PBS NewsHour - 2008-10-13

Channel: malgent

Transcript

Language: English (original, YouTube automatic captions)

[0:00] series.

[0:05] [music]

[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 [music]

[0:31] picture campaign battleground reports

[0:33] from New Mexico.

[0:36] >> Major funding for the NewsHour with Jim

[0:39] Ler is provided by

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[1:35] And this program was made possible by

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[1:41] and by contributions to your PBS station

[1:44] from viewers like you. Thank you.

[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.

[13:07] >> [music]

[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.

[30:32] >> [music]

[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.

[46:26] [music]

[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

[51:36] companies that ship our jobs overseas,

[51:38] followed by oil executives who've gotten

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