PBS NewsHour - 2008-10-13
Channel: malgent
Transcript
Language: English (original, YouTube automatic captions)
[0:00] series.
[0:10] >> Good evening. I'm Jim Lara. On the
[0:12] NewsHour Tonight, the news of this
[0:14] Monday and the latest on efforts to
[0:16] break up the global credit freeze and
[0:18] restore confidence in the markets. A
[0:21] conversation with Paul Krugman announced
[0:23] today as the 2008 winner of the Nobel
[0:25] Prize in Economics. A presidential race
[0:29] roundup and the first of our big picture
[0:32] campaign battleground reports from New
[0:34] Mexico.
[0:36] >> Major funding for the NewsHour with Jim
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[1:50] World stock market staged a comeback
[1:52] today. They did so as key governments
[1:55] moved to support troubled banks. On Wall
[1:57] Street, the Dow Jones Industrial Average
[1:59] scored its largest point gain ever,
[2:02] soaring 936 points to close above 9387.
[2:07] The Nasdaq was up more than 194 points
[2:10] to close at 1844.
[2:12] Overseas, stock indexes rose 8% in
[2:15] Britain, 11% in France and Germany.
[2:18] Markets across Asia also shot higher,
[2:21] including a gain of 10% in Hong Kong.
[2:24] News of European efforts to end the
[2:26] banking and credit crisis helped ignite
[2:28] the rally. On Sunday, nations that used
[2:31] the euro agreed on coordinated steps.
[2:34] Today, Britain was first to act. It was
[2:36] followed by Germany, France, Spain,
[2:38] Portugal, Austria, and the Netherlands.
[2:41] We have a report on the British
[2:42] situation from Chris Ship of Independent
[2:45] Television News. It may not feel like
[2:48] the most significant day in the history
[2:50] of British banking. Your money's in the
[2:52] same place. You can withdraw it, save
[2:54] it, and pay the mortgage. But what
[2:56] happened this morning was unprecedented.
[2:58] Some of the most recognizable banking
[3:00] names on the high street are now
[3:02] effectively under government control.
[3:06] An hour after the markets opened, the
[3:08] prime minister stepped into a Downing
[3:09] Street press conference. This was his
[3:11] third in under two weeks. No wonder
[3:14] given the amount of taxpayers money he's
[3:16] using to prop up our banks. support
[3:18] British family. We've agreed to make a
[3:20] series of commercial investments
[3:22] amounting to 37 billion pounds of public
[3:24] money in a number of UK banks at 20
[3:27] billions in the Royal Bank of Scotland
[3:29] and following the takeover of it boss by
[3:32] a strong bank Lloyd's GSB 17 billions in
[3:35] the merge bank.
[3:36] >> Now taxpayers have these figures in
[3:38] front of them in black and white. Can
[3:40] you understand why they might today be a
[3:43] little a gas in the extent of the risk
[3:45] to which they're being exposed? much of
[3:47] it really as a result of the reckless
[3:48] behavior by the banks.
[3:49] >> I can understand people's concern about
[3:51] what's been happening in the banking
[3:53] system and I think that's why you'll see
[3:54] that we've laid down very tough
[3:56] conditions about any support we're
[3:58] prepared to give.
[3:58] >> The money came with strings attached and
[4:00] that meant no future for the bosses who
[4:02] have left their businesses most
[4:04] dangerously exposed. So it was goodbye
[4:06] to Royal Bank of Scotland's chief
[4:08] executives to Fred Goodwin. He's also
[4:10] waved his generous severance package.
[4:12] His chairman Tom McKillip will retire
[4:15] and the chief exec of Halifax Bank of
[4:17] Scotland Andy Hornby and chairman Lord
[4:19] Dennis Stevenson will also play no
[4:22] future role at their bank. News the
[4:24] government is now the majority
[4:26] shareholder of Royal Bank of Scotland
[4:28] pushed its shares down. AIDS boss also
[4:31] tumbled. The Treasury says it will sell
[4:33] its bank shares as soon as conditions
[4:35] allow. But astonishingly no one is
[4:37] ruling out having to find more money if
[4:39] 37 billion pounds proves not to be
[4:42] enough.
[4:44] >> Iceland looked for international help in
[4:46] its banking crisis today. The small
[4:48] North Atlantic country was forced to
[4:50] take over three large banks in the past
[4:52] week. Today, the government formally
[4:54] sought financing from the International
[4:57] Monetary Fund to save off bankruptcy.
[5:00] The US financial rescue effort picked up
[5:02] momentum today. The Treasury official in
[5:05] charge, Neil Kascari, said planning is
[5:07] moving quickly on the $700 billion
[5:10] program. He gave few details but
[5:12] initially the plan called for buying bad
[5:15] debts from banks and as of the weekend
[5:18] it also calls for buying part ownership
[5:20] in banks. Later the leaders of top banks
[5:23] met in Washington to discuss details.
[5:25] We'll have more on the global rescue
[5:27] effort. Later in the program tonight,
[5:30] House Democrats and Republicans pushed
[5:32] plans today for a second economic
[5:34] stimulus package. Democrats said they
[5:37] are considering more money for Medicaid,
[5:39] food stamps, and unemployment benefits.
[5:41] They did not give a price tag. And
[5:43] Speaker Pelosi said there is no
[5:45] timetable for passage.
[5:47] >> We're at a time where we have to tighten
[5:49] our belt, take ourselves into survival
[5:52] mode as we see the challenges to the
[5:54] economy of our country and make some
[5:57] very strong decisions about our spending
[5:59] priorities. We cannot be uh steamrolled
[6:03] into acting. we must have hearings to
[6:08] review the size, the nature, the
[6:10] particulars uh of a recovery package.
[6:14] Instead, Pelosi said hearings will start
[6:16] next week, but Republicans announced
[6:18] their own proposal, including tax cuts
[6:21] and more oil and gas drilling. In a
[6:23] statement, Minority Leader Boehner said
[6:25] Congress should take additional measures
[6:27] to get our economy back on track, and we
[6:30] should not wait until January. There was
[6:33] more on the economy from the
[6:34] presidential candidates today.
[6:36] Republican John McCain worked to
[6:38] distance himself from President Bush's
[6:40] economic policies. In Virginia Beach,
[6:43] Virginia, he said, "We cannot spend the
[6:45] next four years as we have spent much of
[6:47] the last eight waiting for our luck to
[6:50] change." In Toledo, Ohio, Democrat
[6:53] Barack Obama called for a three-month
[6:55] moratorum on home foreclosures, among
[6:58] other things. He said, "We need to give
[7:00] people the breathing room they need to
[7:02] get back on their feet." We'll have more
[7:04] on the campaign right after this news
[7:06] summary. Economist and columnist Paul
[7:08] Krugman was awarded the Nobel Prize in
[7:10] Economics today. He won for his work on
[7:13] economies of scale and how they affect
[7:15] trade patterns. Krugman teaches at
[7:18] Princeton University and writes a column
[7:20] for the New York Times. We'll talk with
[7:22] him later in the program tonight.
[7:24] General Motors today announced two plant
[7:26] closings. Its oldest plant in
[7:28] Jamesville, Wisconsin was sent to close
[7:30] in 2010. It will now shut down two days
[7:34] before this Christmas. And a GM metal
[7:37] stamping plant in Michigan will close by
[7:39] the end of 2009. Weekend reports said
[7:42] General Motors was in merger talks with
[7:44] Chrysler today. Chrysler's chief
[7:47] executive confirmed discussions with
[7:48] third parties, but he would not say
[7:51] more. North Korea agreed today to allow
[7:54] UN monitors to reenter its main nuclear
[7:57] facility. The UN nuclear agency said
[8:00] North Korea will resume disabling the
[8:02] site on Tuesday. The decision came after
[8:05] the US removed North Korea from a list
[8:07] of states that sponsored terror. And
[8:10] that's it for the news summary tonight.
[8:11] Now today in the credit and markets
[8:14] crisis, Nobel Prize winner Paul Krugman,
[8:17] a campaign wrap up and a big picture
[8:20] from New Mexico.
[8:28] This was indeed a big day in the
[8:30] financial crisis and for Wall Street.
[8:32] We'll have our coverage later in the
[8:34] program because of travel delays for two
[8:36] of our guests. We go now to the
[8:38] presidential campaign with 22 days to
[8:41] go. Here's NewsHour correspondentWami
[8:43] Homeman with our report.
[8:46] >> Sarah Palin and John McCain took the
[8:48] stage before a large and enthusiastic
[8:50] crowd in Virginia Beach, Virginia this
[8:52] morning. Their message was upbeat
[8:55] despite polls showing the Republicans
[8:57] are falling further behind Democrats
[8:59] Obama and Biden. McCain focused on his
[9:02] own credentials and on distancing
[9:04] himself from eight years of the Bush
[9:06] administration.
[9:07] >> We cannot spend the next four years as
[9:10] we have spent much of the last eight
[9:12] waiting for our luck to change. The hour
[9:14] is late. Our troubles are getting worse.
[9:17] Our enemies watch.
[9:20] >> We have to act immediately. We have to
[9:24] change direction now. And we have to
[9:27] fight. If I'm elected president, I won't
[9:29] spend nearly a trillion dollars more of
[9:32] your money on top of the 700 billion we
[9:35] just gave the Treasury Secretary as
[9:38] Senator Obama proposes. He can't spend
[9:41] that much without raising your taxes or
[9:43] digging us further into debt. I'm going
[9:45] to make government live on a budget just
[9:48] like you do.
[9:49] >> A new ABC News Washington Post poll
[9:51] shows McCain trailing Obama by 10
[9:54] points. A gap no candidate in modern
[9:56] history has overcome this close to an
[9:59] election. But McCain declared the
[10:01] presidential race is far from over. We
[10:03] >> have 22 days to go. We're six points
[10:06] down. The national media has written us
[10:10] off.
[10:16] >> Senator Obama
[10:18] Senator Obama is measuring the drapes.
[10:22] You know what they forgot? They forgot
[10:24] to let you decide.
[10:30] My friends,
[10:32] we've got them just where we want them.
[10:38] >> In the ABC poll, 59% of respondents said
[10:42] the Republicans were campaigning
[10:44] negatively instead of addressing issues.
[10:46] >> I know you're worried.
[10:48] America is a great country, but we're at
[10:51] a moment of national crisis that will
[10:54] determine our future. Will we continue
[10:57] to lead the world's economies, or will
[10:59] we be overtaken? Will the world become
[11:02] safer or more dangerous? Will our
[11:04] military remain the strongest in the
[11:07] world? Will our children and
[11:08] grandchildren's future be brighter than
[11:12] ours? My answer to you is yes.
[11:16] Yes, we will leave.
[11:18] >> Meanwhile, Barack Obama chose tightly
[11:20] contested Ohio to lay out new plans for
[11:23] the economy.
[11:24] >> The typical Ohio family has seen their
[11:26] income fall $2,500.
[11:29] It's getting harder and harder to make
[11:31] the mortgage or fill up the gas tank or
[11:33] even keep the electricity on at the end
[11:35] of the month. At this rate, the question
[11:37] isn't just are you better off than you
[11:40] were four years ago. It's are you better
[11:42] off than you were four weeks ago.
[11:44] Obama's multi-point program has at its
[11:47] center increasing employment.
[11:49] >> It's a plan that begins with one word
[11:52] that's on everybody's mind and it's easy
[11:54] to spell. J Os
[11:58] jobs. We've got to work on jobs.
[12:02] We've already lost 3/4 of a million jobs
[12:04] this year. Some experts say that
[12:06] unemployment may rise to 8% by the end
[12:09] of next year. We can't wait until then
[12:12] to start creating new jobs. That's why
[12:14] I'm proposing to give our businesses a
[12:18] new American job tax credit. Obama also
[12:21] called for a three-month moratorum on
[12:24] some home foreclosures and for moving up
[12:26] to this year, tax cuts he proposed for
[12:29] middle income filers.
[12:31] >> We can't wait to provide real and
[12:33] immediate relief to families who are
[12:34] worried not only about paying this
[12:36] month's bills, but their entire life
[12:38] savings. And this plan will help ease
[12:40] those anxieties. And along with the
[12:42] other economic policies I propose, it
[12:44] will begin to create new jobs, grow
[12:46] family incomes, and put us back on the
[12:49] path to prosperity.
[12:50] >> The candidates continue to concentrate
[12:52] their activity in a dozen battleground
[12:54] states. According to a new analysis,
[12:57] front runner Obama far surpassed McCain
[12:59] in time and money spent in those states
[13:02] in recent weeks.
[13:12] Now on the NewsHour and the online
[13:14] NewsHour, we begin a week of reporting
[13:16] from and about New Mexico as part of our
[13:19] ongoing big picture series. The idea is
[13:22] to listen to what people in different
[13:24] parts of the country have on their minds
[13:26] now as the election approaches. New
[13:29] Mexico is very much a battleground state
[13:32] in the presidential campaign. Ray Suarez
[13:34] sets the scene.
[13:39] October in New Mexico brings thousands
[13:41] from the rest of the state and the rest
[13:43] of the country to the foothills of the
[13:45] Sandia Mountains for the 10-day
[13:47] international balloon fiesta.
[13:52] And this fall with hot air balloons
[13:54] floating overhead, there's hot political
[13:56] debate on the ground. For many, the
[13:59] economy is key. That's the case with
[14:01] first time and still undecided voter
[14:04] Danny Lucero. I would say mostly right
[14:07] now the economy and maybe like houses
[14:10] and jobs. Right now the job market's
[14:13] real low and people are just trying to
[14:15] struggle to make it.
[14:16] >> We're a tourist state. So when we were
[14:20] walking around today we noticed there
[14:22] even though you see think it's a lot of
[14:23] people, there weren't as many people as
[14:25] they usually are here.
[14:27] >> For others like undecided voter Todd
[14:29] Tilman, it's not just the economy.
[14:32] >> It's economic issues. uh the war that's
[14:34] going on right now, war against terror
[14:36] as well as the one that we have in Iraq.
[14:37] I mean, the war against terror is kind
[14:39] of hard to define and where it's at, but
[14:41] I think those are the two main issues
[14:42] for me right now.
[14:46] >> The presidential race has been neck
[14:47] andneck for months. Both candidates have
[14:50] made numerous visits to the state,
[14:52] fighting for its five electoral votes.
[14:54] Votes that could help determine victory
[14:56] or defeat in November.
[14:58] >> How do you like yours? Medium or high?
[15:01] Being a battleground isn't new for New
[15:03] Mexico. Recent elections have been so
[15:06] close it's taken weeks, even months to
[15:08] name a winner, says Lana Atkinson,
[15:10] professor of political science at the
[15:12] University of New Mexico.
[15:14] >> We were the closest race in the country
[15:17] in terms of numbers in 2004 and 2000. In
[15:21] 2004, there were less than 4,000 votes
[15:23] between Bush and uh Kerry. And in 2000
[15:28] there were less than 500 votes between
[15:31] um Bush and Gore. It's a very very
[15:34] competitive contest at that level.
[15:36] >> That's the change the American people
[15:38] need and that's what I will provide when
[15:40] I'm president of the United States.
[15:42] >> So both candidates are fighting for
[15:44] every last vote. About 2 million people
[15:46] live here, about as many as in greater
[15:48] Pittsburgh, spread out across the fifth
[15:51] largest state in the country. Well, New
[15:53] Mexico is a really interesting state and
[15:55] really diverse state in that it's a
[15:57] minority majority state. And so we have
[16:00] about uh 43% Hispanic, 43% Anglos, and
[16:05] about 9% to 10% uh Native Americans.
[16:09] >> It's a mostly rural place with expansive
[16:12] landscapes and high meases. Nearly a
[16:15] third of the land is owned by the
[16:16] federal government. And the state relies
[16:18] heavily on federal money, too, on
[16:21] military bases and research labs. The
[16:24] public sector plays an unusually large
[16:26] role in New Mexico's economy. One out of
[16:29] every four workers here has a job with
[16:31] the federal, state, or local government.
[16:35] >> I didn't know that. That translates into
[16:37] greater economic stability, especially
[16:40] in these jittery financial times, says
[16:42] Albuquerque economic development
[16:44] director Gary Tongis.
[16:46] >> I think it's uh disconcerting here um as
[16:50] much as any other place. We haven't had
[16:52] um really dramatic shakeups. We haven't
[16:54] had large numbers of foreclosures here.
[16:56] We're one of the better performing
[16:58] metros in the country in that regard.
[17:00] Our banks, our community banks
[17:02] throughout the state really are in
[17:03] pretty good shape. But not everyone is
[17:06] doing well. The unemployment rate, still
[17:08] less than the national average, has
[17:10] ticked up nearly a percent in the last
[17:12] year.
[17:14] The state has made a concerted effort to
[17:16] attract new jobs, new industry, and a
[17:19] higher profile.
[17:20] >> And action.
[17:23] >> What is it you're offering to do for me?
[17:25] >> This new show for the AMC network called
[17:28] Breaking Bad could have been produced in
[17:30] one of Los Angeles's 400 sound stages.
[17:33] Instead, its cast and crew set up shop
[17:36] here in the new high-tech Albuquerque
[17:38] Studios. The facility offers Hollywood
[17:41] producers highquality at low cost in
[17:44] part because a new government program
[17:46] gives a 25% tax rebate for production in
[17:50] the state.
[17:51] >> I told you not to say anything.
[17:55] >> Nick Smearan and Jeremy Haritan opened
[17:57] the $91 million facility a year and a
[18:00] half ago. the incentives that the state
[18:02] was providing were so good, so
[18:04] beneficial to the productions that we
[18:06] thought if we could build a worldclass
[18:09] facility here that the productions would
[18:11] come simply because we're only an hour
[18:14] and a half away from Los Angeles.
[18:16] >> The other piece of the program here in
[18:18] New Mexico is that they'll loan you
[18:19] money for your uh for your film. They
[18:21] absolutely make it work for a production
[18:24] to leave Los Angeles. While the few
[18:26] urban areas are trying to diversify, the
[18:29] rural regions rely mostly on agriculture
[18:31] and mining with many Hispanics living
[18:34] there. Long before there was a United
[18:36] States, this was a province of the vice
[18:39] royalty of New Spain with its capital in
[18:42] Santa Fe since6008.
[18:45] This Hispanic population, the highest
[18:47] percentage of any state, has its own
[18:50] complexity. According to National
[18:52] Hispanic Cultural Center director
[18:53] Eduardo Diaz, these are people who can
[18:56] trace their heritage back to the
[18:58] earliest of the Spanish explorations and
[19:00] incursions here. So juxtapose that
[19:04] against the Mexican immigrant who just
[19:06] arrived from Durango two months ago. So
[19:09] it's it's a very interesting dynamic
[19:11] that's occurring here in New Mexico.
[19:13] Hispanics traditionally vote Democratic,
[19:16] but this year, as in most elections,
[19:18] both parties are targeting the Spanish
[19:20] speaking population over the airwaves.
[19:33] You're an Obama supporter, right?
[19:35] >> And Democrats and Republicans have
[19:37] armies of volunteers registering new
[19:40] voters and trying to boost turnout among
[19:42] Hispanics.
[19:45] >> Native Americans tend to vote
[19:46] Democratic, too. 22 sovereign tribes
[19:49] call New Mexico home.
[19:51] >> Well, it's it's really an interesting
[19:54] progression.
[19:55] >> It's the only state with a cabinet level
[19:57] secretary for Indian affairs.
[20:00] you have a situation where as of 1962,
[20:02] Native Americans were not even allowed
[20:05] to be involved in the political process,
[20:07] even at the basic level of voting, much
[20:09] less uh running for office or any other
[20:12] any other aspect of that. And so now you
[20:16] fast forward to the present and what we
[20:18] see now is this tremendous um uh effort
[20:23] throughout several of the tribal
[20:24] communities to increase voter
[20:26] registration to actually uh ensure that
[20:29] people go out and cast their vote. In
[20:33] the mountains north of Santa Fe at the
[20:35] Santa Clara PBLO, tribal employees are
[20:38] restoring the site of a
[20:39] thousand-year-old ancestral village. The
[20:42] PBLO's governor, Michael Chavaria, says
[20:44] the tribe gets most of its money from
[20:46] the federal government.
[20:48] >> It's very important that the uh tribal
[20:51] members actually get out to vote in a
[20:53] couple more weeks on the November the
[20:55] 4th. So, it's very important that we
[20:57] utilize that strategy to help uh elect
[20:59] people into positions that are then
[21:01] going to help us native people in the
[21:03] United States. Republicans are hoping to
[21:06] attract their base from regions across
[21:08] the state and to convince conservative
[21:10] Democrats and Hispanics to vote their
[21:13] way. A recent poll showed 14% of
[21:16] registered voters say they still haven't
[21:18] made up their minds. That's nearly twice
[21:20] the national average of undecided
[21:22] voters.
[21:22] >> Okay, guys. So, we have 30 days until
[21:25] this election, but until then, we have
[21:26] to knock on every door that's on your
[21:28] list so we can get these people to vote
[21:29] for Barack Obama.
[21:30] >> So, both sides are running daily phone
[21:32] bank operations.
[21:34] This is Algra. I'm calling from the
[21:35] Barack Obama campaign.
[21:39] >> On Monday,
[21:40] >> so if you want to go see him, we have
[21:41] tickets.
[21:42] >> And canvasing at tailgate parties in
[21:44] college parking lots. The frenzy is only
[21:47] expected to grow in the next 3 weeks.
[21:50] The race has been up in the air, but
[21:53] recent polls show Obama's campaign is
[21:56] taking off.
[21:58] Judy Woodruff is also in New Mexico this
[22:01] week. She has more on the state and the
[22:03] race there.
[22:05] >> For more on what's driving voters here,
[22:07] we are joined by Christine Sierra. She's
[22:10] a professor of political science at the
[22:12] University of New Mexico and Joe
[22:15] Monahan. He's author of the nonpartisan
[22:18] political blog New Mexico Politics with
[22:21] Joe Monahan. Thank you both for being
[22:24] with us. And Joe Monahan, I'm going to
[22:25] start with you. You just heard Ray
[22:28] Suarez's report. Where do you think New
[22:31] Mexico's almost what is it 1.2 million
[22:34] registered voters are today?
[22:36] >> Well, this is a great bellweather state.
[22:37] We usually pick the winner. It looks
[22:39] like it's trending Obama's way. Uh the
[22:41] economic situation, as we all know, has
[22:44] drastically changed the picture of this
[22:45] election nationally and that of course
[22:47] includes New Mexico. maybe what
[22:49] terrorism was to the 2004 election, the
[22:52] big issue. That's what economic security
[22:54] is to the uh 2008 election. And it's
[22:57] being felt across America and across New
[22:59] Mexico. Maybe the economic bump, Judy,
[23:01] not quite as intense because of the big
[23:03] government base as uh Ry pointed out in
[23:05] his setup piece, but definitely this is
[23:08] the Paul, the shadow over this election,
[23:10] and it is helping Obama.
[23:12] >> Christine Pierre, what would you add to
[23:14] that? What do you where do you see the
[23:15] race right now? Well, it's still
[23:17] competitive. Uh Obama is running about
[23:19] four or five points ahead of McCain, but
[23:22] there's still some undecided voters out
[23:23] there. I would uh second what Joe was
[23:26] saying about the economy, and I would
[23:28] say that the uh the economic meltdown
[23:31] and people concerned about that is also
[23:34] broken down to some very competitive uh
[23:37] open races and seats for the
[23:39] congressional candidates. And so one
[23:42] surprising thing is that in conservative
[23:44] congressional district two, which is
[23:45] down south in our state, the uh
[23:48] Democratic candidate is running just a
[23:49] little bit ahead of the Republican
[23:51] candidate. I think that also is a
[23:53] reflection of just the general climate
[23:55] of the times and people's concerns when
[23:57] you let's let's talk about the economy
[23:59] for just a second though Joe because Joe
[24:01] Monahan because uh as you pointed out a
[24:03] lot of government jobs here that
[24:04] insulates people from the from the harsh
[24:07] winds of this economic situation but you
[24:10] also have a higher than usual poverty
[24:12] rate in this state. Help us understand
[24:15] uh how that's affecting people's votes.
[24:17] Well, in New Mexico, the the economic
[24:18] engine is Albuquerque and Santa Fe and
[24:20] Los Cusus, the three cities. But outside
[24:22] of those, uh, hundreds of thousands of
[24:24] people reside, and these gasoline
[24:26] prices, for example, are really hurting
[24:28] in uh rural areas, Judy, where people
[24:30] have to drive a long distance. There's
[24:32] also uh a lot of small businesses in
[24:34] this state. This is not a big
[24:35] manufacturing state with uh uh companies
[24:38] like IBM or or Microsoft. So, it is
[24:41] being felt. Even the government
[24:42] employees who have their um keyhole
[24:44] plans and their IAS are also feeling it.
[24:47] But this state does have a big poverty
[24:49] problem. And the problem here is we
[24:50] didn't fully participate in the boom
[24:52] years. Uh and we're going to uh take a
[24:55] hit on the bus.
[24:56] >> Christine Tier, what in addition to the
[24:59] economy, you and I were just talking
[25:00] there are other issues at play here.
[25:03] There are uh they uh are related to the
[25:07] economy as well though. uh certainly
[25:10] healthc care issues, the concern with
[25:12] health care, uh concern with education,
[25:15] and also still the war in Iraq. So many
[25:18] of the New Mexican families as well as
[25:21] some of our um major ethnic groups,
[25:24] Hispanics and Native Americans, so many
[25:26] of them are involved with the military,
[25:29] have members in the military or are
[25:32] employed in defense related industry,
[25:34] which is quite prominent here in the
[25:36] state. So there's still very much of a
[25:38] keen interest in what our US policy is
[25:41] going to be with regards to war and the
[25:44] fight against terrorism. In ' 04, it
[25:46] worked very well in George Bush's favor
[25:49] uh who argued stay the course, reelect
[25:52] me. But this time, I think the political
[25:55] landscape was so different. And I think
[25:57] people really do tie uh the uh war uh to
[26:02] the economy uh in in regards to wanting
[26:05] their uh family members home, having
[26:08] served three or four tours of duty, but
[26:10] also the money that we're spending.
[26:12] Social issues playing much of a role
[26:14] here.
[26:14] >> You know, the Republicans are trying to
[26:16] make them uh gun control uh uh down
[26:18] south where uh they they're hitting
[26:21] Obama on that and hitting some of the
[26:22] congressional candidates. You know,
[26:23] social issues like gay marriage and
[26:25] abortion were big issues in the 2004
[26:28] race where John Kerry did not perform
[26:30] well among Hispanic Catholics in New
[26:32] Mexico. But now the Obama people think
[26:35] the economy is so big that these social
[26:37] issues are becoming second tier and they
[26:39] can dominate the Hispanic vote and get
[26:41] over this problem of turnout with the
[26:43] Hispanic base by emphasizing the
[26:45] economy. It's a uh it's a sad news this
[26:48] economy, but it's good political news, I
[26:50] think, for the Democrats up in the
[26:51] northern part of the state. And
[26:52] Christine Sierra, what would you add to
[26:54] that to the historic go? Because it did
[26:57] go for George W. 44% for George W. Bush,
[27:01] I believe. And
[27:02] >> well, that means still though a majority
[27:04] went for John Kerry, right? But two
[27:06] things. Uh uh I do think that for single
[27:09] issue voters for whom abortion was
[27:11] important, abortion was uh what they
[27:14] voted on. But I really don't think that
[27:16] carried the day. I do think it was kind
[27:17] of stay the course on defense uh and the
[27:20] war. Uh I would add though that uh uh
[27:24] other issues like immigration even
[27:26] though it's not mentioned by the
[27:27] political ads of the candidates on
[27:29] English language TV is very much there
[27:32] in Spanish language television. And how
[27:34] do you explain that? Because the
[27:35] campaigns have finally figured out that
[27:37] the Hispanic vote is not monolithic and
[27:39] that there is a foreignb born population
[27:41] although it's much smaller uh here in
[27:44] New Mexico than in other states. uh but
[27:46] there is a Spanish-sp speakaking
[27:47] population and for them they immigration
[27:51] issue is not an abstraction they are in
[27:53] uh have family members of various
[27:55] statuses of citizenship non-citizenship
[27:58] and undocumented and so that issue what
[28:00] happens to them and their family members
[28:02] really is important and both campaigns
[28:04] are actually blaming the other for the
[28:07] lack of immigration reform and joy
[28:10] to those undecided voters I think the
[28:12] last poll by the Albuquerque Journal had
[28:14] it at something like 15%. Where do you
[28:17] see that going and help us understand
[28:19] anything more you can tell us about the
[28:22] efforts of these two campaigns and the
[28:24] organization here?
[28:25] >> Well, this is a big turnout game now and
[28:27] New Mexico is a majority Democratic
[28:30] state. Obama has field offices, maybe
[28:32] three dozen of them all over the state.
[28:34] He is trying to pump up that Democratic
[28:36] turnout and bring back the Democratic
[28:38] party to the Democratic candidate. This
[28:40] is a notorious t uh ticket sweating
[28:42] state. As Christine pointed out, we have
[28:45] a lot of national defense here. They
[28:46] like to vote conservatively, but this
[28:48] time again getting back to the economy
[28:51] that is arousing the grassroots that is
[28:53] getting the people excited. They want
[28:55] change and that's selling and that is
[28:57] bringing home these Democrats to these
[28:59] congressional races out here too that
[29:01] normally they would vote Republicans.
[29:02] So, I'm thinking we may have less ticket
[29:04] splitting as we speak than we have
[29:06] previously.
[29:07] >> As Christine was was mentioning a minute
[29:08] ago, how do you see these undecideds
[29:10] going or or are they going to hold out?
[29:12] Let me just mention specifically the
[29:13] Hispanic vote because the ch the the
[29:15] difference between Obama and McCain is
[29:17] dramatic. Right now Obama's running 45
[29:20] percentage points ahead of John McCain
[29:22] with the Hispanic vote or at least in
[29:24] terms of the polls that leaves only uh
[29:27] uh a small amount 20 uh 17% or or
[29:31] something like that of undecideds, but
[29:33] even 30% or something of undecided. even
[29:35] if John McCain were to pick up those
[29:38] undecided and certainly they're not all
[29:40] going to go for him. Um Barack Obama
[29:43] still looks pretty good
[29:44] >> but he has got to get the Yeah. And I'll
[29:45] just add that he has got to get that
[29:47] vote out. Carrie did 62% but the problem
[29:50] is he was the undervote the Catholic
[29:52] some ripplings in the among Catholics
[29:54] and Hispanics not even voting in the
[29:56] present
[29:57] >> but they didn't turn out.
[29:58] >> They didn't turn out. So that's the
[29:59] challenge. They've got to they're going
[30:00] to turn the percentage. They got to get
[30:02] the vote out.
[30:03] >> All right. Well, New Mexico's been a
[30:04] bell weather. Maybe it will be again
[30:06] this time.
[30:07] >> Joe Monahan, Christine Sierra, thank you
[30:09] both. Thank you very much.
[30:11] >> Thank you.
[30:12] >> There's more on New Mexico on our
[30:14] website, including background reports on
[30:16] Hispanic voters in the state and voices
[30:19] from citizen journalists from local PBS
[30:21] station KNME.
[30:24] As always, just go to pbs.org and then
[30:26] scroll down to NewsHour Reports.
[30:37] Now we're ready to deal with today's big
[30:39] economic news. And we go to Jeffrey
[30:41] Brown once again for our financial
[30:43] crisis coverage.
[30:45] The coordinated European plan to spend
[30:48] up to $2 trillion to assist bailing
[30:50] banks comes after several weeks of
[30:52] confusion among Europe's governments as
[30:55] the crisis mounted.
[30:57] British Prime Minister Gordon Brown
[30:59] first proposed this approach. His
[31:01] government will spend $86 billion to
[31:03] take equity stakes in British banks and
[31:06] guaranteed transfers between
[31:08] institutions in hopes that banks will
[31:10] begin lending again and thaw frozen
[31:12] credit markets.
[31:14] >> In extraordinary times with financial
[31:16] markets ceasing to work, the government
[31:19] cannot just leave people on their own to
[31:21] be buffeted about. for savers, for small
[31:24] businesses, and for homeowners. We must
[31:26] in an uncertain and unstable world be
[31:29] the rock of stability upon which British
[31:32] people can depend.
[31:34] >> The British action reportedly inspired
[31:36] the Europewise moves, though there is an
[31:39] agreed framework for the cash infusions.
[31:41] Each of the 15 nations involved will act
[31:44] independently on a national level.
[31:47] German Chancellor Angala Merkel
[31:49] announced her government's action this
[31:51] morning, which could pump as much as
[31:53] $670 billion into Germany's alien
[31:57] banking sector.
[32:00] >> I know that we agreed to extensive,
[32:02] farreaching, as well as drastic measures
[32:04] today. They have one goal. They shall
[32:06] help to create new trust. Trust between
[32:09] the banks, trust in the economy, and the
[32:11] trust of the citizens. Because trust is
[32:13] the currency that will be paid with.
[32:16] French President Nicholas Sarcoi pledged
[32:18] nearly a half trillion dollars to his
[32:20] own country's effort. Sarcoi, who holds
[32:23] the rotating presidency of the European
[32:25] Union, said that the combined
[32:27] initiatives would outpace American
[32:29] actions to quell the credit crisis.
[32:33] >> We will see tonight that really Europe,
[32:35] a united Europe, did better than the US
[32:38] by the amounts they've pledged. And I
[32:39] also think the plan we're presenting is
[32:41] totally transparent. Through you, the
[32:44] French people will know exactly what we
[32:45] are doing and why we are doing it.
[32:47] >> For its part, the US Treasury offered a
[32:50] framework this morning for the $700
[32:52] billion rescue package passed by
[32:54] Congress 10 days ago.
[32:57] Neil Kashkari, the Treasury official in
[33:00] charge of the effort, laid out several
[33:02] available options. This team is working
[33:04] hard to define the requirements for
[33:06] those financial institutions so they can
[33:08] participate in one of three possible
[33:10] scenarios.
[33:12] First, an auction purchase, an auction
[33:14] of troubled assets. Second, an equity
[33:19] program or direct purchase program. Or
[33:21] third, in rare cases, the case of an
[33:25] intervention to prevent the impending
[33:27] failure of a systemically significant
[33:29] institution. Amid criticism that the US
[33:32] has not focused on injecting capital
[33:34] straight into the banking system, as is
[33:36] now the case in Europe, Kashkari said
[33:39] that idea is very much in play. We are
[33:41] designing a standardized program to
[33:44] purchase equity in a broad array of
[33:46] financial institutions.
[33:48] As with the other programs, the equity
[33:50] program will be voluntary and designed
[33:53] with attractive terms to encourage
[33:56] participation from healthy institutions.
[33:59] It will also encourage firms to raise
[34:01] new private capital to complement the
[34:03] public capital. And after complaints
[34:06] from Treasury officials took too long to
[34:08] detail their plans, Kashkari said they
[34:10] were working quickly now and with many
[34:12] other players. Treasury is working with
[34:15] both domestic and international
[34:17] regulators to understand how best to
[34:19] design tools that will be most effective
[34:22] in dealing with the challenges that we
[34:24] face. For example, regulators are
[34:27] helping us to identify the quickest and
[34:29] most efficient method to purchase equity
[34:32] in financial institutions so they can
[34:34] resume lending. This afternoon, Treasury
[34:37] Secretary Pollson gathered heads of
[34:39] leading US financial institutions to
[34:42] discuss the plan. With all this underway
[34:45] and more to come, markets today at least
[34:47] seem pleased, staging a major rally. And
[34:51] for analysis of all this, we're joined
[34:53] now by Joseph Stiglets, professor of
[34:55] economics at Columbia University. He was
[34:57] chairman of President Clinton's Council
[34:59] of Econ Economic Adviserss and shared
[35:02] the 2001 Nobel Prize in economics.
[35:05] Martin Feldstein, professor of economics
[35:07] at Harvard University. He served as
[35:09] chair of Ronald Reagan's Council of
[35:11] Economic Adviserss. And Fred Bergstein,
[35:13] director of the Peterson Institute for
[35:14] International Economics. He's held
[35:16] international economic positions in both
[35:18] Republican and Democratic
[35:20] administrations. Well, Joseph Stiglets,
[35:23] after a horrible week last week, a
[35:25] hugely positive today, market up about
[35:28] 936 points. What do you think was the
[35:30] key thing to turn the markets today? I
[35:33] think it was the concerted action in
[35:35] Europe and the fact that finally finally
[35:38] the pollen uh the Bush administration is
[35:41] beginning to consider the uh equity
[35:44] injection approach that uh has been used
[35:47] in other countries around the world and
[35:49] uh that has been adopted in Europe. uh
[35:52] the contrast between the slowness with
[35:54] which the Bush administration has
[35:56] approached the problem and the speed
[35:59] with which uh the UK for instance has
[36:02] been able to produce a pro a program and
[36:05] then already implemented uh uh is is
[36:09] really stark and I think the fact that
[36:11] that kind of approach can be implemented
[36:13] quickly uh has been very reassuring.
[36:15] Martin Feldstein, we talked so much last
[36:17] week about the need to inject confidence
[36:20] into the markets, into the system. Is
[36:22] there reason for confidence today?
[36:25] There's more reason for confidence.
[36:27] There's certainly reason for the
[36:29] individual saver depositor to be
[36:32] confident both about their bank deposits
[36:35] and also their money market mutual fund
[36:37] balances. But I don't think that the
[36:41] program that we've heard is going to
[36:43] provide enough confidence to generate
[36:46] substantial interbank lending or lending
[36:49] from the banks uh to the wider economy.
[36:52] What are its shortcomings?
[36:55] Well, simply injecting equity by itself
[36:59] isn't going there isn't going to be
[37:00] enough equity injected to make uh other
[37:04] financial institutions and other
[37:06] investors in the commercial market
[37:08] willing to provide uh lots of additional
[37:11] funds to the major banks that are
[37:13] holding impaired securities.
[37:16] uh what the Europeans are doing that
[37:18] we're not doing is providing some kinds
[37:20] of credit guarantees on top of that. But
[37:24] the fundamental thing in my mind uh
[37:27] about the situation in the United States
[37:29] that makes us very different from Europe
[37:32] is that our our bad mortgage paper, our
[37:37] bad assets in these financial
[37:39] institutions is being driven by the uh
[37:43] foreclosures and defaults in the
[37:46] residential real estate market. For the
[37:48] Europeans, the problem is assets that
[37:51] their institutions bought from the
[37:53] United States. So there's nothing they
[37:55] can do to stop that part of the problem.
[37:58] For us, we have to get at the
[38:00] fundamental cause of all this, which is
[38:03] the uh the the rapid decline in house
[38:07] prices, which is causing individuals to
[38:10] default on their mortgages leading to
[38:13] foreclosures and a further downward
[38:16] spiral in house prices. All right, let
[38:17] me ask Fred Burkston, where where do you
[38:19] see us today after all this activity
[38:21] over the weekend and today?
[38:22] >> I think we're moving very rapidly toward
[38:25] a very effective policy response to the
[38:27] problem. What we've now got is the major
[38:30] countries having committed over $3
[38:33] trillion
[38:34] on top of all the money the central
[38:36] banks have put together in what amounts
[38:38] to a fivepart internationally
[38:40] coordinated program. Putting new capital
[38:43] into the banks, guaranteeing interbank
[38:46] lending. So that key financial channel
[38:48] will start up guaranteeing deposits by
[38:52] bank depositors and money market funds
[38:55] uh and providing monetary and fiscal
[38:58] stimulus to get the economic side of the
[39:02] equation going. Again, this is a global
[39:04] crisis. It's got financial and economic
[39:06] dimensions. I think the major countries
[39:09] over the weekend here in Washington at
[39:11] the G7 meeting, at the IMF meeting put
[39:14] the framework together. The Europeans
[39:16] have now filled in the blanks on their
[39:18] implementation. The US is rapidly moving
[39:21] to do it as well. So looking forward, I
[39:24] think the world is right to be
[39:26] increasing its confidence that a
[39:28] comprehensive and effective program is
[39:30] really taking shape very rapidly. Now
[39:32] >> Joe Stiglets, is the next step really
[39:34] back on on the US? I mean, we're hearing
[39:37] about uh meetings between Secretary
[39:40] Pollson and major financial
[39:42] institutions. Uh there's supposed to be
[39:44] an announcement tomorrow about the
[39:45] latest step. They're clearly rethinking
[39:47] their plan, aren't they?
[39:49] >> They are. But I want to to echo what uh
[39:51] Marty said. The fundamental problem is
[39:55] uh the problem of the foreclosures, the
[39:56] problem of mortgages. Uh what we are
[39:59] doing is analogous to a massive blood
[40:02] transfusion to a patient that is
[40:04] hemorrhaging very badly and we're doing
[40:07] nothing or very little to address the
[40:09] fundamental problem. Uh and if we don't,
[40:12] the problem is going to get uh larger
[40:14] again. That is there going to be more
[40:16] foreclosures. The holes in banks balance
[40:18] sheets are going to get larger. Uh
[40:20] people aren't going to be repaying the
[40:22] loans. And that is really the
[40:24] fundamental problem that Paulison missed
[40:27] in uh several weeks ago when he began.
[40:29] He didn't understand or didn't seem to
[40:31] understand uh that the banks had made
[40:34] bad loans. Uh people weren't repaying
[40:37] those loans that created a hole in the
[40:39] balance sheet. buying bad assets
[40:42] improves liquidity but doesn't solve the
[40:45] problem of the gap in their balance
[40:47] sheet.
[40:48] >> But you so you're suggesting that the
[40:49] kind of rally we saw today could be
[40:51] quite short-lived if we don't do more.
[40:53] >> I we clearly need to do more. And the
[40:55] other thing that we need to do more is
[40:57] uh we we need a stimulus. I actually I
[41:00] wouldn't use the word stimulus at this
[41:02] point. I would call a recovery. I would
[41:04] use point uh I would say we have to
[41:06] prevent the economy from going down
[41:08] deeper. The fact is that states and
[41:10] localities are facing a crisis. Uh if
[41:13] they don't get aid fairly soon in a
[41:15] massive amounts, they're going to have
[41:17] to cut back expenditures. You might call
[41:19] that a dstimulus. We're going to have a
[41:20] contraction going on. So uh we we need
[41:24] far more than what has been done.
[41:26] >> Well, Fred Burkston, back to you. You
[41:28] you thought that what we saw in the last
[41:30] couple of days was really quite a boost.
[41:32] So
[41:32] >> I do think so. But I think Joe
[41:34] overstates in the sense that the US plan
[41:37] does include the possibility of
[41:40] renegotiating mortgages. The Congress
[41:42] insisted on that when they appropriated
[41:44] the 700 billion dollars for the Paulson
[41:47] plan. That's got to be an important
[41:49] dimension of it. But I think part of
[41:50] that's in the plan already. The
[41:52] administration has already been uh
[41:55] instructing Fanny May and Freddy Mack,
[41:58] which they now own, to be doing a lot of
[42:00] that same kind of renegotiating. Uh you
[42:03] could put more emphasis on it. You could
[42:04] put even more money into it, but a lot
[42:07] of that is already in the program and is
[42:09] moving forward. Martin Feldstein, you
[42:11] want to weigh in here?
[42:12] >> Yeah, I do. Because uh while it's true
[42:15] that they're going to try to help some
[42:17] of those who are already uh with
[42:19] negative equity, that is have loans,
[42:21] mortgage loans that exceed the value of
[42:23] their homes. Nothing in this plan deals
[42:27] with uh those people who today have some
[42:32] positive equity, have loans less than
[42:34] the value of their home, but are seeing
[42:36] house prices fall and are being pushed
[42:39] into a situation where it will be
[42:41] attractive to default. So there's no
[42:43] firewall. There's no circuit breaker to
[42:46] stop what Joe Stiglets uh described as
[42:49] hemorrhaging from the the loss in the
[42:53] prices of homes leading to defaults,
[42:56] leading to foreclosures, and thus
[42:59] creating a downward spiral in house
[43:01] prices. I I suppose what people want to
[43:03] know, I'll stay with you, Martin
[43:04] Feldstein. You know, people see these
[43:06] big swings, huge swings in the market
[43:08] and a freef fall it looked like last
[43:10] week. So do steps like what we saw over
[43:12] the weekend and today and and the and
[43:14] the market going up is that not a are
[43:18] those steps are not are not those steps
[43:20] necessary to at least stop the free
[43:22] fall. Uh I think that they have
[43:26] certainly helped to build confidence. I
[43:28] think in Europe what we're seeing is
[43:30] essentially a nationalization of the
[43:32] banks, a nationalization of risk. So
[43:36] that's a very different situation uh
[43:38] than we've ever seen before and
[43:41] certainly different than anything we've
[43:43] seen in the United States. And even if
[43:45] we were to do everything in the US that
[43:47] the Europeans are doing, it wouldn't be
[43:49] enough because we have this fundamental
[43:52] problem in the housing sector that's
[43:55] driving our own and indeed also to the
[43:57] extent that the Europeans are holding US
[44:00] mortgage back securities that is driving
[44:02] the problems there as well. Joseph
[44:05] Stiglets, what about this notion of
[44:07] nationalization of the banks? If we do
[44:10] go down the road of injecting uh
[44:12] investing directly in banks, how does
[44:14] that change oh, you know, the system
[44:16] we've all lived under for forever? How
[44:19] does that change the banks? How does
[44:21] that change the role of governments? How
[44:22] does that change all of us as
[44:23] depositors? Well, we've already changed
[44:26] the role of government. I don't think
[44:27] anybody ever thought uh in a Republican
[44:31] administration you'd have this kind of
[44:33] massive government intervention in the
[44:35] economy but there was in that sense no
[44:37] choice. Sweden actually showed that
[44:40] there the the right framework and
[44:42] actually Norway and other countries have
[44:44] done it. What they did is they
[44:45] effectively nationalized the banks but
[44:47] then they privatized it. They
[44:49] restructured them and the result of it
[44:52] was that it was done relatively quickly.
[44:54] the economy recovered relatively
[44:56] quickly. The problem with our the way
[44:59] we've been doing in this partial halfway
[45:02] house is that you're giving money to the
[45:05] private sector, the guys who've had a
[45:07] proven record of bad risk management of
[45:12] uh paying themselves big bonuses and
[45:14] leaving big holes to to the
[45:16] shareholders. Uh you're giving them more
[45:19] money. Uh haven't changed the regulatory
[45:21] structure. uh saying trust us there's a
[45:24] real conflict of interest uh there's a
[45:27] kind of simplicity to the way that uh
[45:30] Sweden and Norway did it uh that that I
[45:33] think has a has a certain attractiveness
[45:35] to it.
[45:36] >> Okay, we only have 30 seconds. Fred
[45:37] Bergston, you want to come back on that?
[45:39] >> Yeah, I think the government in taking a
[45:42] big position in the banks in Europe and
[45:44] here are going to be insisting on tough
[45:46] conditions. They're certainly going to
[45:48] limit executive compensation. They're
[45:50] certainly going to require uh a
[45:52] sessation of dividend payments until the
[45:54] banks are earning money again. They're
[45:56] charging very high interest rates. The
[45:58] British are charging 12% on the
[45:59] preferred stock they're buying. And
[46:01] they're going to require the banks, at
[46:03] least in the British case, to lend to
[46:05] small and medium enterprises to lend to
[46:07] homeowners so they can deal with their
[46:08] foreclosure problem. The governments are
[46:10] going to put conditions on this that
[46:12] won't let the lousy managers keep doing
[46:14] lousy management.
[46:15] >> All right, we will watch for the next
[46:17] shoe tomorrow. Fred Bergston, Joseph
[46:19] Stiglets, and Martin Feldstein. Thank
[46:21] you all very much.
[46:22] >> Thank you.
[46:23] >> Welcome.
[46:29] >> And finally tonight, a conversation with
[46:31] Paul Krugman, winner of the 2008 Nobel
[46:34] Prize in Economics. He's a professor of
[46:37] economics at Princeton University, a
[46:39] columnist for the New York Times, and a
[46:41] frequent guest here on the NewsHour. I
[46:43] spoke with him earlier today. Paul
[46:46] Kirkman, welcome and congratulations.
[46:49] >> Thank you. It's been an awesome day.
[46:50] >> Yeah, bet it has. The Nobel Committee
[46:52] said the prize was for your theory on
[46:55] international trade. Explain that.
[47:00] Before the late 1970s, the international
[47:03] trade was a a theory about countries
[47:06] that are different. One country, you
[47:07] know, some place is tropical, another
[47:09] place is temperate. So the tropical
[47:11] country is going to produce coffee, the
[47:12] temperate place going to produce wheat.
[47:14] and that was how you thought about
[47:15] international trade. Um, a lot of us
[47:18] were groping towards saying, you know,
[47:20] that's only part of the story. There's a
[47:22] lot of almost arbitrary specialization
[47:24] between countries, you know, that
[47:25] somebody gets a head start. uh somebody
[47:27] uh uh starts producing a product before
[47:29] someone else and then the just the logic
[47:32] of specialization once you got there
[47:33] advantages to producing things on a
[47:35] large scale lead to countries producing
[47:37] different things lead to international
[47:38] trade and making sense of that turning
[47:40] that into a clear story something you
[47:42] could test against data that's kind of
[47:44] work that I did that's that's really
[47:45] what the prize is about and the theory
[47:48] led to what I mean how what has what has
[47:50] happened as a result of your coming up
[47:52] with this theory
[47:53] >> well it's first of all it just there was
[47:55] a a huge
[47:57] blank spot. We we couldn't understand
[47:59] before why the United States and Canada
[48:02] were doing so much trade, why France and
[48:04] Germany um were shipping seemingly
[48:07] similar goods back and forth, why you
[48:08] were sending uh uh puja from from France
[48:11] to Germany and and Volkswagens from
[48:12] Germany to France. And and the theory
[48:14] told you why that was happening. And
[48:16] then it has to some extent shaped policy
[48:18] because it it tells you why uh uh for
[48:21] example integrating the European economy
[48:23] is so important. the the advantages of
[48:25] being able to um have uh 15 economies
[48:29] that are doing slightly different things
[48:32] so that each of them is doing it at an
[48:34] adequate scale instead of having a
[48:36] having this fragmented marketplace. So
[48:38] it it it I think it's helped with policy
[48:40] but mostly you know it's scientific
[48:42] work. We're trying to understand why
[48:44] does the world work the way it does.
[48:45] >> Sure. So it's an understanding theory as
[48:47] much.
[48:47] >> Uh yeah this was not uh most of it was
[48:50] not really very much about policy. There
[48:52] are policy implications, but it was
[48:54] >> why is there international trade?
[48:56] >> I got you. All right. Is there no
[48:58] connection, do you believe that between
[49:00] the warnings you've been given the last
[49:01] 3 years or so about uh uh the
[49:04] difficulties coming in the economy if
[49:06] something wasn't done? Uh if you read
[49:10] deep into the Nobel Committee's uh
[49:12] discussion of my work, they do talk
[49:14] about the work I've done on economic
[49:16] crisis. And in fact, I did a lot of work
[49:18] on trying to understand crises in places
[49:20] like Indonesia and Argentina, which
[49:22] unfortunately is relevant. Uh it does
[49:25] turn out that some of the same
[49:26] mechanisms uh some of the same sort of
[49:29] domino effects that lead to financial
[49:30] collapse have been operating in the
[49:33] United States and and the rest of the
[49:34] world. So there there's a connection to
[49:36] some of my academic work, but not the
[49:38] trade work.
[49:38] >> Sure. Any satisfaction at all in in
[49:41] being right about the calamities that
[49:43] were coming? you know, uh, better to
[49:46] have been right than to have have not
[49:49] seen any of it. But no, I'm I mean, I uh
[49:51] I'm I'm terrified by, you know, I I I
[49:55] did not expect to be seeing anything in
[49:57] my lifetime that was reminiscent of the
[49:59] 1930s, and I'm not gratified to be
[50:02] living through it. Thank you. I'd rather
[50:03] have been wrong in this case.
[50:05] >> On the uh you were on a program, of
[50:07] course, uh last Friday, and you were you
[50:09] were you were downbeat. Now what has
[50:12] anything changed as a result of what
[50:13] happened in the market today? 950 plus
[50:16] points etc.
[50:17] >> Well, the market does what the market
[50:18] does. But actually there was some
[50:19] serious good news yesterday. Remember,
[50:21] you know, the United States is not the
[50:24] core of the world. We have uh we're one
[50:27] of the big players. But uh the nations
[50:29] of continental Europe, the Euro zone,
[50:31] the 15 countries that use the euro as a
[50:33] currency, had a very good summit uh
[50:35] yesterday. They they did much better
[50:38] than I thought they would. Uh uh on
[50:40] Friday I think I was just saying that
[50:41] they can't get their act together. Well,
[50:43] on Sunday they did. They agreed on a
[50:45] rescue plan which is similar to the plan
[50:47] that Britain has already implemented um
[50:50] similar to the plan that I hope the
[50:51] United States will implement. So
[50:53] actually the policy got significantly
[50:54] better. So I'm substantially more
[50:56] optimistic now than I was when we last
[50:59] we talked. Uh not that's not enough to
[51:01] make me you know actually optimistic,
[51:03] but it's not as bad.
[51:06] >> Okay. as a result of the weekend as a
[51:08] result
[51:08] >> as a result as a result primarily of
[51:09] that European summit on
[51:10] >> but the the the 900 the 950 points of of
[51:13] Wall Street shouldn't be read as
[51:15] anything too serious is that what you're
[51:16] saying
[51:17] >> uh you know the old line that the the
[51:19] stock market has predicted nine of the
[51:21] last six recessions and and uh and
[51:23] probably 10 of the last eight recoveries
[51:25] I mean it the market the market is is
[51:28] not
[51:29] >> dollar signs when Smith wanted to
[51:31] privatize social security oh and here
[51:33] comes George Bush of course tax
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