies of religious judges. the promise in the case of india. and all of these cases, the ruler has to go to religious authority to give sanctions. and india, you have to be sanctified by a prop man. there's a clear status distinction. it is the priest on top of the warrior in that society. so that is rule of law. that is what we mean by rules. the only world civilization that did not have rule of law and the censors china. the reason they believe the chinese never have this was the club was they never had a say transcendental religion. they had ancestor worship, that is amazing that chinese guy to be so sophisticated with such a primitive religion. ancestor worship, you only have to worship your ancestors. there's really no authority that comes from it and it is completely controlled by the state. no chinese emperor has ever thought there is a higher source of law that they have to obey. that continues to the present day. the chinese communist party has a constitution, but they make the constitution. it doesn't really limit what they want to do. and the west, the rule of law develops early and powerfully. one of the heroes in my book, the classic modernization. like the reformation like the catholic church in a couple of historical respects. the church was extremely important. in the post here than jihad. , in the early middle ages, bishops and priests could marry and have children. and guess what they did? they'll start to their benefices over the children. they are all wrapped up in the clan shenanigans of all the local princes and inability in germany. you have at one point in the late 11th century, the rise of a pope gregory the seventh u.s.a. titanic historical figure. he was very much like the luther who would come after him by a few centuries, who realized unless the church itself eliminated this biological principle of being able to have children, it would not have moral authority to become an independent institution. furthermore, all the bishops in the church were being appointed by the emperor. the church did not have control over his own personal policy basically. so he declared the church is independent. they will point the bishops and other priests and bishops have to be celibate. they cannot marry and cannot have children. this comes as something of a surprise to both very priests. it's a huge struggle within the church and it's an even bigger struggle that the emperor because the emperor wants to keep his legitimating source of authority. they fight a two generation were, alloys of the pope versus allies of the emperor. at the yen, the church issues independence. at that point, they can establish a separate ecclesiastical law presided over by bishops and priests appointed only by the church. the first lawyers are ecclesiastical lawyers. legal specialists is really a creation that happens first in the church and then gets transferred to the secular realm and also in the christian west divides church and state at the very early point. the legal authorities have legitimacy in a separate hierarchy that is complete independent of european rulers. this is extremely important for subsequent european development because any european beluga wants to be like a chinese emperor and do whatever he pleases has to contend with the fact there's a preexisting set of legal constraints that prevent him or her from doing that one. the final basket of institutions are institutions of accountability, a.k.a. democracy. you sometimes get the idea and this actually comes from tokyo that once the idea of equality gets out its unstoppable and. one of the things he relates many you look at the history of the rise of democracy is just how weird and in a way contingent its emergence was. and it arose really because of the survival of a peculiar feudal institution into modern times, which is called the parliament. every european country in the mid in the middle ages had a body called an estate, a parliament, sovereign court. there is the cortez and russia, emc schoolbook. all of these were notables of gentry, high nobility, sometimes at the bourgeoisie and the king traditionally had the courage of these bodies to get permission to wage war and especially to collect taxes. in the late 16th and 17th centuries come and you had all these powerful monarchs i wanted to behave like a chinese emperor. they wanted to create a centralized, powerful, bureaucratic realm in which everything was uniformed. and they reached this long struggle against these estates in every single country. only if one of them did the parliament or the states when the battle and that was england. in a sense, shows you how accidental history is. parliament didn't prevail in france and didn't prevail by the way because the french had sold off all of the offices to wealthy individuals. once you take care of me and my family, i'm fine with everything else. were not going to defend liberties. as tocqueville said, the french interpreted liberty has privilege, but it didn't happen in spain. it certainly didn't happen in russia, were desired basically recruited the entire mobility in tucson military organization. it did happen in england for a very peculiar reasons because parliament for a whole variety of reasons have a lot of solidarity. not only did they hang together, they raised an army, friday february 15th. they defeated him, cut off his head. this is charles the first in the 1640s. in 1688 the deposed another came and brought an blame the points from holland to be their new monarch. because of the whole issue they did not want to be taxed without parliamentary consent. so it just happens in this one island nation, you get this powerful parliament that is able to force a constitutional settlement on the english monarch. from there to the american founding is a really short distance because john locke was a participant in the events of the glorious revolution. he wrote the second trade of government is unjust to is unjust to find was something that has to come up with can send in u.k. to the american revolution, based on the principle, no taxation without representation. so the difference from the english defense during the single were in our own founding is a country based on democratic and is really not a font distance at all. it would not have happened if we had been colonized by spain and indeed in latin america it didn't happen on that timescale and didn't result in a powerful commercial empire the way england evolved except for the balancing of aeroflot accountable government and a strong state. so this is a miracle. this miracle happen. if you think about it, there is no necessity. no historical driving forces that dictated this would be the outcome. when singling out there, it is a powerful model and others wanted to imitate. the fact that after the first place for some historical accident. and china to stay been so powerful and an early stage of the history, they never allowed free cities great bourgeoisie or opposing religious groups to appear and they don't do it to this day. they control the potential source of opposition to the regime. so let me just conclude with a couple of observations about how this is relevant. so let's begin with india and china. every business school for the last 10, 15 years has been to remember shane cory says, contrasting india and china. when china wants to build a three gorges dam to have to have 1.2 million people at the floodplain. they just do it. people kick and scream and there's a lot of unhappiness. but all the people are moved out. high-speed rail, beautiful airports in chinese cities, turnpikes, infrastructure because they have this very strong and relatively high-quality authoritarian government that does not decrease back, the interest of citizens. in india, just to give you an example, the motor co. a couple years ago wanted to establish an assembly plant in west bengal. they get hit with lawsuits, peasants association, they go on strike protesting the citing of this planet. finally they say enough. we are not going to do it and they put the plant elsewhere. in india come me that the real problem with basic infrastructure because they are block of our democracy. they are checks and balances. the indian state can't do anything at us because it's involved in this fashion were a lot and accountability are actually much more important. a lot of people will say, this is the inheritance of british colonialism for something that happened in the last couple hundred years of the history of these countries. i think having written this book, i now understand this is total nonsense. these reflect patterns of government are at least 2000 years old. since the unification of china in 221 b.c., the country falls apart in inter-dynastic years, that has always come together spent more time as a unified authoritarian government governed by a single authority that is in a state of disunity. india is almost a near upset. it's only been unified for two brief periods. under the more you can pay identity group is a few centuries later when the vocals are british invaded inside to india, none were able to extend their rule through the whole of the subcontinent. the fact that india is a democracy i don't believe has deep historical roots. the fact that is not a chinese style dictatorship is absolutely not accidental. nobody in indian history has ever been able to really big d. in that kind of authoritarian fashion because indian society is way to test. it's organized into kasson village associations and powerful religious groups all of which resisted to dominate. the final thing i mentioned that the eurocentric accounts of modernization don't understand how peculiar european modernization is. it's important to remember when we modernize through a country in the third world today. how is european development peculiar? first of all, the exit from kinship was again not done by a state, by a powerful state that demanded people have allegiance to it. it was done by the catholic church. the church of the roman empire set rules of inheritance. the first eight concubines, forbade divorce and forbade marriage up to five degrees of relatedness of cousins. all of these are a means of cutting off the ability of claims, a tribal groups to keep property within the clan. they also supported the right of women to hold and alienate property at this very, very early stage in the middle ages. they did this for self-interested reasons. they wanted to break the economic power of the tribal groups and it worked beautifully. it turns out widows and spinsters in this area ended up with all the money in the family. when they died without children, guess who inherited? churches holdings in france go up by 20%, 30% in the first part of the century as a result of changes in the rules. it means that individualism started in europe is a much, much earlier point. that wasn't the industrial revolution the reformation. within two or three generations of their conversion to christianity, all the barbarian tribes were already no longer living in this tribal associations. inning win, it gets carried to this extreme, where thierry parent who is improvident enough to turn over your fortune to your son before he died without having signed it made this contract come you could be in big trouble because the kid could say well, sorry dad. i got my own business to worry about and i'll try to take care of you, but it's not a priority. an english families, already in the 1300, you are having family signed contracts with each other because you could not rely on children to take care of their children in old age. already that presumes a huge amount of individualism that were not bound by what ernest gelder returned as within that big conglomeration of relatives. for much more individualistic early on. finally, sequence and development of europe goes like this. it goes first with her for comment and you construct a powerful centralized state and only later do you get democratic accountability. what comes before the state building. the early modern european monarchs that want to create chinese style states had to do this against the background of existing was that limit their ability to exercise power. the final anecdote is my favorite historical character recounted in this book is the evil empress wu. the evil empress wu was the only woman who established a dynasty in their own name as ruling through her son or has been. she came early in the sixth century. she was originally concubines of the second emperor. she got into his grace is an displeased the existing empress by having her own daughter as an audience at the empress and then was smothered. the emperor carbureted her and made babaloo the new empress. she actually killed a couple of her own sons and her rise to power and she managed to kill off a great part of the tom mobility listed in the way of her rise to power. you know, it didn't do much for women's empowerment unfortunately in china. it is actually a plaque somewhere in the forbidden city that warns against women in politics after the experience of the evil empress wu. you contrast that to a couple stories from europe. what a couple of revolts. in the 1520s, there's a thing called the commune near epic commie narrowcast habsburg emperor, charles the fifth. they fight a civil war in essence for a few years and the emperor one, defeated his enemies. there is a civil war called the phone in france 130 years later under louis the 14th. they fought a very bloody civil war and the king defeated his aristocratic foes. and both of those cases, it's remarkable that charles the fifth and louis the 14th basically pardoned their noble opponents and go back to their states and live happily ever after. if this had been china, the emperor would've killed the opponents and told us as we lineage of those opponents to make sure the rope of dissent was awoken. i think the early presidents really did make a difference in terms of the kind of authoritarian government, that you could create until these horrible governments, totalitarian governments of the 20th century as a result of modernization come you undermined the authority of the traditional forms of law. so this is that the. well, it's not that the beard is a small part of the book. but i guess what i have learned in the 20 years since the end of history is full process by which forget to modern liberal democracy, which is the only realistic alternative for modern society is based on an awful lot of accidents and in a sense, pathetic. it means if we try to create similar institutions in other societies that haven't had similar experiences, it's a hard process. thank you very much. [applause] >> what a rich presentation. maybe nominally a political scientist with lots of historic sensibility. one of the things you want to know is that francis fukuyama has been in public service. he's been one of those who has tried to let government have a longer range outlook and governments have a serving on on the state department policy planning twice and as the deputy under dennis ross. as you know, there has been a distinguished group of people who have served as head of the state department planning staff. george cannon, sam lewis, winston lord, robert urie, dennis ross, people have a passion for public service as does francis fukuyama. so let's begin with the questions. >> that was a wonderful overview. and maybe this question is too specific and not general enough. but you began by saying, how do we get to beat denmark? there's now a divide opening between england and i was in their vision of the state involves a lot more state responsibility to take care of retirement, to organize health. and we seem to be going in exactly the other direction. is there something in your theory to kind of speaks to that? >> you have to wait for volume two for that one. [laughter] is a very good question. it is a volume to kind of issue. most of what i know about the subject i learned from seymour burton mixed income of the great sociologists and political scientists wrote an excellent book called american exceptionalism, which is a book about why the united states is so peculiar when you compared to other developed countries. one of the important ways it is different is we don't trust government. in europe, people say the government as an embodiment of the public interest to continue the path to an respect because it represents a public interest. the united states has been regarded as an in potentially oppressive. they are good that it come out of the american revolution. it was a revolts against overweening monarchical power. and that is in no way stuck with us. and then i think the other issue is that since america was the land of new settlement for europeans, obviously not indigenous people have into that here, but for the new settlers, but i was pretty much greater degree soso mobility. at least if you did make it come your children, grandchildren could race and economic status. i think reinforces the american view that if you are poor, it is because you have not worked hard enough. if you're rich, it's because you're industrious and thrifty and there's enough truth that i think it reinforces american kind of unwillingness to have the state put you ahead. it ought to be individuals doing this on their own. >> i have a question since our state department is very talked about democratization is a process. there's one element to have it right up and that the issue of technology and the spread of information. i suspect i will be in your second volume. to wonder if you could speak to that briefly because it seems we may be at the end of history moment, where information technology has radically changed a lot of the underlying theories of some of these arguments taking. >> i think there's been this important change for social media, for example. it played a very big growth in the arab spring. it's very good at mobilizing people and social mobilization is really critical for producing democratic change. what is not clear to me is whether it is as good in producing institutions down the road as it is in this kind of short-term mobilization. if you look at tunisia were egypt right now, what they desperately need is not for social mobilization. they need political parties, vigorous, free media, all of these institutions that make civil society powerful and able to stand up and demand things that the government. technology can help with that. i think that it is not kind of the panacea that some people see it as being. >> i'm referring to is more in the sense of transcending the other inherent problems that the information can overcome some of these things. i was worried the nature of my point. thank you. >> okay. >> well, for the second volume, you might want to check some other authorities than marty lipstick. since the end of the second world war, the rates of intergenerational social mobility in person western europe have been demonstrably higher than ours, presumably because of the welfare state and educational investment. >> lipstick did not assert -- at a was higher. he leaped it was higher. >> yes. at the question, which represents a professional professorial definition. you think a big terms. they're one of the social scientists who do. every campus has one for better or worse. some have two, three, four. and yet, the city is full of tens of thousands of university graduates, highly educated the federal democracy, petraeus is extremely proud of his princeton phd. and yet, if you look at the results in terms of policy derivatives of what we think they might have learned in our universities, the result aren't far from sublime. what's your comment? [laughter] >> well, as a professional educator, i don't want to denigrate the impact of university education. i tied at sites a decade and i think some of my students are here. did you learn anything? [laughter] okay, so see. however, let me make this comment. i actually think that the direction that a lot of the social scientists have been the last 20 years has not been helpful because it's basically been taken over by economics. and so actually, one of my agenda is in this book full of history is to remind people that they can't understand the way the contemporary world is unless they know more history. you can't do things they game theoretic models and regressions alone. one of the reasons contemporary american political science has not been terribly useful to policymakers is because it's now moved into the abstract realm, where people don't know about real places and therefore they can't tell you, what do you do in pashtun is stand when you are confronting these tribes because nobody has bothered to learn the languages are spent time in the villages and figure out what's going on there. so i will grant that win. my students spend time in these villages and their big exceptions to this general rule. >> my students document my harvard college. the list is like henry kissinger were simply awful. so, congratulations. [laughter] [inaudible] >> high, and the end of history in the last man, you argued that liberal democracy represents the endpoint of history, h. history, which is to say that my previous stages of history does not contain within itself and does not have this internal contradictions that it destroyed all others. in the first chapter of your new book, you touch on some disturbing themes in our culture, notion amongst a lot of people get the government is simply bad and not needed. stratification of wealth, rights of corporations. in the 20 years since he published the end of history, have you had reason to doubt that we are in fact at the end of history? or do you think that we may be seeing the destruction of what we thought was the end of history to spot something new? >> well, there's a couple of different parts and so i think it a lot in the last 20 years. i haven't sat still. one of the important games in the current book is when i pick up from huntington's, which is the possibility of political decay. one think you see very clearly as you create institutions for one set of purposes and then people and pass them but they kind of intrinsic worth, either through religious sanctification or historical tradition or whatever and the circumstances change and institutions need to be changed and they become dysfunctional. i would say we've got a path than in the united states because we faced certain long-term challenges and fiscal sustainability of where we are and so forth. our political system is so check and balance and so polarized committee underlined political culture is so polarized we can make these basic decisions. if indeed we cannot solve these problems, there's no reason to think our particular american democracy is going to do all that well and it could certainly decay over time. now that is a slightly different question from the one i raised in the end of history, which is okay, in theory can you think of a better political system that would solve these problems? the one that's out there is this authoritarian capitalist china. for a number of reasons, they think they are on a roll right now, but i don't actually believe that this doesn't is sustainable over a long period of time, compared to a system like ours that has checks and balances. largely because i don't think the chinese have ever solved this problem that they themselves called the bad emperor problem, which is to say if you have an authoritarian system without checks and balances and you have a good emperor, you are sitting pretty. you can make quick decisions, much faster than a democracy that has to get consensus and agreement and so forth, interest groups and that sort of thing. if you have a bad emperor, you're really big trouble because there's no way of getting rid of that person. evil empress wu or the first chance that bird was a maniacal guy who buried 400 confucian scholars in an open pit because he didn't like what they're saying about him, and the last bad emperor that the chinese would knowledge. you don't get that in a democratic system because we do have checks and balances. in that respect, i still vote their system down the road for all of its current problems. the >> thank you very much. >> due dated the importance of the law in the church to the eighth century. >> no, that is the end of the family. the investor crisis at a 10th century -- the 11th century rather. >> that she is the question because i was wondering because we've always been told that charlemagne saved civilization. if they are to have the foundation of the laws in the eighth century, he would have been inherited. he did not have that. >> i misunderstood you. >> congratulations on the book and your success. i wanted to ask if someone believes that made very correct predictions a year before, end of communism in eastern europe and even the end of history, my belief is canada phone. the two persons before me pretty much asked the question, but i want to emphasize why. obviously we don't want war, to chaos. we cannot have democracy and free markets in the arab world and iran in china at the same time. is this a 10 you would recommend to policymakers right now. should we be not afraid to free markets to prevail, obviously without chaos, without wars? >> absolutely. i believe historically we have regarded it as part of its national identity virtually to be not just -- we happen to be democratic in north america. we are kind of a model to other people. we believe this is based in universal human rights and rules of justice. and we have promoted democracy all over the place. my objection during the iraq war as we should do it militarily. but not to be based on people in the societies that what democracy. there's plenty of ways we can level up the playing field when they are facing very repressive authoritarian regimes. so that means is different. and also, i have never believed that american democracy per se with a model for democracy as such. and anyways, the european union represents a more accurate version of what the end of history would look like because they want to transcend power politics and replace power by rules and so forth. >> thank you, dr. fukuyama. how does india's policy and kashmir fit in with its democracy? 75,000 deaths unaccounted for in the past few decades. >> i'm not going to act as a spokesman for the end of government. i doubt on whether doing this and kashmir. democracies do a lot of things. you look at american foreign policy is the remake a lot of mistakes in the world as well. the other thing is just because a country is a democracy, doesn't mean it puts the promotion of democratic values first and foremost in all aspects of his policy. we support saudi arabia because they got oil, not because they're a democracy. this wife. so you know, it's interesting actually that a lot of newer democracies like india, turkey, pisgah are all so different from the united states because they actually don't regard projection of democratic values around the world with the same imperative that americans do. it's interesting why that's the case. >> they're going to take everyone who is the mind's questions and then we'll have to come to an end. everyone in blankets to ask ask a question. >> this is a volume three question. given the supranational organizations, u.n., world trade organization, the world core and a whole bunch of regional organizations, can i coax you into commenting on the prospects of a world state? >> sure. i think the prospect is zero. [laughter] no, i mean, i just think if you look at -- if you look at a political system, it has to be based on some minimal degree of consensus about basic rules of justice, values and so forth. and in a big diverse democracy like the united states, we are having a lot of trouble with that. .. this question may sound a lot of years and trick and i apologize ahead of time, but i think at the end of the middle ages with the treaty we sort of an established between the nation's aids agreement the sovereignty of the nation state was the fury in the relation between states it seems until very recently do you think that in the post-world war two order that the idea of the responsibility to protect often trumps the right to sovereignty for the state which seems to be excellent reading in the post cold war order especially with russia justifying georgia by the sword of normative example of the west intervening in kosovo do you think we are moving into a post system in the western states? >> i don't think we were ever that deeply into the system. the 19th century may have had that just in europe you think about 20th century we have all these marxist running around trying to undermine other states in the name of the communist revolution we have the united states trying to do the same thing except in an anti-communist direction anyone suspected sovereignty terribly well and i don't, you know, as an ethical matter, i think that there is an important argument you can make that if you believe in the system that produces a certain moderation in the international relations because it means you are not going to try to get involved in the control politics of your neighbors and then destabilize them in this sort of thing but unfortunately i don't think we live in that kind of willed. globalization means ideas, people travelling across borders of time and this idea that we can see all countries of and say we are not touching them i don't think is realistic. >> thank you. >> i took your class back in 1999. so i8 read the book i think i wrote him an e-mail but he didn't get back to me. [laughter] i wrote the book as is my what and essay that you wrote about hypocrisy added to this but as a sort of grand reputation, very historical the referenced reputation of the libertarian ideology to what was the continued emphasis on how institutional the decay live and die on their ability to tax interestingly that is light one of putin's bigot renovations. ischemic and their ability to tax legitimately. >> legitimately, yes, as opposed to the current system that we have right now. so i was wondering about that and then also generally since you no longer live in d.c. has that changed your opinion about things? [laughter] >> well it's made me much more comfortable in the summer. [laughter] the issue of taxation is really important because it is a hallmark of a serious government is able to legitimately tax and the people willing to pay taxes in order to support the public services and so i think one of the unfortunate elements roane into our ideological mix as a result of reganism is that all taxation is legitimate that never under any circumstances you raise taxes because i don't think you're going to have a serious country if that is your starting assumption. so you're right i am not a libertarian. and i will talk to you but i've been busy. [laughter] you described the tribal society as a precursor to the state. what relevance does that bear to a country like libya where the tribes are still tremendously important? >> it turns out that we discover the charges made that there are still many societies in the middle east that are organized tribally. when we stumbled into anbar province, we simply didn't realize you have to go to the sheik and get him to agree on behalf of the tribe rather than try to organize elections and all this stuff that americans want to do. and i think that one of the big, you know, tunisia and egypt have had national identities and much more modern political systems than what say yemen or libya or jordan in which the tribalism is still extremely strong and one of the things we simply do not know about libya is the degree to which the current conflict, you know, represents a democracy or whether it is a fight between cut off the's tried and another coming and that is one of the big dangers. i still think we have to do it because i think if you've been able to crush it would have been terrible. but that being said, we just don't know a lot about that society and which actually organized. >> to my friend jonathan, he actually had his hand up. >> please come to the microphone because this is on c-span. >> [inaudible] [laughter] >> i don't have trouble with the authority. [laughter] >> i understand in agreement with much of what you say about that but what you haven't diluted to and i offer another generalization you have to venture into is how does the phenomenon of the war and interstate war in particular effect of the evolution of the systems as you see? >> it drives state building was it doesn't cease to drive it after you get a state it continues like you look at this city there is a big five cited next to the river where does that come from? where does the growth of the big federal government before the civil war the population of the city was i don't know something like 50,000 people and then after the civil war its several hundred thousand and after that it drove the increases in the need for the civilian bureaucracy is of the various sorts, so i think that is a process of reform can only be brought about by military threat and competition because people are kind of muleheaded and a lot of times they are stuck in certain ways and unless they are really hit on the hit by the to buy for meaning by the threat of the real military danger they are just not going to do the things that are necessary. just. [applause] >> thank you. isn't it great to be here for the late night? it's wonderful. [applause] >> thank you for joining us for this and the other programs. i have to say this is my third opportunity to host one of these conversations for the season and it's just great. not only the wonderful talent that it's been able to attract to bring to dallas also the fact i always walk out and see a roomful of people who love reading and writing as much as i do in that community that we share when we are able to talk to authors and talk about the work and enjoy that. i've always said the dallas museum of art is a special place since i grew up here and took my first trip to the museum here when i was a student at williams high school so i had the chance to come back and participate in a program like this is very special and it's also a special to have somebody like ben mezrich suretype. i was talking to one of my friends today and told them what i was doing this evening and she's like that's the one that gets the great stories i would like to write and i think that's true he's now the author of 12 books but he says no one read the first six which i don't believe that you know him i'm sure for the book bringing down the house which was made into a movie with kevin spc called 21. i'm sure you know him from the accidental billionaires' which was made into a little movie called the social network and now i know we will all be talking about this book called speed," which is so fantastic not the least of which it centered in texas and role of the places featured in the book from the johnson space center to the enchanted rock to a night on the coast in galveston i think will be familiar to many of you. so, please welcome to dallas and welcome to the stage ben mezrich. [applause] >> am i wrong when i heard the title of the book was "sex on the moon i thought of as a drink the college kids had? [laughter] office and at my wife actually came up with the title so i was in the dirty mind behind the title of the main character did have to do the to spread moon rocks on his bed and had sex with a goal on the moon. i'm afraid it's getting caught in this band filters. [laughter] but yeah. >> when i was reading it i kept thinking of the title where does it come from an sec you get a moment later in the book becomes very evident as to why the book is called that. very quick because i'm guessing that many people haven't had the chance to read it because this is one of those delicate things you don't want to give away what happens. >> go ahead and let's just say tell us about that and what he does. you said he is the most complex individual that you have written about in any of your books. take that, mark zuckerburg. laughter could tell about him and what really attracted you to tell his story. >> thad roberts came from a hardback ground, fundamentally mormon family. he was kicked out of his house when he was 18 for admitting to premarital sex. and then he decided he wanted to be an astronaut and he changed his life and kind of became james bond and he majored in she physics and geology in utah and learn how to fly airplanes and scuba dive and he spoke what i said five languages and then he got into the johnson space center in mccullough's program for college kids but it's a feeder to the programs and he was achieving the dreamed. he was a big star and she became the social leader of the co-ops and interns and then he fell in love in the young intern and then we all done something stupid out of love or what thad roberts did is he stole 600 pounds a full moon rocks from his professor's office and spread them on a bed, had sex with a school friend and tried to sell them over the internet to a belgium jim dealers design was axel emmerson and we couldn't have invented this guy. she's never been out in his life comegys collects rocks and trees and every monday night in this huge center where all of the guys treat rocks, his hobby is popinjay which i've never heard of which there is a bird on a 100-foot pole and all these men stand on the air around it and shoot with crossbows. i've never heard of this she is this guy in sees the senate on the internet i have moon rocks for sale and he is a big believer in right and wrong so he immediately called the fbi, he mailed the fbi in tampa and became a big operation and thad roberts was taken down. i always give it away but you know he got arrested. [laughter] >> you obviously have come off enormous with not only the book but the fact they then are converted to movies which obviously help in terms of that notoriety. >> they always change the titles and it's annoying. so "sex on the moon" is the one they have to keep. >> you're locked in on that one. >> and you said you were working on this at the time that the social network was being done so there was some kind of overlap but at that point i've always thought actors and actresses are only as good as the roles they choose, writers only as good as the stories defect. all of that that you explained notwithstanding all of the story is that he could have told what was it that attracted you to this particular? >> for me the stories come to me. i don't look for them and if anymore ever since bringing down the house and get 20 or 30 e-mails or phone calls a week just every college student does something crazy will call me, and i've always wanted to write about nasa but when you think of speed of you think of the 60's, tom hanks and a silver castle and this let me get inside of nasa today to read some of the blue contact me just out of present and it was weird because i never met someone who spent almost a decade in prison before so he arranged to meet in a crowded hotel lobby. [laughter] but he was the nicest most charismatic and good looking smart guy who did something stupid. >> the nicest fellow that he had ever met. >> i was amazed no one had written about the story. there had been one article in the l.a. times median texas there had been more stuff i've not seen anything about this, and i just couldn't believe it and so the first thing i did is i filed information with the fbi to get the fbi file which is thousands of pages. i even got when the fbi agents took him down they were leaving wires and lagat the transcript of everything set on the wires and the first thing that he says when he walks into the restaurant is if you are wearing a lawyer i unscrewed. [laughter] spearman there's one section in the book - discreet, too whether it's that correspondence between thad who is going by the name of or in robinson. >> it's like a play on words because he was a geologist it turns out. >> which i didn't know. but you are reprinting their e-mails and those are in fact. actually nasa gave him as a gift for solving the moonrock caper to name an asteroid after him so there is an asteroid floating around the sun somewhere. but it's reprinted directly and a lot of the dialogue is actually street from the transcript and everything. i do get attacked a lot in the press for my style which is a very kind of dramatic cinematically of telling the story but the reality is that everything in here is from the files. >> you brought that up and so that is something i want to visit with you about. certainly that can now a lot in bringing down the house, so i wonder if you can talk about that technique that you employee as a writer. >> my controversial -- demint your controversial technique. estimate exactly. >> , you imply that and why, "the new york times" came out yesterday she did you. >> she hates me. [laughter] but that's part of it. that was the source hangover from that and so tell me -- >> it's been like this my entire career. in a cinematic interim this is the kind of stuff i like to read it is a form of new journalism i guess i get all the information i interviewed just about everybody and thousands of pages of court documents and all the fpi stuff and then i sit down and i tell the story in a visual way and there are going to be journalists who do not like. certainly janet was of one of those but i don't miss surly right for janet, i write for me and the people who like this kind of book and the realities of a true story as true as any other thing on the nonfiction list. uzi a biography of cleopatra come on, nobody knows anything about cleopatra and you see a biography of abraham lincoln and obama's biography has invented characters. it's a process, you know, you have to take the facts and then write in a certain way. i choose to write in a very cinematically. so for instance i will interview thad roberts, i will interview the other kid for was there, this guy gordon whose leader in the book. so i know there was a conversation that took place years ago between these people but i don't know the exact word. one journalism talked about moon rocks but that is a very boring and week way of telling the scene and i know what they did with the moon rocks, so i describe what they did with the moon rocks and there are some journalists who love it and some who don't, and it will be a controversy for ever in terms of certain journalists will never like it with the social network and accidental billionaires', mark zuckerburg came out and said it's not true and then he called me the jackie collins of silicon valley. he never went about anything that wasn't true he never said this isn't true she just said the holding isn't true. so i think the reality is it is a very true story. he meant to have sex on moon rocks because he wanted to be like having sex on the moon he spread them on a bed and had sex in the moon. he said he just put them under the mattress that's actually not true she did this on purpose and so, i use the facts but i tell it in my style and, you know, some people like it and some people don't. >> so you're saying some journalists might not like it. what you think of yourself or you a journalist or -- >> i never saw myself as a journalist i always saw myself in the entertainment business, and i only stumbled into the true stories. i heeded nonfiction, i grew up watching really bad television, and i was a fan of pop culture and movies and then i met these mit kids in the bar hanging out in the bar in boston called crossroads which it's like an mit dhaka av triet [applause] i like to hear that. it's like if you can imagine an mit dive bar it's a bunch of geeky guys -- sorry. [laughter] ibm geeky, too. but the cattle this money and it was an hundred dollar bills and in boston university hundred dollar bills. i don't know what it's like in dallas using them. >> thousands. [laughter] >> leal comer it? in boston university them because it is all college kids and i couldn't figure out why so i went over to his house and in his laundry was $250,000 in the stacks of 100 scum and i thought she was a drug dealer but he wasn't a drug dealer and the next day we flew to vegas and i ended up joining the team and then i said i want to write the story and so that was my first restore the so i kind of fell into nonfiction but i wrote like a thriller because that's what i had been writing so it wasn't like i'm just going to sit down and write non-fiction in this way. it's just i was writing fiction and then i ran into a true story and that's been the we accidental billionaires', same thing. sitting at home and i get an e-mail to the point in the morning and it is a harvard senior actually from houston and he said my best friend cofounder facebook and no one has ever heard of him and then in a box eduardo etds three yes, mark zuckerburg siggerud him and he wanted to tell his story and suddenly i was in another true story. so it is this weird kind of stumbling my way through nonfiction treat stomach there's been any merchant experience for you in terms of bringing down the house your part of that culture and that is what brought you -- >> i think that most -- i want to stay with us for a minute because it's interesting in terms of what the readers expect in the book as to how is marketed and how it is built, i think that we all have that kind of classic notion of the willing suspension of disbelief so you're point of cleopatra is well taken but it's true in bringing it on the house there were large sections, not large sections but there were scenes created to help move the story along, right? >> i disagree. there was definitely claims by people who were not on the mit black jack team who said the scenes didn't happen but the reality is that it played pretty close to what really happened. there is a scene i think the big scene people talked about is when they use the strippers to change in the chips and i was told that by two members of the mit black jack team that were there so maybe you can discount the story. i definitely interviewed a few strippers and you can probably discount -- [laughter] their story is also with the reality is you can only go so far in terms of how many interviews you do and whether or not you believe it happened. all journalists make choices, so it is a dispute with accidental billionaires' is heavily vetted. you know, aaron sorkin writing the screenplay on the social network there were lawyers and everyone involved in making a movie like that, so you know, it's pretty accurate i would say the social network is very close to at least with the legal guys believe happened. then the others you couldn't invent? 65 olympic twin rowers to read when i first met them i walked into a hotel room and i don't know if it was tyler or cameron, you can't tell, and tyler is like you look it up and think we must be the bad guys of this torian adc we would be addressed as skeletons chasing the karate kid and i put that in the movie and it ended up and ralph called as the original crotty kid and was like i love that line so that was cool. [laughter] but anyway, there's a lot of different choices and different opinions of what happened. >> right. well, we touched on a couple of things i want to make sure to talk about to read one, you talked to the cinematic quality of your wedding and level to hold off on that because i think the audience would be interested to know the sort of jump that you've made from sitting at your desk by yourself pounding of these books and in the translation to the biggest screen because that is an experience in its own. let me hold on that and say that one of the things we have seen particularly in the last three books is that you are sort of drawn to a particular type of character it seems to me, young and smart and pushing the envelope of what ever is that they are doing. is that a fair characterization? >> yanna, geeky, that isn't by choice that is just who calls me. >> what is it about that a world that appears to you? >> i live vicariously through them. i was a geeky guy, still pretty much in common and the idea you could go from that to rock star or marked zuckerberg sitting alone in a room suddenly billionaire or the high life in vegas. even thad roberts is the guy that went from nothing to almost being an astronaut to than stealing a case of moon rocks. it is a vicarious thrill. >> it's interesting because i think you make the point that one as a result of his upbringing in the number two, coming to houston and not knowing anybody he was determined to reinvent himself. he wanted to be the guy people recognized as the social leader and the person coming up with all of these not pranks but who could get into the simulator and push abound. >> that does drive the narrative in building up to that climaxed. this is a kid that need people to love him. he said i need people to love me. there's no better need than that. he didn't have that a growing that and that's what he did. yeah i think there is that transformation is what i like to write about. >> you're saying that he met with eduardo event of a of winklevoss twins. thad is your main source. how's that different and were their moments even his story began to see to fantastic were you able to check certain things he had said because there are some moments and hear that kind of stretch the bounds. how do you go about vetting whether or not he's telling you is correct or if he is just spinning a tale? >> with mark zuckerberg i spent a year trying to talk to him and he refused. he was talking to eduardo and it was his right to say no but i spent a year and he was very nice but then in the end, no, no, no. thad wanted to tell his stories and i got hundreds of hours of him on tape telling it, and in the beginning he wasn't telling the truth. and it was a matter of once i have all the fbi files i could confront him and say that is not actually happened according to the fbi. and according to the clerk transcripts and the other people who were there and then he would back off and wait and say okay it happened so there is that aspect of it and i guess if i may journalist that is the main form of my journalism is seeing where people are lying to me. but in the and he was open and honesty and fisa here's the deal especially with my book there will be picked apart by people like janet so you need to tell the truth. so he did. in the end he did and he was very open and honest with me and you know there is that thing where i did start to like camelot and as a writer that's where things get tricky because of some of these extremely likable what he did is pretty bad. i mean, my dad who is an engineer, scientist read the book and said i hate this guy. this guy stole our national treasure, minute gave their lives to get moon rocks and he stole let for petty reasons, right? and there is that and when you look at it objectively, yeah that the same time he's tearing up and he scored his life because he thought it would be cool and it's hard not to feel bad for him and of start to like him and i tell you anybody that met thad roberts would love him he is a very lovable guy. who just did a bad thing. and so for the author that may be my main problem close to the subject because i want to be a part of it. so, yes i guess there is that. but yeah. >> ig does come across very sympathetic. and i think that you, you know where this is headed but as he is coming from these other things establishing himself at nasa uzi that he's talented and working hard and trying to improve himself i think that there is a question as you sit in the interviews with cbs in the sunday morning program that he doesn't know why he did what he did what he looks back on it and so that is a puzzling aspect of it but i do think that you do get the sense that part of a, the personality that made him great in those things also led him to the real and kind of good on the other path. islamic absolutely. this was the kid who could do anything and then decided to do this, so -- >> you talk about writing in a cinematic way that you refer to that a couple of times already in the conversation. so, tell me when you are sitting down to write these books are you already thinking of what may happen in the movie? is that -- you are already -- >> 100%. it started in my first book threshold. i've always been a cinematic writer and then with bringing down the house when and actually became a movie suddenly i had a kevin spacey became my first reader so is writing books and he was one of the first to read it. and now mike who is like a god in this industry so i do know when i sit down this could be a movie and i'm picturing, not picture and justin timberlake running around nasa but i am picturing a very visual not on the he would be great which he would, i'm picturing a very visual setting the true to him that way because i feel that there is a synergy now because books become movies more and more frequently i feel devotees i've been fortunate in that respect. so in this one we spoke to the same people in the social network said the same producers and kevin spacey and ruden and sorkin, sorry, daluca so yes i do think that we but movies are much more fun, right? for me when i sit down in my cold dark room in boston for three months of solid loneliness you have to be to string a big screen in your head. >> would you rather be reading a book or watching a movie? >> i love reading books and, you know, i am sad in a way that i like the kindle and that it is a great device because books are so wonderful and i read all the time and i watched a lot of tv and a lot of movies and i kind of consume all forms of entertainment but the books are great. i grew up and i wish that they could last forever. >> the hollywood aspect has been very good to you. i think that he has said did you went to the golden globes as kevin spc's plus one. >> it was a weird experience because normally someone like me wouldn't be sitting anywhere near actual celebrities because i write books in the hollywood that means here. my table was kevin and nicole kidman and chief urban and mcginn fox and brian austin green and scarlett johansson and then right behind me was bruce willis, and it was crazy. i had to go to the bathroom and you only get free minute breaks. so i run right into brad pitt and angelina jolie and you were just like quote you are really good-looking. [laughter] and get to the bathroom. but it was a wild experience. i see myself as a guy from boston. i always kind of just wandering around the corner of these things and it was just a wide experience. >> tell a little bit about how involved you are in the production and the actual creative process behind the film. actually do the, obviously aaron sorkin -- >> when you get a guy like sorkin -- >> i've had in the writers that i've talked with over the years or that i know that have had books made into films there is one school of thought that it's mine and mine alone and i'm going to protect it and john grisham is famous for saying once it goes i could care less it's not mine anymore. tell about your creative involvement and help your creative involvement will be a net "sex on the moon." >> for me i'm mostly involved in when the screen plays are written. erin came to boston and we sat in the hotel room and i wasn't finished yet it was a strange situation so i was literally handing him checks writing the screenplay so that was a really cool thing and then once they are onset, the director is god, she runs the place. god, god, and just us that really runs and you are just there. my involvement is, you know, i am very and if they have any questions you have no control. once you sell the book they ask things and you do have input and with a story like this, you know, it is kind of like what john grisham says once you select it is theirs. it's your book. it's their movie and it's hard to say that, but at the same time i've been very lucky. i love 21, thought 21 was a fun movie and i love the social network. so so far it's been great. i mean, you know, you never know what's going to happen. >> would you ever just write a screenplay? >> i have done a couple of screenplays. i did a draft of one of my early books of the americans which hasn't gotten made yet but it's a different format and for me the books are my main bread-and-butter but sooner or later it's like they have to want me to. i spend a lot of time as a struggling writer so now i don't want to be and go through that again, but its -- the truth is they don't necessarily want you to adapt your own work for whatever reason it's not normally the first thing they go to so we will see. >> who should play thad? >> i get asked that a lot and that will be up to the director and producer, but it's got to be a good looking guy that can be both athletic and like a mountain climber and a geek so it's kind of challenging and that you can -- >> i've heard names like shia laboufe, there's definitely a lot of younger guys that could pull it off. i do get is a real juicy role for a guy. >> let's talk about the other aspect of the book business which i think is interesting to folks is you are now on a whirlwind kind of promotional tour, 5 a.m. flight in the city and multiple interviews how does that square again with a writer that we always think of as being in the rest of the world as seriously trying to get that last chapter light and to be dropped in the world is the sort of media push? >> it's a culture shock because you spend half of your year walked in the room and the other half talking to people. i like it like the entertainment aspect but it's weird suddenly having schedules because normally you don't care what time it is you just write and get put into the project is and have control over your life and then you have no control over your life but it's also a wonderful and i will say the tour has changed dramatically. this is amazing. the first book tour the first stop was tunnell retial which is a radio station that only errors in the italian tunnell in boston it's literally in a am station in 100 yards of the tunnel and was a traffic station that someone got the idea of putting authors on so no one wants to hear you, right, because they are trying to get the traffic report, and then my second stop was in need of massachusetts it was a public access television station and i'd written a book called threshold. as a medical thriller and somewhere in the book i mentioned in the future and there may not be dwarfs because we will be able to genetically choose our children. it was a little sentence in the book and i never thought of it and i show that the public station and others to chairs like this and in one is a dwarf. [laughter] and it was my second publicities top of my life and i sit down and i start to think wait a minute, this isn't good. [laughter] and it was a debate there shouldn't be dwarfs. then he said union people won't want to choose dwarfs. [laughter] but there was no budget and after the interview in did we go outside and the dwarf had to give me a ride home. so i don't know, it was a strange day. >> you're next book the lead character was in fact. >> i'm a big fan. i watched a game of phones. i think he's awesome. >> speaking of projects, you said you don't have -- you don't have your next one lined up right now obviously you were going to enjoy this and continue with the media push. how will you begin to decide. you are getting all of these e-mails and wanting to tell the story but what will you be looking for for that next project? >> i looked through all of these ideas and they come and 90% of them are really bad. it's like every person who commits a crime, but you know, i need that sort of young kid, really smart is not a bad person was kind in the grey area of right and wrong. this is the first highest ever and a person to commit the crime, and then the there has to be all those elements of the trail and the sex and all those kind of things that janet doesn't like and then there has to be a little fun for me in a place i want to go because you have to spend six months to a year doing it so for me going to vegas, also but i wouldn't go somewhere horrible so there's that kind. >> for the next project you're going to be looking for that sort of type of character and story. >> would be cool if prince harry because i don't want william. harry has a story, you know he has a story so that is what i'm looking for. >> what are you reading, what are you doing when you're not working on the book as you say just all the time that you are spending with the research what are you reading and what writers inspire you? >> a game of thrones is amazing. >> because of the hbo -- >> i started one before and i watched it like this is great and now i'm reading them all and those books are the reason dwarfs was created because of serious business. i read a lot of what comes out, so you know, i read i think sebastian is a phenomenal nonfiction writer and he's hardcore. he will go to afghanistan and embed himself in afghanistan so, good for him. and coming you know, who else -- i read it all. i love the hundred games a trilogy which is odd that i would like that but it was really good. >> are you more comfortable now with the screen writers to the other authors or where do you find, what is your community? >> i have a lot of writing friends but overall i don't know that many screenwriters because i don't live in l.a. and they are all there. but yeah, i don't have a lot of close friends who are writers as a couple, a guy named matthew parole. wonderful book, she's great. and a few other local writers but we don't sit around in her turtlenecks -- yeah. >> we are starting to come up on the time as we say ben is going to be doing a book signing immediately after this and there are obviously other defense with the late night dna. i want to ask this a couple more questions and what we would really like for the audience to do is if you have a question to please come on down to one of the standing microphones at the front and we will take you sort of in order for 15 minutes or so at that point. if you have questions you might begin to think what's continue a little bit more in the audience. how would you describe the joke i thought was funny that nobody had read your first six books but what you told me is you graduated from harvard and you knew he wanted to write books, not magazine articles or screenplays, books. so you lock yourself away. how do you feel like you have matured as a writer and that you are better than now? how did you learn the craft? >> i've written nine novels and they take place in bars in new york city. none of them got published about 190 rejection slips rejected by everyone in new york and then i read john grisham and my book and in a thriller and so my first six books were thrillers and they were pretty trashy from the medical trollers and one was a tv movie called fatal error if any of you saw it, i hope you didn't and i apologize and it was the start of antonio jr the underwear model and he plays a surgeon and there is a scene where watching with my dad is a doctor now and he leans over the chest and says we have a subdural hematoma and my dad turns to me and he's like you know that's in the head, right? [laughter] i think that i've got a lot better than that. but you know i think my style is improving. i feel strongly that "sex on the moon" is my best book. i think bringing down the house for me is a transitional moment in my life. that book ever in six weeks in vegas and in the state of the hotel each flight publishers hate when you say that quickly i want you to say it took five years but the reality is it was this crazy like i was living and writing it which was not and that became the see emerging technique i just go inside and live the story but i will say anybody out there that wants to be a writer, you know, those days of rejection are kind of the most noble and romantic times in life and you should look forward to the rejection. i, being a geeky guy had a lot of rejection that to that point with women, but then it became books and i would put them on the wall and each would become this thing i would have to beat that rejection and i will say that when i got into the public and finally started to sell my books every person i worked with i had a rejection letter from which was kind of cool. he would go to the meeting and they were like we love your stuff. what about this? [laughter] you didn't love this, right? so, you know, you learn from the rejection and there is this huge mall in publishing it's impossible to get over this wall. you know, it's a tough business but it's that climb over the wall i think that makes you better, and i feel like now i'm a very different writer than i was in the beginning. >> you say you think this was your best work. what is it about them? >> as i said most of the geeky guys i wrote about before were unable to get laid and this is the first character of which falling in love became his problem, and it was his downfall and its new for me to write a romance, the love letters he wrote from prison are within the book. the access i had to him, you know, even when i was with the mit kids this was different this was a kid really laying it out saying this is my life and i screwed up so there's more than anything i've written about before and during this book i had a kid, which a lot of you probably know changes your life in a jar of headrick -- dramatic ways and it isn't using to me because you are not sleeping, right? but you are also dealing with, you know, massive sort of your understanding to discuss different and i tried to get inside of this kid's head more and more. >> i can't do better than that. >> thank you. [applause] >> the book obviously is "sex on the moon." we will do questions for about 15 minutes and then there will be a book signing immediately afterwards. >> if you have questions just come down. we have standing microphones at the front and we will call on you and fire away. >> yes, ma'am. >> you were asked what books you read now and i'm curious what books you like and read growing up. >> my parents had a rule when we were little we have to read two books a week before we were about to watch tv which seems draconian now that i have a kid. [laughter] and i was obsessed with television, so for me i can a speed reader. but anything counted. any kind of books. so i've really got into science fiction, robert, and then i graduated to hemingway and i loved the song of the horizon and i kept reading it and reading it and from there i would go through periods of different types of books. i've literally read everything there is to read. i was reading of can this nonstop for one year. i don't know why. it was great. so why shift from finton thing. i don't limit myself. so yes i think growing up it was mostly science fiction. >> fer exit entel billionaires' you didn't interview mark zuckerberg just the people mad at him, do you take the bodies into account? >> yes coming and i feel like in that book it is clear that a lot of it is from edgardo. i think the movie is a little bit more market also had sean parker, who is on the other side come and i also have a lot of people who knew market extremely well from high school friends to college friends to people that actually work at facebook even though they said in e-mail to everybody not to speak to me or aaron sorkin that just made people want to talk to me, so there were a lot of sources. it would have been great if marked talked to me, but i don't think that there is any way that you could look to the book or that movie and say that it's not true. i feel the people who were there other than marked say that's what happened. so yes, eduardo definitely have an ax to grind. the winklevoss as you can see all the time have an ax to grind. sean parker was a pretty good source and a wonderful person. i think that timberlake got him perfectly and i feel like sean is looking more and more like justin timberlake now. laughter echoes of the positive thing. but yeah, you do have to take into account, and i feel like you can tell which scenes are from eduardo's point of view and which aren't but it is one of the issues, yes. >> yes, sir. >> other than "sex on the moon," it may be but which of the books, which one was your favorite to write? >> ugly americans is a book that not as many people read. >> a quick follow-up on that are you still shopping ugly americans? >> it is a true story about a kid from new jersey played football, had never been out of jersey, gets a phone call comegys at princeton university college football player, gets a call from the alum, invites him from japan, packs a duffel bag and flies to japan, ends up working for a guy that some of you might remember was a 26-year-old trader who bankrupted the entire biggest bank in england abetting all of the assets on the japanese stock market. he goes to jail in the main character in my book becomes a hot shot kelly in asia, falls in love with a daughter of a japanese gangster and makes a single deal that makes 500,000,005 minutes and has to leave japan quickly. it all takes place in japan and the sex underground of japan. it's a story about leaving large and asia saw it out as a fun book. it did well on wall street, every wall street guy had a copy of it. but outside wall street it didn't really catch spc and dana are involved so hopefully eventually it will get made. bringing down the house i think is, for me, if you want to know what i write, it's what i write. but, you know, between those three really. >> go ahead, please. >> i have two questions. one is -- thanks for coming, by the way. i was curious on your latest book what was the subject incentive for wanting to talk to you and have his story written? and then i'm also curious about the label of nonfiction. have you thought about putting it out under fiction and avoiding the controversy? >> first of all its the publishers of the publishers look at it and their lawyers look at it and their editors and they say this is true. so that on the one hand but on the other hand know i feel very strongly is non-fiction and i think is clearly nonfiction. i would say chapter by chapter and every scene can be documented both in the court documents and interviews so yes it's written stylistically in a way that reads like a thriller but there's no way to cut fiction everything in that scene happens but it's going to be a controversy that will always be journalists who are searching out james fry that's all holding but in the opening of my book i say exactly what i'm going to do so there is no scandal and that upsets journalists because they want scandal so badly. so they always say you recreate a dialogue. i'm going to recreate a dialogue. but it's not made up dialogue it's created from the people who were there so no i don't have a problem with it. i love talking about it and that's the other thing. they expect me to run away but i happy to talk about it. i think it is a very valid form of nonfiction that goes back to thompson and tom wolfe and it goes back beyond that. there's plenty of writers and the designation is really of to the publishers. but i think it is very clearly nonfiction. the second question was about thad, why did he come to me. that is a great question. obviously he saw himself as a movie character. when he did the crime the james bond theme song was going through his head, and so he wants to be famous or infamous which is tricky obviously but at the same time he also feels like he spent an enormous amount of his life in prison. seven and a half years is like murderers get seven and a half years, and he had the moon rocks for a week and he used them, no question about that, but he felt like he had served so much time that telling his story was the right thing to do. it's not that he's proud she did but at the same time he feels like she did this crazy thing and there is no reason he shouldn't tell people. it does he feel bad about it? yes but is he ashamed of himself? i don't think so but that is a question people come to me because they want to get famous. i think that is definitely part of it. but a look at it like the mit kids who were like we have this sports career that nobody knows about and they want people to know about it so yes, there is that. >> yes, sir. >> life of one of your best books was rigged. i hope you could talk about that if you got a chance. >> it is a true story about a kid that had one foot in harvard and the other from the streets of brooklyn. he worked at the merc exchange in new york where they traded oil and so it's a very physical exchange where you are fighting for inches on the trading floor and then he went to dubai and set up merc basically the leal trading world in him to buy at a time and it's a crazy story that takes place all over the world and to buy a very short trips for me there in and out. and, you know, you like the hot weather. for me it's a little weak, but it's a wild story. the whole world of oil which i knew nothing about and i heard about that story this kid i knew and he invited me when bringing down the house can about on the exchange so i went down there to ring the bell and they worked on this incredible sea of tough guys from brooklyn pushing and shoving and throwing tickets at each other and there was one clerk that was a small body and so he hired a bunch of people behind him whose entire job was to hold him to the trading floor so this is so cool that is what made me write rigged and we are working on that movie as well with summit i think so we will see if that gets going. >> yes, ma'am. >> i just want to actually read something funny to you based on the conversation about recreating a dialogue. >> sure. >> this is tonight's program. ben mezrich porter for thousands of pages of court records, fpi transcripts and documents and has interviewed most of the participants in the crime to reconstruct the ocean's eleven style highest the story of genius, love and duplicity. already, the mall for has been snatched up by hollywood to create film. [laughter] >> yeah, that happens. so i think -- yeah, people use the word novel interchangeably now. it will always be a controversy but most people are coming around to this form of new nonfiction. it's funny when i tour in england and europe they have no problem with it. there's not even a discussion of it. they are like why are american journalists so upset with your writing and i don't know what to tell them, but it's -- it seems to be more controversial that "the new york times" than it is anywhere else. >> yes, ma'am. >> i wanted to ask you on your next big project when you are looking for that story, do you prefer to write about it unfolding like bringing down the house? >> that was the idea. >> or like the social network. >> i love the idea of getting inside the story right when it's happening but it's hard because at that point you don't know where it's going to end and you don't want to spend years of your life chasing something and then it doesn't happen but yet that would be the idea of the story where you are in as it is happening. both of this and accidental billionaires' happened a number of years ago. so that was a little bit different. and you can try to recreate it itself, but yeah, i would love it if it were actually happening but you have to know the ending. >> any other question? >> can you share with us what -- i hope i pronounced this right, thad is doing right is a criminal? >> thad got out of prison and then he went back to the university of utah to get his phd. i think he just recently left utah and he really still wants to go to space. that is his dream still obviously not at nasa but he's as maybe in the private sector one day. he is a smart guy. it's a question of if he can overcome his own demons. he has issues to read his very spontaneous and he doesn't -- me he needs to control himself. but i hope the best for him. he served his time, he paid his dues and if he is smart she will study and he is brilliant and he will get his ph.d. and move on that we but, you know, she is a good kid that did a bad thing. >> how has he responded to the? >> she liked most of it, he didn't like the idea that this guy was rewarded for taking him down. he didn't like some of the ways he described as being a little delusional and the fantasy aspect of it, but he also said it's hard to see yourself from someone else's eyes phyllis and he let a lot of it. he felt like after being at nasa and all that stuff in the beginning very well. so overall he liked it but, you know, there were things he didn't like. .. to see these things they advance the human species, just by existing i feel. i feel like the race to mars would answer some ways we can't tell you. so that is my very pro-nasser's speech. i hope that we find a mission to mars. >> what is nasa's response? >> they weren't happy i was writing this book if this was a guy from the inside. they didn't want me to make him into a hero, although thursday things. i feel like they haven't responded since the book came out. when people do actually read the book, they're going to love it because i think it looks now for very cool. i think they will like it, but i thought they spoke would like a social network and eventually they did come around to his bn. but you know, it is not a hit job on nasa. >> let's do one last question in them will call it an evening. yes, ma'am, right in the middle. [inaudible] >> he took the fall for them and he said it was entirely forcing him to do appear to fill him him in this other guy were involved in finding the guy went to jail. they got probation and never spoke to him again. but with that. you know, they've known each other three weeks. it was his quick love. when she was in the courtroom and the judge of the prosecutor asks her, you did a skit for three weeks. why would you do it? she said i'm still trying to do it. they've moved on with their lives. they were not happy about this book. she asked me to change your name. she wanted nothing to do with it. i think she's in texas, but she didn't want to be involved. >> listen, thank you sp/@ú!pzçñ loans. this is half an hour. >> thank you. i hope you all enjoyed the program so far this morning as much as i have. this helps us advance our policy dialogue and thank you all for being here. i want to thank the speakers this morning for their honesty and openness and comments. i want to thank our economy team for their foresight and activity in organizing today's program. we have a staff of housing and community development experts in the division of community and community affairs that are committed to examining the concerns of disadvantaged communities. today's program is just the beginning of a fall lineup of many other programs that include small business entrepreneurships, the use of data, disposition strategies. so we'll be having many things throughout the fall so stay tuned. i'm looking forward to seeing many of you back again for those programs as we move forward. so i have the distinct pleasure today of introducing governor betsy duke. governor duke has helped lead us through some of the most dramatic changes that we've seen, i think, with the confidence of a seasoned leader and an eye towards really practical solutions. what you may not know about her, though, is that from the beginning, many of us have aforgetly thought of her as the -- averagesly thought of her as the housing governor. but regulatory oversight. governor duke has helped us maintain a steadfast focus on restoring a functioning housing sector. she served on the board of neighbor works america through the first two years of her term, during which she developed a keane interest in neighborhood spablization efforts and went out to many communities around the country. in 2009 when everyone was talking about preventing foreclosures. she recognized then that r.o.e. was a critical issue and institutions needed to come up with good strategys for efficient policies. governor duke, i had the pleasure of working with her and stabilizing neighborhood activities in areas designated by local communities by h.u.d. exactly one year ago she gave a speech in this very room, highlighting best practices from the field for the disposition of r.e.o. and vacant properties at a summit we held on that subject. she shared the perspective, neighborhood stabilization is not just sound economic policy. it is rooted in a vision of our shared future, our sense of community. today's forum is designed to challenge us to think beyond the conventions that we've known and look toward the future with fresh perspective. i can think of no one better to take us into the next phase of our dialogue today than governor elizabeth duke. please join me in welcoming her. [applause] >> hey, there's nothing better than being introduced by someone whom you have oversight. good afternoon and i'd like to join my colleagues in welcoming you to the federal reserve board where lively viewpoints and discussion are a way of life. the housing market going forward, lessons learned from the recent crisis has been designed to connect the recent pass with policy that may affect the market for use to -- years to come. determining the issues and getting this connection right are important but perhaps not as easy as it might sound. i'd like to offer some suggestions that i think could help. i should clarify that the ideas that i'll be discussing do not necessarily reflect the opinions of my colleagues on the federal reserve board and these suggestions should not be construed as policy of the board. as we saw in the last panel discussion, there are many interpret tages of the dee factors that led to the current state of affairs and there are a similar number of visions about what the future should look like. but while it's important to learn from and avoid the mistakes of the recent past, we should not forget what did work for many years in the housing and housing finance market. an important starting point is to carefully analyze what we're solving for. certainly we want a solution based on private cal -- capital but the role of government in housing markets will need to be defined. any policy solution will have to be evaluated on the context of its affect on both owner occupied and rental housing markets. and it will also be important to maintain a focus on the demand side of the market, which is to say all of us as consumers of housing. finally, it should also serve the segments of our citizenry that has been long underserved. longer term solutions are critical but before we get to those we need to deal with the unprecedented number of foreclosures still entering the pipeline and the affect of a high percentage of distressed sales on house prices. regardless of how we got here, we as a nation currently ha have a housing market that is so severely out of balance that it's hampering our economic recovery. to many, the story of the recent financial crisis and its afteraffects of the housing market is one mainly atranscribe thed to sup prime lending. today about 2/3 of underwater mortgages or loans in foreclosure are actually prime or f.a. -- f.h.a. mortgages. this suggests that previous issues are not sufficient. clearly the market is not functions as it should. despite near record low interest rates, credit remains tight. more over, the lack of sufficient buyers and sellers may limit price discovery, which heightens uncertainty about the right price for a given piece of real estate and further limits activity. in addition, the large number of foreclosures and the process has led to an unprecedented level of bank-owned homes, a level that is likely to persist for some time. so how do we move forward? these difficult circumstances? the economy has self-correcting mechanisms. typically a drop in price stimulates demand and brings new byears into the market. in the case of houses, price declines often occur in broad based weakness in the overwhelm economy. in response, the federal reserve generally the -- can lower the federal funds rate, which can be expected to lower mortgage rates. the combination makes home purchases more affordable and helps revive the housing markets. indeed, most recent recoveries have been led by housing. for a variety of reasons, these mechanisms are not working in today's economy. it's helpful to look at areas where we can operate more productively. one way to reduce the flow of home foreclears is to ease the loans, which can be accomplished by refinancing loans at lower rates. the federal reserve has already acted through the purchase of longer term treasury skirts, agency backed and agency mortgage backed scurlingts. in i guess so to enabling more byears to purchase homes, they act to reduce the debt service costs of existing household debt. while recent activity has picked up in response, it's been subdued compared with past low rate environments. that is, even though mortgage rates on many outstanding loans are above current market rates, many have not been able to take advantage because they have lower equity in their homes or other obstacles. to facilitate, the administration's home affordable refinance program provides streamline refinancing if the borrower meets certain qualifications and if their existing mornings are already guaranteed by freddy may or freddie mac. so far more than 800,000 borrows have refinanced this way. one question is why more have not benefited from this program? four million borrowers appear to meet the requirements. given the potential savings to households, the relatively low take-up on the program warrants another look at the fricks that may be imprecede peeding these refinancing reactions. responses revealed four possible frictions. number one, loan level pricing adjustments. llpa's. they're up-front fees added to the refinancing costs of loans such as higher loan to -- devalue ratios. the fees can raise the cost by thousands of dollars and discourage borrowers from participating in the program. when the lender or gaurn or already owns the credit risk, refinancing a low or no-equity loan can reduce risk because it reduces payments and thus makes default less likely. number two, limited competition -- competition due to lender concerns about putback risks from previous underwriting. that's the possibility that the loan originator will have to repuffs the loan because the underwriting violated guidelines. lenders who process harp refinancing have putback risks both from the refinance and from the original underwriting. even if the understood writer did not underwrite the original loan. the risk may make lenders reluctant and limit participates in the program. programs participation cob increased have a minimum number of timely payments could be used as a proxy to relieve the liability for the mistakes of previous lenders. number three, junior lien hold,. in some cases, holders are refusing to let their liens remain subordinate and number four, some mortgage insurers are will not agree to underwrite their loan policies. the common theme in all these frictions is that in each case the parties tots tran db transaction are applying standard tools that would normally apply to -- but they're applying them to risk. the existing risk skoshe of all credit risk holders decreases. to the extent that widespread refinancing reduces mortgages. it also leads to lower house prices. and finally, removal of barriers to refinancing would boost the impetus to recovery approvaled by lower long-term rates so thus finding different approachs would likely provide some support to the economic recovery while improving the circumstances of homeowners and reducing the overall limit of credit risks borne by the varies holds. -- various holders of property risks. real estate owned or r.e.o. one million more properties will likely pass will you r.o.e. in 2011. r.o.e. properties are weighing heavily on the markets for owner occupied houses in at least three ways. first, they increase the total inventory of properties for sale. we estimate that in the second quarter of 2011, roughly 500,000 to 600,000 of the two million vacant homes for sale in the united states were r.e.o. properties. the extra supply is particularly problematic because demand is quite low. high up employment and stats are currently precluding many from buying homes and others may be staying out of the market due to uncertainty about their incomes. even due to the large backlog of diss tressed loans, the current inventory of existing homes for sale represents approximately nine months compared with a norm of five to six months, suggesting additional pressure on house prices. second, the downward pressure on prices is compounded by the high proportion of sales considered to be distressed sales. currently around 40% of all sales transactions are considered to be distress sales and third, high vacancy rates and the low level of maintenance make a neighborhood a less desirable place to live and thus depress the value of surrounding homes. the market for rental housing has been strengthening of late. apartment rates have turned up in the past year and vacancy rates on multifamily properties have dropped noticeably. it shows increased demand as families who are unwilling or unable to purchase homes are renting properties instead. it's also been supported by families who've lost their homes to flore closure. the majority of these people moved to rental housing. unfortunately these conditions supporting rental demand may persist for some time. the weak demand in the owner occupied housing market and the relatively high demand in the rental housing market, suggestions that transferring some rental properties to r.e.o. housing might benefit both markets. and it might be in the best interests of both lien holders and gaurn torreys. over time, as financing conditions ease and the number of r.e.o. properties for sale declines, it will adjust. small investors are already converting some foreclosed properties to rental units on a larger same. slarger scale has been hindered by two factors. first, managing single family rental homes is expensive unless the properties are concentrated within a geographical area. second, regulatory guidance and standard servicing practices have encouraged servicors and financial institutions to consider rentals only as a short-term income generator while the properties are marketed. in august, the federal housing finance agency, working with the treasury department issued a request for information seeking ideas for the disposition of r.o. -- r.e.o., including ideas for terming these properties into rental housing. together, they may be able to aggregate enough properties to facilitate a cost-effective rental program in many markets. i want to three highlight -- highlight three possible design considerations. first, achieving a cost-effective program may require obtaining a critical mass of properties. perhaps a couple hundred or more within a limited geographic area. in this respect, the comparative interest of government is in solving the aggregation problem. combined portfolios of the g.s.a. and f.h.a. are large enough to achieve the necessary scale in a number of markets. however, it might require the flexibility or a pooling entity to acquire wo properties from more than one seller or to contract for the acquisition of a minimum number of properties over time. the scale could be supplemented with properties from servicer or financial institution portfolios. second, it's important to insure that -- ensure that such rental communities are in the best interests of renters and local communities. replacing the blight of a foreclosed home with the blight of a rental property would give little assistance. it is crucial that properties are well-maintained. better recoveries may result from renting properties rather than selling them. however, in other markets, converting r.o.e. properties to rentals may not be in the best interests of mortgage institutions but to local communities. it may be possible to consider the role of new incentives and what role they might take. while existing statutes and regulations do not prohibit financial institutions from renting r.e.o. properties, supervisors encourage buying. in light of the rental market along with the potential for a g.s.a.-f.h.a. program to solve the problem of infivet scale in some markets, it might also make economic sense to clarify existing expectations to recognize that in some cases, converting a portion of residential r.e.o. to rental may be a reasonable option for financial institutions. i believe that it could allow for better outcomes for institutions. a spearier net present value compared with traditional approaches and at the same time contribute to market healing. however, to be effective such an approach would require supervisors to clarify current supervisory guidance or explain how it might apply compared to rental. the fast ball institutions with large portfolios might be able to achieve scale in some marks on their own or possibly leverage the scale of a g.s.e.-f.h.a. program. they should be able to act in acorns with conditions in their local markets. in addition, there are steps that all r.e.o. holders can take today to ensure they're not contributing further to the problems. they should make sure they're adequately monitoring any third party vendors with which they contract to maintain market or sell r.e.o. properties. severe consequences can result from failing to monitor them. r.o.e. holders could also consider first-look types of programs, who enable public entities and nonprofits windows of time to build on available properties. a number of institutions have used such programs with successful results. and r.e.o. holders who sell large numbers of properties to informsors should screen and monitor investors to recently assess their maintenance and disposition after acquiring the properties. so far i've talked only about r.o.e. as a solution but that's not going to work every. some property are too damaged sor too low valued for either. we estimate that about 5% of the properties in the r.e.o. inventory are appraised at less than $20,000 and in some markets the share is significantly higher. in many of these cases the cost to repair or demolish existing structures exceeds market value. in recent jeers -- years, local governments and community based organizations have struggled to control the effects of foreclosure on neighborhoods. one tool to controlling is the use of a unique entity known as a land bank. they're typically created to deal with properties not dealt with adequately through the standard market. the notion of a land bank rather than a land trust is that properties are brought in and moved out of a land bank's portfolio rather than permanent lip preserved. a community can gain control of low-value properties that may otherwise sit vacant and cause problems for surrounding neighborhoods. options available include physical rehabilitation. some period of rental. fail to new owner occupants or investors or in some cases demolition. such a strategy would help some communities deal with a short-term crisis and ultimately allow for the disposition of properties over the longer term. while few land banks surnl have the resources to operate at significant scale, the land bank model has shown some success and it could help many communities stabilize properties if used more extensively. however, the current infra structure for land banks is limited. first, not all states have passed legislation that will allow them. more technical assistance would be needed to scale these up to an adequate level. this approach appears to be an instance where relatively modest investments have the potential to produce significant benefits, such as lower municipal costs. to provide services to neighborhoods that are largely vacant. higher property revenues and other benefits that may be realized. these are my thoughts on some of the things that be be done in the near term. an immediate priority is rebalancing supply and demand in a market overwhelmed by financially stressed homeowners, tight credit conditions and an unusually high number of foreclosed homes. it's an important part of rebuilding our market but it's only a part. in addition we must think carefully about longer term policy and market changes that may affect america's housing for years and even decades to come. this is an important mark and i appreciate your participation in the forum today. thank you. [applause] and it looks like we do have time for a couple of questions and can day -- stay on schedule. please raise your hand to get the microphone. thank you. >> thank you for that. the two million houses that you talked about were r.e.o. for sale, meaning on the market. do you have an account for properties not on the market but already defaulted? you've given so many great ideas about how to deal with -- where do you see the housing market going assuming none of these great ideas that have been instituted. [inaudible] >> to your first question, i'm not going to cite a statistic off the top of my ahead. the two i referred two for vacant homes for sale, not r.e.o. to your second question -- we've thought a lot about this and there's been an awful lot of attention paid to loan modifications and less attention to what happens to the loans that can't be modified for whatever reason. we're getting to the point where addressing that part of it is critically important to getting back to whatever the market is going to be going forward. there's nothing in here that would clear all of that inventory but i think it's going to take a number of small things, all of which will help and complement each other in a strategic sense so they work together to get a little movement from i've looked for things that are not necessarily incentives but places where the market itself didn't seem to be working the way you would expect it too. >> governor duke? >> nice to see you again. i was pleased to hear you mention the disparate impacts the crisis had on lower wealth people, people of color and female-headed households and i wonder which of your policy solutions that you discussed would most help those populations? >> i don't think there's anything in this group of policy solutions. i think there may be some other things that are specifically directed in that area, although i do think paying attention to both the needs of rent others and owner-occupants is going to be particularly important because there seems to be a growing demand for not justify rental properties that are multifamily properties but also those that are single property -- single family properties in the same neighborhoods are -- where foreclears are taking place. this would provide housing options again in the same neighborhoods. >> can we get a microphone over here? >> thank you. governor, jarrett seaburg with m.f. global. you talked a lot about this refinancing program. one of the counter arguments is that if there is a mass refinancing that could cause m.b.s. investors to either flee the market going forward or to demand a higher risk premium that could raise housing finance costs across the board. how do you raise those potential risks against potential benefits? >> when i used to buy mortgage bake backed skirts i always knew this were subject to refinancing if rates fell below a certain level and i think that's been the case. prior to the last couple of weeks there had got on the be within the market a pricing of these fricks into those mortgage-backed skirts. in other words, on assumption that the refinancings would not occur at the rate that might be expected. i don't view changing that dynamic as being harmful to the markets. >> thank you. >> one more? or maybe not. ok, thank you very much. ok, thank you very much. [applause]

Related Keywords

Dubai ,Dubayy ,United Arab Emirates ,Brooklyn ,New York ,United States ,China ,Kosovo ,Russia ,Princeton University ,New Jersey ,Washington ,District Of Columbia ,Mexico ,India ,Egypt ,Netherlands ,Massachusetts ,Dhaka ,Bangladesh ,Hollywood ,California ,Belgium ,Papua New Guinea ,Libya ,South Korea ,Jersey ,Spain ,Haiti ,Canada ,Japan ,Tokyo ,Anbar ,Sistan Va Baluchestan ,Iran ,Germany ,Texas ,Afghanistan ,Boston ,Georgia ,Jordan ,United Kingdom ,Tunisia ,Maine ,Boston University ,Iraq ,Thailand ,Denmark ,Israel ,Pisgah ,Princeton ,Newfoundland ,Saudi Arabia ,Houston ,Somalia ,Dallas ,France ,Utah ,Berlin ,Americans ,America ,Holland ,Chinese ,Thai ,French ,Soviet ,British ,Han ,Japanese ,American ,Elizabeth Duke ,Henry Kissinger ,Tom Hanks ,Brad Graham ,Sean Parker ,Angelina Jolie ,Brad Pitt ,Shane Cory ,Justin Timberlake ,John Grisham ,Melissa Muscatine ,Karl Marx ,Nicole Kidman ,Friedrich Hayek ,Jackie Collins ,Freddie Mac ,Thad Roberts ,Dennis Ross ,Barbara Meade ,Aaron Sorkin ,Antonio Jr ,Mcginn Fox ,Bruce Willis ,Charles Tilly ,Francis Fukuyama ,Kevin Spacey ,Abraham Lincoln ,John Locke ,Tom Wolfe ,Axel Emmerson ,Kevin Spc ,Scarlett Johansson ,Catholic Fairfax ,Seymour Burton ,Ernest Gelder ,Betsy Duke ,