this is "real money" you are the most important part of the show, tell me what's i don't on your mind by tweeting me or hit me up on facebook.com/al seevelshi. thousands mourners were at michael brown's tune ram. thousands were there to commemorate the young man's life. the african american teen was shot dead two weeks ago by a white policeman in ferguson, missouri as we all now know, his death sparked days of angry protests and violence in that community. drawing attention to a raw, racial divide in this country. brown was unarmed when he was shot and a local grand jury has convened to consider criminal charges in the case. there is also a federal investigation under way, but the events in ferguson highlight a widening economic divide between blacks and whites in america's suburbs. now, nationally the number of suburban poor living in distressed neighborhoods grew 139% between 2000 and 2012. that's almost three times as fast as the pace of growth of concentrated poverty within cities. this is suburban. according to census numbers crunched by the brookings institution, suburbs in the largest metro areas are now home to 3 million more poor people than the large cities that anchor them. and african americans make up a disproportion al number of those poor, a study published last year by brandeis university concluded that the wealth gap between blacks and whites is just getting wider. the bleak economic reality for blacks is ferguson is similar across the countries richie disturbing trend tracked by brandeis university showed that over the past 25 years the gap between the value of what black and white households own has nearly tripled. from $85,000 in 1984, to $236,500 in 2009. the largest factor driving that divide is homeownership. 43 and a half percent of blacks own a home, compared to 72.9% of whites. and because it sometimes is easier for white to his get financing, they are able to buy homes an average of eight years earlier than african americans. even after they purchase a home, housing prices in nonwhite neighborhoods tend to rice more slowly. contributing to the growing gap, higher unemployment for black it's 11.4%, for whites 5.3%. add lower income to the eye characters might young household income for blacks is 35 their $416 fork whites $59,754. and the wealth gap continues for the next generation. 80% of black students graduate with debt, compared to 64% of whites. well, joining us now is thomas shapiro eco authored brandeis' study. explaining the black-white economic divide. authors conclude the wealth gap doesn't just hamper americans but growth for the entire country. thank you so much for joining us. >> great to be here, thank you. you study aid group of 2500 people and went over 25 years and included ferguson, missouri. you feel the biggest part of the wealth gap between whiles and blacks and that's the total value of all of their as second the biggest part of that comes from housing. >> it absolutely does for most american family what that he own in their home, the equity of the value of their home is two-thirds of their entire wealth. that's how important homeownership is in terms of generating wealth for american families. it wasn't totally surprising in looking at this group of people over 25 years, and understanding that our question was really about how does a racial wealth gap grow in real dollar terms from 85,000 in 1984 to $236,000.20 knife year$236,000 . >> dynamics around homeownership by far is the largest driver of the difference in wealth creation for whites and african american families. accounting for about 27% of the difference of that growth of the racial wealth gap, it's huge. >> and the housing situation, a place like ferguson would mirror the national picture? >> well, i think it does. and the housing situation in ferguson actually brings in a bunch of other dynamics. so in the 1990 census, ferguson was about 75% white and about 25% african american. 20 years later, in the 2010 census that's totally flipped. so now the african american population of ferguson is about a little over 70%, the white population is about 25% or so. in 20 years, that's an incredible flip of a community. and what we see when communities go through periods of rapid transition like that, the home values don't keep pace at all. and in fact, it's very fertile ground for, and ferguson was, for predatory lending. the predatory lending schemes of the financial industry and the insurance industry, was laid right on top. so just one quick fact here, right before the housing foreclosure crisis in 2006, the median home price in ferguson was $110,000. now that's -- ferguson is a lower middle class modest community lot of single family homes. >> right. >> and now the median home price in ferguson, after the foreclosure crisis is about $60,000. so there was a 40% drop in the wealth that homes could possibly create for people. and that was laid not coincidentally, right on top of the racial and ethnic transition that community. >> and you talked about predatory lending. in african american minority communities in general, h you hd the combined factors the predatory lending of people with lower credit scores and red lining, the idea that you would pay a higher interest rate even if your credit score was the same as somebody that was not a minority group. has that sort of practice stopped? is that -- that must have been a contributor as well. >> well, i think that's a great insight. when we start to look at the data is that communities that were in transition or communities that are nonmajority white by a large percentage, those are exactly the kind of places where predatory lending was most prominent. so we have data, they are studies not done by us, but by other institution that his show when you sends people in you phone i up a resumes about home lending when the exact same credit score and resume, and a white couple walks in, they tend to be bumped -- they tended to be bumped up to prime rate. where an african american or family of color were offered the subprime loan that often had predatory terms with it. >> that's, of course, hard to track whether that still continues, it's supposed to not be happening today. let me ask you this, something very interesting came out of your study. african american families, for a reason that you'll explain to me, take eight years longer to acquire a home. they get in to homeownership eight years later. but the length of time somebody owns a home is a real determinate in their overall wealth in the end because if they buy it early it's appreciating and they are gaining wealth. so one of the biggest factors is the difference in the lengths of time that whites own homes versus blacks. >> that's absolutely right. so what our date is showed us in following the same set of families again for 25 years, the number of years that a family owned a home was key to the dynamics around homeownership. if you think of it a omahas a lot of uses and i wouldn't suggest us treating it like a stock, but in metaphorical terms, if you buy a stock eight years earlier, chances are you right out the bumps, the ups and downs and your capital gains at the end of that period is probably going to be better than the individual or family that bought it eight years later. so african americans on average buy their first home about eight years later in their life course. and the reasons for that have to do with family support and inheritance, the ability, the fortunate ability of some families to lend a down payment money to their newlywed offspring. and that provides them a great head start in life. now, those families are great -- are fortunate, but we also have to look and ask the question, in racial and ethnic terms which set of families and which groups have much more opportunity and access to that. and that's where we get the idea that african americans buy their first homes about eight years later in the life course. giving them an 8-year less window to accumulate home he can wit. >> i and. , that end up delaying their ability to pass that on or reducing the amount that they can pass onto the next generation. what an interesting and thoughtful conversation. thomas shapiro the director of the institution on assets and social policy at brandeis university. all right, coming up, the deal that could bring together burger king's whop he were and tim horton's coffee. though the real reason for a merger probably has nothing to do with fast food. plus why it's so easy to get a loan to buy a car these days and why that might be something for you to worry about. those stories and more as "real money" continues, keep it here. burger king known for its whopper, is in talks to buy the canadian restaurant chain tim hortons known for its coffee and doug donuts, you know my burger king as the home of the whopper but tim hortons is on, in my opinion, every street corner in canada. it gives starbucks a run for its money back home. it's a real brands name north of the board, celebrating 50 years in business, we called it timmy's when i was growing up in toronto. burpinger king and tim hortons combined would create the biggest fast foot company in the world. but forget that about that part for a minute. the real headline is yet another american company is looking to combine with a foreign one so it can reincorporate abroad and pay a lower corporate tax rate. these so-called tax inversions have become a hot bit unpoliticallish new washington. president obama has called on congress to pass legislation that would make it more painful for u.s. firm to his quit america. u.s. corporate tax rate currently about 35%, though most companies pay an effective tax rate that is much lower than that. because this deal involves an iconic firm burger king, a quote, debt desperate democratic group might have found what it means. greg has spent 30 years covering capital hills to inning tigersal investors making sense of what they are dork which has become a harder and harder job, 30 years ago it was easier to find sense on capitol hill. i was watching another tv indications that will remain nameless but that is the initials cnbc where they were arguing this isn't about tax inversion, this is just a merge are of two companies, why would a company with 13,000 stores an american icon base million dollars miami want to merge with a smaller company, although one that's worth almost as much in market cap based in toronto and movies a head quarterrers to canada. i see no other reason other than inversion why this would be taking place. >> of course not. good to he into you, ali. when you were growing up i bet you didn't think canada was a tax haven, but sure enough. burger king things it can make more, pay less, and i understand that they have a respond to their share shoulders maximize their earnings, but at the same time, this exposes a really serious issue and that his thats the inability for congress to get together on tax reform. and we'll probably see more things like. >> president obama has asked dong make it hard ore these companies. the possibly, more logical, but much harder solution would be as you say comprehensive tax reform. that's something that both democrats and republicans will tell you is necessary but i have a, did you know, a burger in one hand and a coffee in the other hands and i am not even sure we can get democrats and be republican to his agree that's the case. >> these for sure. some will move in september in the senate to try to pass something to curb these deals, it will never move in the house it's dead in the house, so the real focus for the investigators becomes the tres treasury department. could trish are you issue treass to curb these deals, i think there is a growing chance they will do it. >> it's unseemly, doesn't seem to be operating in one's national interest. when a company does this. it's clearly not ill. how do democrats make it in to an issue about the voters. >> it rhetoric will get really harsh. treasury secretary has already said it's unpatriotic. the president said about the same thing, with a franchise as you say as iconic as burger king there will be a lot of very harsh bashing the burger king over the next few weeks. i think that might at the margin men some democrats, this is a party that really needs issues, because they are not looking so hot for the november election. so this might help them in a few races. >> there has actually been a lot of inversion going on but mostly involving companies people haven't heard about. this is a big one. >> right. >> walgreen's came out and said it's not going to undergo an inversion. >> right. >> was that because they were worried about the backlash? that somebody can go cvs or rite aid or something else? >> i think it's a factor, they were based in illinois and walgreen's had heard in dick durban that life could get uncome art football for walgreen and they backs off. obviously burger king thinks that they can withstand the bad publicity ty and i think the deal probably will go through. here is the other thing, we only have a few months to go before the treasury department regulations might take effect. >> right. >> ironically instead of curbing deals you could see a flood of deals in the next few weeks as companies trying to get in under the wire. >> bad for investors when deals get rushed through for the wrong reasons, i will tell you burger king is not like mcdonald's people hold their stock in their 401k. burger king has been owns by nonamerican owners for sometime. it was a privately held company, now back to a public company. it does have the iconic culture of mcdonald action, ford and g.m. a not sure their owners care. >> maybe not. but the democrats will latch onto any issue they can get and they have really good french fries. >> good point. greg, always a pressure to talk to you, aiyegbeni the chief political strategist at potomac research join me from washington. there is a knew development in the family feud engulfing nenew england supermarket market basket arthur the ceo ousted earlier this summer has offered one 1/2 billion dollars to buyout the portion of the company owned by his rival cousin arthur s. >> such a mouth would put arthur t. back in management the extent of his role is up in air. a meeting was supposed to happen saturday night but it was called off. both sides of the family after they couldn't agree on the terms of the sales. okay, poor credit. no problem. while that sounds like a used car commercial, it's also the truth about buying a car in america right now. i'll look at what could be the dark side of that reality coming up. plus how a stalled economy has led to a big shake up in france. >> start with one issue education... gun control... the gap between rich and poor... job creation... climate change... tax policy... the economy... iran... healthcare... ad guests on all sides of the debate. >> this is a right we should all have... >> it's just the way it is... >> there's something seriously wrong... >> there's been acrimony... >> the conservative ideal... >> it's an urgent need... and a host willing to ask the tough questions >> how do you explain it to yourself? and you'll get... the inside story ray suarez hosts inside story weekdays at 5 eastern only on al jazeera america looking for a new or used car? don't have that much money put down? credit isn't that great? boy, i have ideal for you or rather america's financial institutions have ideal for you. those institutions, banks, credit unions, auto dealerships have lately been making a record number of auto loan to his subprime borrowers, subprime borrowers in case you have forgotten are consumers with credit scores or 640 or under out of a possible score of 850. in fact, subprime lending now accounts for a whopping 32% of all car loans. representing an outstanding balance of $46 billion that is an eight-year high according to ex-what fashion the credit reporting company, some critics say if you look under the hood of all those car loan loans you'll see trouble they are create a financial bubble similar to the mortgage bubble that precipitated the financial crisis back in 2008. we ale know how that turned out w mim. with me to discuss is amy the cheer economist from she was examined the data and she says that the traditional characteristics chas of a bubble are are not present. good to have you here, here is my issue. the traditional characteristics of a bubble were not necessarily present before the last time we had a real estate bubble. so the day before it becomes a problem it didn't look like a problem. because we thought the value was there, people were okay, they were making their loans. why does this make you not worry? >> well, one of the big characteristics ali that i think differentiates here is people buy a car knowing that the values will depreciate. >> uh-huh. >> we bought houses because we couldn't lose in real estate. prices could only go up as they had forever. so i think that's a very salient part of that. another part of that is the average age of cars today on the road is going, it's 11.4 years currently. and it wasn't all that long ago when the average age was under eight years. so when we think about what's happening to houses and cars and the demands for cars, we have -- went on a car-buying bust for a long time during this great recession, people are finally getting around to replacing those cars and there is real demand for this asset as opposed to the housing thing where people were trying to flip it and make a profit. >> you are not buying a car on a loan to resell it at a higher price ever. here is the interesting thing, though. we have seen record car sales in the last few months even as retailers struggle and we are not sure where the economy is going. if you were a marshawn and just judging by the auto sales market you would think the economy is on fire, is that because of the pent-up demand for cars or is it because cred sit easier to come by i? >> i think it's mostly the pent-up demand. i don't think we are at record high in car sales we are at rekept highs, we sold 17 million units a year for a decade leading up to 2004, looking at maybe 16.4 million units this year, you are right that it's really risen sharply but it's driven really boo the need for new cars on the road as those cars we are driving are turning in to gentleman lop is and starting to fall apart on u us. >> in the subprime market you can get loans for up to seven years long, average financing higher by about a thousand dollars than a year ago. $27,600. is credit too easy? what is to easy. what is the right level at which people should qualify for a loan to buy a car? >> the did he have is always in the details, but one thing that shows up in our data is because people with credit scores at the higher end of the credit scale are getting those loaned, 620 to 640, that's where it's concentrated and grown from 40% to 60% of the market share so we are seeing more and more loans going to the better end of the subprime spectrum and that's shifting that out. they get bigger loans than the guys with the small credit scores. >> your research is based on the fact that you have studied the people getting the loans and you are saying they are likely to continue to pay their balances. >> i think that they will be consistent, yes, with what we know to be true of folks with those kind of credit scores, i don't see any reason why they would be expected not to perform well in the next several years, given what we have seen already. >> what's the good side to all of this? this is people who are so subprime that some nba some case that his they have been out of any other borrowing market, does this ever help them, does the car loan help them build up cred snit. >> i think it does absolutely. you make your on time payments with your car, maybe that allows to you keep the job you have gotten you make the on-time payment and your credit score is likely to rise, could even rise to be classified at pure private some point in the future. importantly, we can't under estimate how hard it is to get to work when you don't have a car. america is a car place. >> amy, good conversation. thank you for joining us, came i is the chief cone mist at he can what fashion. the snp500 hit a historic milestone today, crossing the 2,000 mark during the trading day but failed it hold onto it by market close, close at 1997 for those of you that follow it, that's still a gain of half a% for the day that's pretty good. the snp him i object i mimics. as it's a name suggests the snp tracks 500 stocks while the dow tracks only 30. so far the s. and p has gained 8% for the year, but up 195%. of the low in 2009, making for a five-year bull run in stocks, if you want more proof of the bull run being look at what apple did. apple stock rawlied to another all-time high of 151 a share today. you may be used to hearing apple stock quoted in the hundreds of dollars but the computer and gadgets giant completed a 7 for 1 stock split so trust me when i say crossing 100 is big news to apple. its return to record prices is being fueled in part by high hopes for two new products. the new iphone six and the upcoming i watch. coming up the economic pressure there caused the french government to quit. plus forget going to a mile high ale take you to an airport where the real opportunity might be a mile underground remember >> al jazeera america presents a self portrait of generation now... >> so many of my friends is pregnant... >> i feel so utterly alone... >> you need to get your life together >> i'm gonna do whatever needs to be done... >> ya boy is working on becoming a millionaire... >> an intimate look at what our kids are facing in school and beyond 15 stories, 1 incredible journey >> in this envelope is my life right now... >> edge of eighteen only on al jazeera america we are big news of europe today. french president francois ohlund dissolved his government and ordered his prime minister to form a new one that after reports of clashes in his cabinet over check austerity measures that are really starting to hurt. both germany and the european union are pushing france to get their finances in order. butt spending cuts and tax hikes that owe lands has e enact the e unpopular. france's gross flat lined. germany didn't do any better. germany's economic whoas are so dire that many people think that austerity had run its course, i talked about that today to the chief advice tore a financial services firm and the chair of the president's global development council. this is what he told me. for more i am joined from irvine cal by the chief economic advice fore financial services firm alliance se and chair of the president's global development council. good to have you here, through for being with us. >> thank you, amie. >> mohamed, the french government dissolved monday after the country's economic minister resigned insisting that austerity measures had gone too far, not much to think about the austerity measures which they didn't implement. but what does it tell us about policies across europe, do they have staying power or have they run their course? >> france and europe more gem is searching desperately for a growth model. and in the absence of a growth model, the resistence to austerity has increased. so basically whether it's france, whether it's the president of the european central bank said on friday, europe desperately needs a new approach to promoting growth and reducing unemployment. >> the problem, though, that we have zeina cross our enough most case is his slowing economies. i am worried about how worried we should be about those weakenless economies, we have recent developments in germany as well. the economic powerhouse appears to be weakening, where would this growth in europe come from? >> first we should really worry and as you point out, germany has also slowed, so the locomotive has slowed. in fact, if if you look at the second quarter not only did europe as a whole stalker but the three largest economies showed significant weakness, so we should worry. about where does it come from, it comes from three sources if you want to grow. first some structure reforms to improve competitiveness. secondly, more action by the european central bank. and then thirdly, you need to rebalance aggregate demand which is another way of saying that where there is a will to spend, there isn't the wol you want and where there is the wallet there isn't the will and what you need to on is combine both and europe can do that. >> let talk about europe again, you didn't mention energy, when we talk about america and growth we talk about energy. europe has this problem on its doorstep and that is her russia. they ever take an i more aggressive stance than they had in june and july. but the bottom line is as the winter months approach, russia still controls europe's natural gas or at least 30% of it, 40% of it. what does europe did to get more aggressive with russia given its dependence on russian energy? >> so soup in a difficult europt situation, they have to counter russian aggression and it has tried to do that through sanctions, on the other hand, the more it implements sanctions the more it risk says counselor sanctions in fact russia has moved to implement counter sanctions if this continues ultimately down the road russia can disrupt the ply of energy to you are up and that would unambiguously tip both russia but europe in to recession, so this is a lose-lose situation. it's yet another reason why people are worried about the economy in europe. >> should we be worried about that in america. >> yes, we could, it is a big trading partner and the biggest economic ring none the world. i tell people that you cannot be a good house in a did he tear youdeterioratingneighborhood. >> the s & p500 hit an all-time record today, above 2,000 for the first time ever. if you look at it it's up more than 35% since the beginning of 2013. some people are warning the market is overheated. the other argument is much of the stock market run is investors brushing off many major world events because interest rates are low and stocks are the only game in town, what do you think? >> both arguments of right let me explain. amazing resilience on the part of the stock market. that resilience has shown itself in the ability to brush off, as you say, economic weakness, geopolitical shocks and do it repeatedly. now, why is the market so confident in brushing off these things? for two reasons, one, the markets believe and have been conditions to believe, ali, that the central banks are their best friends, so the central banks will be there if ever markets come under pressure. not because central banks love markets because that's the only way they can get to their ultimate economic objective. that's the first reason, the second reason is there is a ton of money come income to the stock market. individuals who are under invested but importantly companies with massive piles of cash are now putting their money to work. through higher did did he want paints and shared by backed and activity that his often boost the price of the acquired firm well beyond what is justified by fundamentals. so investors feel confident for now to brush off all the bad if you want. little because i have the two very strong attributes in their pocket. >> always a pressure to talk to you, thank you, sir. mohamed is the chief economic ahead vicar atta lines sc. >> thank you. >> and you can see more of my conversation tonight on "consider this." all week long i am filling in for antonio month are, a 10:00 p.m. eastern, 7:00 p.m. pacific, coming up fracking for natural gas under the runway of a major airport. plus potential profits puddled on the floor after the napa earthquake. real... news... real reporting that brings you the world. >> this is a pretty dangerous trip. >> security in beirut is tight. >> more reporters. >> they don't have the resources to take the fight to al shabaab. >> more bureaus, more stories. >> this is where the typhoon came ashore. giving you a real global perspective like no other can. >> al jazeera, nairobi. >> on the turkey-syria border. >> venezuela. >> beijing. >> kabul. >> hong kong. >> ukraine. >> the artic. real reporting from around the world. this is what we do. al jazeera america. america is the middle of afternoon energy boom that many predict will last for decades, according to the department of energy, natural gas production will rise by 56% between 2012 and 2040. that spike will be due in part to advances in technology. new drilling techniques will allow company to his accessory serves that were once out of reach. some of them in some pretty surprising places. david shuster has the story. >> this may look like your normal airport but pittsburgh international is anything but normal think situated within the mineral rich shale formation the airport is practically floating atop a fortunate of natural gas reserves earlier this year allegheny county signed an open-ended lease with console energy to drill for natural gas on airport ground the county expect to collect a half billion dollars over the next 20 years, that's about 25 million a year. rich fitzgerald is executive of allegheny county which owns the airport. >> they are going to spends about $500 million in building out the infrastructure needed for the airport property. the drilling, the pipe work, the engineering, the excavation, et cetera, when you add that to the royalties, we have a billion dollars deal, a billion dollars development without any tax dollars going in to it. it's a pretty much a win-win for the community. >> that deal could not have come at a better time. a 1987 pittsburgh international made a billion dollars gamble of its own, partnerin partnering wr honor air opartnering with u.s.o handle 30,000 passenger a he a year but it piqued at 20,000. and u.s. air rebranded as u.s. airways filed for bankruptcy the next year the airline broke its lease, leaving airport officials holding the bag. >> what it meant was we didn't have the money coming in from all of airline operations to pay off the debt of our airport. this is a source of revenue from the extraction of the natural gas. that will help pay down that debt. >> console officially broke ground on its first drilling site monday, located just outside the airport fence, it will bore more than a mile deep to extract the natural gas it, can even drill horizontally sucking up deposits from beneath ago aactive runways airport offs say it's safe with all flights and runways operate as usual. despite the use of a controversial method calling hydraulic fracturing or track, it faced little opposition from the local community. it may have helped that pittsburgh is not the first effort to double as a fracking site. both denver international and airport and dallas fort worth of home to dozens of wells, they have been for years. but each operation brings in less than $10 million a year. a drop in the bucket compared to pittsburgh's annual $25 million windfall, in addition to paying off its debt, pittsburgh international plans to invest some of its new found riches back in to the airport. it's goal to a track more airlines with lower costs. but with the natural gas deal under it's belt the airport hopes diversify even more. >> of those 9,000 acres that we own out at the airport we are developing those for commercial development, office space, research and development, distribution center, and we are able to use that money to build out infrastructure creating jobs for the residents of this regis. >> david shoe steer, al jazerra. >> fracking, especially under an active run a may be one of the more eye-popping examples of airport disverse indication but it is a trends happening across the country, airports are putting their assets to use with business opportunities well outside the aviation industry. at chicago's o'hare international airport there is everybody 7500 beehives with over a million bees, mike is president of a global kilting firm that helps planning for their needs think he said i disverse identify port mol idenl crows makeportfoliomakes sense,g some land to shell oil what are they doing there? >> air worse have longed serve for other things. oil field equipment, energy equipment has been a significant portion of that. up don't ship things by air until they justify the additional costs the it's the most expensive short of shipping. oil freed is a bread and butt irrelevant commodity. pharmaceuticals are another one a lot of airports are looking to bringing in. listening to the lead in, pittsburgh is not your typical airport they have tough times with the u.s. airways hub close but it's not a model that can be replicated too many times because not everybody is sitting on a shell verve like that. >> if you can't lease on the your land to shale, what are other airports partnering to do? >> well, sure i can mentioned earlier pharmaceuticals that he's particularly hot one right now. what is happened and u.s. airways at pittsburgh say great example, but there are many of them. there were a lot of carriers that you used to see a lot of planes for including cargo carriers that within out of business, what happen is airports have different prospects. they are having to go after the demands drivers the folks putting the cargo on the belly of the planes and pharmaceuticals has shown a lot of, you know, durability to it. so what you are started to go see now, is maybe some of the pharmaceutical producers as bell as things like organ banks, things like that that are very time sensitive and a lot less con kicost conscious, refrigerad facilities are looking to pharmaceuticals and organ banks, things like that. >> is there any benefit for fliers and residents around the airport to this diversification? >> there is a derived benefit. certainly in an extraordinary case like pittsburgh, where they went from 20 million passengers a year down to 8 million, airports operate in a closed funding loop. any money they can raise on the revenue side allows them to decrease the cost to the airlines, so these types of nonaeronautical revenues that increase the revenue side of the ledger do allow them to potentially lower their costs in materials of, i know, rents for the passengers terminology gates and landing fees for the aircraft as well. so in that sense it makes one airport more competitive against another one. and so in that sense for the local flyer it certainly does. >> michael, good to talk to you, great conversation, michael weber president of weber air cargo. sunday's earthquake was a wake up call for wineries. i will look in investing in an earthquake protection system coming up. coming up right after "real money" we'll bring you details from missouri the funeral for michael brown and the community's unanswered questions. plus an american hostage in sear -- held in syria is free. what friends and family are saying of peter curtis' condition after being held cap five nearly two years. >> we'll have those stories and more coming up right after "real money" with ali velshi. >> now available, the new al jazeea america mobile news app. get our exclusive in depth, reporting when you want it. a global perspective wherever you are. the major headlines in context. mashable says... you'll never miss the latest news >> they will continue looking for survivors... >> the potential for energy production is huge... >> no noise, no clutter, just real reporting. the new al jazeera america mobile app, available for your apple and android mobile device. download it now the heart of carl's wine country, napa valley is trying to get back on its feet after sunday's earthquake even as aftershocks continue to shake the area. in the city of nap arc the historic downtown district sustained damage in the magnitude 6.0 quack, the towards hit the san francisco bay area if a quarter century. more than 170 people were hurt, three of them critically. napa valley's wineries took it on the chin, thousands of barrels and fragile bottles of wine were damaged leaching profits to bleed out onto the floor at a time when severe drought is already taking a toll. estimates of financial losses from this weekend's quake are expected to run between 500 million a billion dollars. the area's wineries and tourist vendors taking stock of the damage now. the wine industry is a huge engine no for the local economy being employing some 46,000 workers generating $14 billion a year from wine sales and tourism. the ring sun home to 700 grape growers and 430 wineries, jake ward joins us now from napa. jake, good to see you. how is the situation there and how is the clean upcoming? >> reporter: well, he just got extremely lucky, amie. we arali.we are here in downtowc nap i which was the hardest plate hit this is where old and new come together. i mean that literally. this is the old classic brick, here is the new brick, because these two materials vibrate at different frequencies that so many of these buildings came apart. if you look behind me here, there is tremendous damage to this historic building because particularly the old brick peeled away from the steel retrofit that go you see in the building throughout the don't area, that's why we are seeing it here. so but in the end, no loss of life, the roadway is still working. emergency services could get in. we didn't lose water so it really all worked out. california dodged a bull net this case. >> but you folks in california always think about this. worry about it. is there a plan for what happens when you don't duck a bullet? >> reporter: that says the thing that everybody is thinking about right now. as you mentioned as much as a billion dollars in economic losses in just the restaurant alone, in an area that contributes $13 billion to the california economy, so now we are trying to think what if this had happened in do you want san francisco, what if it had taken silicon valley off line, $176 billion contributed to the economy from there. now we are talking earthquake preparation systems, right now a prototype system in development at u.c. berk that i happens to be hooked up to the bart system as an experiment it worked it gave a 10-second warning but there is no money right now for this. it would cost $100 million, they want to make it law, but nobody has moved for it. it's hard to invest in something like that. >> something you said caught my attention, a 10-second warning makes a big difference? >> yeah, a huge difference, if you look down the street. any one of these storefronts would have been packed with people on the day in question. but instead, the earthquake happened at 3:20 a.m. and so, you know, the idea here that you would give people 10 seconds to step not middle of the street, right, 10 seconds for a dentist to take a drill out of somebody's mouth. and 10 seconds in this case for the local train system to slow trains that are going too fast that warning would be invaluable and yet there isn't currently mon knit state budge feed a system that otherwise californians now all agree they could really benefit from. >> those decision are often quite political. so they'll need to rethink whether or not they do that. tell me, jake, you are a scientific mind you think about these things very clinically. did you feel it? were you around it when it happened? >> oh, man, nothing will make you abandon your rational mind like being woken by a 6.0 in the middle of the night. my wife and i are used to earthquakes, you know, we are bay area residents it usually feels like a truck has backed in to your now a second. this went on and onside by side rocking we were reaching for each other in bed because it's so out of control. that moment of pan sick there and then pretty quickly you think, okay, where are the kids, where are the emergency system, where is the disaster kid those thoughts come back but nothing will rob you of your rational mind like an earthquake. >> that's remarkable. great report on the ground it, jake and i am glad you and yours are safe. of course we have to remember that several people were injured, more than 100 people injured. three of them critically our thoughtourthoughts are with the. a surprising twist in the tech industry, amazon confirmed it's buying the video game streaming platform twitch for fool a billion dollars. this is an interesting twist or twitch i guess, just a month ago reports swirled that google was purchase twitch to help shore up it's a youtube platform you are probably sitting there saying what's a twitch. twitch draws more than 55 million users each month who are good for the picking for advertise that's want to reach them. youtube commands relatively low advertising rates but could have presumably profited from these new users but neither google nor twitch confirmed the deal which reportedly soured over some antitrust concerns. now it looks like google's loss is amazon's gain. and this time it's actually official. here is the problem, america's energy boom has created a glut of natural gas, not to worry they are working on a solution. coming up tomorrow, aim going to tell you how the u.s. is about to take one of its biggest steps yet in joining the ranks of top energy exporters like qatar and saudi arabia. that's tomorrow 7:00 eastern, 4:00 pacific right here on arsenaaljazerra america. earlier tonight we talked about the economic social and racial divide that is widened in places like ferguson, missouri. the uproar over the shooting death of 18-year-old michael brown has brought those divisions to the fore, the divide between blacks and whites in americas suburbs has been decades in the making. african americans in the inner-city started leaving for nearby suburbs in large numbers by the 1980s. the pace of that migration picked up as federal government programs offered many phenomenallies vouchers to subis a described the cost of moving. at the time they were seen as a good way to move people out of crowded and sometimes dangerous public housing projects, after can american family who his took advantage of the vouchers saw them as a way to improve their lives, but as we have seen, it didn't always work out that way. instead, the rapid demographic changes to communities like ferguson created pockets of concentrated poverty. and as we have learned, concentrated poverty affects the larger environment. it's been harder for african american to his purchase their homes and invest more in the communities that they live in for very real structural reasons and local city councils have been ill equipped to deal with the issues because the small tax base that his suburbs provide can't possibly fund the services that big cities tend to have, as we have seen in ferguson, new come verse been slow to break in to local politics and demands a bigger piece of the pie. the majority of ferguson's residents today are african american, more than 70%. but they have virtually no presence in the city council and on the local police force, a circumstance that they alone can play a role in change think. ferguson's story isn't unique it's been repeated all around the county, to him we will take to you some of those towns. that's our show for today. i am al see velshi, thank you for joining us. hi, everyone, in al jazerra america i am john seeing en thought never new york. remembering michael brown. the funeral and the calls for justice. when will the community get some answers? the journalist set free after two years in syria, why an al quada linked group let him go after the beheading of james foley. the so-called islamic state seizes another military base in syria. how the offensive could draw the u.s. in to syria's war. and cleaning up after the worst quake in almost 25 years. the d
this is "real money" you are the most important part of the show, tell me what's i don't on your mind by tweeting me or hit me up on facebook.com/al seevelshi. thousands mourners were at michael brown's tune ram. thousands were there to commemorate the young man's life. the african american teen was shot dead two weeks ago by a white policeman in ferguson, missouri as we all now know, his death sparked days of angry protests and violence in that community. drawing attention to a raw, racial divide in this country. brown was unarmed when he was shot and a local grand jury has convened to consider criminal charges in the case. there is also a federal investigation under way, but the events in ferguson highlight a widening economic divide between blacks and whites in america's suburbs. now, nationally the number of suburban poor living in distressed neighborhoods grew 139% between 2000 and 2012. that's almost three times as fast as the pace of growth of concentrated poverty within cities. this is suburban. according to census numbers crunched by the brookings institution, suburbs in the largest metro areas are now home to 3 million more poor people than the large cities that anchor them. and african americans make up a disproportion al number of those poor, a study published last year by brandeis university concluded that the wealth gap between blacks and whites is just getting wider. the bleak economic reality for blacks is ferguson is similar across the countries richie disturbing trend tracked by brandeis university showed that over the past 25 years the gap between the value of what black and white households own has nearly tripled. from $85,000 in 1984, to $236,500 in 2009. the largest factor driving that divide is homeownership. 43 and a half percent of blacks own a home, compared to 72.9% of whites. and because it sometimes is easier for white to his get financing, they are able to buy homes an average of eight years earlier than african americans. even after they purchase a home, housing prices in nonwhite neighborhoods tend to rice more slowly. contributing to the growing gap, higher unemployment for black it's 11.4%, for whites 5.3%. add lower income to the eye characters might young household income for blacks is 35 their $416 fork whites $59,754. and the wealth gap continues for the next generation. 80% of black students graduate with debt, compared to 64% of whites. well, joining us now is thomas shapiro eco authored brandeis' study. explaining the black-white economic divide. authors conclude the wealth gap doesn't just hamper americans but growth for the entire country . thank you so much for joining us. >> great to be here, thank you. you study aid group of 2500 people and went over 25 years and included ferguson, missouri. you feel the biggest part of the wealth gap between whiles and blacks and that's the total value of all of their as second the biggest part of that comes from housing. >> it absolutely does for most american family what that he own in their home, the equity of the value of their home is two-thirds of their entire wealth. that's how important homeownership is in terms of generating wealth for american families. it wasn't totally surprising in looking at this group of people over 25 years, and understanding that our question was really about how does a racial wealth gap grow in real dollar terms from 85,000 in 1984 to $236,000.20 knife year $236,000 25 years later. >> dynamics around homeownership by far is the largest driver of the difference in wealth creation for whites and african american families. accounting for about 27% of the difference of that growth of the racial wealth gap, it's huge. >> and the housing situation, a place like ferguson would mirror the national picture? >> well, i think it does. and the housing situation in ferguson actually brings in a bunch of other dynamics. so in the 1990 census, ferguson was about 75% white and about 25% african american. 20 years later, in the 2010 census that's totally flipped. so now the african american population of ferguson is about a little over 70%, the white population is about 25% or so. in 20 years, that's an incredible flip of a community. and what we see when communities go through periods of rapid transition like that, the home values don't keep pace at all. and in fact, it's very fertile ground for, and ferguson was, for predatory lending. the predatory lending schemes of the financial industry and the insurance industry, was laid right on top. so just one quick fact here, right before the housing foreclosure crisis in 2006, the median home price in ferguson was $110,000. now that's -- ferguson is a lower middle class modest community lot of single family homes. >> right. >> and now the median home price in ferguson, after the foreclosure crisis is about $60,000. so there was a 40% drop in the wealth that homes could possibly create for people. and that was laid not coincidentally, right on top of the racial and ethnic transition that community. >> and you talked about predatory lending. in african american minority communities in general, h you hd the combined factors the predatory lending of people with lower credit scores and red lining, the idea that you would pay a higher interest rate even if your credit score was the same as somebody that was not a minority group. has that sort of practice stopped? is that -- that must have been a contributor as well. >> well, i think that's a great insight. when we start to look at the data is that communities that were in transition or communities that are nonmajority white by a large percentage, those are exactly the kind of places where predatory lending was most prominent. so we have data, they are studies not done by us, but by other institution that his show when you sends people in you phone i up a resumes about home lending when the exact same credit score and resume, and a white couple walks in, they tend to be bumped -- they tended to be bumped up to prime rate. where an african american or family of color were offered the subprime loan that often had predatory terms with it. >> that's, of course, hard to track whether that still continues, it's supposed to not be happening today. let me ask you this, something very interesting came out of your study. african american families, for a reason that you'll explain to me, take eight years longer to acquire a home. they get in to homeownership eight years later. but the length of time somebody owns a home is a real determinate in their overall wealth in the end because if they buy it early it's appreciating and they are gaining wealth. so one of the biggest factors is the difference in the lengths of time that whites own homes versus blacks. >> that's absolutely right. so what our date is showed us in following the same set of families again for 25 years, the number of years that a family owned a home was key to the dynamics around homeownership. if you think of it a omahas a lot of uses and i wouldn't suggest us treating it like a stock, but in metaphorical terms, if you buy a stock eight years earlier, chances are you right out the bumps, the ups and downs and your capital gains at the end of that period is probably going to be better than the individual or family that bought it eight years later. so african americans on average buy their first home about eight years later in their life course. and the reasons for that have to do with family support and inheritance, the ability, the fortunate ability of some families to lend a down payment money to their newlywed offspring. and that provides them a great head start in life. now, those families are great -- are fortunate, but we also have to look and ask the question, in racial and ethnic terms which set of families and which groups have much more opportunity and access to that. and that's where we get the idea that african americans buy their first homes about eight years later in the life course. giving them an 8-year less window to accumulate home he can wit. >> i and. , that end up delaying their ability to pass that on or reducing the amount that they can pass onto the next generation. what an interesting and thoughtful conversation. thomas shapiro the director of the institution on assets and social policy at brandeis university. all right, coming up, the deal that could bring together burger king's whop he were and tim horton's coffee. though the real reason for a merger probably has nothing to do with fast food. plus why it's so easy to get a loan to buy a car these days and why that might be something for you to worry about. those stories and more as "real money" continues, keep it here. >> fault lines labor day marathon the true cost of cheap labor >> nothing can be worse than this people burnt to ash... >> horrendous conditions... traffic labor on us bases... management stealing wages... exploited children put to work... >> how many of you get up at 4 or 5 o'clock in the morning to go out to the fields? 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clutter, just real reporting. the new al jazeera america mobile app, available for your apple and android mobile device. download it now burger king known for its whopper, is in talks to buy the canadian restaurant chain tim hortons known for its coffee and dough donuts, you know my burger king as the home of the whopper but tim hortons is on, in my opinion, every street corner in canada. it gives starbucks a run for its money back home. it's a real brands name north of the board, celebrating 50 years in business, we called it timmy's when i was growing up in toronto. burpinger king and tim hortons combined would create the biggest fast foot company in the world. but forget that about that part for a minute. the real headline is yet another american company is looking to combine with a foreign one so it can reincorporate abroad and pay a lower corporate tax rate. these so-called tax inversions have become a hot bit unpoliticallish new washington. president obama has called on congress to pass legislation that would make it more painful for u.s. firm to his quit america . u.s. corporate tax rate currently about 35%, though most companies pay an effective tax rate that is much lower than that . because this deal involves an iconic firm burger king, a quote, debt desperate democratic group might have found what it means. greg has spent 30 years covering capital hills to inning tigersal investors making sense of what they are dork which has become a harder and harder job, 30 years ago it was easier to find sense on capitol hill. i was watching another tv indications that will remain nameless but that is the initials cnbc where they were arguing this isn't about tax inversion, this is just a merge are of two companies, why would a company with 13,000 stores an american icon base million dollars miami want to merge with a smaller company, although one that's worth almost as much in market cap based in toronto and movies a head quarterrers to canada. i see no other reason other than inversion why this would be taking place . >> of course not. good to he into you, ali. when you were growing up i bet you didn't think canada was a tax haven, but sure enough. burger king things it can make more, pay less, and i understand that they have a respond to their share shoulders maximize their earnings, but at the same time, this exposes a really serious issue and that his that is the inability for congress to get together on tax reform. and we'll probably see more things like. >> president obama has asked dong make it hard ore these companies. the possibly, more logical, but much harder solution would be as you say comprehensive tax reform. that's something that both democrats and republicans will tell you is necessary but i have a, did you know, a burger in one hand and a coffee in the other hands and i am not even sure we can get democrats and be republican to his agree that's the case. >> these for sure. some will move in september in the senate to try to pass something to curb these deals, it will never move in the house it's dead in the house, so the real focus for the investigators becomes the tres treasury department. could trish are you issue treasury issue deals to curb these deals, i think there is a growing chance they will do it. >> it's unseemly, doesn't seem to be operating in one's national interest. when a company does this . it's clearly not ill. how do democrats make it in to an issue about the voters. >> it rhetoric will get really harsh. treasury secretary has already said it's unpatriotic. the president said about the same thing, with a franchise as you say as iconic as burger king there will be a lot of very harsh bashing the burger king over the next few weeks. i think that might at the margin men some democrats, this is a party that really needs issues, because they are not looking so hot for the november election. so this might help them in a few races. >> there has actually been a lot of inversion going on but mostly involving companies people haven't heard about. this is a big one. >> right. >> walgreen's came out and said it's not going to undergo an inversion. >> right. >> was that because they were worried about the backlash? that somebody can go cvs or rite aid or something else? >> i think it's a factor, they were based in illinois and walgreen's had heard in dick durban that life could get uncome art football for walgreen and they backs off. obviously burger king thinks that they can withstand the bad publicity ty and i think the deal probably will go through. here is the other thing, we only have a few months to go before the treasury department regulations might take effect. >> right. >> ironically instead of curbing deals you could see a flood of deals in the next few weeks as companies trying to get in under the wire. >> bad for investors when deals get rushed through for the wrong reasons, i will tell you burger king is not like mcdonald's people hold their stock in their 401k. burger king has been owns by nonamerican owners for sometime. it was a privately held company, now back to a public company. it does have the iconic culture of mcdonald action, ford and g.m. a not sure their owners care. >> maybe not. but the democrats will latch onto any issue they can get and they have really good french fries. >> good point. greg, always a pressure to talk to you, aiyegbeni the chief political strategist at potomac research join me from washington. there is a knew development in the family feud engulfing nenew england supermarket market basket arthur the ceo ousted earlier this summer has offered one 1/2 billion dollars to buyout the portion of the company owned by his rival cousin arthur s. >> such a mouth would put arthur t. back in management the extent of his role is up in air. a meeting was supposed to happen saturday night but it was called off. both sides of the family after they couldn't agree on the terms of the sales. okay, poor credit. no problem. while that sounds like a used car commercial, it's also the truth about buying a car in america right now. i'll look at what could be the dark side of that reality coming up. plus how a stalled economy has led to a big shake up in france. >> on techknow... >> so, this is the smart home... >> saving the environment >> the start point for energy efficiency, is to work with the sun... >> saving you money >> we harvest a lot of free energy >> and so we're completely off grid here >> how many of the appliances were almost a little too smart for us? >> techknow every saturday, go where science, meets humanity. >> this is some of the best driving i've ever done, even though i can't see. >>techknow >> we're here in the vortex... only on al jazeera america >> start with one issue education... gun control... the gap between rich and poor... job creation... climate change... tax policy... the economy... iran... healthcare... ad guests on all sides of the debate. >> this is a right we should all have... >> 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those institutions, banks, credit unions, auto dealerships have lately been making a record number of auto loan to his subprime borrowers, subprime borrowers in case you have forgotten are consumers with credit scores or 640 or under out of a possible score of 850. in fact, subprime lending now accounts for a whopping 32% of all car loans. representing an outstanding balance of $46 billion that is an eight-year high according to ex-what fashion the credit reporting company, some critics say if you look under the hood of all those car loan loans you'll see trouble they are create a financial bubble similar to the mortgage bubble that precipitated the financial crisis back in 2008. we ale know how that turned out w mim. with me to discuss is amy the cheer economist from she was examined the data and she says that the traditional characteristics chas of a bubble are are not present. good to have you here, here is my issue. the traditional characteristics of a bubble were not necessarily present before the last time we had a real estate bubble. so the day before it becomes a problem it didn't look like a problem. because we thought the value was there, people were okay, they were making their loans. why does this make you not worry? >> well, one of the big characteristics ali that i think differentiates here is people buy a car knowing that the values will depreciate. >> uh-huh. >> we bought houses because we couldn't lose in real estate. prices could only go up as they had forever. so i think that's a very salient part of that. another part of that is the average age of cars today on the road is going, it's 11.4 years currently. and it wasn't all that long ago when the average age was under eight years. so when we think about what's happening to houses and cars and the demands for cars, we have -- went on a car-buying bust for a long time during this great recession, people are finally getting around to replacing those cars and there is real demand for this asset as opposed to the housing thing where people were trying to flip it and make a profit. >> you are not buying a car on a loan to resell it at a higher price ever. here is the interesting thing, though. we have seen record car sales in the last few months even as retailers struggle and we are not sure where the economy is going. if you were a marshawn and just judging by the auto sales market you would think the economy is on fire, is that because of the pent-up demand for cars or is it because cred sit easier to come by in ? >> i think it's mostly the pent-up demand. i don't think we are at record high in car sales we are at rekept highs, we sold 17 million units a year for a decade leading up to 2004, looking at maybe 16.4 million units this year, you are right that it's really risen sharp ly but it's driven really boo the need for new cars on the road as those cars we are driving are turning in to gentleman lop is and starting to fall apart on u us. >> in the subprime market you can get loans for up to seven years long, average financing higher by about a thousand dollars than a year ago. $27,600. is credit too easy? what is to easy. what is the right level at which people should qualify for a loan to buy a car? >> the did he have is always in the details, but one thing that shows up in our data is because people with credit scores at the higher end of the credit scale are getting those loaned, 620 to 640, that's where it's concentrated and grown from 40% to 60% of the market share so we are seeing more and more loans going to the better end of the subprime spectrum and that's shifting that out. they get bigger loans than the guys with the small credit scores. >> your research is based on the fact that you have studied the people getting the loans and you are saying they are likely to continue to pay their balances. >> i think that they will be consistent, yes, with what we know to be true of folks with those kind of credit scores, i don't see any reason why they would be expected not to perform well in the next several years, given what we have seen already. >> what's the good side to all of this? this is people who are so subprime that some nba some case that his they have been out of any other borrowing market, does this ever help them, does the car loan help them build up cred snit. >> i think it does absolutely. you make your on time payments with your car, maybe that allows to you keep the job you have gotten you make the on-time payment and your credit score is likely to rise, could even rise to be classified at pure private some point in the future. importantly, we can't under estimate how hard it is to get to work when you don't have a car. america is a car place. >> amy, good conversation. thank you for joining us, came i is the chief cone mist at he can what fashion. the snp500 hit a historic milestone today, crossing the 2,000 mark during the trading day but failed it hold onto it by market close, close at 1997 for those of you that follow it, that's still a gain of half a% for the day that's pretty good. the snp him i object i mimic s. as it's a name suggests the snp tracks 500 stocks while the dow tracks only 30. so far the s. and p has gained 8% for the year, but up 195% . of the low in 2009, making for a five-year bull run in stocks, if you want more proof of the bull run being look at what apple did. apple stock rawlied to another all-time high of 151 a share today. you may be used to hearing apple stock quoted in the hundreds of dollars but the computer and gadgets giant completed a 7 for 1 stock split so trust me when i say crossing 100 is big news to apple. its return to record prices is being fueled in part by high hopes for two new products. the new iphone six and the upcoming i watch. coming up the economic pressure there caused the french government to quit. plus forget going to a mile high ale take you to an airport where the real opportunity might be a mile underground remember >> al jazeera america 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believe what just happened. >> this is life >> i'm just gonna prove my family wrong. >> "on the edge eighteen" only on al jazeera america >> i'm joie chen, i'm the host of america tonight, we're revolutionary because we're going back to doing best of storytelling. we have an ouportunity to really reach out and really talk to voices that we haven't heard before... i think al jazeera america is a watershed moment for american journalism we are big news of europe today. french president francois ohlund dissolved his government and ordered his prime minister to form a new one that after reports of clashes in his cabinet over check austerity measures that are really starting to hurt. both germany and the european union are pushing france to get their finances in order. butt spending cuts and tax hikes that owe lands has e enact the e unpopular. france's gross flat lined. germany didn't do any better. germany's economic whoas are so dire that many people think that austerity had run its course, i talked about that today to the chief advice tore a financial services firm and the chair of the president's global development council. this is what he told me. for more i am joined from irvine cal by the chief economic advice fore financial services firm alliance se and chair of the president's global development council. good to have you here, through for being with us. >> thank you, amie. >> mohamed, the french government dissolved monday after the country's economic minister resigned insisting that austerity measures had gone too far, not much to think about the austerity measures which they didn't implement. but what does it tell us about policies across europe, do they have staying power or have they run their course? >> france and europe more gem is searching desperately for a growth model. and in the absence of a growth model, the resistence to austerity has increased. so basically whether it's france, whether it's the president of the european central bank said on friday, europe desperately needs a new approach to promoting growth and reducing unemployment. >> the problem, though, that we have zeina cross our enough most case is his slowing economies. i am worried about how worried we should be about those weakenless economies, we have recent developments in germany as well. the economic powerhouse appears to be weakening, where would this growth in europe come from? >> first we should really worry and as you point out, germany has also slowed, so the locomotive has slowed. in fact, if if you look at the second quarter not only did europe as a whole stalker but the three largest economies showed significant weakness, so we should worry. about where does it come from, it comes from three sources if you want to grow. first some structure reforms to improve competitiveness. secondly, more action by the european central bank. and then thirdly, you need to rebalance aggregate demand which is another way of saying that where there is a will to spend, there isn't the wol you want and where there is the wallet there isn't the will and what you need to on is combine both and europe can do that. >> let talk about europe again, you didn't mention energy, when we talk about america and growth we talk about energy. europe has this problem on its doorstep and that is her russia. they ever take an i more aggressive stance than they had in june and july. but the bottom line is as the winter months approach, russia still controls europe's natural gas or at least 30% of it, 40% of it. what does europe did to get more aggressive with russia given its dependence on russian energy? >> so soup in a difficult europe is in a difficult situation, they have to counter russian aggression and it has tried to do that through sanctions, on the other hand, the more it implements sanctions the more it risk says counselor sanctions in fact russia has moved to implement counter sanctions if this continues ultimately down the road russia can disrupt the ply of energy to you are up and that would unambiguously tip both russia but europe in to recession, so this is a lose-lose situation . it's yet another reason why people are worried about the economy in europe. >> should we be worried about that in america. >> yes, we could, it is a big trading partner and the biggest economic ring none the world. i tell people that you cannot be a good house in a did he tear youdeterioratingneighborhood. >> the s & p500 hit an all-time record today, above 2,000 for the first time ever. if you look at it it's up more than 35% since the beginning of 2013. some people are warning the market is overheated. the other argument is much of the stock market run is investors brushing off many major world events because interest rates are low and stocks are the only game in town, what do you think? >> both arguments of right let me explain. amazing resilience on the part of the stock market. that resilience has shown itself in the ability to brush off, as you say, economic weakness, geopolitical shocks and do it repeatedly. now, why is the market so confident in brushing off these things? for two reasons, one, the markets believe and have been conditions to believe, ali, that the central banks are their best friends, so the central banks will be there if ever markets come under pressure. not because central banks love markets because that's the only way they can get to their ultimate economic objective. that's the first reason, the second reason is there is a ton of money come income to the stock market. individuals who are under invested but importantly companies with massive piles of cash are now putting their money to work. through higher did did he want paints and shared by backed and activity that his often boost the price of the acquired firm well beyond what is justified by fundamentals. so investors feel confident for now to brush off all the bad if you want. little because i have the two very strong attributes in their pocket. >> always a pressure to talk to you, thank you, sir. mohamed is the chief economic ahead vicar atta lines sc. >> thank you. >> and you can see more of my conversation tonight on "consider this." all week long i am filling in for antonio month are, a 10:00 p.m. eastern, 7:00 p.m. pacific, coming up fracking for natural gas under the runway of a major airport. plus potential profits puddled on the floor after the napa earthquake. >> aljazeera america presents >> the killing of journalist is a question directed to society >> they are impartial... >> if you wanted to be a good journalist in iraq, you have to risk your life... >> they observe. and report... >> kidnapping is a very real problem... >> journalists on the front lines... >> sometimes that means risking death >> getting the story, no matter what it takes >> that's what the forth estate is all about... that's why i'm risking my life... >> killing the messenger on al jazeera america america is the middle of afternoon energy boom that many predict will last for decades, according to the department of energy, natural gas production will rise by 56% between 2012 and 2040. that spike will be due in part to advances in technology. new drilling techniques will allow company to his accessory serves that were once out of reach. some of them in some pretty surprising places. david shuster has the story . >> this may look like your normal airport but pittsburgh international is anything but normal think situated within the mineral rich shale formation the airport is practically floating atop a fortunate of natural gas reserves earlier this year allegheny county signed an open-ended lease with console energy to drill for natural gas on airport ground the county expect to collect a half billion dollars over the next 20 years, that's about 25 million a year. rich fitzgerald is executive of allegheny county which owns the airport. >> they are going to spends about $500 million in building out the infrastructure needed for the airport property. the drilling, the pipe work, the engineering, the excavation, et cetera, when you add that to the royalties, we have a billion dollars deal, a billion dollars development without any tax dollars going in to it. it's a pretty much a win-win for the community. >> that deal could not have come at a better time. a 1987 pittsburgh international made a billion dollars gamble of its own, partnerin partnering wr honor air opartnering with u.s.o handle 30,000 passenger a he a year but it piqued at 20,000. and u.s. air rebranded as u.s. airways filed for bankruptcy the next year the airline broke its lease, leaving airport officials holding the bag. >> what it meant was we didn't have the money coming in from all of airline operations to pay off the debt of our airport. this is a source of revenue from the extraction of the natural gas. that will help pay down that debt. >> console officially broke ground on its first drilling site monday, located just outside the airport fence, it will bore more than a mile deep to extract the natural gas it, can even drill horizontally sucking up deposits from beneath ago aactive runways airport offs say it's safe with all flights and runways operate as usual. despite the use of a controversial method calling hydraulic fracturing or track, it faced little opposition from the local community. it may have helped that pittsburgh is not the first effort to double as a fracking site. both denver international and airport and dallas fort worth of home to dozens of wells, they have been for years. but each operation brings in less than $10 million a year. a drop in the bucket compared to pittsburgh's annual $25 million windfall, in addition to paying off its debt, pittsburgh international plans to invest some of its new found riches back in to the airport. it's goal to a track more airlines with lower costs. but with the natural gas deal under it's belt the airport hopes diversify even more. >> of those 9,000 acres that we own out at the airport we are developing those for commercial development, office space, research and development, distribution center, and we are able to use that money to build out infrastructure creating jobs for the residents of this regis. >> david shoe steer, al jazerra. >> fracking, especially under an active run a may be one of the more eye-popping examples of airport disverse indication but it is a trends happening across the country, airports are putting their assets to use with business opportunities well outside the aviation industry. at chicago's o'hare international airport there is everybody 7500 beehives with over a million bees, mike is president of a global kilting firm that helps planning for their needs think he said i disverse identify port mol idenl crows makes portfoliomakes sense, they are g some land to shell oil what are they doing there ? >> air worse have longed serve for other things . oil field equipment, energy equipment has been a significant portion of that . up don't ship things by air until they justify the additional costs the it's the most expensive short of shipping. oil freed is a bread and butt irrelevant commodity. pharmaceuticals are another one a lot of airports are looking to bringing in . listening to the lead in, pittsburgh is not your typical airport they have tough times with the u.s. airways hub close but it's not a model that can be replicated too many times because not everybody is sitting on a shell verve like that. >> if you can't lease on the your land to shale, what are other airports partnering to do? >> well, sure i can mentioned earlier pharmaceuticals that he's particularly hot one right now. what is happened and u.s. airways at pittsburgh say great example, but there are many of them. there were a lot of carriers that you used to see a lot of planes for including cargo carriers that within out of business, what happen is airports have different prospects. they are having to go after the demands drivers the folks putting the cargo on the belly of the planes and pharmaceuticals has shown a lot of, you know, durability to it. so what you are started to go see now, is maybe some of the pharmaceutical producers as bell as things like organ banks, things like that that are very time sensitive and a lot less con kicost conscious, refrigerated facilities are looking to pharmaceuticals and organ banks, things like that. >> is there any benefit for fliers and residents around the airport to this diversification? >> there is a derived benefit. certainly in an extraordinary case like pittsburgh, where they went from 20 million passengers a year down to 8 million, airports operate in a closed funding loop. any money they can raise on the revenue side allows them to decrease the cost to the airlines, so these types of nonaeronautical revenues that increase the revenue side of the ledger do allow them to potentially lower their costs in materials of, i know, rents for the passengers terminology gates and landing fees for the aircraft as well. so in that sense it makes one airport more competitive against another one. and so in that sense for the local flyer it certainly does. >> michael, good to talk to you, great conversation, michael weber president of weber air cargo. sunday's earthquake was a wake up call for wineries. i will look in investing in an earthquake protection system coming up. >> weekday mornings on al jazeera america >> we do have breaking news this morning... >> start your day with in depth coverage from around the world. first hand reporting from across the country and real news keeping you up to date. the big stories of the day, from around the world... >> these people need help, this is were the worst of the attack took place... >> and throughout the morning, get a global perspective on the news... >> the life of doha... >> this is the international news hour... >> an informed look on the night's events, a smarter start to your day. mornings on al jazeera america >> start with one issue education... gun control... the gap between rich and poor... job creation... climate change... tax policy... the economy... iran... healthcare... ad guests on all sides of the debate. >> this is a right we should all have... >> it's just the way it is... >> there's something seriously wrong... >> there's been acrimony... >> the conservative ideal... >> it's an urgent need... and a host willing to ask the tough questions >> how do you explain it to yourself? and you'll get... the inside story ray suarez hosts inside story weekdays at 5 eastern only on al jazeera america the heart of carl's wine country, napa valley is trying to get back on its feet after sunday's earthquake even as aftershocks continue to shake the area. in the city of nap arc the historic downtown district sustained damage in the magnitude 6.0 quack, the towards hit the san francisco bay area if a quarter century. more than 170 people were hurt, three of them critically. napa valley's wineries took it on the chin, thousands of barrels and fragile bottles of wine were damaged leaching profits to bleed out onto the floor at a time when severe drought is already taking a toll. estimates of financial losses from this weekend's quake are expected to run between 500 million a billion dollars. the area's wineries and tourist vendors taking stock of the damage now. the wine industry is a huge engine no for the local economy being employing some 46,000 workers generating $14 billion a year from wine sales and tourism. the ring sun home to 700 grape growers and 430 wineries, jake ward joins us now from napa. jake, good to see you. how is the situation there and how is the clean upcoming? >> reporter: well, he just got extremely lucky, amie. we arali.we are here in downtowc nap i which was the hardest plate hit this is where old and new come together. i mean that literally. this is the old classic brick, here is the new brick, because these two materials vibrate at different frequencies that so many of these buildings came apart. if you look behind me here, there is tremendous damage to this historic building because particularly the old brick peeled away from the steel retrofit that go you see in the building throughout the don't area, that's why we are seeing it here. so but in the end, no loss of life, the roadway is still working. emergency services could get in. we didn't lose water so it really all worked out. california dodged a bull net this case. >> but you folks in california always think about this. worry about it. is there a plan for what happens when you don't duck a bullet? >> reporter: that says the thing that everybody is thinking about right now. as you mentioned as much as a billion dollars in economic losses in just the restaurant alone, in an area that contributes $13 billion to the california economy, so now we are trying to think what if this had happened in do you want san francisco, what if it had taken silicon valley off line, $176 billion contributed to the economy from there. now we are talking earthquake preparation systems, right now a prototype system in development at u.c. berk that i happens to be hooked up to the bart system as an experiment it worked it gave a 10-second warning but there is no money right now for this. it would cost $100 million, they want to make it law, but nobody has moved for it. it's hard to invest in something like that. >> something you said caught my attention, a 10-second warning makes a big difference? >> yeah, a huge difference, if you look down the street. any one of these storefronts would have been packed with people on the day in question. but instead, the earthquake happened at 3:20 a.m. and so, you know, the idea here that you would give people 10 seconds to step not middle of the street, right, 10 seconds for a dentist to take a drill out of somebody's mouth. and 10 seconds in this case for the local train system to slow trains that are going too fast that warning would be invaluable and yet there isn't currently mon knit state budge feed a system that otherwise californians now all agree they could really benefit from. >> those decision are often quite political. so they'll need to rethink whether or not they do that. tell me, jake, you are a scientific mind you think about these things very clinically. did you feel it? were you around it when it happened? >> oh, man, nothing will make you abandon your rational mind like being woken by a 6.0 in the middle of the night. my wife and i are used to earthquakes, you know, we are bay area residents it usually feels like a truck has backed in to your now a second. this went on and onside by side rocking we were reaching for each other in bed because it's so out of control. that moment of pan sick there and then pretty quickly you think, okay, where are the kids, where are the emergency system, where is the disaster kid those thoughts come back but nothing will rob you of your rational mind like an earthquake. >> that's remarkable. great report on the ground it, jake and i am glad you and yours are safe. of course we have to remember that several people were injured, more than 100 people injured. three of them critically our thoughtourthoughts are with the. a surprising twist in the tech industry, amazon confirmed it's buying the video game streaming platform twitch for fool a billion dollars. this is an interesting twist or twitch i guess, just a month ago reports swirled that google was purchase twitch to help shore up it's a youtube platform you are probably sitting there saying what's a twitch. than 55 million users each month who are good for the picking for advertise that's want to reach them. youtube commands relatively low advertising rates but could have presumably profited from these new users but neither google nor twitch confirmed the deal which reportedly soured over some antitrust concerns. now it looks like google's loss is amazon's gain. and this time it's actually official. here is the problem, america's energy boom has created a glut of natural gas, not to worry they are working on a solution. coming up tomorrow, aim going to tell you how the u.s. is about to take one of its biggest steps yet in joining the ranks of top energy exporters like qatar and saudi arabia. that's tomorrow 7:00 eastern, 4:00 pacific right here on arsenaaljazerra america. earlier tonight we talked about the economic social and racial divide that is widened in places like ferguson, missouri. the uproar over the shooting death of 18-year-old michael brown has brought those divisions to the fore, the divide between blacks and whites in americas suburbs has been decades in the making. african americans in the inner-city started leaving for nearby suburbs in large numbers by the 1980s. the pace of that migration picked up as federal government programs offered many phenomenallies vouchers to subis a described the cost of moving. at the time they were seen as a good way to move people out of crowded and sometimes dangerous public housing projects, after can american family who his took advantage of the vouchers saw them as a way to improve their lives, but as we have seen, it didn't always work out that way. instead, the rapid demographic changes to communities like ferguson created pockets of concentrated poverty. and as we have learned, concentrated poverty affects the larger environment. it's been harder for african american to his purchase their homes and invest more in the communities that they live in for very real structural reasons and local city councils have been ill equipped to deal with the issues because the small tax base that his suburbs provide can't possibly fund the services that big cities tend to have, as we have seen in ferguson, new come verse been slow to break in to local politics and demands a bigger piece of the pie. the majority of ferguson's residents today are african american, more than 70%. but they have virtually no presence in the city council and on the local police force, a circumstance that they alone can play a role in change think . ferguson's story isn't unique it's been repeated all around the county, to him we will take to you some of those towns. that's our show for today. i am al see velshi, thank you for joining us. the u.s. starts surveillance flights over syria to gather inning del jenks on the islamic state group. ♪ ♪ we are live from doha. also to come on the program. the united arab emirates and egypt be condemned for carrying out air strikes against anti-government factions in libya. >> reporter: i am jane ferguson in the gads strip where at least two tall buildings have been brought down by israeli air strikes. political shake up in france, the cabinet resigns
♪ this is "real money" you are the most important part of the show, tell me what's i don't on your mind by tweeting me or hit me up on facebook.com/al seevelshi. thousands mourners were at michael brown's tune ram. thousands were there to commemorate the young man's life. the african american teen was shot dead two weeks ago by a white policeman in ferguson, missouri as we all now know, his death sparked days of angry protests and violence in that community. drawing attention to a raw, racial divide in this country. brown was unarmed when he was shot and a local grand jury has convened to consider criminal charges in the case. there is also a federal investigation under way, but the events in ferguson highlight a widening economic divide between blacks and whites in america's suburbs. now, nationally the number of suburban poor living in distressed neighborhoods grew 139% between 2000 and 2012. that's almost three times as fast as the pace of growth of concentrated poverty within cities. this is suburban. according to census numbers crunched by the brookings institution, suburbs in the largest metro areas are now home to 3 million more poor people than the large cities that anchor them. and african americans make up a disproportion al number of those poor, a study published last year by brandeis university concluded that the wealth gap between blacks and whites is just getting wider. the bleak economic reality for blacks is ferguson is similar across the countries richie disturbing trend tracked by brandeis university showed that over the past 25 years the gap between the value of what black and white households own has nearly tripled. from $85,000 in 1984, to $236,500 in 2009. the largest factor driving that divide is homeownership. 43 and a half percent of blacks own a home, compared to 72.9% of whites. and because it sometimes is easier for white to his get financing, they are able to buy homes an average of eight years earlier than african americans. even after they purchase a home, housing prices in nonwhite neighborhoods tend to rice more slowly. contributing to the growing gap, higher unemployment for black it's 11.4%, for whites 5.3%. add lower income to the eye characters might young household income for blacks is 35 their $416 fork whites $59,754. and the wealth gap continues for the next generation. 80% of black students graduate with debt, compared to 64% of whites. well, joining us now is thomas shapiro eco authored brandeis' study. explaining the black-white economic divide. authors conclude the wealth gap doesn't just hamper americans but growth for the entire country . thank you so much for joining us. >> great to be here, thank you. you study aid group of 2500 people and went over 25 years and included ferguson, missouri. you feel the biggest part of the wealth gap between whiles and blacks and that's the total value of all of their as second the biggest part of that comes from housing. >> it absolutely does for most american family what that he own in their home, the equity of the value of their home is two-thirds of their entire wealth. that's how important homeownership is in terms of generating wealth for american families. it wasn't totally surprising in looking at this group of people over 25 years, and understanding that our question was really about how does a racial wealth gap grow in real dollar terms from 85,000 in 1984 to $236,000.20 knife year $236,000 25 years later. >> dynamics around homeownership by far is the largest driver of the difference in wealth creation for whites and african american families. accounting for about 27% of the difference of that growth of the racial wealth gap, it's huge. >> and the housing situation, a place like ferguson would mirror the national picture? >> well, i think it does. and the housing situation in ferguson actually brings in a bunch of other dynamics. so in the 1990 census, ferguson was about 75% white and about 25% african american. 20 years later, in the 2010 census that's totally flipped. so now the african american population of ferguson is about a little over 70%, the white population is about 25% or so. in 20 years, that's an incredible flip of a community. and what we see when communities go through periods of rapid transition like that, the home values don't keep pace at all. and in fact, it's very fertile ground for, and ferguson was, for predatory lending. the predatory lending schemes of the financial industry and the insurance industry, was laid right on top. so just one quick fact here, right before the housing foreclosure crisis in 2006, the median home price in ferguson was $110,000. now that's -- ferguson is a lower middle class modest community lot of single family homes. >> right. >> and now the median home price in ferguson, after the foreclosure crisis is about $60,000. so there was a 40% drop in the wealth that homes could possibly create for people. and that was laid not coincidentally, right on top of the racial and ethnic transition that community. >> and you talked about predatory lending. in african american minority communities in general, h you hd the combined factors the predatory lending of people with lower credit scores and red lining, the idea that you would pay a higher interest rate even if your credit score was the same as somebody that was not a minority group. has that sort of practice stopped? is that -- that must have been a contributor as well. >> well, i think that's a great insight. when we start to look at the data is that communities that were in transition or communities that are nonmajority white by a large percentage, those are exactly the kind of places where predatory lending was most prominent. so we have data, they are studies not done by us, but by other institution that his show when you sends people in you phone i up a resumes about home lending when the exact same credit score and resume, and a white couple walks in, they tend to be bumped -- they tended to be bumped up to prime rate. where an african american or family of color were offered the subprime loan that often had predatory terms with it. >> that's, of course, hard to track whether that still continues, it's supposed to not be happening today. let me ask you this, something very interesting came out of your study. african american families, for a reason that you'll explain to me, take eight years longer to acquire a home. they get in to homeownership eight years later. but the length of time somebody owns a home is a real determinate in their overall wealth in the end because if they buy it early it's appreciating and they are gaining wealth. so one of the biggest factors is the difference in the lengths of time that whites own homes versus blacks. >> that's absolutely right. so what our date is showed us in following the same set of families again for 25 years, the number of years that a family owned a home was key to the dynamics around homeownership. if you think of it a omahas a lot of uses and i wouldn't suggest us treating it like a stock, but in metaphorical terms, if you buy a stock eight years earlier, chances are you right out the bumps, the ups and downs and your capital gains at the end of that period is probably going to be better than the individual or family that bought it eight years later. so african americans on average buy their first home about eight years later in their life course. and the reasons for that have to do with family support and inheritance, the ability, the fortunate ability of some families to lend a down payment money to their newlywed offspring. and that provides them a great head start in life. now, those families are great -- are fortunate, but we also have to look and ask the question, in racial and ethnic terms which set of families and which groups have much more opportunity and access to that. and that's where we get the idea that african americans buy their first homes about eight years later in the life course. giving them an 8-year less window to accumulate home he can wit. >> i and. , that end up delaying their ability to pass that on or reducing the amount that they can pass onto the next generation. what an interesting and thoughtful conversation. thomas shapiro the director of the institution on assets and social policy at brandeis university. all right, coming up, the deal that could bring together burger king's whop he were and tim horton's coffee. though the real reason for a merger probably has nothing to do with fast food. plus why it's so easy to get a loan to buy a car these days and why that might be something for you to worry about. those stories and more as "real money" continues, keep it here. >> on techknow... >> so, this is the smart home... >> saving the environment >> the start point for energy efficiency, is to work with the sun... >> saving you money >> we harvest a lot of free energy >> and so we're completely off grid here >> how many of the appliances were 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lower corporate tax rate. these so-called tax inversions have become a hot bit unpoliticallish new washington. president obama has called on congress to pass legislation that would make it more painful for u.s. firm to his quit america . u.s. corporate tax rate currently about 35%, though most companies pay an effective tax rate that is much lower than that . because this deal involves an iconic firm burger king, a quote, debt desperate democratic group might have found what it means. greg has spent 30 years covering capital hills to inning tigersal investors making sense of what they are dork which has become a harder and harder job, 30 years ago it was easier to find sense on capitol hill. i was watching another tv indications that will remain nameless but that is the initials cnbc where they were arguing this isn't about tax inversion, this is just a merge are of two companies, why would a company with 13,000 stores an american icon base million dollars miami want to merge with a smaller company, although one that's worth almost as much in market cap based in toronto and movies a head quarterrers to canada. i see no other reason other than inversion why this would be taking place . >> of course not. good to he into you, ali. when you were growing up i bet you didn't think canada was a tax haven, but sure enough. burger king things it can make more, pay less, and i understand that they have a respond to their share shoulders maximize their earnings, but at the same time, this exposes a really serious issue and that his that is the inability for congress to get together on tax reform. and we'll probably see more things like. >> president obama has asked dong make it hard ore these companies. the possibly, more logical, but much harder solution would be as you say comprehensive tax reform. that's something that both democrats and republicans will tell you is necessary but i have a, did you know, a burger in one hand and a coffee in the other hands and i am not even sure we can get democrats and be republican to his agree that's the case. >> these for sure. some will move in september in the senate to try to pass something to curb these deals, it will never move in the house it's dead in the house, so the real focus for the investigators becomes the tres treasury department. could trish are you issue treasury issue deals to curb these deals, i think there is a growing chance they will do it. >> it's unseemly, doesn't seem to be operating in one's national interest. when a company does this . it's clearly not ill. how do democrats make it in to an issue about the voters. >> it rhetoric will get really harsh. treasury secretary has already said it's unpatriotic. the president said about the same thing, with a franchise as you say as iconic as burger king there will be a lot of very harsh bashing the burger king over the next few weeks. i think that might at the margin men some democrats, this is a party that really needs issues, because they are not looking so hot for the november election. so this might help them in a few races. >> there has actually been a lot of inversion going on but mostly involving companies people haven't heard about. this is a big one. >> right. >> walgreen's came out and said it's not going to undergo an inversion. >> right. >> was that because they were worried about the backlash? that somebody can go cvs or rite aid or something else? >> i think it's a factor, they were based in illinois and walgreen's had heard in dick durban that life could get uncome art football for walgreen and they backs off. obviously burger king thinks that they can withstand the bad publicity ty and i think the deal probably will go through. here is the other thing, we only have a few months to go before the treasury department regulations might take effect. >> right. >> ironically instead of curbing deals you could see a flood of deals in the next few weeks as companies trying to get in under the wire. >> bad for investors when deals get rushed through for the wrong reasons, i will tell you burger king is not like mcdonald's people hold their stock in their 401k. burger king has been owns by nonamerican owners for sometime. it was a privately held company, now back to a public company. it does have the iconic culture of mcdonald action, ford and g.m. a not sure their owners care. >> maybe not. but the democrats will latch onto any issue they can get and they have really good french fries. >> good point. greg, always a pressure to talk to you, aiyegbeni the chief political strategist at potomac research join me from washington. there is a knew development in the family feud engulfing nenew england supermarket market basket arthur the ceo ousted earlier this summer has offered one 1/2 billion dollars to buyout the portion of the company owned by his rival cousin arthur s. >> such a mouth would put arthur t. back in management the extent of his role is up in air. a meeting was supposed to happen saturday night but it was called off. both sides of the family after they couldn't agree on the terms of the sales. okay, poor credit. no problem. while that sounds like a used car commercial, it's also the truth about buying a car in america right now. i'll look at what could be the dark side of that reality coming up. plus how a stalled economy has led to a big shake up in france. >> al jazeera america presents... labor day marathons >> our government is allowing an invasion >> our most acclaimed series.... back to back to back... toughest place... >> i call that a lot of hard work for next to nothing >> the system... >> a justice system run by human beings can run off the rails >> and borderland... >> a lot aof people haven't got a clue what goes on near the border >> al jazeera america presents labor day marathons >> this is not over... >> start with one issue education... gun control... the gap between rich and poor... job creation... climate change... tax policy... the economy... 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put down? credit isn't that great? boy, i have ideal for you or rather america's financial institutions have ideal for you. those institutions, banks, credit unions, auto dealerships have lately been making a record number of auto loan to his subprime borrowers, subprime borrowers in case you have forgotten are consumers with credit scores or 640 or under out of a possible score of 850. in fact, subprime lending now accounts for a whopping 32% of all car loans. representing an outstanding balance of $46 billion that is an eight-year high according to ex-what fashion the credit reporting company, some critics say if you look under the hood of all those car loan loans you'll see trouble they are create a financial bubble similar to the mortgage bubble that precipitated the financial crisis back in 2008. we ale know how that turned out w mim. with me to discuss is amy the cheer economist from she was examined the data and she says that the traditional characteristics chas of a bubble are are not present. good to have you here, here is my issue. the traditional characteristics of a bubble were not necessarily present before the last time we had a real estate bubble. so the day before it becomes a problem it didn't look like a problem. because we thought the value was there, people were okay, they were making their loans. why does this make you not worry? >> well, one of the big characteristics ali that i think differentiates here is people buy a car knowing that the values will depreciate. >> uh-huh. >> we bought houses because we couldn't lose in real estate. prices could only go up as they had forever. so i think that's a very salient part of that. another part of that is the average age of cars today on the road is going, it's 11.4 years currently. and it wasn't all that long ago when the average age was under eight years. so when we think about what's happening to houses and cars and the demands for cars, we have -- went on a car-buying bust for a long time during this great recession, people are finally getting around to replacing those cars and there is real demand for this asset as opposed to the housing thing where people were trying to flip it and make a profit. >> you are not buying a car on a loan to resell it at a higher price ever. here is the interesting thing, though. we have seen record car sales in the last few months even as retailers struggle and we are not sure where the economy is going. if you were a marshawn and just judging by the auto sales market you would think the economy is on fire, is that because of the pent-up demand for cars or is it because cred sit easier to come by in ? >> i think it's mostly the pent-up demand. i don't think we are at record high in car sales we are at rekept highs, we sold 17 million units a year for a decade leading up to 2004, looking at maybe 16.4 million units this year, you are right that it's really risen sharp ly but it's driven really boo the need for new cars on the road as those cars we are driving are turning in to gentleman lop is and starting to fall apart on u us. >> in the subprime market you can get loans for up to seven years long, average financing higher by about a thousand dollars than a year ago. $27,600. is credit too easy? what is to easy. what is the right level at which people should qualify for a loan to buy a car? >> the did he have is always in the details, but one thing that shows up in our data is because people with credit scores at the higher end of the credit scale are getting those loaned, 620 to 640, that's where it's concentrated and grown from 40% to 60% of the market share so we are seeing more and more loans going to the better end of the subprime spectrum and that's shifting that out. they get bigger loans than the guys with the small credit scores. >> your research is based on the fact that you have studied the people getting the loans and you are saying they are likely to continue to pay their balances. >> i think that they will be consistent, yes, with what we know to be true of folks with those kind of credit scores, i don't see any reason why they would be expected not to perform well in the next several years, given what we have seen already. >> what's the good side to all of this? this is people who are so subprime that some nba some case that his they have been out of any other borrowing market, does this ever help them, does the car loan help them build up cred snit. >> i think it does absolutely. you make your on time payments with your car, maybe that allows to you keep the job you have gotten you make the on-time payment and your credit score is likely to rise, could even rise to be classified at pure private some point in the future. importantly, we can't under estimate how hard it is to get to work when you don't have a car. america is a car place. >> amy, good conversation. thank you for joining us, came i is the chief cone mist at he can what fashion. the snp500 hit a historic milestone today, crossing the 2,000 mark during the trading day but failed it hold onto it by market close, close at 1997 for those of you that follow it, that's still a gain of half a% for the day that's pretty good. the snp him i object i mimic s. as it's a name suggests the snp tracks 500 stocks while the dow tracks only 30. so far the s. and p has gained 8% for the year, but up 195% . of the low in 2009, making for a five-year bull run in stocks, if you want more proof of the bull run being look at what apple did. apple stock rawlied to another all-time high of 151 a share today. you may be used to hearing apple stock quoted in the hundreds of dollars but the computer and gadgets giant completed a 7 for 1 stock split so trust me when i say crossing 100 is big news to apple. its return to record prices is being fueled in part by high hopes for two new products. the new iphone six and the upcoming i watch. coming up the economic pressure there caused the french government to quit. plus forget going to a mile high ale take you to an airport where the real opportunity might be a mile underground remember >> fault lines labor day marathon the true cost of cheap labor >> nothing can be worse than this people burnt to ash... >> horrendous conditions... traffic labor on us bases... management stealing wages... exploited children put to work... >> how many of you get up at 4 or 5 o'clock in the morning to go out to the fields? don't miss our award winning series fault lines labor day marathon only on al jazeera america >> start with one issue education... gun control... the gap between rich and poor... job creation... climate change... tax policy... the economy... iran... healthcare... ad guests on all sides of the debate. >> this is a right we should all have... >> it's just the way it is... >> there's something seriously wrong... >> there's been acrimony... >> the conservative ideal... >> it's an urgent need... and a host willing to ask the tough questions >> how do you explain it to yourself? and you'll get... the inside story ray suarez hosts inside story weekdays at 5 eastern only on al jazeera america >> i'm joie chen, i'm the host of america tonight, we're revolutionary because we're going back to doing best of storytelling. we have an ouportunity to really reach out and really talk to voices that we haven't heard before... i think al jazeera america is a watershed moment for american journalism we are big news of europe today. french president francois ohlund dissolved his government and ordered his prime minister to form a new one that after reports of clashes in his cabinet over check austerity measures that are really starting to hurt. both germany and the european union are pushing france to get their finances in order. butt spending cuts and tax hikes that owe lands has e enact the e unpopular. france's gross flat lined. germany didn't do any better. germany's economic whoas are so dire that many people think that austerity had run its course, i talked about that today to the chief advice tore a financial services firm and the chair of the president's global development council. this is what he told me. for more i am joined from irvine cal by the chief economic advice fore financial services firm alliance se and chair of the president's global development council. good to have you here, through for being with us. >> thank you, amie. >> mohamed, the french government dissolved monday after the country's economic minister resigned insisting that austerity measures had gone too far, not much to think about the austerity measures which they didn't implement. but what does it tell us about policies across europe, do they have staying power or have they run their course? >> france and europe more gem is searching desperately for a growth model. and in the absence of a growth model, the resistence to austerity has increased. so basically whether it's france, whether it's the president of the european central bank said on friday, europe desperately needs a new approach to promoting growth and reducing unemployment. >> the problem, though, that we have zeina cross our enough most case is his slowing economies. i am worried about how worried we should be about those weakenless economies, we have recent developments in germany as well. the economic powerhouse appears to be weakening, where would this growth in europe come from? >> first we should really worry and as you point out, germany has also slowed, so the locomotive has slowed. in fact, if if you look at the second quarter not only did europe as a whole stalker but the three largest economies showed significant weakness, so we should worry. about where does it come from, it comes from three sources if you want to grow. first some structure reforms to improve competitiveness. secondly, more action by the european central bank. and then thirdly, you need to rebalance aggregate demand which is another way of saying that where there is a will to spend, there isn't the wol you want and where there is the wallet there isn't the will and what you need to on is combine both and europe can do that. >> let talk about europe again, you didn't mention energy, when we talk about america and growth we talk about energy. europe has this problem on its doorstep and that is her russia. they ever take an i more aggressive stance than they had in june and july. but the bottom line is as the winter months approach, russia still controls europe's natural gas or at least 30% of it, 40% of it. what does europe did to get more aggressive with russia given its dependence on russian energy? >> so soup in a difficult europe is in a difficult situation, they have to counter russian aggression and it has tried to do that through sanctions, on the other hand, the more it implements sanctions the more it risk says counselor sanctions in fact russia has moved to implement counter sanctions if this continues ultimately down the road russia can disrupt the ply of energy to you are up and that would unambiguously tip both russia but europe in to recession, so this is a lose-lose situation . it's yet another reason why people are worried about the economy in europe. >> should we be worried about that in america. >> yes, we could, it is a big trading partner and the biggest economic ring none the world. i tell people that you cannot be a good house in a did he tear youdeterioratingneighborhood. >> the s & p500 hit an all-time record today, above 2,000 for the first time ever. if you look at it it's up more than 35% since the beginning of 2013. some people are warning the market is overheated. the other argument is much of the stock market run is investors brushing off many major world events because interest rates are low and stocks are the only game in town, what do you think? >> both arguments of right let me explain. amazing resilience on the part of the stock market. that resilience has shown itself in the ability to brush off, as you say, economic weakness, geopolitical shocks and do it repeatedly. now, why is the market so confident in brushing off these things? for two reasons, one, the markets believe and have been conditions to believe, ali, that the central banks are their best friends, so the central banks will be there if ever markets come under pressure. not because central banks love markets because that's the only way they can get to their ultimate economic objective. that's the first reason, the second reason is there is a ton of money come income to the stock market. individuals who are under invested but importantly companies with massive piles of cash are now putting their money to work. through higher did did he want paints and shared by backed and activity that his often boost the price of the acquired firm well beyond what is justified by fundamentals. so investors feel confident for now to brush off all the bad if you want. little because i have the two very strong attributes in their pocket. >> always a pressure to talk to you, thank you, sir. mohamed is the chief economic ahead vicar atta lines sc. >> thank you. >> and you can see more of my conversation tonight on "consider this." all week long i am filling in for antonio month are, a 10:00 p.m. eastern, 7:00 p.m. pacific, coming up fracking for natural gas under the runway of a major airport. plus potential profits puddled on the floor after the napa earthquake. >> consider this: the news of the day plus so much more. >> we begin with the growing controversy. >> answers to the questions no one else will ask. >> why did so many of these people choose to risk their lives? >> antonio mora, award winning and hard hitting. >> people are dying because of this policy... >> there's no status quo, just the bottom line. >> but what is the administration doing behind the scenes? >> real perspective, consider this on al jazeera america >> fault lines labor day marathon the true cost of cheap labor >> nothing can be worse than this people burnt to ash... >> horrendous conditions... traffic labor on us bases... management stealing wages... exploited children put to work... >> how many of you get up at 4 or 5 o'clock in the morning to go out to the fields? don't miss our award winning series fault lines labor day marathon only on al jazeera america america is the middle of afternoon energy boom that many predict will last for decades, according to the department of energy, natural gas production will rise by 56% between 2012 and 2040. that spike will be due in part to advances in technology. new drilling techniques will allow company to his accessory serves that were once out of reach. some of them in some pretty surprising places. david shuster has the story . >> this may look like your normal airport but pittsburgh international is anything but normal think situated within the mineral rich shale formation the airport is practically floating atop a fortunate of natural gas reserves earlier this year allegheny county signed an open-ended lease with console energy to drill for natural gas on airport ground the county expect to collect a half billion dollars over the next 20 years, that's about 25 million a year. rich fitzgerald is executive of allegheny county which owns the airport. >> they are going to spends about $500 million in building out the infrastructure needed for the airport property. the drilling, the pipe work, the engineering, the excavation, et cetera, when you add that to the royalties, we have a billion dollars deal, a billion dollars development without any tax dollars going in to it. it's a pretty much a win-win for the community. >> that deal could not have come at a better time. a 1987 pittsburgh international made a billion dollars gamble of its own, partnerin partnering wr honor air opartnering with u.s.o handle 30,000 passenger a he a year but it piqued at 20,000. and u.s. air rebranded as u.s. airways filed for bankruptcy the next year the airline broke its lease, leaving airport officials holding the bag. >> what it meant was we didn't have the money coming in from all of airline operations to pay off the debt of our airport. this is a source of revenue from the extraction of the natural gas. that will help pay down that debt. >> console officially broke ground on its first drilling site monday, located just outside the airport fence, it will bore more than a mile deep to extract the natural gas it, can even drill horizontally sucking up deposits from beneath ago aactive runways airport offs say it's safe with all flights and runways operate as usual. despite the use of a controversial method calling hydraulic fracturing or track, it faced little opposition from the local community. it may have helped that pittsburgh is not the first effort to double as a fracking site. both denver international and airport and dallas fort worth of home to dozens of wells, they have been for years. but each operation brings in less than $10 million a year. a drop in the bucket compared to pittsburgh's annual $25 million windfall, in addition to paying off its debt, pittsburgh international plans to invest some of its new found riches back in to the airport. it's goal to a track more airlines with lower costs. but with the natural gas deal under it's belt the airport hopes diversify even more. >> of those 9,000 acres that we own out at the airport we are developing those for commercial development, office space, research and development, distribution center, and we are able to use that money to build out infrastructure creating jobs for the residents of this regis. >> david shoe steer, al jazerra. >> fracking, especially under an active run a may be one of the more eye-popping examples of airport disverse indication but it is a trends happening across the country, airports are putting their assets to use with business opportunities well outside the aviation industry. at chicago's o'hare international airport there is everybody 7500 beehives with over a million bees, mike is president of a global kilting firm that helps planning for their needs think he said i disverse identify port mol idenl crows makes portfoliomakes sense, they are g some land to shell oil what are they doing there ? >> air worse have longed serve for other things . oil field equipment, energy equipment has been a significant portion of that . up don't ship things by air until they justify the additional costs the it's the most expensive short of shipping. oil freed is a bread and butt irrelevant commodity. pharmaceuticals are another one a lot of airports are looking to bringing in . listening to the lead in, pittsburgh is not your typical airport they have tough times with the u.s. airways hub close but it's not a model that can be replicated too many times because not everybody is sitting on a shell verve like that. >> if you can't lease on the your land to shale, what are other airports partnering to do? >> well, sure i can mentioned earlier pharmaceuticals that he's particularly hot one right now. what is happened and u.s. airways at pittsburgh say great example, but there are many of them. there were a lot of carriers that you used to see a lot of planes for including cargo carriers that within out of business, what happen is airports have different prospects. they are having to go after the demands drivers the folks putting the cargo on the belly of the planes and pharmaceuticals has shown a lot of, you know, durability to it. so what you are started to go see now, is maybe some of the pharmaceutical producers as bell as things like organ banks, things like that that are very time sensitive and a lot less con kicost conscious, refrigerated facilities are looking to pharmaceuticals and organ banks, things like that. >> is there any benefit for fliers and residents around the airport to this diversification? >> there is a derived benefit. certainly in an extraordinary case like pittsburgh, where they went from 20 million passengers a year down to 8 million, airports operate in a closed funding loop. any money they can raise on the revenue side allows them to decrease the cost to the airlines, so these types of nonaeronautical revenues that increase the revenue side of the ledger do allow them to potentially lower their costs in materials of, i know, rents for the passengers terminology gates and landing fees for the aircraft as well. so in that sense it makes one airport more competitive against another one. and so in that sense for the local flyer it certainly does. >> michael, good to talk to you, great conversation, michael weber president of weber air cargo. sunday's earthquake was a wake up call for wineries. i will look in investing in an earthquake protection system coming up. >> al jazeera america presents >> yeah, i'm different. i wanna do what god asks of me. >> 15 stories one incredible journey edge of eighteen premiers september 7th only on al jazeera america >> it's a chilling and draconian sentence... it simply cannot stand. >> this trial was a sham... >> they are truth seekers... >> all they really wanna do is find out what's happening, so they can tell people... >> governments around the world all united to condemn this... >> as you can see, it's still a very much volatile situation... >> the government is prepared to carry out mass array... >> if you want free press in the new democracy, let the journalists live. >> weekday mornings on al jazeera america >> we do have breaking news this morning... >> start your day with in depth coverage from around the world. first hand reporting from across the country and real news keeping you up to date. the big stories of the day, from around the world... >> these people need help, this is were the worst of the attack took place... >> and throughout the morning, get a global perspective on the news... >> the life of doha... >> this is the international news hour... >> an informed look on the night's events, a smarter start to your day. mornings on al jazeera america the heart of carl's wine country, napa valley is trying to get back on its feet after sunday's earthquake even as aftershocks continue to shake the area. in the city of nap arc the historic downtown district sustained damage in the magnitude 6.0 quack, the towards hit the san francisco bay area if a quarter century. more than 170 people were hurt, three of them critically. napa valley's wineries took it on the chin, thousands of barrels and fragile bottles of wine were damaged leaching profits to bleed out onto the floor at a time when severe drought is already taking a toll. estimates of financial losses from this weekend's quake are expected to run between 500 million a billion dollars. the area's wineries and tourist vendors taking stock of the damage now. the wine industry is a huge engine no for the local economy being employing some 46,000 workers generating $14 billion a year from wine sales and tourism. the ring sun home to 700 grape growers and 430 wineries, jake ward joins us now from napa. jake, good to see you. how is the situation there and how is the clean upcoming? >> reporter: well, he just got extremely lucky, amie. we arali.we are here in downtowc nap i which was the hardest plate hit this is where old and new come together. i mean that literally. this is the old classic brick, here is the new brick, because these two materials vibrate at different frequencies that so many of these buildings came apart. if you look behind me here, there is tremendous damage to this historic building because particularly the old brick peeled away from the steel retrofit that go you see in the building throughout the don't area, that's why we are seeing it here. so but in the end, no loss of life, the roadway is still working. emergency services could get in. we didn't lose water so it really all worked out. california dodged a bull net this case. >> but you folks in california always think about this. worry about it. is there a plan for what happens when you don't duck a bullet? >> reporter: that says the thing that everybody is thinking about right now. as you mentioned as much as a billion dollars in economic losses in just the restaurant alone, in an area that contributes $13 billion to the california economy, so now we are trying to think what if this had happened in do you want san francisco, what if it had taken silicon valley off line, $176 billion contributed to the economy from there. now we are talking earthquake preparation systems, right now a prototype system in development at u.c. berk that i happens to be hooked up to the bart system as an experiment it worked it gave a 10-second warning but there is no money right now for this. it would cost $100 million, they want to make it law, but nobody has moved for it. it's hard to invest in something like that. >> something you said caught my attention, a 10-second warning makes a big difference? >> yeah, a huge difference, if you look down the street. any one of these storefronts would have been packed with people on the day in question. but instead, the earthquake happened at 3:20 a.m. and so, you know, the idea here that you would give people 10 seconds to step not middle of the street, right, 10 seconds for a dentist to take a drill out of somebody's mouth. and 10 seconds in this case for the local train system to slow trains that are going too fast that warning would be invaluable and yet there isn't currently mon knit state budge feed a system that otherwise californians now all agree they could really benefit from. >> those decision are often quite political. so they'll need to rethink whether or not they do that. tell me, jake, you are a scientific mind you think about these things very clinically. did you feel it? were you around it when it happened? >> oh, man, nothing will make you abandon your rational mind like being woken by a 6.0 in the middle of the night. my wife and i are used to earthquakes, you know, we are bay area residents it usually feels like a truck has backed in to your now a second. this went on and onside by side rocking we were reaching for each other in bed because it's so out of control. that moment of pan sick there and then pretty quickly you think, okay, where are the kids, where are the emergency system, where is the disaster kid those thoughts come back but nothing will rob you of your rational mind like an earthquake. >> that's remarkable. great report on the ground it, jake and i am glad you and yours are safe. of course we have to remember that several people were injured, more than 100 people injured. three of them critically our thoughtourthoughts are with the. a surprising twist in the tech industry, amazon confirmed it's buying the video game streaming platform twitch for fool a billion dollars. this is an interesting twist or twitch i guess, just a month ago reports swirled that google was purchase twitch to help shore up it's a youtube platform you are probably sitting there saying what's a twitch. than 55 million users each month who are good for the picking for advertise that's want to reach them. youtube commands relatively low advertising rates but could have presumably profited from these new users but neither google nor twitch confirmed the deal which reportedly soured over some antitrust concerns. now it looks like google's loss is amazon's gain. and this time it's actually official. here is the problem, america's energy boom has created a glut of natural gas, not to worry they are working on a solution. coming up tomorrow, aim going to tell you how the u.s. is about to take one of its biggest steps yet in joining the ranks of top energy exporters like qatar and saudi arabia. that's tomorrow 7:00 eastern, 4:00 pacific right here on arsenaaljazerra america. earlier tonight we talked about the economic social and racial divide that is widened in places like ferguson, missouri. the uproar over the shooting death of 18-year-old michael brown has brought those divisions to the fore, the divide between blacks and whites in americas suburbs has been decades in the making. african americans in the inner-city started leaving for nearby suburbs in large numbers by the 1980s. the pace of that migration picked up as federal government programs offered many phenomenallies vouchers to subis a described the cost of moving. at the time they were seen as a good way to move people out of crowded and sometimes dangerous public housing projects, after can american family who his took advantage of the vouchers saw them as a way to improve their lives, but as we have seen, it didn't always work out that way. instead, the rapid demographic changes to communities like ferguson created pockets of concentrated poverty. and as we have learned, concentrated poverty affects the larger environment. it's been harder for african american to his purchase their homes and invest more in the communities that they live in for very real structural reasons and local city councils have been ill equipped to deal with the issues because the small tax base that his suburbs provide can't possibly fund the services that big cities tend to have, as we have seen in ferguson, new come verse been slow to break in to local politics and demands a bigger piece of the pie. the majority of ferguson's residents today are african american, more than 70%. but they have virtually no presence in the city council and on the local police force, a circumstance that they alone can play a role in change think . ferguson's story isn't unique it's been repeated all around the county, to him we will take to you some of those towns. that's our show for today. i am al see velshi, thank you for joining us. ♪ >> announcer: this is al jazeera. ♪ we are live from al jazeera's headquarters in doha, this is the news hour and i'm mrs. dennis, spying in syria, the u.s. launched surveillance flights to track them. syrian government sources continue their battle against rebels but their use of barrel bombs is having devastating consequences. also ahead into national fury as air strikes in libya carried out by
the european central banks in physic and not fix the economy on its own but ready to take more steps to help. here is ecb president mario draghi. >> it is necessary to further longss risks of too periods of inflation. the governing council is unanimous in using additional instruments within its mandate. >> one of those unconventional measures is buying government bonds. that is something that has not been mentioned before, at least not officially. his comments come less of three weeks before the next ecb forecast, which is likely to show weaker outlook for growth and inflation. >> in jerusalem, and attack described as the deadliest in years. palestinians armed with guns, knives, and axes killed four israelis in a synagogue. at least six more people were wounded. police still be two attackers. jimmy netanyahu says the country will respond with an iron fist. toyota unveiled a new car that emits only water vapor. it is toyota's bid to compete with teslas electric car. only a few hundred will be sold. toyota once to limit to those located near hydrogen fueling stations. missouri is preparing for more violence in the shooting of an unarmed black teenager. michael brown's death led to weeks of protest in ferguson, missouri. sometime this month, a grand jury will decide whether to indict the white police officer who shot him. governor nixon has declared a state of emergency and activated the national guard in preparation. officials say they will cancel school the day the decision is announced. they're asking people to treat as a "major storm event" and stay home. this are our top headlines morning. let look at stocks, bonds, currencies and commodities. futures at negative two. yields have done nothing since time began. the euro advances. crude oil trading 75, 76. on to the next screen. a 117 on yen. above 1200.s back brent crude still under 80. how bad is the pain in japan? here is the animal spirit of japan. nominal gdp. the collapse in 2008. ugly, ugly, improving. .his is good news for abe >> i still feel like every time we talk about this, we talk about japan as if there is no secular problem that they have, the demographics of the country and the problems they have getting women into the workforce. we keep looking at fiscal policy of monetary policy of forgetting there's a cultural policy that has to change their -- there. getting out of home depot without multiple purchases. they have earnings. they have been doing better than good. >> they have been doing better than good. earnings per share at $1.13 -- one dollar 15 cents, analysts have predicted $1.13. year-over-year sales, stores open at least a year, up 5.8% in the u.s. we're not seeing a lot of retailers with those numbers. overall, sales up 5.2%, which is also better than had been estimated. >> life is good. >> i got out of home depot and spent less than $100 earlier this month. >> how did you do that? >> a list and i left. >> with the way m&a is, maybe we have home depot meeting with walmart. i think it is a good merger. walmart and home depot? maybe not. >> i think they're going smaller, not bigger. >> that to japan. it is widely expected to be nymex needs a reaffirmation -- abenomics needs a reformation. our guest host this morning is with rbc capital markets. also on the phone, carl weinberg who has been way, way out front on the struggles of japan. carl, frame the import of the moment. how serious is the moment for the people of japan? >> from an economic policy point of view, this is a critical juncture. japan needs people, it doesn't need more debt or need to print more money. it needs people and it cannot get them. printing money is just bad policy. may win the election in control of the government again, but he may lose the economy as a consequence. >> explained the importance of japan in the modern world. we know it is the second-largest economy. we learned all of this in school, but things have changed with china. why should we care about japan this morning? >> we care about japan because a lot of investors, a lot of people listening to your program may have investment in japan, particularly in japanese stocks. the japanese stock and it has been doing well. is surged last nine in response to this news, although, it did so in a little bit yesterday in news the condo me -- economy contracted. that news will dominate. we have a bubble. betweent want to fly the clouds because there are storms lurking on the other side. right now we have a bubble going nikkei on optimism and policy and that optimism, in my opinion, is misplaced the economy can deliver what people are hoping it will. you say japan to its people. is all of this just whistling past a specific graveyard that japan is not interested in immigration? >> that's right. japan is absolutely doomed by the fact its population is shrinking. you don't have to be an economist to know if your economy is increasingly fewer people every year, you can expect those people that are going to demand increasingly less stuff and they will produce increasingly less stuff. in our lifetime, we've only seen economies growing with rising populations and this is the first time we're confronted with a major economy with a declining population. >> carl, on the currency and currency debasement, how we can the yen get? a technicians can tie you better story on that than i can, but the final medals are in place for the yenta continued to weaken. deal the offset is japanese pools of money are going to be pulling money home. this is a medium time story. that will offset some of the negative factors on the yen and break its decline. i think we want to look for a cheaper yen. >> carl weinberg, thank you for your expertise. we're thrilled to bring in morsels sunshine. it is not that you are on the japan watch, but i think it is simple to say everybody is intertwined the hydrocarbons. where does japan look to, indonesia? >> one of the things were concerned about with japan, and you mentioned sliding crude, this underscores a bearish sentiment. japan is an importer of crude. all of the negative news about japan will reinforce very bare sentiment in the argument. >> do you affirm the new mediocrity? i took a vacation. the world has changed. abenomics isn't working. >> is that the new mediocre? >> i'm curious, when he talked about this global demand problem that you're discussing, where is the biggest demand problem right now when it comes to oil? >> one of the biggest problem sibley's with north american production, we don't have the need for imports coming into this country. oecd, europe,g at japan. china's numbers have recently been a bit better, but we have about one million barrels of crude overhang right now in the markets. that is the fundamental problem, why we are in lower prices. here froml, you're sunshine partners were you advise on mergers. those cares about the phrase car weinberg used, a sucker hole in the clouds. is that what you see right now? >> it is the new term of art. sector hold. hole.ker >> do you see that? >> i think the united states is in a strong recovery mode. japan is not. parts of europe are not. i think it depends. >> let's get a shameless plug. what you hope to accomplish at your conference. every year,d of her because we love having you speak, we bring all of the m&a folks, lawyers, bankers, private equity folks and at the end of the year a usually issue a paper and we talk about -- >> you issued tomatoes and they throw them at you. >> where are we now? this is the year that m&a for real.for year -- at some point it is going to stall a little bit because a lot of what is driving it at the last remnants -- >> thank you. we will get to those. what was it, $100 billion of deals yesterday? >> unbelievable. but what does it all mean? it means nothing. today, our twitter question -- i know i could not. tweet us. this is what we are going to be talking about later in the 7:00 hour. ♪ >> good morning, "bloomberg surveillance." this guy is interesting. if you don't know him, you should. he's from the fourth congressional district in oklahoma, chickasaw indian and he is a really smart, interesting republican. he will join us in our next hour. really looking forward to speaking to dr. cold this morning. we say good morning. i am tom keene with her and in greeley and -- brendan greeley and julie hyman is in for scarlet fu. >> activists are one of the 10 largest pharmaceuticals and the company are going to buy elegant for $60 billion and with that botox. and they will stop growing, cut costs, and focus on it salesforce. marshall sonenshine, tom and i agree about this. i feel like when we see a couple , i always wonder whether it means anything. is a possible to draw a thread between those two and say it means anything about the markets at all? twoes, i think you can draw threads. number one, cheaper stuff. activist is about generic drugs, taking costs out of rmb, out of sales so you can smell -- so more drugs. halliburton is about cheaper oil, meaning fewer projects need to cut costs. the second thread is both of these jets are about expensive stocks. >> can you see the botox, is it leaking. >> you're holding up for now. >> clearly, you take it for migraines. talks i noticed the price of stock. yesterday was like a typical bubble m&a reaction to halliburton. we finally reached the stupid season? tough ona little halliburton because baker hughes is a prize and stupid season would be tough on actavis. where you saw that, last week i was here and we were talking about the rumor about hasbro buying the movie studio. dreamworks. remarks was up quickly 15% and hasbro went down 5%. i said, i think hasbro shareholders are saying because all. i think there is a lot of that right now. you have to pay up to get these companies. what are people paying with? as much stock as humanly possible. >> let's bring up a quote. actavis does it make stuff, it buys stuff and sells it. one of the things with the planes they have is they're going to drop $400 million in r&d. how long can they keep cutting on r&d -- >> it is financial engineering. >> at the moment, you're seeing the buying companies because it is hard to about yourself of new opportunities for patent expirations. it actavis makes generics. they were built on the foundation of summit else's patent is expiring, we can rush in there with a cheaper product. >> just to clarify, they don't do r&d for new stuff. >> they don't. you can't blame them because you have to come up with a hit him a little bit like dreamworks. but if you can makes up that competes on price, taking costs out of the hospital chain. >> going back to connecting the deals we have seen. this looks like it will be another record year for deals. >> it is. >> we see when the market rises on days when you get a lot of takeovers announced, well, it is because people are optimistic. but in many of these cases, are they not coming from a position of strength? aren't they doing this defensively or because their core business isn't growing? >> yes, julie, you're right about that. let's take the baker hughes situation. both of those companies are playing defense right now. for exactly the reason helima croft was giving. wehave less demand for oil, have an oversupply, u.s. is going energy independent. guess what? fewer options. >> where is the tipping point on oil? we heard from stephen short is $72 a barrel. does halliburton and baker hughes signal a behavioral change? >> i would watch for the opec meeting in terms of potentially where there is a floor. >> are you going to it? >> i wish. it is on thanksgiving day. >> helima croft has a higher floor and oil for saudi arabia, $100 a barrel. i look atdo, because the defense spending. so many of the projections on saudi arabia and the budget do not include defense spending because it is not probably disposed. that is 31% of their budget. i think break evens are much higher in saudi. >> let's get back on script. what does halliburton mean for the oil business from your economic purview? >> in terms of the notion that the low oil price. is this going to become the new normal? i guess i take a bit of a contrarian view because i do believe there is phenomenal support for higher prices out there from the middle east, but right away, i'm looking for this opec meeting. if you go into it opec meeting with one million barrel cut potentially, you could be up $10. >> i'm sure they want the price to be higher. i want my salary to be higher. but do they have the negotiating power to do it? >> compared to 1986 whenever 7 million extra barrels out there in capacity, we are at 3 million barrels -- >> before this our ins, i'm going to get you to tell me what this means for exxon mobil. she always goes to the opec in is still from 35,000 feet. >> isn't that where we live at 6:00 in the morning? >> what does it mean the u.s. is producing a lot of fracking and opec is meeting on thanksgiving? >> i don't know. conspiracy theory. >> we're going to come back with helima croft, and of course, listen to her carefully on opec. in the next hour, the discussion on the middle east will stop look for that on radio and television in our next hour. we say good morning to you from new york city. it is "bloomberg surveillance." ♪ >> good morning, "bloomberg surveillance." i am tom keene with brendan greeley and scarlet fu is off today, we have julie hyman. >> my morning must-read comes from lucy marcus. she wrote more generally about investing in the public sphere and infrastructure, but also the private sphere she writes -- >> goes back to financial engineering. >> we were just talking about this. you said this is a totally legitimate strategy, which makes sense for a company. overall, as this worry you about the industry? >> it doesn't worry me about pharma because i think we have had an extremely level of investment in pharma. i think right now the consolidation is necessary to take some cost out. there are other industries we are underinvested. i suddenly think in infrastructure, this country is simply missed the boat. we had an opportunity to build and we didn't. >> how do we fix it? >> i don't think you can because politically it is not popular to build. >> the earlier point, if these companies are just buying other companies rather than investing , doesn't that signal a lack of confidence in economic growth? >> i think you to take a piece by piece. situation,ughes there isn't as much as for oil rig's now. they have to cut back. these two companies did not really want to get together. but they had to. >> when you start 2015, what is on income statement? is there a lot of fat to cut? >> in corporate america, there's always that to cut. i was teaching yesterday and we had this discussion with ted shell and we were saying, you see large public companies always have a little too much fat. i think less of today than what have been the case a decade ago because activism has worked. >> we are ready have our quote of the day. , "i think when bridges fall again, you will see fixes." >> i'm thrilled you think that is quote-worthy. >> that is sort of depressing. do we have to get to that point? ande get a "d" infrastructure when we did not rebuild. >> is opec going to make it? with 1986 upon them, are they going to learn? >> i think many market dissidents would say, no cut. but i think of weak growth with the iran nuclear discussions coming up -- >> there it is, helima croft on opec. >> nuclear talks, we will talk about that and opec. ♪ >> good morning, "bloomberg surveillance." let's get to our top headlines. >> hong kong's government starting to clear away barriers during the seven weeks of pro-democracy protests. authorities met little resistance from the demonstrators who knew about the move ahead of time, but there has been no action to clear barricades in a more volatile protest zone. sony is hoping for a new growth and turning its eye to a superhero for help. the company says it expects new spiderman movies to drive growth as much as 36% in its pictures unit in the next three years. sony is pushing the idea of growth in its entertainment business or than your after rejecting the push to spin a part of that unit. a record-setting deal for baseball star don carlos stanton, the 25 year old center deal withs 1320 $59 the miami marlins. it is the most lucrative deal ever for an american athlete and averages $25 million per season .r more than $154,000 a game he led the national league this season with 37 home runs. i have not done the math to see how much that is per home run. >> unbelievable. >> remember how we were having his discussion about how baseball was becoming a niche sport? >> your son is playing baseball? >> our youngest son is the outfielder for a city college. the oldest is a harvard large school in the middle guy is at usc. we love city college because he owns that turf. >> these are tying into media deals. are they goingn to learn about extending it out five years, tenures, 13 years? >> and yet the sport continues to prosper. >> well, i guess it does. i'm worried about baseball. i thought this year was a real tipping point of disinterest. what we have, data check? >> let's take a look. shinzo abe saying, give me another chance. future saying, we have been burned before. nymex crude ticking up a hair. conveniently, we're talking about oil today. will be talks between iran, america, and europe with a self-imposed deadline of november 24. minimal common ground. helima croft is with us with rbc capital markets. has theeverybody question of, why are these talks important to america? >> it is the big question of, can you get a final settlement on the iranian-nuclear issues? i think this is very important. the notion there is no common ground -- i mean, in the last year, significant, ground has been reached. there are some big hurdles remaining. >> what is the biggest hurdle? >> sanctions. can you pull off the yuan sanctions, how quickly can the u.s. sections be removed? also what kind of nuclear architecture iran should have. the white house once a deal. >> before tew before the new co- >> of course. once you have mitch mcconnell senate majority leader, the transfer new sanctions is really on the table. >> over the summer we saw estimates of whether a joe kennedy reached by the 24th -- whether a deal can be reached by the 24th. where is yours? >> 35%. and the iranopec nuclear negotiations are tied together. i think if you get a deal on iran, that puts the pressure on opec will stop people will start to say, oh, my gosh, there are one million barrels off the market because of sanctions. >> could it we look at a situation where you have partial sanctions? >> no. i think that will be very challenging. if you waver the loan on u.s. measures because congress is not going to repeal them or you will european companies be willing to go back in? will he have normalization of trade relations with waivers alone? i think it will be very challenging. >> set this up, sunni-shia, ageless multi-century antagonism between them, to the saudi support iran in this or do they support us in this? >> i think the saudi's are watching this with horror. the idea we could cut a deal with the iranians that would leave iran was so much nuclear architecture in place, that is the saudi's worst nightmare. that is why they're talking about having her own nuclear program. that is what potentially is frightening. >> if we get a deal, do they drive the price of oil to $40 a barrel? >> there are some of the conspiracy theories, but that is why we put the piece out on the saudi budget. at the end of the day, the saudi's have high physical demands themselves. >> i will pull this up from your research note at rbc capital markets -- >> you read her research notes? >> not only did i read it, i highlighted it because i hang on her every word. >> did you use the "surveillance" highlighter? >> you wanted? -- you want it? i'm fascinated how high you pegged the price of oil they need. they need it worth of $100 a barrel to balance the budget. for you, this is about defense spending. i'm curis about the possibility of defense activity. the saudi's have always been reluctant to fight their own wars. >> that is the amazing thing about saudi arabia, they biased -- they buy the biggest and best toys. we did see in the case of bahrain, they did send their tanks of the causeway. they see isis on a tear, problems in yemen, problem still in the eastern province. this is not a great time for prices to be lower. that is why don't believe at the end of the day that would really risk a strategy of trying to stick it to iran or russia if they had domestic concerns. >> it is not just outside of the reporters committee is also potentially within their borders. we're not just talking about external defense budget, but a domestic defense budget, right? what is the oil price where it is right now due to them domestically? >> one thing about king abdullah, his been very concerned about keeping the population happy. so he does spend on education and health, significantly, he does not want his people in the streets. it becomes the question of, do you have to go into the red? at youth up looking unemployment. this long-term problem from the arab spring is a huge problem for saudi arabia. >> for the entire middle east. saudi arabia, at least they have cash. >> helima croft, help marshall sonenshine. you have an outlier call of higher oil prices? >> ultimately, i think the middle east provides significant floor for oil prices. i am a higher end of the spectrum. >> can you and rbc capital markets go long on oil given the technical construction of those shattered charts? >> well -- >> halliburton. >> it becomes a question of, do you believe the middle east is going to be smooth sailing? everyone focuses on north america. we have like a one million barrel supply overhang. the question is, does libya come back? libya is a huge swing factor. it basically went up to one million barrels over the summer. if that falls back, the market begins a debt balance. >> limit ask your question. let me cut to the chase. furthermore halliburton-baker hughes out there? oil is where it is, do you expect chevron or -- i say texaco. texaco was an oil from a few years ago with a red star. >> there are box in which you can read about things that happened before you were born. >> really? i love that tricia your with song, "underneath the texaco star." >> the deals in many cases have happened. to take costigned out of increase the efficiency for a market that was bracing itself, in my judgment, for a change on the downside. i think baker-halliburton is yet another one on the oil services side where the expectations by and corporate disappearances, we will see less trolling because we have a softer market. -- participants, we will see less because we have a softer market. you may be right because it would be the first time wall street is wrong, but i think that is our financial markets are. >> what about the drillers themselves? are they going to get swallowed up? >> wildcat or's are always wild. sometimes they get swallowed up and sometimes they don't. i think you will see the and automation of wildcatters. you will see continued consolidations and services and equipment sector. >> does keystone matter? are you fired up about keystone or suggest politics? is politics. with the republicans winning in the senate, that increases the likelihood of congressional action on keystone. anon't believe it is initiative the obama administration still was to deal with because of this became terminal agenda. i think of something they would like to kick down the can. >> this is great. that was a tom keene of fiber heard one. -- if i ever heard one. story is different, don't let your eyes glaze over. today single best chart after the break. also, our twitter question of the day -- ♪ >> good morning, "bloomberg surveillance." brendan greeley and julie hyman with me today. it is one of the biggest drivers of this bull market, and it will continue that as share buybacks as american big business puts its cash to use a returning it to shareholders. i spoke recently with citigroup's tobias left could pitch. >> this idea of 2007 was actually the absolute peak for buybacks in u.s.. 2011, 2012, 2013 have been record doubles first -- record levels for spending. numbersthe u.s., the have been mid to high syntel digits for capex. durable goods orders have stayed relatively strong. we're seeing more and more interest in doing this particularly as you get broaching 80%. >> there it is, you wonder where the mystery is the next year. marshall sonenshine is with us. are they inventing cash to do m&a or using cash to do m&a? >> first of all, there's a lot of cash being used to do m&a but the most important currency for him in a right now is stock. i think the fact of the matter is, companies are expensive so the acquirer once do you stock. you see the two deals that just happened yesterday, both are substantially stock -- >> of the $100 billion, how much was gross? 20 of 100 billion? >> probably a good number. >> we call that funny money. >> you did not ask me what percentage of halliburton-baker was stock, 76%. -allergan, 40%. the fact of the matter is, don't like me could not win eligible because he wasn't paying cash. that was not a hostile bid recent, take my cash, your board of directors are asleep, i have a solution. he was say,. >> take my stock, and you could not sell it. >> is or anywhere you can see they're using more by investing? >> i see a lot of good investing by corporate america. it's be honest, there's a lot of cash on the sidelines. if it sits too long on the sidelines, carl icahn has a point, given back to her shareholders. people needed to pay tuitions. that brings us to -- >> marshall sonenshine, you have three children in college. he recently went through the entire power of the market to figure out how best to take care of them. take a look at our single best chart today -- what is happening is, college students were applicants are shopping around for the best tuition deals they can get and applying for more colleges. >> the number of colleges they're applying to is a little silly in one sense and rational and another because the truth of the matter is, how muddy businesses can you name where demand is incredible he robust or decades and they don't build more capacity? the truth of the matter is, many, many colleges have raised tremendous amounts of money -- yale a 20% on billions, but they don't build more seats. >> when the croft offspring goes to college, it is going to be $100,000 per year. >> my husband is a professor, so hopefully we get a tuition break. >> oh, please. amen. >> i am a professor at columbia and iwatch -- >> you're talking about yale not adding capacity. yale is like apple, they want to restrict capacity in a certain way. we saw the capacity raise in for-profit colleges. the ceo of our endowment at columbia, i have him talk to my class about what the hell goes on inside the money side of universities. one of my students asked, why is it they have the her education price index, which is always a point or two above the consumer price index? why have they decided universities are entitled to their own inflation index? he thought for a moment and said, i've got to tell you, it is an arms race out there. they have to raise money and bill because that is what they do. they want the sat scores to go up every year and endowment to go up every year and the -- >> does anything change? spend $100,000 to send our kids to college? if not, what will change that trajectory? >> we're talking about eight or 10 or 20 colleges and then all the rest. they are the ones that need to fill seats. we need to redefine our own understanding and appreciation of great universities. i made a little bit of a quick before because you asked about baseball. our youngest son was recruited. he loves it. i tell you, for 2500 dollars a semester, he gets a first-rate education -- they got for public education. i think to myself, thank god there's a public education system. we need it. >> amen. there is lack of investment at the state level in the state universities. we will be talking about that in the next hour with dr. catherine:. cohen.ryn twitter question of the morning -- >> i don't the guy to get a job at my own firm if i applied. ♪ good morning, keystone front and center. he is from oklahoma, between norman and a chroma city am a tom cole will join us. city, tom cole will join us. this is "bloomberg surveillance." brendan greeley and julie hyman with this, scarlet fu is rumored to return at some point. top headlines. thehe trustee unwinding ponzi scheme says more than $10 has and recovered so far, nearly 16% of the lost principle. to offshore funds that funneled money to the fraud have just agreed to pay a total of $497 million to end lawsuits. madoff is serving a 150 year sentence in a prison in north carolina. snapchat. it is joining forces with payment company square so users can send cash to each other. the new feature is called snap cash and will be available to users 18 or older with a debit card. the deal gives square access to snapchat users who and where than 100 million disappearing steps a day. noble energy investment today. the world's largest amateur retailer is by no 165 megawatt wind farm in texas. this brings the number of wind projects ikea owns to nine. they planned to invest early $2 billion in wind and solar power by the end of next year. >> really? "some assembly required"? >> you had not told anybody. >> we need some video footage of you assembling ikea furniture. something tells me you don't have a lot of ikea furniture. >> i have two lawyers to inform me. >> what do we have? mervyn king is speaking up and says we need to make a distinction between the eu and the euro area. he spoke to olivia sterns at the global financial leadership conference in naples, florida, joining us this morning with more on her exclusive conversation with the former bank of england governor. >> good morning. plenty to talk to mr. irvin king about in a very soggy and windy naples, florida. we talked about the stagnation in europe and about the risk of relation of the crisis in ukraine. and the bank of japan is once again back in recession. among all those potential threats to the global economy of a certain mervyn says he is most worried about europe. he says he is very concerned and apple european leaders have a plan. he says the first step for european leaders must be a recognition that a single monetary policy is not appropriate for all the countries in europe. got tobig step for has be within europe. the news to be a clear recognition on the part of the leaders of europe that looking ahead, there will be two different categories members of the european union. in the euro and those not in the euro area. those in the euro area will require a degree of coordination, if not explicit fiscal and political union, which is wholly inappropriate for those countries not in the euro area. and then is to be recognized. the idea there is the euro area is the european union is a dangerous mistake at present and will lead only to bigger troubles down the road. >> he says the first that must be a reckoning of there are two tiers of economies, two speeds of economy within europe. the former french president herezy is also down naples, florida. i asked mervyn king if he feels the countries domestically or put in place sufficient structural reforms, whether or not this is something mario draghi can solve any says, yes, he things many countries are making structural progress. he does think the ecb and mario draghi will need to do more stop the challenge now is, they're pushing on a string. >> bolivia, greatly appreciate it. , greatly appreciated. we have lots to talk about here. helima croft with us with rbc capital, final thought as we look at what we have seen this year. a year ago, did you expect the 2014 we saw? >> oh, gosh, no. what i been so stunned by is this price rob. i was in the middle east in january. no one was expecting mr. medic price decline. the fact we're sitting -- dramatic price decline. the fact where we're sitting is astonishing. >> marshall, the money question this morning, is the fraud back -- froth back? >> this is a sure teacher driven m&a market to a greater extent than we are seen in a long time. >> thank you so much, marshall sonenshine and helima croft. let me do a report. 117 on yen. stay with us. another hour of "bloomberg surveillance." ♪ . . this is "bloomberg surveillance." >> japan is in recession. abe results parliament. he looks for a mandate for the nation. america's middle east political and economic policy is in disarray, and suddenly, most college classrooms are half full. colleges need to fill seats. good morning, everyone. this is "bloomberg surveillance." we are live from our world headquarters in new york. it is tuesday, november 18. i'm tom keene, joining me brendan greeley, julie hyman is in for scarlet fu today. let's get to the top headlines. x in japan, prime minister shinzo abe is moving to jumpstart an economy that has fallen into recession. abe has a great 118-month delay for an unpopular tax hikes set for next october. a sales tax increase earlier this year is getting some of the blame for japan's slumping economy and the primus or is dissolving parliament. japan's nhk network says elections will be held the summer 14th and he bets his liberal democratic party will maintain control of japan's parliament. that will allow him to proceed with his abenomics program. meanwhile, the euro economy cannot be fixed on its own, but it is ready to take more steps. he ecb president mario draghi. >> it is necessary to further address risks of too long period of inflation. the government council is unanimous in its commitment to using additional and conventional instruments within this mandate. unconventional measures -- by a government bond. that has not been mentioned before. come weeksmments before the next ecb forecasts, which is likely to show a weaker outlook for growth and inflation. according to police, palestinians armed with guns, knives, and axes killed four israel he's. at least six more people were wounded. prime minister benjamin netanyahu says the country will respond with an iron fist. told you what i is hoping its new alternative fuel car is at the prius hass been. only a few hundred will be sold. toyota wants to live her deliveries. the cost about $58,000. >> to st. louis, missouri, governor jay nixon not taking chances. he is preparing for more violence for the shooting of an unarmed black teenager. death led to's weeks of protest in ferguson, missouri. sometime this month, a grand jury will decide whether to indict the white police officer who shot him. now missouri's governor has to cleared a state of emergency and has activated the national guard. school be canceled today. officials are asking people to treated as an "major storm" event and a stay home. those are our top headlines this morning. let me go to the data check now. goldbach above $1200 is really what we have got, euro-dollar $1.25, brent crude still under $80 a barrel, $79.26. on japan, we are fortunate to have a special guest. abe will dissolve a parliament in europe and they are linked, he says, there are no arrows in the quiver. president of is the council of foreign relations and only weeks ago met with mr. abe and mr. kuroda in japan. minister is incredibly forceful and he has this ambitious to mess with policy reform and secondly his foreign policy is a much more normal japan, you might fall at the first -- call it the first post-world war ii japan. >> amnesty is a parliamentary system, but he has the support of the people, i believe. why does he need to vote come december? >> it is a good question. i think they were surprised by the result of this most recent quarter. 9% down is a recession by anybody's calculation, so i think they need to go to hope to regain their initial momentum if they are ever going to move beyond monetary policies. >> i think what we are seeing is there's only so much central bankers can do. >> mario draghi is boxed in as well as kuroda. >> correct. at some point, these guys are left out there. >> you have structural reform and fiscal policy. structural reforms seems to be what is missing in japan. fiscal policy is missing in europe. what do they have to do structurally? both are missing. to some extent, even some of the meskill -- the fiscal is missing. they can do things like immigration reform, which has been a bridge too far. the one area he has made a little bit of progress in is women in the workplace. you have got to continue to move but i do think he has got to do something different with this campaign, which is say not just support me, but here is what i'm going to do specifically. last time around, they had a vague mandate. i would say give an explicit mandate. >> does he have that ability? there is a risk obviously when you call for election that you will not be successful. >> the opposition is weak and and really disarray right now, so i think he has got a pretty good chance. he is by far the strongest personality on the japanese political scene. kuroda, the central bank support.t has ask for those of you on bloomberg radio, i will put this out on bloomberg radio plus on itunes and android. this is back years and the miracle of japan and the stronger yen and then the little itsy-bitsy of all been on makes -- of abenomics. up they time we pull floorboards on japan, we look at cultural issues, bringing women into the workforce. i think women are leaving japan to get jobs and other continents where they are excepted. these are cultural issues. can japan change culturally? >> historically, yes. work.es an awful lot of it does not just happened. that is where someone like promised are able has got to talk this and translate the big hasike prime minister abe got to talk this in trend lately big picture. could the process begin? absolutely. >> what if the next big step after women in the workforce culturally, what is the next most important step? >> i would think immigration would be big to increase the number of workers who are allowed into japan. i think that would send a real signal to the workplace. >> give us a great on the trip to china by the president. you speak to this, you have got a great team of advisors, and it on thet to have you show. the president is great, but i see a lot of negativity. >> i think people are making a little too much about the chinese statement on climate. the idea that they're going to essentially in another 25 years again to calm down, but we do not know exact way from where, and even that is soft. i do not see that is quite as remarkable as other people do. i think some of the progress on a trade and technology front is good, but we will see where we go on electronic policy. >> how do you do it? i just deal from richard haass. gotgo in there, and i have four briefings on burma, and all the sudden, ima burma expert. a burma expert. >> actually you are not, but you can play one on tv. having read your foreign affairs article the unraveling, talk about international organizations to do with this, yet we have different organizations trying to come to terms with it. >> i am trying not to sound condescending -- which is the least and capable international organization -- >> this week's question. that was a triple negative. >> i am sorry. organization do you see least capable of making change? are you happy? >> the imf and other situations can actually affect some reform. >> brussels? >> nato? that nato still exists is impressive and has not done terribly well in a current crisis. think it is fascinating that you have finland considering joining nato, you have sweden -- >> the real question is whether gets capability to be meaningful . i think some of the wto -- not bad. resolutiondispute system in the wto, but others are talk shops. the g20, these are talk shops. >> ambassador, and the opening credits, mumbling as we show japan and europe linked together. how are kuroda and draghi linked together? all oftary policy out of the monetary tools is the least difficult to play because this is what central bankers can do. with a step harder to deal fiscal and several steps harder to deal with real fundamental reform. look at europe. the fundamental reform of labor mobility --labor that is simply a bridge too far, so what you have is mario draghi -- he is out there peddling furiously. everybody likes him and admires him, but at the end of the day, he cannot stay here. >> to come back to your article here in "foreign affairs," there seems to be a fundamental astament you are expressing, trajectory of default right now. is that accurate to say? like is the metaphor i there has been something of a correction, not a collapse or a crash, but a correction and world order. >> that implies we will go back up -- >> we have the possibility, not in every ability. continued haass will with us. coming up, the keystone pipeline will head to the senate. we will speak with tom cole of oklahoma. good morning. ♪ >> good morning, everyone. this matters now to our guest host, richard haass, president of the council on foreign relations. considering america's ambition and the middle east and to be direct is a mess. we need a new policy for 2015. what should it be? >> part of it is beyond the middle east. asia, where the president just was, ought to be the area of focus. increase american presence of a medically, economically, to keep asia on the rails. asia has been a remarkable three-decade story. we want to keep it that way. europe is tougher because you have the russian challenge. there we ought to be doing i believe more for ukraine and more for nato. the answer should not always be just to penalize russia. you should strengthen ukraine militarily, strengthen the rest of nato. steps to weaken european energy dependence on russia. middle east is by far the less successful, most problematic part of the world, and there we have simple he got to take steps to try to thwart the momentum of a group with isis. >> what type of diplomacy is proactive in the middle east the way we see this? everyone stammers. >> i do not think there is diplomacy with groups like isis. what you can try to do is shore up some of the neighbors. do more with turkey. i was there the other day. i am not sold that the turks are prepared to be partners of the united states and slowing down isis. proactive diplomacy with iran. as bad as the middle east is, you can imagine how much worse it could be in a week if the iranian negotiations came down. >> you just came back from exit code, he's been a year -- from abroad,you spent a year but we forget about our neighbors. has become a great surprise. you had these 95 or 96 areas of energy reform that the three major parties all signed on to. then suddenly, it is as if somebody pulled the thread and you begin to see unraveling on the security front with the awful story of the 43 students who have disappeared, and so far at least the government not being able to find the people behind it. but we know it was for up to politicians and drug lords. you are beginning to see stories of corruption, so all of a sudden this administration, mr. opinion yet though -- mr. nieto, it is the first real crisis where people are saying is this politics as usual, is mexico going backwards? time, the highly touted government of mexico is facing a crisis. >> we need another hour interview with richard haass about our latin american diplomacy. coming up, he is on the fourth congressional district of oklahoma, tom cole is a republican but much more than that. tom cole on the divide north and south, it would be the keystone pipeline. stay with us. it is "bloomberg surveillance." ♪ >> good morning, everyone. "bloomberg surveillance." i am tom keene. let's get right to our top headlines, julie hyman. >> home depot's topping estimates in the third quarter. closer to a profit of $1.15 a share. $1.13.s had estimated shares up 19% since the beginning of the year and 22% in the last 12 months. a record-setting deal for bass eball stanton. he has agreed to a $325 million contract with the miami marlins. it averages $25 million per season, or more than $154,000 a game. led the national league this season with 37 home runs, unanswered on based on his output. to $676,000k out per homer. xlote on the keystone pipeline will come today. mary landrieu is pushing for passage of the bill before next month's runoff election, but she trails representative bill cassidy. those are your top headlines. >> there a good. to politics a little bit north of louisiana. i-35, which was highway 77 and another time, cuts north-south through moore, oklahoma. tom cole is from the fourth district. he was born and raised in moore and knows this early the things i go north and south. keystone pipeline divides washington. perhaps it should not. republicans and democrats may be able to find a common ground. congressman, wonderful to have you here with us this morning. change theice of oil search for a common ground? .> no absolutely not. oil fluctuates up and down, and for american consumers, pretty good recently. long-term you have to build the infrastructure and transport the product. keystone is a critical element in that and is imported in our relationship with our friends to the north. a lot of americans forget we run a pretty important type line called the alaskan pipeline through their territory. >> if you are going to meet with the house and senate leadership today with the president, what would be your single talking point to president obama? >> energy security. frankly, making north america energy secure. not only important economically but also it has important geo, strategic implications as well for our country long-term. congressman,quote, that you gave to bloomberg news a couple of days ago, which is that the president is trying to "bait house republicans into a fight that risks a government shutdown." standing on the rotunda, how do you walk around to your colleagues in that building and keep them from taking the bait? [laughter] >> i think you just reminded what happened only a year ago in the last shutdown. thinkof people, i mistakingly, let us into a fight where we shut down the government to defund obamacare. it did not do that. our own numbers limited, the american people i think rightly were upset, and if it had not been for the failed rollout of obamacare, we would have paid a heavy price for that going forward. we should not repeat that same play. we know it does not work. there are other means to oppose the president without shutting down the government. our aim should be to shed on the presidents, not the government. >> two years ago, you said something really interesting, which is that part of the problem right now in congress for both parties is that earmarks are gone, and that was part of the way things got past, business got done. what else needs to be done for you to start getting more bills passed the president will sign? think things will change. we have a republican senate now, so the senate has been basically a graveyard for house legislation for years now. that is getting ready to change. but it has still got to recognize the president has a veto and the senate has a filibuster, and democrats have enough votes there, so it will be important to find things that are bipartisan like keystone to give the president frank way some tough decisions. we put that on his desk. majorityhelming of the american people favor that. labor unions favor it. let's give him an opportunity to make a decision. >> congressman, stay with us, richard haass is with us from cfr. your book is on his world. are you happy with the initial dialog that you see with the republican senate and republican house? progressy can do some on trade agreements, particularly the transpacific agreement, if you can do sunning on keystone, which in addition to everything the congressman has correctly set, it will send a powerful signal. we want the french to do fracking. how can we get them to do tough energy decisions if we continue to kick this down the road? >> congressman cole, what you say to conservative republicans, those who are on edge about any kind of getting something done? how do you address them in the house and even in the senate? >> again, we have been given a majority for two years and both houses. the worst thing you can do is do nothing and simply throw rocks at one another. we have got to show that republican governance works and not only ported to maintain those majorities -- it is important to set up our next presidential nominee to have a chance to win. we have got some things we know a bipartisann in basis. we have things we can work in with the president. trade is one of them, tax or four might well be another, none of us like isil, there could be a bipartisan new authorization on syria. find the areas we have in common, continue to oppose him when we think he is wrong, big if things done. >> congressman, thank you so much, tom cole from the fourth congressional district in oklahoma. julie, such an interesting guy to go beyond the monday and politics. dane- the on the mondaun politics. >> it is. not just the pipeline, charge him on immigration -- >> tom cole has always been a member of the getting things done. >> exactly. i would like to see a beer between tom cole and president obama. >> i would like to see a beer between me and tom cole. coming up, colleges are turning away students at record ♪ rates. >> good morning, everyone. "bloomberg surveillance." i am tom keene. brendan greeley and julie hyman with me. scarlet fu rumored to return sometime before christmas. let's get to our top headlines. ask hong kong's government is beginning to clear away barriers that have blocked the city center during seven weeks of protest. authorities met little resistance from the pro-democracy demonstrators. there has been no action to clear barricades in a more volatile protest zone. turning to japan, prime minister shinzo abe is moving to jumpstart an economy that has fallen into recession. an 18-month delay for an unpopular tax hike set for next october. a sales tax increase earlier this year is partly to blame for the economy. the premised or is dissolving parliament this week. held december be 14. sony is hoping a superhero will help with the revenue growth. "spiderman"he new movie to grow in the next six years -- in the next three years. those are your top headlines. >> a week ago -- i love this warm guidanceour along with times of straightness really helped our daughter bomb the sat's. >> let's hope your daughter does not read that. >> 5% of high school seniors who apply to stanford university were accepted last year. that is down from double-digit omission rates less than a year ago. cohen has a consulting form, iv wise. you were an admissions officer at yale university. first of all, thank you for nothing. [laughter] second of all -- how many people around this table got rejected? is that a rational strategy? >> no. there was an article in the "new about students submitting a crazy number of applications. we advise our students to submit to 1510 applications applications, still up from about 10 years ago when we were advising kids to do. the problem is it is very hard to manage more than that and make sure that the college knows that if a top choice school for the student, because colleges are concerned about their yield, which they are looking at for their ranking, and they want to make sure they offer you a place and you are going to come there. >> we are looking at the top five here, all of the ivs, yells going, columbia going down, princeton is going down. is there a floor there? most the top level at the selective schools, we see rates drop, so stanford last year, 5.07%, and seven years below that, it was 10.3%, so we are seeing those numbers drop. we are even seeing small liberal arts schools, your child goes to middle barry, at 20% or less. amherst 13%. >> i am sure you have had things thrown at you in speeches -- if my kid goes to middlebury, blah, blah, blah. when does this disease start? need tots and students think that most of for-year universities except two-thirds of their applicants, so we have over 3000 -- >> does anyone on the east coast know harvey mudd? >> they should. if they cast their net wide and do their research well and they put together a balance list of schools, some reach some targets, they will have -- >> thank you, a balanced list. >> great choices -- how much does it matter where you go to college? isn't the disparity between someone has gone and someone can go at all? isn't the income disparity much greater than between say a yale and a harvey mud, for example. what you makee is of the experience because you could go to harvard and not make relationships with professors, so it is what you do when you get there that is important. atcan look of course business and all walks of life and look at people and where they have gone to college. where they have gone to college does not necessarily guarantee success. it does not also guarantee that they will get that high-paying job at the end, so harvey mudd is a school where you can have the highest salary. >> we have got to take a break, cat. >> this is "bloomberg surveillance." we are going to -- we are going to continue with cat cohen. i want to pull up another couple of acceptance rates dropping. these are not randomly chosen, these colleges we are looking at, tulane university, rochester, my all mma mater, keene, tom randolph-macon for julie. >> yours is a tough one. >> mine? something happened after the storm -- they really made a change at tulane. what is driving this from the parents and the applicants in? ofwere just looking at video the leafy, beautiful video at cambridge. what is driving the increased panic about getting their/ -- getting there? >> students want to get that great college education, they are thinking by the r.o.i., return on investment's, they are thinking what the job market and what is happening after that. as you were saying earlier, it matters what you are doing when you're in school and then how you make the most of the career services, and that alumni network once you get out of school. we teach students that. driven.is financially colleges have to justify the $50,000 a year. increasingly private high schools, have to justify the 35,000 dollars a year. how much are we on a financial treadmill? >> this is one of the problems with higher education, especially the cost, going up something like three times the rate of inflation and how are we going to be able to sustain that over the years? however, one can audit for free any of these classes at harvard, m.i.t., princeton -- >> it drives me nuts how we go back -- my mother called it harvard on the brain. richard haass, you are in the trenches. every kid in the international relations would kill for an internship as cfo, when you look at a resume, what do you look at? >> not the grade point average. at is least interesting. we look at how a serious courses the young person has taken, what they have done what what rigor -- what they have done -- >> rigor! any great public school, what do you look at on a resume? >> a college is going to look at the same thing, course rigor first, if the college accepts standardized test scores, but they also look at the student having pursued their core interest. they do not want a jack of all trades, and made an and packed in their community through those core interests. that is crucial for the engagement with what they are doing. >> what about the problem of middle and lower income kids getting into the best colleges, you know, not only do they have to pay all of these application fees and if they are applying to 20 places, they have to pay 20 application fees. they have to pay to visit the college, do what the tuition, the debts, have to do with maybe paying your fees if they want to get into some of the ivy leagues -- we are talking about an enormous cost. >> tom cole was just on from the fourth district of oklahoma. he went to rent out college. -- he went to grinnell college. >> tough to get into. top sevencus on the schools drives me nuts. >> to answer your question, families need to start in a financially very early on, not just for the cost of college but for the cost of applying to college. >> this is part of -- you charge a fee to help people get into these colleges, which is a noble service, but it really dries up the price. every parent is stuck in an arms race. >> the bottom line is we are talking 40 schools, and everybody else has got seats to fill. >> it is true that most schools will accept two-thirds of their applicants, but if you look at the most selective schools, that is what is driving this sort of insanity, as we just read about in the "new york times." >> do students know what pepperdine is? >> yes. >> her argument is we are undervaluing the schools i do not have the big reputations. the quality of the education is barely correlated to the reputation. >> my argument is students need to create their list based on what is important to them, so if well-balanced list of all good fiscal's entry them all like their first choice, they will have a good place to go. >> kat cohen, thank you very much. twitter question of the day -- could you get into your alma mater day? tweet us @bsurveillance. ♪ >> good morning, everyone. churning markers. we say good morning. i am tom keene. with me brendan greeley. scarlet fu -- when is scarlet back? is she sick? goodam having a really time with julie today. >> i am having a good time. but i really hope that scarlet gets well soon. i do have a long day, but it is worth it to be here with you guys. a.m. up at 3:00 >> i am feeling so much love. >> your nose is growing. >> i know. let's get back to keystone, which we talked about a short while ago. the keystone pipeline is on the senate floor today, and while it is a lyrical flash point, does -- a politicalke flashpoint, that the pipeline make economic sense? anchor betty liu was talking about this on her show. we were talking with cole, veryive tom much in favor of keystone. you guys are what to talk more deeply about it. on sincerld has moved 2008 when transcanada first put in the ripples all that they wanted to build the keystone pipeline, which -- put in the proposal that they wanted to build the keystone pipeline, which flows across the continental united states. look, oil now, julie, is at $100 at the time, now it is $75, right? we were producing in the u.s. about 5 million barrels a day, now we are producing 8.6 million barrels a day. our energy independence has grown, so it raises the question whether the world has moved on, do we still need this? >> richard haass, you travel everywhere. we are seeing this all over the world as oil becomes less expensive, the expensive projects do not make sense anymore. >> that is true, but keystone has become something more than a narrow energy project. for canada, it is a test of its relationship to the united states and for a lot of people it is a test about the american ability politically to take tough decisions in the energy space will set be on the keystone and how much oil it puts into the united states, bottom line is it will not change the environmental impact on the world. this stuff is going to be produced and moved, so this becomes -- as much of anything -- about politics and our willingness politically to take top decisions, even if it offends some environmental lobbyists. >> richard is right. oil is coming out of the tar sands no matter what and the fact of the matter is that instead of being transported by a pipeline, it is already being transported by rail road, so those of the oil coming out of the tar sands. the oil is going to matter what washington does. >> you are going to talk to jack gerard, head of the american petroleum institute, michael weber of the mg institute -- >> they are on different sites, sub they will be debating. gerard says the keystone pipeline is needed, michael webber sets let's move on. >> it looks like congress is not looking to move on. we are looking to that conversation, betty liu, thank you so much. >> iran as well. a lot going on in international relations. we talked to richard haass of the council of foreign relations. what you need to know about united states, europe, and iran. stay with us worldwide. "bloomberg surveillance." ♪ >> good morning, everyone. "bloomberg surveillance." tomorrow, one of our most popular guests will get you ready for investments in 2015. she has been long and right, you haven't, i haven't. ers within, liz ann sond a prosperous 2015. look for that on television and radio tomorrow on "bloomberg surveillance." we say good morning. here is julie hyman. doff says $10d billion has been recovered. irving per card said two optional funds have just agreed to pay a total of 490 million sub -- $497 million. federals serving at a prison in north carolina. send cash to each other. the new feature is called snapcash and will be available to users 18 and older with a debit card. it gives access to snapchat users who send more than 7 million disappearing snaps a day. ikea makes its biggest process tonergy date, the number of wind projects ikea owns 29. it plans to -- to 9. we see corporations continuing to lead on these types of her new will bowl investments. ask very good. on international relations, richard haass with us with the council on foreign relations, and we look to a deadline, november 24, a deadline between iran, the u.s., europe, multilateral does not begin to describe the diplomacy needed to get multiple parties and constituencies of those parties to make tough decisions. those talks will be in vienna. there is no hall of mirrors is there? none of the romance we read in history books. >> it is tough diplomacy and so tough that the one thing we will be unlikely to get is a fully developed agreement. we will be likely to get a second interim agreement or a framework agreement with many principles and details to be filled in. >> who do we speak to in tehran? >> the foreign minister, who is very close to the president, mr. the main pointen person. this is the president's negotiation. the end of the day, the supreme leader is the force but not at the table. >> there is a confusion upon americans, so shattered by 1979. about this linkage of religion to the nonreligious state of iran. >> if you are sitting in negotiations on the side of the united states, what are you willing to give up to get a deal? >> i think the issue is -- how much capacity in the nuclear business do you allow iranians to keep, and i think your answer is we will let you have more capacity than we want to if we have confidence that we will and sufficient transparency oversight, so we know that is all you have and no more. it is both a question of capability as well as transparency and our ability to investigate, and then at the do youbate now is also allow the iranians more numbers, more centrifuges if we know that they are not sitting on fuel? it is a detailed arrangement that you can have slightly more capacity so long as you are forced to park your fuel say outside of the country and russia. multi ringcome a circus. >> how much trust is there? any trust between the two parties? word.st is a funny as ronald reagan said, trust but verify. there is a history of iran cheating here. sorry to use an undiplomatic word, but there has been cheating. >> russia is trying to stick its thing are in the pie a little bit. >> they can be important because they have a decent relationship with iran over the years. they have had on-again, off-again negotiation about giving the iranians a reactor. the fuel produced will be parked outside in russia. >> but your theory about order and disorder, russia does not seem to want a good relationship with anyone else right now. why would they do that? >> financially it makes sense plus they want to be a player. it is wrong to write russia off. i would not assume they are terrible ever. they have a history of playing a constructive part. >> in kissinger's world order, the iran chapter is frightening. you read the chapter, you go really -- is it that bad? do americans understand how important these meetings are? i think it has gone over our heads. >> it is important for the middle east. imagine if this fails what what what happens if this fails? israelis will have to make a very short order decision about what to live with and in others, the saudi's, the ejections, the turks, they are going to say -- the saudis, the edge of shins, the turks will say hold it, we do not want to live in a world where only a ryan has capabilities. >> we had helima croft on, and she said the saudis buy the biggest and best toys but never deploy them. do you see them as a real presence in the region? >> they are now. they will continue to play a heavy hand the city iran. >> you get on the "surveillance" ulf stream out of dubai and you go out over the persian golf, where does the united arab emirates play in? become a real player. it is hard to exaggerate how opposed they are to both iran's bid to nuclear weapons and iran's bid to regional primacy. -- the uae is lined up. >> let's get to our agenda. i looking forward to economic and international relations. the news of the morning on japan. here we are with japan's struggling with truly decades-long deflation and tepid nominal gdp. we will look for the election there. ambassador haass, what is the one thing to look for in the coming days from japan? >> it is what the government says it will do if reelected. what is the case for free voting? what is the mandate, and what is the calendar for introducing real reform? the am taking a look at keystone pipeline today. richard haass come i was fascinated -- you said keystone pipeline is no longer an economic issue, it is purely a political issue. >> absolutely. it is being produced and shipped, the question is where it is being shipped, the environmental impact is monthly better if it is shipped to us by pipeline than if they goes by rail or by truck. but increasingly, you are right -- it is symbolic. for people who care passionately, for the tom of the world and everyone else, this is how you measure the fidelity -- >> what should they measure fidelity by if not by this? >> take real things, like how hard you push for a carbon tax. there are serious things we can and should contemplate. this is not one of them. this is a mistake for the environmentalists to make. >> thank you for saying carbon tax on air. we cannot say it enough. >> i will be heading toward north bergen, new jersey today to a walmart supercenter. they are going to be talking about holiday plans, black friday, i will be talking to the head of their general merchandise business, which is everything you cannot eat or consume, so it should be quite an interesting -- >> they want to be open twice four hours a day for the next 40 days or something -- they want to be open 24 hours a day for the next 40 days or something? >> it seems like it. they talk about different things they try to do to mitigate the trampling from the stampede. >> adrian was adamant that every dollar of bricks and mortars goes to the internet. dollar for dollar. reachare all going to into our own path, try to accuse, the twitter question of the day -- could you get into your alma mater day? is answer -- undergrads that a state school, yes, grad, i'm not sure i could afford it, or i would ask whether it is worth it. next answer -- i could get into my all mma mater today, but i could not get readmitted when i flunked out. last answer -- i could not afford it today. >> funny thing is -- >> i was the last one of my class who did get admitted. i got my letter in august. i doubt i could get in today. >> somehow you would have made it anyway, right? you are a plucky guy. >> plucky, that is the word. >> where did you go to school? >> overland college. >> my mother went to that school. it cost $185 -- >> a quality education. >> i could not skate at rit. i majored in hockey. i did not go to school. there we are. green on the screen. stay with us for another hour. good morning. ♪ >> good morning. it is tuesday, november 18, and we are alive from bloomberg headquarters. you are "in the loop." i am betty liu. japan trying to get itself out of recession to a vote today. we have got your morning covered. six years after keystone was proposed, is the pipeline still economically necessary? has the world move beyond the pipeline? we asked scott ritual of rigell of- scott virginia to weigh in. and, making a comeback at a start up, and 15 years after affirmative action was introduced in the u.s., we're still fighting over race-based emissions. why harvard is now getting sued. first, a look at the top stories this morning. japan's prime minister is trying to get the country's economy back on track. hike, pushing the japanese economy into recession. plus, calling for new elections.
than what the union laborers are requesting. nissan says they expect to pay the highest average monthly rate with ¥5,000 a month. a little change. we saw the stocks rise in japan. we expect to hear from the governor in less than half an hour. manus: let's talk about the composite. it is a 72% gain in the past 12 months. is this a reserve requirement drop or more stimulus? yvonne: we are talking about a huge rally that we are seeing. we are talking about these sign-ups seeing the highest since before the financial crisis. the highest level as we mentioned. airlines and utility companies jumped. investors seemed to be betting on the stimulus in the hope of the economy. we talked about how the pboc is ready to step in and thread the needle of reform, if they need to and they see the economy slow down. some strategists say this means there is a bottom-line that is strong right now. china will step in and make sure the 7% growth target is reached and will not go any lower. manus: thank you for the roundup. mark: israelis have begun voting in a general election that coulsd see netanyahu be defeated at the polls and retain his position as promised or. -- as prime minister. confused? does it come down to voting blocs, rather than party? elliott: that is right. voting began an hour ago in israel for the election of the 19th prime minister. they will stay until 10:00 p.m. after that, we will get exit polls which are a good indication of who has won the election and who are likely to be able to form a government, in terms of a coalition. the numbers have changed for netanyahu's party, which was leading in the last opinion poll and trailed by four seats. the constant has been more right-wing parties adding up to a greater number than the center and center-left parties. there seems to be more coalition partners for netanyahu. unlike in many countries, the leading party, the party that wins, does not automatically get tapped by the president to form the next government. he will look at the results, and the official results come out late thursday, and, after one more week after that the resident will decide, looking at the numbers, which party is most likely to form a governing coalition. it may appear to be the right wing. there are a lot who are waiting for the results to come out. he may decide the government of national unity is the best bet. that could have netanyahu sharing the prime ministership with herzog. it would not be unprecedented. there are too many unknowns. if i were a betting man i would not bet on the outcome of the election. mark: we had dramatic developments last night. elliott: a couple of things. netanyahu trying to shore up the right-wing base, giving a speech from a settlement saying categorically, if i am elected again, there will be no palestinian state on my watch. that will play well to his right wing voters. that will not do much to improve relations with the united states. another development is the zionist union leading in the final opinion polls. it was always can to be the case that herzog would be prime minister for the first two years and he would switch with livny who was once part of the same party as netanyahu. she offered to relinquish her prime ministership if it meant they were more likely to form a government. the zionist unit has described this as a noble offer. it may come down to the fact that she loathes netanyahu more than she craves power. she does not want to see him serve another term as prime minister, mark. mark: obama is neutral on these matters. is it fair to say that he will not shed tears if netanyahu is ejected from office? elliott: anyone who has watched television for the last two years will know that the relationship between obama and netanyahu is not as good as it could be. it reached a peak when netanyahu went to congress without the approval of obama. congress is controlled by the opposition republicans. he gave a speech warning of the dangers of a bad nuclear deal with iran. the white house refused to meet netanyahu. the white house said they do not meet run ministers in the middle of domestic election campaigns. if there is a victory for the opposition, that would give a chance for u.s. and israel he relations to reset themselves. there are -- is really relations to rid set themselves. -- israeli relations to reset themselves. they want a better partner for the negotiations, in the form of a government led by the zionist union. netanyahu said, no palestinian state. 50 is elected prime minister you can forget about peace negotiations. mark: we will speak to you later, elliott. anna: 10 minutes past 6:00. let's talk about technology. another day and another skyhigh valuation. it is pintierest. here with more is caroline hyde. the valuation is growing. what did you call it? i heard it called online scrapbooking. caroline: exactly. if you are decorating your house, it is a mild obsession. mark: we are all looking at it. manus: we went to my pinterest. i have to say it is inspirational. you go into it and it is a volume of images. caroline: it is not just decorating your house. anything and everything. you can put it on a board and save it. it is 11 billion dollars, doubling the valuation in less than 12 months. it raised money at $5 billion. it is on the scale. they are on the hunt for a little bit more cash. it is new and existing investors for series g, as it is known. manus: the half 15 investors lined up. -- they have 15 investors lined up. what will they use it for? caroline: how do you make revenue from this company? they have not been building out advertising. they started to. they were beta testing. you can see promoted pins. you will see certain tweets pushed toward you that are sponsored. similar things will happen with pictures. bring that international, that is what they have to be doing. build it out and make it e-commerce. you see a picture, want to buy it there and then, and you cannot. they need to use the my to expand internationally. the numbers are stark. international users have doubled. they are half of all of those who use pinterest. they have offices in london and tokyo. they need to scale that and use the advertisers. you have to see it. last week snapchat, $200 million they raised. manus: is this a race for yields? mark: how exclusive is this? is it exclusive if you are above $10 billion? caroline: they were called unicorns, if you were valued at $1 billion. now, you have uber and snapchat. it is the sixth most valuable privately-weheld startup. many are cautious the money is too easy to come by. we will see the unicorns start to fall over. anna: the business model lends itself to a shopping source of revenue. caroline, you do not speak from experience. thank you very much. we have numbers coming from sony. they reported sales, including the pictures division. this includes the pictures to deivision. the operating profit is ¥182 billion. this is what they say about the forecast. the eggs japanese companies tell us about forecasts and that is where analysts focus. the net loss and ¥8 trillion in 2014 revenue. they are tying up loose ends. manus: join us on twitter. european equities are indicating a little bit lower at this stage. anna and mark barton, what is on the agenda? mark: china. copper. the red metal jumping earlier this week, following the premier league pledge to boost expansion. we will bring you an interview with this man, the first interview of the day. we will talk earnings, prices chinese demand, in just over an hour. manus will be sitting down with him one-on-one. mark: the stories on bloomberg this hour. that is according to the financial times. the move delivers a blow to the united states. western countries should stay out of -- it charges western countries should stay out of these institutions. including android devices, apple is seeking to fuel more iphone six and iphone 6 plus phones. more people have switched to android -- to apple from android. according to the oil minister, after talks resumed with the u.s. over the nuclear program, the world powers are working towards a deadline to end the decades-long dispute over the program. uber's cf is leaving the company, he expanded -- cfo is leaving the company. he expanded in 53 countries. he is leaving for personal reasons. anna: mario draghi spoke in frankfurt yesterday. here is what he had to say about the euro area advances. draghi: the euro area has advanced a long way. we began with a single market, currency, and monetary policy. have a supervisor and resolution of authority. soon, a capital market. anna: let's look at japan. central-bank spurs have decided to keep record stimulus unchanged. -- central bankers have decided to keep record stimulus unchanged. let's bring in unicredit's head of global equity strategy. thank you for coming and. -- in. the bank of japan, steady as she goes, despite 0% inflation in the japanese economy. >> what is interesting is that we have had a gradual downgrade. in the previous one, we had a downgrade of consumption outlook and we have downgraded the consumption outlook -- the inflation outlook. if the effects continue to be negative, as they have been this provides a good excuse for the bank of japan to say the slow down in prices and price inflation is temporary, having said that -- temporary. having said that, domestic demand is rare in japan. anna: can it get a boost? >> it might. a lot of the world and outside of the u.s. is going to get a boost in real demand with a lag from lower oil prices. what is interesting is, the decline we have seen is abrupt and concentrated in the fourth quarter of 2014. a lot is in the pipeline. manus: we have an article on the yen and the bank of japan. the bay japan is hitting a target of 2%. -- the bank of japan is hitting a target of 2%. the last time they saw that was in 1998. is it achievable? >> i think it is. to be honest, whether we go to 135 or 140, one can debate that. japan is facing ongoing structural problems. it is highlighted by the fact that real gdp and consumption, as well as inflation expectations, are at the same level that they were prior to the bank of japan initiating the program. that speaks to qe failing to do anything. in general, it irrespective -- in general, irrespective of in gauging or not, -- in gauging or not, they need to work on the yen. -- engangging or not, they need to work on the yen. mark: do they need to take into account the strong dollar in their deliberations? >> as far as the word patience is concerned, we can expect them to drop that. not just us. pretty much everyone. a lot of that, pretty much all of that, is in the price of the dollar. we would need to see a hawkish build somewhere else for the dollar to get a meaningful boost. as far as the fed being impacted in the decision with the language or the timing i would say a couple of things. first of all, it would be unusual to use the dollar on the statement. this is more likely to be reflected in the minutes that will be published later. the second thing i will say is, yes, the appreciation has been steep, by historical standards. the level of the dollar is not completely unprecedented. the other thing we need to take into account is the u.s. economy not being like other economies. that means the filtering through the export channel into the real economy is quite lower, compared to other economies. at the end of the day, payrolls if you look at the trend a basis, is raising by 300,000. that is the highest since january 2000. the output gap is diminishing. the fed analysts will wake up tomorrow and see the increase. the fed will see through that appreciation. anna: some people are drawing parallels with a time of appreciation in the dollar the strong and not having seen this for decades. we have not seen the strength of the dollar in this particular period since this time. our historical perspective useful? >> i think they are. when you draw comparisons, as i said, the pace of appreciation has been unprecedented. it is steep. having said that, we have not really seen a big effect on the u.s. economy. at the same time, what was mentioned before, oil prices will boost real demand and, if there was a negative impact to the export channel, i suspect it will be largely -- manus: one of the things that caught my eye was that you were more ambitious for sterling the rest of the market. is that smart timing or hopeful thinking? >> what we published recently we said the next 1.5 months, in the run-up to the election, it will be increasing volatility and a downside pressure. the fundamentals in the u.k. are strong. the gap between the timing of the fed and the rate hike is the second thing. mark: porsche takes on elon musk. can the luxury carmaker overtake? manus: you're watching "countdown." the dollar desperate times call for desperate measures. yesterday when the manufacturing data was out, a little bit disappointing, they sold the dollar, doing anything to hold on to cheaper rates. lowest since 2009. there was a little bit of a shake in the dollar. you're going to see this level of the dollar. dollar/yen we just had unicredit in here saying it is just a matter of debate. q.e. has failed in japan. thus far in terms of benchmarking the numbers from where they started to where they are. it is probably going to take more. that is the view from the markets. would have made about 20%. the question is yen still your funding currency of choice? dollar/yen needs to get to 1.40 for them to achieve a 2% inflation target. when it comes to minutes and the meeting of minds, the aussies told us what they thought on march 3. the current set of growth and inflation forecast suggests a need for further easing. however, i love what r.b.c. said. the aussie dollar dropped ever so slightly. blackrock said get ready for an 8% drop. r.b.s. said it is firmly intact. they want to keep the maximum pressure on the currency at the moment but there is a little bit of patience. a little bit of patience and tolerance goes an awfully long way. anna? anna: thank you. it may be the smallest division at goldman sachs group but it is performing well. they are expecting to see a 10% growth in the foreseeable future. the strong performance comes after three years of mismanagement and returns trailing behind. chinese billionaire is considering a commercial property growth at curbman and wakefield. -- cushman and wakefield. the owners are seeking about $2 billion. blackstone group is buying major stakes in hedge fund firms looking to cash out. most recently they bought a stake in an asset management company. they have raised more than $3 billion to buy stakes of 15% to 25% in established hedge funds. mark: let's bring in chris for the conversation. chris what is behind this move from porsche? guy: well the luxury car has taken notice as a desirable brand and aspirational brand and they are all trying fight against that. what porsche is doing by rolling out, planning to roll out the pure electric car. it is targeting tesla's emergence. it is also a play against regulation. in certain markets like china and california you have to have a pure electric car in order to keep playing the game there. they need to have electrics out there available to the consumers. it is also to counter tesla's rise. mark: is this move unique to porsche, chris? guest: no, it is not. por that belongs to volkswagen. audi plans to roll out an electric s.u.v. coming out by 2018. porsche by 2020. b.m.w. is already if the market. tesla is starting to ramp up the factory. production is going to start there. by 2020 they want to get to 25,000 cars. this is a move by a big player in that space where tesla plays in the luxury segment to counter tesla's rise. it is a pretty significant move. volkswagen is going into electrics. mark: do we know anymore details about that car, what it is going to look like, how much it is going to cost? guest: we don't have details on what kind of electric car it is going to be. they said they want to roll out their seventh model and have given us hints about what direction it could take. it is going to be a direct attack at tesla. like the audi will attack the model x. porsche said they want to go with a sports car at some point above the porsche turbo. that will be what they call a ferrari fighter. it could be an electric sports car like that. we still don't know the details and porsche is keeping us in suspense. mark: thanks a lot. let's shift the to douse the u.k. economy. george osborne is expected to unveil tax breaks for britain's oil industry when he announced the government's budget on wednesday. they have been hit hard by weak oil prices. bloomberg spoke to three people at the heart of the industry to talk about the risks and the opportunities facing the north sea. >> completely starved of investment. i think that unless something is done this could be -- this could be a -- could create demise of the north sea -- i haven't knelt concerned and anxious about it since 1986. 1986 is the worst i've experienced in 30 years in the industry. production has come to fruition. i think see a lot closing down and many leaving the industry. >> i've been through five of these. what will happen is the -- gelt busier than ever. -- get busier than ever. >> they have got flabby. they have got fat. >> it has been a bubble. if the bubble bursts, do we end up looking like -- here. it is another person's opportunity. a private equity firm, the owner said to me recently you to love the downside. actually you can create a lot of value. >> separates the men from the boys. >> if we want to get through this difficult period -- healthier for the future. anna: you can join us in conversation for the future. we head to the budget tomorrow in the u.k. that is going to be 1-2-3 of the topics we're discussing. what is the action the chancellor might take to boost the energy sector in the northeast. you can find me at annaedwards news. manus cranny at manuscranny. ♪ mark: top stories on bloomberg at this hour. australia says another interest rate cut could be needed. they have below average growth if the economy. they last cut rates in february. angela merkel reiterated -- agreement for a cease-fire in eastern ukraine. speaking alongside poroshenko, said sanctions against russia are still on the table. >> what happens if it will not be implemented, we will not talk about possible actions we can take. if violations are happening, we will decide about more sanctions against russia. but this is not our main point. our main goal is to see how we can find a political solution that provides the implementation of the entire minsk agreement. mark: iran could raise oil exports. talks resume with the u.s. over the nation's nuclear program. they are working for an end of march deadline to end the decade-long dispute over the program. you're looking at live pictures of the bank of japan governor. he is speaking now and says that policy won't be affected by the temporary c.p.i. drop. the b.o.j. kept its stimulus unchanged. they warned that inflation will will be brought to a halt in the third biggest economy. inflation is 1/10 of the bank of japan's core inflation target. kuroda is choosing to look through that. kuroda as of now theys the bodily injury can't rule -- b.o.j. can't rule out a drop. a downgrade of expectations from the last meeting. now he is admitting that the key inflation gauge could fall below zero. what it meevens for policy is what is most important here. will it ultimately mean the the b.o.j. has to implement more monetary easing on top of the unprecedented stimulus that is already announced. kuroda speaking after the b.o.j. kept policy unchanged. we'll keep dipping in and out of that news conference. anna: when was fivered win a fourth nerm office in israel but a late surge in the opinion polls made its leader a real contender for prime minister. who is he? elliott gotkine reports. elliott: until recently his name may be registered outside israel. inside the jewish state the saudi name carries the same weight as the kennedys or bushes in america. his father was u.n. ambassador and then president. his uncle was the foreign minister and diplomat. his credentials are not too happen isy either. educated at cornell and n.y.u., he served in the army intelligence unit where his intellect rather than his slight physique would have come in handy. he worked at a law firm founded by his father before becoming a party fundraiser in 1999. his only political positions of note have been housing tourism, social welfare. now he has a shot at the top job. the last opinion polls suggest his zionist union may win the largest share of the vote. he would work on lowering living costs. he promised to let his partner take charge after two years. anna: elliott gotkine joins us now from tel aviv. good morning. what is the latest then? elliott: i should say last night, he offered to relinquish that part of the deal where she would become prime minister for two years if they get to form a government if that was standing in the way of their forming a governing coalition. if netanyahu had his way iran would have been one of the central focuses of this election. he discussed the importance of iran in this vote. i'm joined by the mayor. great to have you with us. does iran matter? guest: according to the polls that were carried out in israel, only 10% of israelis see iran as a top election issue. nobody in israel wants the iranian regime to have nuclear weapons. that is one of the few things that there is a consensus on. in terms of top election issues, only 10%. not more. elliott: three weeks before this election against barack obama did that help? guest: it did not show -- a surge of popularity. it didn't seem to make his life any easier. it actually has given ammunition to the opposition and the voter has not i think been moved by that issue. i think when it comes to typical -- probably we're going to vote anyway without that in terms of turning other voters into supporters iran is not the top issue. i don't think it is successful in attracting more support. elliott: could have been here, he was over there instead. interesting enough as you say, the leader of the zionist union, netanyahu said he would be weaker than iran. they don't necessarily agree do they? guest: it is not what you say. it is how you say it. he doesn't want a nuclear iran. he also is not for the current deal although his way is different. he is not going to taken to best friend of the state of israel, the united states publicly. i think if he doesn't like to deal, he is not going to stop it. he is going to address the issues to have united states behind closed doors and try reach some kind of understanding. if he can't stop this deal israel will live with it but with a better relationship with the united states, especially safe in the knowledge that if iran doesn't respect the deal that united states will at the minimum impose tough sanctions again. elliott: although he would still disagree with the united states potentially on a nuclear deal there would be way to detoxify the relationship. a follower of u.s. politics said champagne corks would be popping in the white house if he gets into power and netanyahu doesn't. guest: one of the first people he would call would be the president of the united states. i think it would be safe to assume one of the first countries he would visit would be the united states. absolutely. i think many people are very concerned about the direction which israel/united states relations are going. this is one of the first issues he would address. elliott: according to the polls they could be the third biggest party in parliament. you would you really see an israeli government including arab parties? guest: it is possible. we could see that once they join the government they can't fracture and some could split off. elliott: great to have you with us today. i'll be here throughout the day giving you the latest on those israeli elections. polls close at 10:00 p.m. local time. 8:00 p.m. u.k. time. we'll get the first polls immediately after that and only then will we get an indication of who may be able to form the next israeli government. back to you. anna: just over an hour to go before equity markets start trading. let's that v a look at what we found on the bloomberg digital universe. mark: how do you know you are really made it? i'll let you know. there is one young man. rory mcilroy from northern ireland. number one in the world rankings. he now says goodbye tiger. it is my time. he of course gets his own video game with electronic arts. he is 25 years of age. he has 2.3 million twitter followers. they said he is the coolness factor. he is highly wanted because of his charismatic and he is good looking and golf needs an icon because when tiger woods is not on the screen playing golf, the numbers dip. there you go. should just say that golf games as it were and about $100 million, fifa, the game is expected to earn $500 million. and the nfl. golf still has a long way to go. mark: there is a lovely story. broadcast billions. don't by premier league european success. if you have been watching the champions league two of our four teams have been knocked out. arsenal going into tonight eas game down 3-1 against manchester. need to overcome a 2-1 deficit against barcelona. chelsea are out as are liverpool. it is important because it matters for money and it is europe's most lucrative and prestigious competition. it could be the second time in three seasons that we're not in the last -- english teams. if maybe next year we repeat that feat if possible, we will lose one of the championship maces. rather than the top four going into the champions league, only the top three. one brighton player said money doesn't buy success. premier league players are surrounded by luxury. maybe they think they have arrived and lose their appetite for winning. there is so much money in football here in the u.k. after the recent bskyb package which paid the premier league 4.5 billion pounds. it is shown in the 12 territories worldwide. an audience of 4.7 million. it is big bucks. big impact on broadcast and sponsorship. anna: i feel sorry for these players. it costs a lot. let's talk about oil. there was a link there. saudi arabia wooing five u.s. shale workers to join our team. the state-run oil company in saudi arabia is now hiring out of work u.s. shale drillers. many in the u.s. of course have been blaming the saudis for the collapse in the oil price. i'm sure many the middle east blame the u.s. there is a lot of blame to go around. the saudis trying to keep up their market share in oil market by not cutting back on production in conjunction with opec. it seems they are launching a great effort to increase the amount of shale drilling they are doing. to date they have only drilled eight shale wells. they are hiring all of those guys that have been put out of work in the u.s. great quote from michael weber. saudi's shale recruiting efforts are akin to a chinese factory running a u.s. factory out of business and then trying hire the unemployed workers to improve situations in china. there are various conditions around the working environment. mark: i have a conspiracy theory. saudi arabia trying to cut production so they can have the best shale drillers. manus: the federal reserve has produced a couple of charts about oil production. even though rig counts are going down, it obviously hasn't hit production yet. this is the official federal reserve monitoring the oil markets. all of this discussion about where we are with the middle east producers continuing to pump and pump and pump. mark: rigs have been cut to their lowest level since twen. anna: it is 6:56 in london. we're going to bring you some live pictures from dubai where francine lacqua is hosting a panel in the world's tallest building. the panelist includes bloomberg l. founder mike bloomberg just to name a couple of the participants. one of the hot topics being discussed is the price of oil and what that does to economies in the middle east and indeed the future of cities. we'll take a short break here. mark: look at twitter. this is where you'll find us. at manus cranny, at anna edwards news and mark barton tv. see you in a minute. ♪ anna: chinese stocks returned to pre-crisis highs on hopes for the revival in the economy. we bring you the latest on the global equity rally. mark: inflations are set to stall. we will tell you what it means for the third biggest economy. manus: israeli election too close to call. -- the israeli election is too close to call. benjamin netanyahu's power is threatened. ♪ mark: welcome to count down. i am mark barton. coming up today, john tells bloomberg the weaker euro is good for luxury outlook. >> because of the euro which is week, we have a booming europe. we have a lot of people from the u.s. and china who find it convenient to shop in europe. we see a good development in china. there is a price differential between the u.s. and china that is substantial. it is growing well in japan, which is a stable economy. it is not a booming economy. as it is right now, there are no countries or territories where we do not manage to have positive growth. mark: getting breaking news. european car sales growth accelerating. sign of strengthening expansion -- signs of strengthening expansions and dealer discounts encouraging purchases. registrations climbing 7% from one year earlier to more than 958,000 the calls -- vehicles. the deliveries rose to 1.99 million cars, following january's gain. all five of the auto markets grew in february. the strongest gain was in spain. a government program encouraged trading in vehicles for scrap. it propelled a surge. sales jumped in italy and the u.k.. in germany, we saw a growth of 6%. folks like in v -- volkwagen expanded. registrations are up. bmw is higher. daimler also registering gains. fiat gains 11%. quite a month. the resurgence of the european car market continues. any resurgence at st. mary's -- sainsbury's? anna: the update came through for the retailer. the third largest grocer. the numbers you are looking at are the total sales excluding fuel down 0.3%. not as bad as the drop of 0.4% that the and with had anticipated. if you are looking at the numbers and comparing apples to apples, down 1.9%. not as bad as the estimates. things are not as bad as could have been expected. the company, mark cooper, the ceo gave us not exactly an upbeat outlook. he said he expects the market to remain challenging. food inflation is likely for the rest of the calendar year and competitor pressures on price will continue. he says he believes the value of quality will allow them to outperform supermarket peers. we are seeing competition coming from discounters. this is the fifth quarter of declines that sins varies -- sainsbury's has had. things have turned around. they have been investing 150 pounds per year in price. we will get an update on all of this when we speak to the management later on in this hour. we will talk to the finance director here on countdown in just a few minutes. mark: getting breaking news. a coppermine controlled by che ile's family. analysts are estimating it is below estimates. below $3.33 billion. the company sees copper price volatility continuing. it is more likely the copper market will be in balance. we are awaiting the forecast for copper production for 2015. no doubt, manus will ask the chief executive all about that. he is joined by him now. manus: thank you. i am joined by the ceo diego hernandez. great to have you with us. looking at the numbers, the big subject is the biggest producing mine. you have had blockades and those were taken away. you suffered production hits. you said it is still uncertain what it may produce this year. can you give us more guidance on that? diego: it is the most important mine we have. it accounts for six to percent of our earnings and production. we have two different issues. the blockades are an area where we are having for six years. people are worried about work. we consume 5% of the oil. we are big players there. our commitment with the community is that for any new expansion we will use desalinated water. manus: that kerry's cost and changes the way you mine copper. -- carries cost and changes the way you mine copper. what does that mean for capital expenditure? diego: we are reducing cap ex. we have another program that has started to commission. it is lower than last year. just on the mines north in chile we only use seawater. in chile, there is a water issue from santiago in the north, in terms of new projects. any new big project will need to use sea water. manus: there will be bigger costs if you have to use desalination. what do you think the cost will be? diego: we have moved to seawater and it is included in our costs. in the long-term, you are asking for a cash cost increase of 5%-at 7% -- 5% to 7%. power costs are higher than other copper producing countries. the country needs to tackle the issue and that is what we are doing now. manus: any further update on the copper production? any further quantum on that? diego: we are working in some plants to reduce that. it is too early to give any number. manus: you are a man who has worked for bhp. your knowledge is extensive. where are we in the great debate on capital expenditure with the mining industry? have we hit the bottom for what miners need to rebel for costs? -- to rip out for costs? diego: it takes time to come down. the cost of projects is more normal. it went up tremendously because of high demand for equipment. i would say the cost of products is normalizing. in terms of operating costs, we are all reviewing our costs. i would say we have made a lot of progress on that. there is still some room to go. manus: a lot of the headlines are global stockpiles of. -- up. shanghai has doubled. that gives support to copper prices. you have been through peaks and troughs before. where are we? stockpiles will hit the buffers soon. there is a limit. diego: the expectation for this year was to end the year with a surplus of 400,000 tons. analysts corrected that to 200,000. we have seen some announcement of lower production with some companies. by the end of this year, the surplus will be nil or very small. manus: does that squeeze copper prices quest mark you are the ceo. -- copper prices? you are the ceo. diego: in the short-term. from then on, copper supply will be tight. i am optimistic about the medium and long-term. manus: li said they are ready to act in china. is that music to your ears? diego: well, i think the mining and the copper business will not change too much. i think that the newcomers if they want to be in this business , they have to pay a premium that is not recommended to be paid right now. i would say that, among all commodities, i believe that copper is in a much better position. manus: thank you so much for joining us this morning. great to have a conversation with you, diego hernandez. thank you so much. anna: you mentioned china. the world-beating it rally continued. -- world-beating rally continued. let's head over to yvonne for more. is this about global stock markets or is it china-specific? >> it could be both. it seems like investors are betting on monetary stimulus reviving the economy. we just spoke about how the pboc was ready to step in and thread the needle of reform, if you economy slows down and it hits jobs and wages. investors are optimistic about that. up 3502 right now. we have not seen levels like that since 2008. the best rally lives on. we saw that in airlines and utility companies. mainland investors opened 6 62,000 accounts. the most since december. it seems like a bottom line has been drawn knowing china will step in, if they do not reach the 7% growth target. they will not let it go any further down than that. anna: of course a lot of news coming out of the bank of japan. the central bank has kept the stimulus unchanged and had to a knowledge that inflation could be near zero. -- had to a knowledge -- acknow ledge that inflation could be near zero. >> cpi could drop below zero. that is a change in language. they will be watching the trend in prices. no changes, so far. abe spoke to parliament and said that exiting deflation is not easy and japan is not in a situation right now of having ended the deflation. if you talk about the main inflation gauge, at 0.2% that is 1/10 of the inflation target of 2%. price hikes will be in focus, especially with the wage negotiations going on right now. the governor has said he wants to see if japan and union members can raise wages there. we heard from toyota talking about raising the average monthly wage base. anna: thank you for joining us from hong kong. mark: join the conversation on twitter. happy st. patrick's day. that is a trending subjects today. me and anna bounced into work. there was a reason. anna: he is always bouncing. manus: absolutely. at 3:00 in the morning, just bouncing off of the walls. we discussed the latest earnings report with john rogers next on countdown. anna: welcome back. the supermarket price war wages on. sainsbury's reported better-than-expected fourth-quarter earnings this morning. the business is combating inflation and the increasing popularity of discounting chains. let's talk to john rogers. good to see you this morning. i want to talk to you about how the business is performing. you are investing in pricing. what you have to invest more? >> we will see -- will you have to invest more? >> we will see. we are investing $150 million in pricing. customers are really benefiting from that investment. we are starting to see the positive impact of the investment in our performance. we are seeing volume increases and like to like transactions increasing. we are seeing overall volume in the business increasing as a constant of the price investment. there will be more price investment coming in the sector over the next 12 months. anna: volumes may be going up. sales, not so. how long will the numbers remain negative? >> we will see price deflation for the rest of the calendar year. the next nine months or so. that will work its way through the system and, i do not see like for like becoming positive for the next 9-12 months. that is consistent with the strategy we outlined a few months ago. we were clear about the direction of the market. it will recover. it will take some time. over the next 12 months or so we expect the market to remain challenging. anna: one of your rivals and wrote down the value of the property portfolio. how comfortable are you with the valuations of your property? >> very comfortable. we took a road down to our estate a few months back. less than others have in the sector. we are comfortable with having taken the right down in the right way within our books. anna: we have talked about the weaker oil price and the upturn in the u economy being felt at your sales. -- in the u.k. economy being felt at your sales. are you concerned that the recovery will bypass the grocery sector? john: it remains to be seen if the recovery impact positively on the retail sector. we have seen this before. it normally takes a while for that to impact the food retail sector because what happens when recession starts to bite is , people switch from eating out to shopping in food markets. you can generally see a bit of an upturn going into recession. the same dynamic was reversed going out of a recession. people are now eating out more and that takes income away from the food retail sector. there is a bit of a lag effect. we could see disposable income rising. it has been over the last few months or so. the time it takes to work its way to the food retail sector hopefully, that will see as positive. anna: can i ask you about the wage build? we may see minimum wages put up in the u.k. are you under political pressure to pay a living wage to guarantee the living wage? -- and to guarantee the living wage? john: the entry-level is above the minimum wage. a positive thing. in addition, we also pay bonuses on top of that and we pay a bonus for hard work they have done. we are positive of that our overall wage position. anna: i'm sure you have been reading the coverage about business rates ahead in into the budget. any thoughts about what is going to come through for the chancellor tomorrow question mark perhaps a lot of the policy will focus on smaller retailers. -- for the chancellor tomorrow? perhaps a lot of the policy will focus on smaller retailers. john: the government announced a major strategic review of the system and we actively welcome that as retailers. the harsh reality is that the retail sector accounts for 5% of u.k. gdp and pays 25% of business rates overall. we think it is overly-punitive on the retail sector. we welcome the review. it will take some time. we are not expecting announcements in the budget tomorrow. we welcome any relief the changes to business rates. anna: thank you very much for joining us. good to see you this morning. john rogers, the ceo of sainsbury's. manus: the israelis have begun voting in the general election. let's getting over -- let's get over to elite gotten. -- elliott gotkine. explain this to me, will you? elliott: the prospect of a coalition in the u.k. seems simplistic, by comparison. the last opinion polls gave a lead of four seats to the zionist union. we are talking about 26 out of 120. you need 61 to form a governing coalition. there seems to be more natural right wing allies for netanyahu, who we saw voting at the opening of the polls at 7:00 local time. he seems to have more natural right wing allies with whto enable him to form a government. netanyahu was trailing in the final opinion polls. even if the zionist union wins they may not have enough coalition partners or natural coalition partners in order to form a government. interestingly, unlike in some countries, like greece where the biggest party gets the first chance to form a government. in israel, the president enin a week, will tap the party who he thinks is most likely to lead a governing coalition, even if it is not the biggest one. they have been voting since 7:00. the polls close at 10:00. we will get the exit polls. we will not get final results until thursday. we will have a pretty good idea of who won the election and who is likely to form a governing coalition. netanyahu has lost the election before it became prime minister. he has ruled out forming a government of national unity with the zionist union. that possibility was precluded by netanyahu already. if i was a betting man, i would not be betting on who would win the election and not on the eventual outcome. manus: we will be back to you throughout the morning. anna: 7:26 in london. you can join the conversation on twitter. mark: coming up, european car sales accelerated in february. who was the big winner? we will breakdown the trends! ♪ . manus: you are watching "countdown." let's check on how the dollar is trading. the report tomorrow evening. here you go. desperate calls call for desperate majors. you saw the dollar deal by 0.5%. could it be that the said keeps the word "patient" in their statement? one guest said it would be removed. the bloomberg economic surprise is -- that is the lowest since 2009. it is dipped yesterday. we are seeing london being able to pick up. as i say, it will come down to the change in a dog mark could've the fed refer to a strong dollar again -- a change in the dollar could those say to refer to a strong dollar again? what we have is the bank of japan keeping stimulus from changing. at first, they said to 0% in the near term. kuroda saying it is possible it could go negative. a lovely story on the bloomberg terminal saying the bank of japan means dollar/yen to go to 140 back to 1998 levels to get any chance at all of getting to the 2% inflation target. the aussies came out with their meetings, the rba reserve up by 0.25%. they acknowledge on march third and a discussion the inflation numbers suggest there is a taste for more easing. they will remain under pressure is what the rba is saying. they are patient for the moment. a little bit of reprieve in the aussie dollar. up 0.25%. anna? anna: some live pictures from us bloomberg's city forum in dubai. francine lacqua is over there and she is hosting a panel. one of the participants is michael bloomberg. in the tallest building in the world discussing future of cities. michael bloomberg: america attracted people and what i think is right in the world. those kinds of ends are easy. the hard things are moving money from the police department to the fire department. money from education to sanitation. that's the real world. those decisions, banning smoking or letting people build a mosque if they want to that are controversial but the easy was to make. anna: -- francine: what is the difficult part? michael bloomberg: people want good companies. they look to the chief executive and even she or he has to give the image of -- anna: that was michael bloomberg speaking in dubai. the top stories is our. it may be the largest division at goldman sachs but it is performing well. the banking unit is expecting to see 10% growth. it was shifted to asset management and more landing to more individuals. the strong performance after three years of mismanagement and returns to trading behind. for you a chinese billionaire spoke is considering a bid for kurtzman and wakefield according to people with knowledge of the matter. the firm is among several companies who have expressed interest in cushaman. blackstone group is buying major stakes in hedge fund firms. most recently, the group bought a stake in an asset manager solis. it has raised more than $3 billion in is established hedge funds. mark: european stock to auto sales accelerating in february. a big for vw and bmw. the growth of the sectors continues. our next guest thinks they are trading at a discount. let's bring in tim. hi, temp. had an astonishing year. vw, daimler. -- they have had an astonishing year. that is incredible. a twist on it the other day. 18 billion euros, it is phenomenal. can they continue? tim: we have to look at evaluations and it comes down to the fact that if you look at the big auto names you mentioned some, they are trading in line with historical values and if you look at the sector as a whole, 11 times earnings. 16 times earnings. very good value to us. what is more important is not just they have very strong tailwinds coming from europe but also been part of a larger change. you are seeing companies transform their businesses. businesses which can have long-term structural and much better margins and much better operational leverage. anna: the business is doing that you said are in -- have done the hard work during the downturn. tim crockford: you are right. not just the yen. valet is a good example. we on the stock and how for a while. if you look at back in 2010 they sold overnight percent of capacity to break even. now, they have managed to lower quite a bit to the 70's. it is making products that help the oem's reduce the co2 emissions. when we bought it it was six times and now it is trading at close to 16 times. it is a co2 emission reduction company and we think it is good value. manus: the burning question, the s&p, of the most in five weeks. china, the highest since 2008. added these markets are cracking on just -- and these markets are cracking on just cheap fuel. do you utterly believe? your language is is about value and real production. do you buy into this rally? tim crockford: in terms of where china is, we look at european markets. you have to separate these regions. in terms of china, it has been a case of bad news is good news. and i think you can say the same with the u.s., the flip side. the opposite happening. when it comes to -- apologies to trading -- to turn it to u.s. equities. manus: they are up at a high. absolutely, concentrated, should i pare back in the u.s. or in china and put it all on the big block? tim crockford: we are excited about european equities and not just because that is what we invest in. i think we're genuinely excited about it. i alluded to earlier, there are real structural changes. the u.s. being -- the macro economy has been the doghouse for a long time. it is forced can't -- companies to change for the better. you have seen these companies increase diversification in terms of production to lower-cost regions. you have seen don't go to less profitable. as a result, even if you look at -- was compared to the u.s. and europe looks more favorable, particularly on the at adjusted terms. when you look at europe as much cheaper than the u.s. you can have much stronger earnings because of the improvement we have seen at the company level. we think the rally in europe can go a much stronger way. mark: driven by health care and technology. tim crockford: those are 2 sectors we like. you find exciting ideas. there are things that are driving old. -- there are themes that are driving both. we think that biological drugs from an economical point of you have a longer shelf life than chemical drugs. manus: the roches of the world. tim crockford: roche has one of the largest biotech companies in the world. the valuation compared to some the biotech companies, really attractive. anna: on technology tim crockford: on technology as well. europe is smaller than the u.s.. look at the valuation in the u.s. manus: a bit of up. tim crockford: there you go. exactly. you look at some other european attack shares -- tech shares. they are trading at evaluation in the double digits for in no way like the double and triple's we see in the u.s. they have proven earnings that can grow at double-digit numbers. mark: tim crockford thank you for joining us. manus: join all of us at twitter. you can pick up some of the snippets from anna's interview. and my interview. and mark has been mobilizing us. mark: an auto part for you. auto parts sector in europe has added 107 billion euros to their valuation. anna: wow. up next is the fed watching these 2 charts. ♪ mark barton: time for bargain chart. the federal reserve has a two-day deliberations. two charts worth considering. when policy will be normalized in the united states. the top one is the outlook for inflation. it shows the difference between the yield on 10 year knowles in the same maturity on treasury inflation protected securities. it is a gauge of trade in expectations for consumer prices over the life of the debt. otherwise known as the rate. it is resting at 1.65%, dropping from the pink circle of 1.88%, as crude oil prices tumble. the average has been 1.6%. that has been a average over the last decade. slowing price may be a rate -- a factor in rates. they are awared. teh fed -- they are aware. the gauge is at .82%. it has not been above 2% since 2012. i want to show you the bloomberg surprise index for the it measures weather data is beating or missing forecast. right now, minus .69%. the lowest since 2009. 2009 is when the nation was in the deepest recession since the great depression. the latest days a to disappoint was monday's gauge on manufacturing. the chart, of course is a missed expectation which may be overinflated. a declining trend. look at the green circle which showed a positive. since then, the trend has been a downward trend. it has not been above zero which shows the data is on average beating estimates since he essentially the beginning of the year, the trend is a downward one which may give the fed reason to pause to thought. two very important charts. the bloomberg echo u.s. surprised. is the fed watching? manus: another interest rate cut could be needed. the bank noted low average economy. the rba last cut rates -- angela merkel reiterates the need to get an agreement for a cease-fire in eastern ukraine. speaking along petro poroshenko further sanctions against russia are on the table. angela merkel: what happens if it will not be implemented? right now, we would not talk about possible actions we will take your if five relations are happening, we will decide about more sanctions against russia. our main goal is how we can find a political solution that finds the implementation of the minsk agreement. manus: iran could raise oil output by one million barrels per day. iran is working toward an end of march deadline to end the decade-long dispute over the nuclear program. anna: the biggest drone market remains military but civil drones are catching up fast. caroline koning reports. -- caroline connan reports. caroline: a picture of agriculture in france. ♪ this drone is flying over 15 hecters. the unmanned aircraft takes hundreds of pictures. it will be analyzed. >> this is the sensor with 4 lenses and the data is on the memory card before it is transferred. caroline: a french company has the farmer to save money. with just 2 drone flights a year. the farmer equipped with a gps can go exactly where needed. >> they like to see. advise them and see the people behind it. caroline: france is one of the most advanced countries with agricultural drones. they were one of the first to regulate. for this farmer who took over his parent's farm, the drone will save a lot of time. >> today, it is a revolution for agriculture. our parents were not the drone generation. to increase profitability. caroline: commission 20,000 flights this year. drone generation is looking up. mark: live pictures of israeli voters headed to the polls. the election is today. more on that after the break. ♪ manus: joining us to pick the earnings of part is alan. look at this, down 1.9%. still in negative territory. when will you turn positive? reporter: he said not at this year the prices are falling. they talked about 2.5% deflation. worse than the cpl figure which is around 2%. and realistically, the weakness of the euro may exacerbate that. anna: is that the structural witness in this environment? do they sell more fresh food? charles: people say they over index they are above average in fresh food. but we will see what happens over the year. we will have to see if the forecast if prices will fall. anna: is it all doom and gloom? charles: probably not. their property was unlike morrison's they do not expect to rate it down again. cap pockets of growth. and i think, looking at overall volume growth. -- and they have pockets of growth. and that is a turnaround. maybe seeing customers come back. anna: on a this is rate, sorry. mark: is the work behind them? looking at the shares since september time -- in december time. relatively new ceos. have we seen the worst? charles: i think this is the sort of question. the consensus is that profits will fall again this year. same with the tesco and they have taken a huge hit and they are expecting maybe no profits in the second half in the u.k. again, it depends on what happens over the next few months and whether we see another step down and profitability. anna: charles allen joining us with the latest on sainsbury. "on the move" is up next. manus: happy st. patrick's day, everyone! ♪ jonathan: good morning and welcome to "on the move ." i am jonathan ferro. minutes away from the start on european trading. more records broken. the dax north of 12,004 -- 12,000 points for the first time ever. japan's low inflation. the bank of japan's kuroda could not reluctant possibility that inflation can go below 0%. the shanghai composite close at the highest level since 2008. extending the world of beating. it surged over 70% in the past 12 months. another monster valuation. internet startup interest, $11 billion, double the company's valuation 10 months ago. the three things we will be watching. euro stocks future data flat. dax is up the nine point sprint let's get over to manus cranny. a very special day for the irish manus cranny. manus: a hint of green on the equity markets. excuse the pun. set the tone in the dax. pretty big expectation number. really saying gets ready to lurch into the european markets they have structurally changed th
a senator: mr. president. the presiding officer: the senator from montana. mr. daines: i ask unanimous consent the quorum call be vitiated. the presiding officer: without objection. mr. daines: i ask unanimous consent the senate proceed to the consideration of senate resolution 181 submitted earlier today. the presiding officer: the clerk will report. the clerk: senate resolution 181, designating may 19, 2015, as national skitzencephaly awareness day. the presiding officer: without objection, the senate will proceed to the measure. mr. daines: i ask unanimous consent the resolution be agreed to the preamble be agreed to, the motion to reconsider be laid upon the table with no intervening action or debate. the presiding officer: without objection. mr. daines: i ask unanimous consent the senate proceed to the consideration of senate resolution 182. the presiding officer: the clerk will report. the clerk: senate resolution 181, expressing the sense of the senate that defense laboratories have been and continue to be on the cutting edge of scientific and technological advancement and so forth. the presiding officer: without objection, the senate will proceed to the measure. mr. daines: i ask unanimous consent the resolution be agreed to the preamble be agreed to and the motions to reconsider be considered made and laid upon the table with no intervening action or debate. the presiding officer: without objection. mr. daines: mr. president i ask unanimous consent that when the senate completes its business today, it adjourn until 9:30 a.m. wednesday may 20. following the prayer and pledge, the morning business be deemed expired, the journal of proceedings be approved to date and the time for the two leaders be reserved for their use later in the day. following leader remarks the senate then resume consideration of h.r. 1314. the presiding officer: without objection. senators should be aware that the filing deadline for all first-degree amendments to both the underlying bill and the substitute amendment is at 1:00 p.m. tomorrow. mr. daines: if there is to further business to come before the senate, i ask that it stand adjourned under the previous order. the presiding officer: the senate stands adjourned until 9:30 a.m. tomorrow. >> the senate gavling out. members continued debate on trade promotion authority earlier. it is the last week before the memorial day recess and senators are supposed to work on the amended patriot act as well and the shortway extension of the highway trust fund. we heard more about that from a capital hill reporter. >> federal highway funding expires at the end of this month and congress is working on a short-term extension to try to bridge the gap. keith lane is joining us. how is the current program funded currently and why is congress facing this deadline at the end of the month? >> the traditional source for trans transpirortation is revenue collected from the gas tax at 18 cents a gallon. the problem is it hasn't been raised since 1993 and cars are becoming more efficient and people are driving less so the gas tax isn't bringing in as much. there is a $13 billion gap in how much the tax brings in and the amount the federal government spends on transportation which advocates say what we are spending now is barely enough to keep up with what they have. they would like to see increase but there is disagreement on how it should she paid for. >> why this deadline now? >> the measure they are pulling up today is an extension of an extension. the bill was passed in 2012 and supposed to expire last summer and they passed an eight-month extension in july of last year and here we are now. >> you write the house and senate are considering a summer fix. what happens if funding is not extended? >> the reason they are focused on the summer is the transportation department said they have enough money to cover spending through the summer without additional money. there had been talk about an ex tension through the end of the year but that would have required $10 billion and there was no agreement on how to pay for that. they stuck with the deadline there is money to cover. >> what is the status of a long-term funding bill in the house and senate? >> well congress hasn't passed a transportation bill longer than two years since 2005. there have been 30 extensions or close to to it. transportation advocates are pretty unhappy about that. there is an amendment being discussed for the house version of this from democrats that would have prevented any extension past september 30th that were not six years in length. that is the length people are seeking because they say that would give states certainty as they plan long-term construction projects. >> what is the whitehouse take on it? >> they have proposed a bill that could be paid for are repatriotion and taxing overseas businesses. some republicans have supported that idea but the parties disagree on the rate of the taxes rather participation should be mandatory or voluntary and there is talk about it being a one-time solution to the transportation funding not a permanent solution. >> you wrote about comments that the former secretary of transportation made about how crazy it was to not raise the gas tax. why is it not an option? where else would the money come from? >> the political reality is it is hard to get a tax increase through this congress. even hood who said he is in favor of a 10 cent bill didn't come out in that position until after leaving office because the obama administration said they are oppose to a gas tax increase. >> i want to touch briefly on the tweet you sent out about a house democrat whose district is portland oregon a big bike city and he doesn't want to see any more short term patches. what is happening here? >> he is offering an amendment to a bill today that would ban any extension after this. this one expires in july and the deadline is september 30th the end of the fiscal year. he would prevent any extensions that are not a six-your long term transportation bill that would end the cycle of temporary extensions. >> does he have supporters behind him? >> he has supporters in the desire for the long term bill but i think there is a realism that the only thing that can get through is this temporary extension. >> we will follow you at the hill and watch out for your tweets at laeing. >> and the house today did pass a short-term highway spending bill to keep road bridge and mass transit projects funded. the vote was 387-35. the house adjourned today and will come back tomorrow to discuss the house bill that expired at the end of the year. coming up tonight, hilary clinton takes part in a round table on small business in ceder fall, iowa and then the senate commerce committee looks at the reauthorization of the federal aviation administration. and later a group of ceos speak out against airlines and the united arab emrites for receiving unfair subsidies. hilary clinton took questions and defended income from her speeches. robert coster writes hilary clinton broke a long drought to take a few questions from the traveling press here on tuesday. distancing herself from the president's trade pact and defending the millions she and her husband have made giving speeches. at the end of the meeting for small business at a bicycle shop clinton said she favors having the state department release e-mails from her time as secretary of state as soon as possible quote i want those e-mails out. now the business round table from iowa followed by the questions and answers with the press. this is an hour. hi everybody. great. well first let me thank all of you in particularly our round table participants for being with us today. thanks to vitech for welcoming us to this facility. i am deelected to have the chance to talk more about small business. but i want to begin by saying a few words on what is happening with the american economy and families because i have always believed that when our families are strong our country is strong. we have come back from very tough economic times. i don't need to tell anybody here that. our economy and our country are in much better shape today. and in large measure because families worked so hard. they took extra jobs, they skipped vacations, they scrimped, they postponed going to college they saved and made it work. but the deck is still stacked for those at the top. people are not getting a fair shake. something is wrong when ceo's earn more than 300 times than what the typical american worker earns. and when hedge fund managers play a lower tax rate than truck drivers or nurses. i am running for president because every day americans and their families need a champion and i want to be that champion. i want families to do more than just get by. i want them to get ahead and stay ahead. i want to make the word middle class mean something again. smalls businesses like vitech and the ones you will hear about today have to be at the heart of that effort creating jobs driving growth giving millions of americans the chance to give up to their own god given potential. i didn't learn this from politics. i learned it from my father who was a small business man. he had a very small business. he printed dapery fabric went out and sold them. my brother, mother and i would help out with the printing process. that is what put food our on table and gave us a solid middle class home. today small business all over have worked themselves back from the perfect storm of the crisis when sales and credit together dried up and businesses are starting to sort out how they can grow again how they can add jobs and planning for the future. but i think the deck is stacked here as well. ask any small business owner as i have and they will tell you it is wrong that it is so easy for big corporations to get breaks but so hard for small businesses even to get a loan. it should not take longer to start a business in america then to does in canada or france. but that is the fact. now i want to be a small business president. a president who does make it easier to start and run a small business again in america. so it seems less like a gamble and more like an opportunity. we have to level the playing field for our small business. we need to cut the unnecessary red tape that cost sing small businesses time and money. we should scrub the federal regulation regulations to find ways to make life easier to small business. and offer incentives to state and local governments to do the same because that is where many of the obstacles lie. we need to simplify tax filing and provide targeted credit and deduction for small businesses not just the big corporations that can afford the lawyers and lobbyist to find every single loophole. third we should use technology to expand small businesses into new markets whether it is across the state or world. that is what i did in partnership with with ebabey. we started a public private relationship help companies reach customers very far away. of course i want to emphasis this i will fight to level the playing field for small businesses so they can get the financing they need to build and hire including women and minority entrepreneurs who face extra barriers. and this morning, when i was reading the des moines register big headline, report iowa ranks last for women-owned businesses. this could not be a more timely article for our discussion today. and although it said iowa has made some progress. it saw the lowest growth in those businesses by women from 1997-2015. and women-owned companies have the least economic clout in iowa compared to all other states and the district of columbia. so this is a very important issue for our whole country but i think it is especially important for our friends here in iowa because access to credit can be as important to growing a small business as it is to the big ones. and you should not have to be a fortune 500 company to get a loan. for many small businesses these loans have come from community banks are deep local ties. but today those same local banks are being squeezed by regulations that don't make sense for their size and mission. like endless examinations and paperwork designed for banks that measures access in the many billions. when it is harder for small banks to do their jobs it is harder for small businesses to get their loans. we can ease the burden without hurting the consumer and without letting up on wall street. we should not apply the same restrictions on community banks as those needed to regulate the big banks. let's be clear about this. it isn't the big banks that need relief from washington. it is small banks and small businesses. we should do more to rein in behavior on the too big to fail banks. i fully support the regulations from dodd frank but we should pass common sense community banking reform right now. however the republicans in the congress insist on using this issue to give relief to community banks as a trojan horse rolling back protection for consumer and rolling back the rules on the biggest banks as we are seeing in legislation republicans are producing right now. we should call this a senate bill attempt to gain the system for those at the top. our goal should be helping community bacbanks serve their neighbors like they always have. help them create jobs and help families get ahead and stay ahead. i am very eager to hear the ideas from everyone around the table. i see some elected officials in the audience and i am excited to hear their ideas as well. we know there are obstacles and we want to know what we can do to help our community banks get back on their feet to do what they want to do most which is help businesses in the community expand. >> why don't we start with introductions? >> i am fred johnson your host of the day. excited to see so many people hear. >> donna parson the chair of ceder fall banks board of director and pleased to be hear representing the many community banks not just in the state of iowa but nationwide. >> and i am the owner of marketing and four seasons consulting. i am happy to be moderating and being a panelist which is a challenge. let's start with questions. donna? >> i need to say after listening to what you just said about community banks and relieving some of the regulatory burdens i cannot tell you how enthused all of us in the community banking world are to hear this. 88% of the banks in this country are community banks. and we are loosing those at a rapid rate unfortunately about 10 every year in iowa and part of that is because of the regulatory burdens that have been placed upon us. and we exist to support small business. small businesses are our bread and butter. we go hand and hand as a partner with our small business customers. and the burdens that have been placed on small business owners from the regulatory and documentation standpoint impact us as well. it creates extra expense complication, the average annual salary for a compliance officer is $73 400 which is a burden on a smaller bank. we need to be regulated. certainly as bankers and community bankers we need to be regulated. our customers and employers and everybody can trust us with their money and we have a responsibility to do that and we should be regulated. but the regulations need to be parsed out and allocated appropriately for risk profile business model size geography and all of that. >> donna, if i could just follow-up on what you said because i think people forget. they look at the banking induesseldorf -- industry and see the big banks with the trillions in assets and they think that is what represents american banking. but as you point out 88% of our banks are community banks. what i have been hearing and talking with community bank board members officers, is that what was meant to rein in too big to fail has really fallen actually harder on them and that is why they need relief because they were not part of the problem. and yup, they are in some ways saying it is disproportional. is that fair? >> that is right on the money. we are not creating systemic risk. we are not too little to fail. that is exactly right. we need to be a regulated industry but they need to make sense for the different size and profile i mentioned earlier. that is very welcome news. we want to be able to loan money to your small business clients. >> what i see happening, which is my i mentioned it at the end of my opening remarks is that community banks are paying the price in two ways. paying the price for being regulated as though you were a large bank that presents systemic risk and paying the price because it is the trogejan horse issue where the republicans are saying they need to make changes in the dodd frank reg playing -- regulations because of changes. i think we need to walk and chew gum at the same time. we need to make changes and provide for the community banks. is that doable? >> i don't know why it would not be. it is in other environments. that is a meaningful distinguishment that has an impact. give us a break so we can get out there and loan more money. >> this makes me very happy. i started my first business with my first bank loan at the age of 15 because the mobile banker knew what i was doing and knew i was a hard work. he took a chance on me. i opened my first restaurant with a bank loan at the age of 20 because the bank president knew me and my work ethic and believed in what i was doing and knew it was something the community needed. a large bank never would have done that. >> that is an amazing story. you have the entrepreneur gene. you were 15 going place to place selling baked goods and then at 20 you start a restaurant? >> it was a fun hobby that kept growing and growing. >> when you started goldie's how old are you? >> i was 20. >> i bought an ice cream shop from a lady ready to retire. at that time the community had not had a restaurant for over two years. i thought i would serve sandwiches. it has grown to a whole scale restaurant that does over $700000 a year in sales. >> how many employees? >> i have almost 30. >> i feel like i should say i rest my case. that is exactly what we want to get moving again in the economy so that more young people in particular have the chance to do what you did brad. as you began to build your business did you encounter obstacles and you were in the middle of the great recession while putting this together. can you talk about the realities you had to over ppcome. >> starting out of college i thought i knew everything. i opened a restaurant and have been doing food service for a few years. i didn't know as much as i thought i did. it was a really tough hurdle to get the expenses reined in and get the business tuned so it works. it took me about three years. i lost a lot of money in that process. my banker was patient with me and saw the potential and enabled me to keep the business operating to get it to the point where it was successful. >> dawn, does that sound familiar? as a community banker this young man you have known and watched, may not have all of the collateral in the world, but has the ambition work ethic and ideas and you are able to take a chance on him? >> absolutely. we know his story. we know the local market. we know some about his background. so we are able with local decision making to extend credit maybe a little more generously and maybe on more favorable terms because we are neighbors. that is the difference. i wanted to throw something in. you commented brad that you don't know how to get started and that is a very interesting and common thing when we see entrepreneurs or new businesses coming in and talk to our bankers. they don't understand about financial statements, budgets, financial projections. i want to throw out there there are a lot of free resources in this country that plays out differently in different areas. retired executives is a wonderful free resource. i know a lot of community colleges have programs available to new business owners and entrepreneurs. chamber of commerce and economic development organizational efforts can help. >> brian has a wonderful story about one of those resources here locally through the small business development center. >> great. >> those are great. as i was trying to figure out okay by debt is growing, my income is not paying all of the expenses but i am lined out the door, what am i doing wrong? i am always busy but not making money. this business development center was freight great for avenues to look at to work on here are resources you can look into for help and assistance and counseling and it was great to have that. because you know in small town iowa there is not a lot of resources to help you. it was great to have that connection. >> how did you find your way to that help? >> i went to the city manager saying this should be working and it isn't. i don't know what i am going to do. and he connected me with the county development office and they led me to here. >> that is a very important point. even if you have the drive and ambition you may not have all of the skills and appearance and the more you can rely on people and resources to get over those hurdles the better. and you do a lot of that? don't you connect a lot of people through your business? talk about your business and what it does to help? >> i started a consulting business in 2007 providing technical assistance and counseling to small businesses. that grow from a passion of being able to give back because i believe as you said small businesses are the engine that drives a community. and when we can take that and bring that into a larger eco system of sharing and compassion and sensitivity toward people that want to start businesses and not to discourage them. i think some policies really may not be intentionally discouraging people from starting businesses but there are policies in place that do. >> like what? give us some examples. >> one of the things i have done in the past is work with small businesses that are low income individuals. there are a lot of challenges there. there are a lot of pathologies there. i have a question for you from someone that kind of expresses some of the issues of people who want to start businesses but they don't have the credit they might have challenges that will follow them for years and years and sometimes forever, here is the question: do you have any plans to make funding loans available to young entrepreneurs? will you change the language in the law that prohibits people with criminal backgrounds the ability to access these funds? or do people who made mistakes in their past not matter in society anymore? so i work with people who were in some of those situations. and some of the policies of not being able to you know vote. or policies of credit. you know? it is great when you have credit. and you have access and you can do things. but some people have made mistakes and those challenges have caused them -- hasn't taken their dreams away but it has made it more difficult for them to pursue those dreams in a way as brad did. having the counselors and intermead aries that are there to help. good credit score. what does that mean to a person who has a dream. but has gotten off track. credit worthyness? give me an opportunity and i will show you what i can do. i have grown. we are human and grow and learn from hismistakes. >> people wonder why some communities in the country are mall halloed out and don't have small businesses or economic resources. there are a number of reasons and one is the point you are making. many people because of where they live or they made a mistake and maybe don't get their voting rights back which i totally disagree with i think if you did your time so to speak and made your commitment to go forward you should be able to vote and be judged on the same bases. you ought to get a second chance. but in a lot of communities there are resources but they cannot be put to good use because too many people can't get access to be able to build those dreams in reality. i think we have to take a hard look at that. i think like brad was saying you went to college. did you come out with any debt? >> i come from a family where i went to community college on pel grant. one of my high school disabilities i lost and had negative income. i went to college with a negative networth. if it were not for the pell grant it would have been difficult. >> that is the other thing that happens. people that try to further themselves by going to school and ending up with debt then that wiped out their credit score. here they did what they think they were supposed to do. i certainly see it all of the time reading the stories about the ads coming to this college or this school and get these skills and you will get a job. and people barorrow money and don't get the job but still owe. then they go and are considered non-credit worthy even though they are trying to do what we want them to do. it is complicated set of issues. particularly low income communities one of my goals is to do watt i can to provide a good base for self generated entrepreneural activity, small business formation and growth. it is difficult but it is at the core of turning around a lot of communities. that was a very good question, too. >> tell us about this wonderful bike shop you have. >> we moved in two months ago. still trying a little. but you talk about using resources this was actually going to be a parking lot. and through a community effort and our local main street organization we discovered grants historic tax credits that made it possible for the development group to make it ready for us to move in and our main street group also on top of small business development centers we used to the past has allowed us to make use of educational training. make it to where upcoming technologies we could use to further our businesses. having that local resource made it nice beyond mainstream. it turned into what used to be a main street area about 20 years ago to a thriving business community and the gem of the area. >> did you have a preexisting business that you moved into this new space? >> yeah. we had previously rented and only our former location on main street for nine years and moved over here when this became available. it will further our growth for the next 20 years. >> how many employees do you have? >> we have five employees. we hired additional employees for the move. >> it is new bikes used bikes, customer's bikes, bike parts -- >> service, education we do a little of everything. able to intill our passion of bike lanes and helping out communities. >> i was going to ask about bike parts because i see my friend bill there. i wanted him to say something because yesterday at one of my events the senator was there and we were talking about how we can enhance through the use of technology the capacity of small businesses to do even more work for themselves or at least to keep it local. and bill do you want to stand up and esh plain what you were and i were talking about yesterday. come on around here. >> this is a -- this is a cord from a 3-d printed. we call it additive manufacturing. you are adding material and if you had an engine block or a part from a bicycle and you wanted to machine it and you drilled a whole in it that is subtract subtractive manufacture. this is a mold to make compressed gas. you will see this is free inside here. and the old world of manufacturing they would have to make a variety of different pieces and then put gaskets and bolt that together. and any time when you are dealing with compresed gas the place where you can have a link is dangerous. not through the 3-d technology. the 3-d printer would lay down a layer of sand all the way across and then another arm comes across and it lays down. and the university of northern iowa at their metals lab is doing research to prove these products. so this isn't just for big business. companies use it. they can take a traditional manufacturing process of making a mold to make this and go from three months with this one mold to overnight and the cost is incredible on the savings. this is just an example where they printed this nut on the bowl and now this isn't a mold. this is just an example of what you can do. but eventually they are going to go -- this is dealing with sand technologies. but there is metal technologies so they can direct print parts. you know, you could take a drawing of a bike part and print it out of metal or you could do polymers. there is a whole line of different items on a bicycle you could make yourself once you had the design for it. we think that added manufacturing is going to onshore a lot of jobs. not only in iowa but across the country. and this morning i stopped in at the tech works and not only are they doing work for companies but the most important thing, i think, is what they are doing is educating the new workforce. what i hear from small business people as the chair of the economic development budget side across iowa they all are fighting to get talented and skilled workers. so as we advance these technologies we have to advance the workforce to help. culinary needs great chefs and people with the tech niskills. these new bikes are so advanced compared to old ones. the technology part is so important. but the workforce is big. and the university of northern iowa with the cedar valley tech works is working to develop individuals who can handle this because it is an explosion of technology and 3-d printers are going to go to mars and be on the ships fixing everything. it is amazing. >> i want to explain this because here is an issue of potentially profound implications for business particularly small business. it is american technology. we need to get ahead of it. we need to be using it. we need to be thinking about it. training people for it. but also making sure that you know suppose in a couple years brent decides he wants to have his own 3-d operation so that you don't have to send an order and wait for a part to come. you have somebody trained on your staff to turn it around within hours if not a few days. we have to be looking for every competitive edge we can get. and we have two potential future scenario. one is robots 3-d technology, all of the advances we can see happening and even dream of happening will displace workers, will lead to more loss of jobs and we will be once again struggling to find ways to give people the digny and purpose of work. or we can start now which is something i want to do and start right now with a public private partnership trying to figure out how we will get ahead and stay ahead of the technology changes with a particular emphasis on what that means for small business. this is what we have to do. >> private partner research training people they are working with 80 companies right nouchlt they cannot find time to hardly do research. we will have the largest 3d printer in the united states here by this fall. small business development centers? federal government has cut back on the funding and states that were struggling to try to keep up and i know because i fund the small business through my budget. we hear over and over in iowa how they help spall businesses. so you are right on and thank you for the opportunity to say a few words. >> thank you so much. i look at where we looked at and this is the tweet spot. the more we can do to generate from the bottom up and training people for small businesses. does that make sense to you that could be something in the future that could enhance your business opportunity? >> i would like a 3-d printer. and the other thing we should think about doing is we have two other elected officials here. we can think about how we create centers so that ever business doesn't have to buy their own. you can buy time on it. it should operate in my view 24/7. shouldn't be a 9-5 job. you have the machine it should operate around the clock so that if your bike shop in a year or two is ready for this you can sign up for the time and collect some of de parts you need to do and once a week you get it for a few hours and reproduce them. we have to start thinking differently. this kind of communal cooperative approach is something i have seen work in other places. there has been studies done about how it can be affective in northern italy where you have a group of small businesses and each one alone can't afford to buy a machine or to hire a certain expert. but together they can. and then they share that and they teach get their part of it. and you know they are still in competition but they have lowered their cost in a way that makes it sensible for them to cooperate. dawn is that something banks would be interested in funding? >> banks are interested in helping something that helps our small businesses thrive without any question. and kind of wanted to tap on to some of the comments just made too, when it comes to funding things that help small businesses because i think people are familiar and mob maybe you have worked with the small business administration before. they make loans through banks to help small businesses. and you know there have been challenges on occasion with funding. you know the government funding the fba. and if they put a ton of money into fba during the financial crisis which was huge and waved some of the fees that business owners have to pay to access funds. we are back to somewhat normal times and it is interesting there are no guarantee fees if the loan you are applying for is less than $150,000. ... if there would be a way to consider that that would help. >> one of the arguments that is made against the small business administration by republicans is that if the government it's a government agency and it displaces banks which is a total misunderstanding of how the small business administration works. you are the ones that have to make the hard choices about who should get it and under what circumstances but you have to obviously follow the rules and you would have more flexibility. we really wanted to jumpstart more amenity bank lending and our communities. part of what we would do is exactly that, raise the limits to avoid the upfront fee. >> absolutely, it's a partnership. we make the loan but the government is helps with a guarantee. >> i think that's important. >> i want to go back to the workforce job creation issue and there was another question i got about asking you where you stand on transpacific partnership. the writer said that other trade bills have resulted in jobs going overseas and when people lose their jobs they have lower paying jobs it decreases customers so what is your stand and what would you do to ensure that jobs are staying in the country? >> is obviously a hot topic right now. i have been very clear on this and i has said over and over again any trade deal that i would support must increase jobs jobs, must increase wages must give us more economic competitive power around the world to sell our products and must be good for our national security and there are questions being raised about this current agreement. it hasn't been fully negotiated yet so i don't know what the final provisions are yet. but it needs to be very strong on health and environmental rules. it needs to try to address directly or indirectly the manipulation of currency by countries that would be trading partners and began to reign that in because that's been a big source of us not being as competitive as we want to be and we also have to address, there's a provision in the ss we are told and i wrote about it and warned about it in my book that gives corporations more power to overturn health and environmental and labor rules then consumers have and i think that is a problem, so i have said i want to judge the final agreement. i have been for trade agreements, i've been against trade agreements. i've tried to make the evaluation depending upon what i thought they would reduce and that is what i'm waiting to see. there are some amendments being proposed in the process right now that would direct the administration to cover certain issues or to negotiate a certain way that i think has merit and i want to see how that turns out as well. >> i wanted to also ask if either jeff or tim if either one of you have anything you want to add about small businesses. >> thank you. i think it's important if government can't do anything right, it just weather cam but it has to be -- this building is a perfect example. it's actually a historic building a post office with the start tax credits which is one of the successful economic development or grams and is revitalized all of our main streets. the programming proves the building in the business of takeover and drive. the largest property -- credit and i will history that went to small businesses prominently so we can do things that are partnerships growing our economy. he knows how to get ahold of me to tell us what those concerns are but you mentioned the access to capital for small businesses. it's a fortune 500 company and they had invested and today your instincts are very good because it's been running literally 24/7 24/7. eamonn fortune 500 companies need us to help them a peek into the future to help them do well with what they are doing well with now. a perfect example of public-private partnerships with people that know those locally needed need the tools to deal to do those. it would be wonderful the federal government would become a partner again on economic growth. >> it's really interesting point about john deere, just because and i'm not saying this is why they have been invested but a lot of big companies also are pulling back on new investments in research, development, new capital equipment investments because it doesn't show up in their bottom line quickly enough and they are under so much pressure they keep putting out as high as set of earnings is possible to try to get credit with the financial markets and i'm looking very hard at how we can change the tax code so that more companies from small to very large are incentivized to make the kind of investments for the future that right now they have to really worry about making because they will be punished in their quarterly returns. and again i'm not saying that is what was going on at john deere but i see it enough to know that is a problem for even the biggest of our companies. >> i want to thank you. last night after we spoke there were several people that got on my facebook and twitter and they were excited that we have someone that is putting energy into iowa, to small businesses. they are excited to see their future looks a little brighter so i think that's really important and it's nice to see people in the audience going wow this is exciting so it's good to have that energy back. we had kind of loss that energy. i and my husband we shop at all local small businesses as much as we can. the quality is better, the service is better and we just feel like we are helping but you also bet with my clerk. i think we are showing some impart -- empowerment and i think what we want to do is to stand behind you and really encourage our communities to take advantage of our small businesses. so there is lots of gems out there and you are bringing that to light for us. >> well that really means a lot to me because my goal is to help set the table so people can begin to solve problems again and not get caught in ideological debates and name-calling and finger-pointing. it doesn't help anybody. it doesn't start a small business. it doesn't educate a child but i think if we begin to really put our heads together about what works and build on that there is no limit to where we can be in the 21st century just as we were in the 20th. everybody who talks about how america can do this and we are behind where we are in decline they are just wrong. anyone who has ever bet against america has lost but that doesn't mean they can sit back and just assume it's all going to work out for the best. we have to work hard like these people run their businesses are showing and we have to stay ahead of the curve. we do live in an increasingly competitive world. we have so many other countries and companies and workers who want what we have and i don't fault them for that. it's our fault if we don't stand up and really push back and push ourselves forward so that's exact weight where i want this campaign to be. not about me but about us about what we can do together new good ideas. i don't care where they come from. let's get them out of must look at them hold them up to the light and make sure they are real and then let's figure out how we can implement them and find better opportunities for more people. being a popcorn person myself you have to tell us a few things about your business. [inaudible] >> wow you are expanding. did you have experience in running a retail store before you started? how did you go to the bank with your idea and make the case in funding your business? [inaudible] >> that's often the way it works, is an it? oh wow that is great. how many employees do you have? that's terrific. congratulations. good look, keep going. any and the other small-business stories before we wrap up? [inaudible] [inaudible] >> that's another part of the four points that i made about the access and regulations and paperwork and given where we are with on line everything we have to be able to do much more of this on line and we have to be able to slim it down. everybody is always trying to protect themselves so they ask a million questions for 102 and up we have the right tank questions that we need answers for from people like yourself and others who want to start businesses that should be adequate but we need to put our heads together and figure out exactly how to do that. there are some interesting lending programs on line right now that are providing funding much faster based on total on line transactions, right? >> wright one of the burgeoning issues for us in the financial services industry certainly in a regulated thinking industry are the non-banks of which there are friday of different kinds. lending tree lending.com and what would he from the bank perspective very helpful to us would be to have a little bit more level playing field in terms of how the banks and the non-banks are both treated thoroughly and from a taxation standpoint. some are under regulated, some are not regulated at all. i think everyone is aware that credit unions which started with the best of intentions absolutely for lower-income people people of modest means in some natural affinity group to pull resources and lend to each other have just exploded and are not for the little person anymore but i think there are 200 credit unions larger than a billion dollars. that's bigger than 90% of the banks. so that is tough for us. it's tough from a competitive standpoint to be a bank that pays taxes and to compete with the nontaxable entity but it's worse from the taxpayer standpoint because there are literally billions of dollars of taxes where an affair environment would be paid. one statistic to throw out from the state of iowa the average iowa family of four paid $11,400 in taxes, federal taxes and $2.5 billion credit union with $38 million in profit paid zero. >> and to add to that the federal poverty level for that family of four is about $24,000. so you take $11,000 from 24, i'm not good at math. >> you don't have to be. >> a little side note as they talk about tax credits one thing that retailers across the nation as do community banks is that we are starting to see more and more people embracing the technology and we are disadvantaging the brick-and-mortar retailers that pay sales taxes that fund our city governments, our police officers and firefighters and that's kind of on unfair tax burden that the brick-and-mortar people have to pay whereas andy keeps her money more local. >> a very good point. >> maybe when i finish talking to the people here, how's that? i might. i will have to ponder it. [laughter] and i will put it on my list with due consideration. >> i'm terry greenlee from sigourney iowa. we ever county of 10000 people. one of our biggest challenges for small business is broadband internet and one of the challenges we see is even those sigourney has great broadcast or regularized download we don't have -- in cedar rapids in those towns but also there's no internet on the backlog. if we can do the same thing for broadband internet. >> and for our rural everywhere and even for some urban areas that are not considered attractive enough to have the kind of high-speed internet that you are talking about. in the weeks ahead i will be talking more about how we have to become more competitive than providing high-speed internet across our country and the perfect example of the rural electric cooperatives. when we begin to electrify her company it became clear that we would do a pretty good job in the larger metropolitan areas that private utilities would want to go there. there would be a lot of business there but it would be expensive and it wasn't that attractive from a profit perspective to put the lines and to go into rural america. that is where the rural electric cooperatives came in. they said we are going to provide aid utility service that will connect our entire country. it took until the light -- late 1960s to get every single part of her country electrified, at least the lower 48. i think your point is really a smart one. if we are going to be competitive globally and there are lots of smart people in rural areas who have good ideas. when i referred earlier to the partnership i set up with e-bay when i was senator from new york we had upstate new york and way up in the north country near the canadian border around the adirondacks they have a lot of small-business people with great ideas but they didn't have that big market and what we did was to connect them up and help them do a web site and get them on e-bay help them advertise. so the man who is making exquisite flyfishing rods and selling one every couple of weeks could get orders from scandinavia as he did. we need to do that everywhere so that you can sell your products from wherever you are and you can sell into the global marketplace. that is where i think we can do more than we are doing and we can't do it without high-speed internet. so i applaud you for that. >> we are coming close to the end here. do you want to give a closing some asian? i want to thank all of the panels for being here and i want to thank the guests for being here but do you have a closing summation? >> i want to thank you and everyone he came in this conversation is another example of why i love doing this. i always learn something and i feel like we need a conversation in our country again where we are talking to each other where we are respecting each others opinions, even when we don't agree. we are listening and we are learning and trying to figure out what the best solutions are for the problems that we face and i have gotten an enormous amount of good ideas, good information from doing these roundtables and i want to thank all of you for participating in this one. what we want to do now is maybe take a picture and then maybe have our elected officials, and joined the picture and we will be able to do that and i might, if you know if i can learn something i might come over and say a few words and take a few questions from the press. barb you have us here and maybe we can get bill and jeff and tammy to join us. can you get us all in? okay. [inaudible conversations] bill thank you for this. that's quite a thing. movable parts, pretty amazing. we will get everybody. popcorn heaven, get everybody up here. [inaudible conversations] >> good seeing you. i wanted to show you a picture. it's the largest 3-d printer in north america. >> that's a john deere? >> he's in the process of putting that part into the computer so they can print that out next and that's the table when it came out and they unloaded it. they are ready to restore it. >> we will give you an opportunity to come maybe this fall. >> i would like that. >> we were precinct cocaptains with the last time. thank you so much. [inaudible conversations] [inaudible conversations] hillary clinton took questions from reporters answering questions about her e-mail account and other issues. >> okay are you already? >> thank you so much. >> lets bring some order to this. >> secretary clinton to you regret the way that the clinton foundation handle foreign donations when when you were secretary of state and your opponent say that the foreign donations and the private e-mails are examples of the clintons having one set of rules for themselves and once it set of rules -- >> i'm proud of the foundation and proud of the work that it has done and it's doing. attracted donations from people, organizations from around the world and i think that just goes to show that people are very supportive of the lifesaving and life changing work it has done here, comment elsewhere. and i will let the american people make their own judgments about that. >> secretary clinton given the situation in iraq you think we are better off without saddam hussein in power? >> i know there've been a lot of questions about iraq posed to candidates over the last weeks. i've made it very clear that i made a mistake plain and simple and i've written about it in my book. i have talked about it in the past and what we now see is a very different and very dangerous situation. the united states is doing what it can but ultimately this has to be a struggle that the iraqi government and the iraqi people are determined to win for themselves. we can provide support but they are going to have to do it re-at. >> secretary clinton on your income disclosure recently that came out on friday you were in the tip top echelon in this country. how do you expect everyday americans to relay to you? >> bill and i have been blessed and we are very grateful for the opportunities that we had but we have never forgotten where we came from and we have never forgotten the kind of country that we want to see for our granddaughter and that means we are going to fight to make sure that everybody has the same chances to live up to his or her own god-given potential. i think most americans understand that the deck is stacked for those of the top and i am running a campaign that is very clearly stating we want to reshuffle the deck. we want to get back to having more opportunities for more people so they can make more out of their own lives. i think that's exactly what america is looking for. >> can you explain your relationship -- a report out this morning that you exchanged several e-mails and should americans expect if elected president he would have the same type of relationship of these old friends you have had her so long? >> i have many many old friends and i always think that it's important when you get into politics to have the friends you have before you were in politics and to understand what's on their minds. he has been a friend of mine for a long time. he sent me unsolicited e-mails which i passed on in some instances and i see that is just part of the give-and-take. when you're in the public eye, when you are in an official position i think you have to make sure you are not caught in a bubble and you only hear from a small group of people. i'm going to keep talking to my old friends whoever they are. >> secretary clinton the state department might not release your e-mails until january 2016 and a federal judge said they should be released sooner. will you demand they be released sooner? was their conflict of interest in your giving paid speeches to the run-up in your announcement and that you are running for president. >> the answer to the first question is know and i've said repeatedly i want those e-mails out. no one has a bigger interest in getting them out than i do. i respect the state department they have their process that they do for everybody not just me that anything they might do to expedite that process i heartily support. they want american american people to learn as much as we can about the work that i did with our diplomats and development as -- experts because that thing was to how hard worked and what we did our country during a time i was secretary of state where he worked extremely hard on behalf of our values and our interests and our security and e-mails are part of that. i have said publicly and i'm repeating it in front of all of you today i want them out as soon as they can get out. >> we demand that? >> they are not mine. they'd longer the state departments of the state department has to go through the process so as much as they can expedite that process please move as quickly as they can to get them out. >> thank you. thank you all very much. [inaudible conversations] >> tuesday the senate commerce science and transportation committee held a hearing on the reauthorization of the federal aviation administration. faa administrator michael weber testified about efforts to modernize the air traffic control system and the next generation air transportation system next jan initiative. this is just over two hours. [inaudible conversations] [inaudible conversations] >> this hearing will come to order. good morning. today the commerce committee concludes his series of planned hearings on reauthorization of the federal aviation administration with an examination of the nation's air traffic control system. they may begin by thanking aviation subcommittee chair a out and make a member cap well for taking through several valuable hearings on the way to the school committee hearing. it's been a busy work period and a great deal of progress has been made thanks to their efforts. u.s. air traffic control or atc system involves thousands of dedicated air traffic controllers guiding tens of thousands of flights safely across the country on a daily basis. we can be proud of the system's safety record. the same time increasing demand the need to improve efficiency and changes in technology all underscore the need to modernize the system that is still radar base and operated using concepts and procedures developed decades ago. efforts to modernize software and hardware have made progress but the long view negates modernization programs have often taken too much time and cost too much. we have sex or portion the deity's office of inspector general the government accountability office detailing the implementation delays the cost overruns that have plagued these efforts for decades and stymied leadership for multiple administrations. the most recent visible initiative is the next generation it air transportation system or nextgen. before was given the name the original goal was something called free flight which was expected to result in a genuine transformation of the system away from air traffic control to air traffic management to taking advantage of gps for navigation and surveillance was at the heart of this idea. faa would save money eliminating most radar and airspace operators would save time and money and fuel by choosing their own direct routes. with more than 15 years after the faa began talking about free flight we still seem to be more than a decade away from anything resembling it. in fact a recent study by the national research council completed the nextgen currently seems to be more about increments of programs and improvements rather than a transformational change. also airlines another operators feel burdened with expensive effort of implementing changes that won't yield direct benefits for many years to come. this situation has led policymakers to question whether the current atc structure is best suited for the task at hand the long-standing difficulties of modernization on one reason to consider reform to the system's reliance on annual transportation appropriations and the vagaries of the political process make long-term planning for system capitalization management of the footprint difficult and probably more costly and the faa will always face challenges attracting and retaining the talent needed to drive major technological change when i must compete with cutting-edge businesses in the private sector. to address the challenges we must consider if there's a better way to deliver atc services for the traveling public and airspace users and i'm open to considering all ideas. faa is a great record of safety regulators something that regulators something though continuous air traffic control services were moved out of the faa. i look forward to hearing from our witnesses about what reform of our system might look like and how reform could serve the needs of all airspace users. to be sure the matters we discussed today are part of a larger effort on reauthorization where we will address a host of other important issues. i'm looking forward to working with ranking member nelson is well a senator's ailing camp on members of the committee to end such legislation. lastly i want to stress their interest about atc modernization are not focused only on the current leadership team. as i mentioned before seems clear there are structural limitations that impeded success over the years principle is the key question is whether we were to build an air traffic control system from scratch today would we necessarily conform to the old strictures or strike a better path? i look forward to this discussion i want to turn to my colleague senator nelson the ranking member for his opening remarks. >> thank you mr. chairman and senator thune joins me to acknowledge the families of those lost on colvin air flight 3407. your presence here is a reminder of how much is at stake with the safe operation of our aviation system so thank you for being here. obviously we have the busiest the most complex airspace in the world and thanks to the hard work and the dedication of the faa employees we have an agency that is providing the safest most efficient airspace in the world yet the negative impacts of the uncertainty of the funding and the sequestration have led to widespread concern about the funding of federal programs and the federal operations. if you take a meat cleaver approach instead of a scalpel approach the sequester forces irresponsible budget decisions in our domestic and defense programs. some of you are going to suggest that the answer is to privatize the faa and air traffic control. the senator feels like we ought to get budget certainty and repeal sequestration. if we do not, the situation will worsen when additional budget cuts return in 2016. the faa has faced unpredictability for too long. the last faa bill took four years and involves 23 extensions and a partial faa shut down. now the good news is that senator thune and i are working together and we are going to do everything possible to get this faa reauthorization going. in the past because of that uncertainty, because of that sequestration the faa has had to furlough employees, implement a hiring freeze, temporarily close their academy and hauled a lot of the work that i've had the privilege of seeing with the administrator on the nextgen programs. this has set the f. a. a. back in its progress to advanced air traffic control modernization so the conversation about moving air traffic control into private not-for-profit entities has an impact far beyond you witnesses here today. take for example the department of defense. they share a responsibility for controlling airspace with the faa and they have for more than 65 years. today, the department of defense controls about 20% of our airspace for civilians as well as the military. faa and d.o.t. coordinate activities to ensure our military can train warfighters test new concepts, equipment and defend the nation. air defense right here in the continental u.s.. no other country in the world has the defense assets of u.s. and we must ensure that our defense and jurists are not harmed by removing the government from air traffic control and i can tell you the department of defense has visited me and they don't want any of this privatization. well, look at the airlines. even the airlines are not in agreement. let me quote from a letter from delta. quote, rather than wasting months of collective energy only to find ourselves with a less efficient, less responsive more bureaucratic like costlier new monopoly service provider we should instead focus our efforts on achieving real reform in the next authorization that brings about tangible benefits for operators and more importantly for the traveling public end of quote. that's delta. so since aviation is the backbone of our u.s. economy we must prioritize air traffic control investments for the good of this country. thank you mr. chairman. >> thank you senator nelson. we have a great panel today led off by the honorable michael huerta followed by the honorable john engler former governor and the honorable byron dorgan policy analyst at fox and former ally of ours are made to decode also a former member of this committee and mr. jeff smisek chairman president ceo of united airlines mr. paul rinaldi whose present of the air traffic controllers association and mr. mr. ed bolen who is ceo of the business association -- aviation association. a great time am i look forward to hearing from all of you and i will start on my left and you're right with the administrator. mr. huerta please proceed. >> thank you chairman thune ranking member and members of the committee thank you for inviting me to speak today about the reauthorization of the faa. they have reauthorization provides us with the opportunity to propel our next -- to foster the kind of innovative climate that has long been the hallmark of our proud aviation heritage. this reauthorization is provided a form for many industry and government to openly discuss possible changes in the governing structure of the faa to help us create the aviation system that will sustain our nation's economic growth well into the future. we are open to having this discussion but we must all agree on the most important problems of reauthorization should fix. in our view is her budget and stability in the lack of flexibility to execute on our priorities. these challenges exist for the entire agency not just for the air traffic control system in the next gen organizations of some of suggested. in addition to finding agreement on the problem we are trying to solve the should agree on funding is to avoid unintended consequences. our ability to deploy nextgen technologies and capabilities hinges on interdependencies and relationships within the agency. next an is more than a installing technology in its and our air traffic facilities in aircraft that involves participation of safety organizations make sure technology is safe and the comptrollers and pilots know how to use it. we believe any decision about governance must take into account these issues so we may best serve our nation and the public. some of our good for changing the faa has not delivered on air-traffic modernization. i would argue the faa has made major progress in modernizing our airspace system to nextgen. we completed the installation of the more powerful technology platform at their new high-altitude air traffic control system. the system will accommodate date applications of nextgen and handle the expected increase in air traffic. lester refinish the coast to coast and solution of the ads-b network that will enable satellites based air traffic control that on a parallel track your collaboration with industry would identify key priorities and implementing their nextgen air traffic procedures. we now have more of a satellite-based procedures and our skies than traditional radar base procedures. we have created new nextgen routes about some of our business -- busiest areas saving millions of dollars in fuel decreasing carbon emissions and cutting on delays. in addition to these improvements we have set clear priorities and delivering more benefits in the next three years years. these range from improved separation standards for heavy aircraft that are poor nation of traffic on the airport surface and streamlined clearances using data communications. and nextgen srd of that $1.6 billion in benefits to airlines and the traveling public. in the next 15 years the changes we have already made to produce $11.5 billion in benefits. we recognize however it is not enough to rely on him projected benefits. that is why we go back and study the benefits that certain improvements have provided to users. for example in atlanta we safely reduced wake separation standards to improve efficiency at the airport. because of this change at landis jackson absent international airport is increased number of planes that can land by up to 5% or five planes more per hour. delta airlines is saving up to two minutes a taxi time per flight and these improvements are saving them to between 13 million to $18 million in operating costs annually. clear where the criticisms of the faa's implementation of nextgen and i would like to explain our prayers. their theories about how to play technology in a complex operating environment. some take the position they usually start from a wide-ranging vision and work back from there on developing a range of scenarios. others suggest mapping out the entire picture and proceeding when you are sure of the endgame. others say to take a more pragmatic approach and this is the path the faa has chosen. based on close consultation with industry. this approach used by the office of management and budget matches investments with tangible benefits to airlines and passengers. we acknowledge it requires upfront investment but we are careful not to strand program in the middle of implementation. when dealing with widespread change in the dynamic airspace system there is no margin for error. the system must transport 750 million passengers every year with the highest levels of safety. any technology we implement must be reliable and safe from the outset. to achieve this high standard we must remain nimble and we must have flexibility. our aviation system is a valuable asset for the american public. we should use the upcoming reauthorization to provide the faa with the tools necessary to meet the demands of the future and to minimize disruption to the progress we have made with nextgen in our work to integrate new users into our system. thank you for the opportunity to appear before you today and i'm happy to take your questions. >> thank you administrator huerta. >> are we live? good morning mr. chairman committee members thanks for the opportunity to testify this morning. the business roundtable members include leaders of aerospace companies and every one of our members relies on air transportation as customers of cargo on passenger airlines as the 20th century drew to a close u.s. aviation set the standard for the world's largest safest most technologically advanced system. said we have lost their primitive position and their future leadership isn't dell. this air-traffic system remains the largest the world say this but not the most technologically advanced nor the world's most cost-effective. our air traffic control system relies on the same technology ground-based radar and radio transmission is it in the 60s but almost all of the surveillance technology is still analog. like any other stakeholders we are concerned about the halting pace of the modernization represented by the faa's nextgen program. national academy report in this committee released this month clearly stated the problems. the original vision for nextgen is not what is being implemented today. airlines are not motivated to spend money on equipment and training for nextgen. in modern innovative air traffic control system would offer tremendous benefits to the users of the airspace, more efficient bypass, reduce fuel consumption lower emissions and less noise pollution, global commercial leadership leading to expanded exports and increase services to small community airports. so what are the obstacles? last year my seat mate here in faa administrator huerta offered one explanation in his speech at the arrow club of washington. quote there something away the faa can implement nextgen recapitalize their aging infrastructure and continue to provide our current level of services without making serious trade-offs something senator nelson referred to in his opening comments. administrator huerta and i would agree i believe on this critical point the current voting system clearly does not provide the needed resources but the deeper problem is the broken budget tori process itself which prevents the faa from pursuing step-by-step technological improvement that a standard elsewhere certainly in the business world. an example of what works look at at&t and verizon. in the years the u.s. government has been talking about nextgen four generations of cellular technology to 4g video -- about dr. to the faa's funding of 20 billion-dollar modernization effort by an annual and unpredictable cash flow. most other transportation sectors issue long-term revenue bonds to finance large capital modernization but bonding is something the faa cannot do. states do it the private sector does it but the federal government does not. i convened at the roundtable and expert group to help study this issue including fa and transportation department officials and knowledgeable policy advisers. their conclusion the status quo is simply too costly and too inefficient. they identified the necessary elements of alternative systems. separation of air traffic control operator from regulator to improve transparency and accountability and to further increase safety. an organizational structure that accounts for multiple objectives for safety and access are valued along with cost efficiency. governance of the air traffic control appointed by stakeholders. the revenue structure that enables air traffic control be fully self-supporting without government financial support and free the federal budgetary process. to one in six x. turns -- wage and benefit structures to protect employees prevent employees career expectations and preserve a collaborative culture. over the last two decades most western countries have restructured the way air traffic control is funded and governed determining it's a high-tech service business part of critical infrastructure and -- infrastructure separating air traffic control into an entity independent of the rest of the faa is a manageable process. tools and precedence exist for addressing the risks that come with any innovation and a thorough planning process is necessary. in the end i hope u.s. senators responsible for the oversight of the faa used the reauthorization process to put america on a trajectory to a modern air traffic control system that is the gold standard for the world. now is the time for decisive bipartisan efforts to restore america's global leadership. this is the roundtable looking forward to achieving these important goals. thank you for the opportunity members. >> thank you. senator dorgan. >> mr. chairman thank you for inviting me back. i have served on this committee for 18 years and no doubt badgered hundreds of witnesses so -- are the past two years i and former transportation secretary jim brimley have cochaired a project at the transportation institute looking at the subject of air traffic control and the structure of air traffic control. i was a chairman of aviation panel the last time we worked on reauthorizing the faa and i put up a headline from moment where we finally succeeded and is set after five years of debate, 23 short-term extensions and a partial shutdown congress approved the final version of the faa bill. my hope this time around is that your headline will be shorter and your conclusions bolder for this reason. aviation is one of the major arteries of the american economy and the fact is the issue of effective air traffic control is essential to that industry. i think we have now come to an intersection where we have to decide can we retain our leadership in developing the new technology and the next generation air traffic control system? can we retain our leadership with the current atc structure? in my judgment we cannot. our conclusion at the institute after two years of work with stakeholders from around the system if we want to retain america's leadership with the most advanced atality moving from ground-based radar to next-generation satellite guidance which would be safer faster and more efficient if we want to retain that we are going to have to restructure the air traffic control function. .. >>
the use of video in a drug prosecution where the video failed for a short period of time and a the defense was the critical and exculpatory for the defendant, when the video failed to create reasonable doubt because of the malfunction. we are not done with this topic for a camera is to be worn by police to ask all of you could you point us in the direction in the of programs that are working and working well to have models for what should be done of the other states if you know, of any? >> working with several agencies doing things right the policies may differ they are thought fall about what they're doing oakland is one of the initial adopters they have had them since 2010 working with daytona beach florida and also rialto with one of the studies we have done. they're all agencies that have done a good job and are still engaged. >> thank you for the question. there is only of few may have 22 agencies and i can think of a couple of the top of my head to come up on the year to have success with the police department to bring everybody to the table that has been approved by the aclu. as of model to follow in their own communities. >> perhaps 28 percent of the laws or senate agencies use body carries in one form or another. it comes from the very small departments. . . >> tuesday the senate commerce science and transportation committee held a hearing on the reauthorization of the federal aviation administration. faa administrator michael weber testified about efforts to modernize the air traffic control system and the next generation air transportation system next jan initiative. this is just over two hours. [inaudible conversations] [inaudible conversations] >> this hearing will come to order. good morning. today the commerce committee concludes his series of planned hearings on reauthorization of the federal aviation administration with an examination of the nation's air traffic control system. they may begin by thanking aviation subcommittee chair a out and make a member cap well for taking through several valuable hearings on the way to the school committee hearing. it's been a busy work period and a great deal of progress has been made thanks to their efforts. u.s. air traffic control or atc system involves thousands of dedicated air traffic controllers guiding tens of thousands of flights safely across the country on a daily basis. we can be proud of the system's safety record. the same time increasing demand the need to improve efficiency and changes in technology all underscore the need to modernize the system that is still radar base and operated using concepts and procedures developed decades ago. efforts to modernize software and hardware have made progress but the long view negates modernization programs have often taken too much time and cost too much. we have sex or portion the deity's office of inspector general the government accountability office detailing the implementation delays the cost overruns that have plagued these efforts for decades and stymied leadership for multiple administrations. the most recent visible initiative is the next generation it air transportation system or nextgen. before was given the name the original goal was something called free flight which was expected to result in a genuine transformation of the system away from air traffic control to air traffic management to taking advantage of gps for navigation and surveillance was at the heart of this idea. faa would save money eliminating most radar and airspace operators would save time and money and fuel by choosing their own direct routes. with more than 15 years after the faa began talking about free flight we still seem to be more than a decade away from anything resembling it. in fact a recent study by the national research council completed the nextgen currently seems to be more about increments of programs and improvements rather than a transformational change. also airlines another operators feel burdened with expensive effort of implementing changes that won't yield direct benefits for many years to come. this situation has led policymakers to question whether the current atc structure is best suited for the task at hand the long-standing difficulties of modernization on one reason to consider reform to the system's reliance on annual transportation appropriations and the vagaries of the political process make long-term planning for system capitalization management of the footprint difficult and probably more costly and the faa will always face challenges attracting and retaining the talent needed to drive major technological change when i must compete with cutting-edge businesses in the private sector. to address the challenges we must consider if there's a better way to deliver atc services for the traveling public and airspace users and i'm open to considering all ideas. faa is a great record of safety regulators something that regulators something though continuous air traffic control services were moved out of the faa. i look forward to hearing from our witnesses about what reform of our system might look like and how reform could serve the needs of all airspace users. to be sure the matters we discussed today are part of a larger effort on reauthorization where we will address a host of other important issues. i'm looking forward to working with ranking member nelson is well a senator's ailing camp on members of the committee to end such legislation. lastly i want to stress their interest about atc modernization are not focused only on the current leadership team. as i mentioned before seems clear there are structural limitations that impeded success over the years principle is the key question is whether we were to build an air traffic control system from scratch today would we necessarily conform to the old strictures or strike a better path? i look forward to this discussion i want to turn to my colleague senator nelson the ranking member for his opening remarks. >> thank you mr. chairman and senator thune joins me to acknowledge the families of those lost on colvin air flight 3407. your presence here is a reminder of how much is at stake with the safe operation of our aviation system so thank you for being here. obviously we have the busiest the most complex airspace in the world and thanks to the hard work and the dedication of the faa employees we have an agency that is providing the safest most efficient airspace in the world yet the negative impacts of the uncertainty of the funding and the sequestration have led to widespread concern about the funding of federal programs and the federal operations. if you take a meat cleaver approach instead of a scalpel approach the sequester forces irresponsible budget decisions in our domestic and defense programs. some of you are going to suggest that the answer is to privatize the faa and air traffic control. the senator feels like we ought to get budget certainty and repeal sequestration. if we do not, the situation will worsen when additional budget cuts return in 2016. the faa has faced unpredictability for too long. the last faa bill took four years and involves 23 extensions and a partial faa shut down. now the good news is that senator thune and i are working together and we are going to do everything possible to get this faa reauthorization going. in the past because of that uncertainty, because of that sequestration the faa has had to furlough employees, implement a hiring freeze, temporarily close their academy and hauled a lot of the work that i've had the privilege of seeing with the administrator on the nextgen programs. this has set the f. a. a. back in its progress to advanced air traffic control modernization so the conversation about moving air traffic control into private not-for-profit entities has an impact far beyond you witnesses here today. take for example the department of defense. they share a responsibility for controlling airspace with the faa and they have for more than 65 years. today, the department of defense controls about 20% of our airspace for civilians as well as the military. faa and d.o.t. coordinate activities to ensure our military can train warfighters test new concepts, equipment and defend the nation. air defense right here in the continental u.s.. no other country in the world has the defense assets of u.s. and we must ensure that our defense and jurists are not harmed by removing the government from air traffic control and i can tell you the department of defense has visited me and they don't want any of this privatization. well, look at the airlines. even the airlines are not in agreement. let me quote from a letter from delta. quote, rather than wasting months of collective energy only to find ourselves with a less efficient, less responsive more bureaucratic like costlier new monopoly service provider we should instead focus our efforts on achieving real reform in the next authorization that brings about tangible benefits for operators and more importantly for the traveling public end of quote. that's delta. so since aviation is the backbone of our u.s. economy we must prioritize air traffic control investments for the good of this country. thank you mr. chairman. >> thank you senator nelson. we have a great panel today led off by the honorable michael huerta followed by the honorable john engler former governor and the honorable byron dorgan policy analyst at fox and former ally of ours are made to decode also a former member of this committee and mr. jeff smisek chairman president ceo of united airlines mr. paul rinaldi whose present of the air traffic controllers association and mr. mr. ed bolen who is ceo of the business association -- aviation association. a great time am i look forward to hearing from all of you and i will start on my left and you're right with the administrator. mr. huerta please proceed. >> thank you chairman thune ranking member and members of the committee thank you for inviting me to speak today about the reauthorization of the faa. they have reauthorization provides us with the opportunity to propel our next -- to foster the kind of innovative climate that has long been the hallmark of our proud aviation heritage. this reauthorization is provided a form for many industry and government to openly discuss possible changes in the governing structure of the faa to help us create the aviation system that will sustain our nation's economic growth well into the future. we are open to having this discussion but we must all agree on the most important problems of reauthorization should fix. in our view is her budget and stability in the lack of flexibility to execute on our priorities. these challenges exist for the entire agency not just for the air traffic control system in the next gen organizations of some of suggested. in addition to finding agreement on the problem we are trying to solve the should agree on funding is to avoid unintended consequences. our ability to deploy nextgen technologies and capabilities hinges on interdependencies and relationships within the agency. next an is more than a installing technology in its and our air traffic facilities in aircraft that involves participation of safety organizations make sure technology is safe and the comptrollers and pilots know how to use it. we believe any decision about governance must take into account these issues so we may best serve our nation and the public. some of our good for changing the faa has not delivered on air-traffic modernization. i would argue the faa has made major progress in modernizing our airspace system to nextgen. we completed the installation of the more powerful technology platform at their new high-altitude air traffic control system. the system will accommodate date applications of nextgen and handle the expected increase in air traffic. lester refinish the coast to coast and solution of the ads-b network that will enable satellites based air traffic control that on a parallel track your collaboration with industry would identify key priorities and implementing their nextgen air traffic procedures. we now have more of a satellite-based procedures and our skies than traditional radar base procedures. we have created new nextgen routes about some of our business -- busiest areas saving millions of dollars in fuel decreasing carbon emissions and cutting on delays. in addition to these improvements we have set clear priorities and delivering more benefits in the next three years years. these range from improved separation standards for heavy aircraft that are poor nation of traffic on the airport surface and streamlined clearances using data communications. and nextgen srd of that $1.6 billion in benefits to airlines and the traveling public. in the next 15 years the changes we have already made to produce $11.5 billion in benefits. we recognize however it is not enough to rely on him projected benefits. that is why we go back and study the benefits that certain improvements have provided to users. for example in atlanta we safely reduced wake separation standards to improve efficiency at the airport. because of this change at landis jackson absent international airport is increased number of planes that can land by up to 5% or five planes more per hour. delta airlines is saving up to two minutes a taxi time per flight and these improvements are saving them to between 13 million to $18 million in operating costs annually. clear where the criticisms of the faa's implementation of nextgen and i would like to explain our prayers. their theories about how to play technology in a complex operating environment. some take the position they usually start from a wide-ranging vision and work back from there on developing a range of scenarios. others suggest mapping out the entire picture and proceeding when you are sure of the endgame. others say to take a more pragmatic approach and this is the path the faa has chosen. based on close consultation with industry. this approach used by the office of management and budget matches investments with tangible benefits to airlines and passengers. we acknowledge it requires upfront investment but we are careful not to strand program in the middle of implementation. when dealing with widespread change in the dynamic airspace system there is no margin for error. the system must transport 750 million passengers every year with the highest levels of safety. any technology we implement must be reliable and safe from the outset. to achieve this high standard we must remain nimble and we must have flexibility. our aviation system is a valuable asset for the american public. we should use the upcoming reauthorization to provide the faa with the tools necessary to meet the demands of the future and to minimize disruption to the progress we have made with nextgen in our work to integrate new users into our system. thank you for the opportunity to appear before you today and i'm happy to take your questions. >> thank you administrator huerta. >> are we live? good morning mr. chairman committee members thanks for the opportunity to testify this morning. the business roundtable members include leaders of aerospace companies and every one of our members relies on air transportation as customers of cargo on passenger airlines as the 20th century drew to a close u.s. aviation set the standard for the world's largest safest most technologically advanced system. said we have lost their primitive position and their future leadership isn't dell. this air-traffic system remains the largest the world say this but not the most technologically advanced nor the world's most cost-effective. our air traffic control system relies on the same technology ground-based radar and radio transmission is it in the 60s but almost all of the surveillance technology is still analog. like any other stakeholders we are concerned about the halting pace of the modernization represented by the faa's nextgen program. national academy report in this committee released this month clearly stated the problems. the original vision for nextgen is not what is being implemented today. airlines are not motivated to spend money on equipment and training for nextgen. in modern innovative air traffic control system would offer tremendous benefits to the users of the airspace, more efficient bypass, reduce fuel consumption lower emissions and less noise pollution, global commercial leadership leading to expanded exports and increase services to small community airports. so what are the obstacles? last year my seat mate here in faa administrator huerta offered one explanation in his speech at the arrow club of washington. quote there something away the faa can implement nextgen recapitalize their aging infrastructure and continue to provide our current level of services without making serious trade-offs something senator nelson referred to in his opening comments. administrator huerta and i would agree i believe on this critical point the current voting system clearly does not provide the needed resources but the deeper problem is the broken budget tori process itself which prevents the faa from pursuing step-by-step technological improvement that a standard elsewhere certainly in the business world. an example of what works look at at&t and verizon. in the years the u.s. government has been talking about nextgen four generations of cellular technology to 4g video -- about dr. to the faa's funding of 20 billion-dollar modernization effort by an annual and unpredictable cash flow. most other transportation sectors issue long-term revenue bonds to finance large capital modernization but bonding is something the faa cannot do. states do it the private sector does it but the federal government does not. i convened at the roundtable and expert group to help study this issue including fa and transportation department officials and knowledgeable policy advisers. their conclusion the status quo is simply too costly and too inefficient. they identified the necessary elements of alternative systems. separation of air traffic control operator from regulator to improve transparency and accountability and to further increase safety. an organizational structure that accounts for multiple objectives for safety and access are valued along with cost efficiency. governance of the air traffic control appointed by stakeholders. the revenue structure that enables air traffic control be fully self-supporting without government financial support and free the federal budgetary process. to one in six x. turns -- wage and benefit structures to protect employees prevent employees career expectations and preserve a collaborative culture. over the last two decades most western countries have restructured the way air traffic control is funded and governed determining it's a high-tech service business part of critical infrastructure and -- infrastructure separating air traffic control into an entity independent of the rest of the faa is a manageable process. tools and precedence exist for addressing the risks that come with any innovation and a thorough planning process is necessary. in the end i hope u.s. senators responsible for the oversight of the faa used the reauthorization process to put america on a trajectory to a modern air traffic control system that is the gold standard for the world. now is the time for decisive bipartisan efforts to restore america's global leadership. this is the roundtable looking forward to achieving these important goals. thank you for the opportunity members. >> thank you. senator dorgan. >> mr. chairman thank you for inviting me back. i have served on this committee for 18 years and no doubt badgered hundreds of witnesses so -- are the past two years i and former transportation secretary jim brimley have cochaired a project at the transportation institute looking at the subject of air traffic control and the structure of air traffic control. i was a chairman of aviation panel the last time we worked on reauthorizing the faa and i put up a headline from moment where we finally succeeded and is set after five years of debate, 23 short-term extensions and a partial shutdown congress approved the final version of the faa bill. my hope this time around is that your headline will be shorter and your conclusions bolder for this reason. aviation is one of the major arteries of the american economy and the fact is the issue of effective air traffic control is essential to that industry. i think we have now come to an intersection where we have to decide can we retain our leadership in developing the new technology and the next generation air traffic control system? can we retain our leadership with the current atc structure? in my judgment we cannot. our conclusion at the institute after two years of work with stakeholders from around the system if we want to retain america's leadership with the most advanced atality moving from ground-based radar to next-generation satellite guidance which would be safer faster and more efficient if we want to retain that we are going to have to restructure the air traffic control function. .. >> >> that is the accounting that the faa has in the current budget. as much as we wish it would the budget picture will not change we will see more and more spending restraint with the impact of sequestration and layoffs with on-again and off-again stock in star funding from continuing resolutions. that is what the faa is confronted with nobody could or would bill the major new technology projects with those types of challenges. here is the headline from last week and though it causes heart ache but commack the faa is not delivered as promised''. the first of the modernization that is why change is needed the consensus of the stakeholders was we need to restructure to a government corporation for a nonprofit organization that has stable funding and the ability to control and finance the march to modernization we have now reached the tipping point i am not the typical spokesperson to come to the table to suggest that is the case i would weigh in to have the agency do it there will not be stable funding to move to the leadership necessary with the next opportunity for air traffic control by a understand this is not easy to be discussed before but it needs to be done now. a number of other countries have done this successfully in so cannery. we know the history data and '03 will learn to fly dash pc the bonfires for guidance then for ground-based radar and we have not changed me to go quickly and effectively the only way that will happen is of the different structure if a non-profit organization and can accomplish what we want to. one final point to know the word privatization has been used. i did not use it this structural focus from non-profit organizations that i think will solve the problem for this country to insist the government retain anb is stakeholder in a new organization. mr. chairman thank you for the invitation is a pleasure to be sure. >> thank you senator dorgan spent a thank-you chairman and ranking member and members of the committee 40 opportunity to be here for the nation of the air traffic control system for users of air space in passengers and employees and the many stakeholders across the country that benefit. airlines for america is dedicated a tremendous amount of resources time and attention to a fact based study of air traffic control reform including a global survey of proper service providers. all of the work points to one conclusion, the american air traffic control system needs a complete transformation to modernize to meet the demands of the future a of the time is now. we cannot continue with a status quo. today all users of this system is behold and to the world were to era system that is inefficient. for decades policy-makers and stakeholders unanimously recognized the need for modernization. long string of reports from commissions dot inspector general a gao and independent private sector experts have found the faa progress has not met exhortations calling into serious question in the agency's ability to deliver on its mission under the current structure. the problem is not the work force or the leadership of the funding and governance that we must fix many countries around the world have successfully transformed their own air traffic control system. we have done extensive benchmarking we show the six basic success. number one is separation of the operation of the atc safety regulation function number to a nonprofit corporation with independent multistate kohler board of governors free from political influence. a professional management team incentivize to pursue efficiency without numerous constraints imposed on government agencies. number for a self funded user fee model based on the cost of services allowing access to capital markets and a steady predictable stream of funding not subject to budgetary constraints. number five. managing assets and capital investments with far greater speed to market of technological information in which user fees so they know what they pay allow them to have full ability to recover cost. under their transformed atc system plus any new fees to fund the remaining should not exceed the total tax burden of today. with independent governments and operation and funding of the atc system the faa could turn the full attention to safety regulation and oversight for the transform atc system could maintain safety as the utmost priority while creating efficiencies delayed reductions in the environmental benefits for the inefficiencies the delays and the cost will only grow over time so there is no better time to transform the atc system than now we are capable to rise to a challenge as many others have before us if we do this methodically and thoughtfully well as giving proper consideration to risk mitigation the results is a modernized air navigation service provider to better deliver the benefits to the users of the system of employees and passengers that they people of this nation expect and deserve. >> thank you. >> mr. chairman is editors of the committee thank you for the opportunity to testify that this hearing to discuss the future of our aviation system. riyal have a stake in the national airspace the economic engine contributes 1.$5 trillion to the gdp provides over 12 million american jobs. reinvented aviation as an american tradition over the last 100 years we have created innovated implemented the unbelievable for current labor you run the largest most complex diverse system in the world it is income parable nine equaled and unrivaled by any other country. for example, the next largest aerospace is canada they have 12 million operations per year on average we have over 132 million operations per year the united states air space systems is considered the gold standard in the community by yet the reality is to keep that honor changes needed. currently we face many challenges to respond to a given problem so unpredictable funding stream concluding the inability to finance long-term projects the inability to grow the airspace for new users the ability to modernize the aging infrastructure currently our centers throughout the country are over 50 years old with no plan to replace them. their struggling to maintain proper resources at the air traffic control facilities are certified air controllers are of the all-time low the of coming bill must address the lack of the of predictable stable funding stream for the hypercritical safety aviation operations and. we'll understand this stop and go funding problems leads to an examination of a structure change and we believe it is time the current system is not dynamic enough to address the needs of air-traffic control operations in the future but any such change reform must be carefully examined to prevent the unintended consequences of safety and efficiency of national airspace system every stakeholder should work together to make sure the united states continues to be a global leader in aviation. any reform must address the safety and efficiency of the airspace system to be misunderstood to provide a stable and predictable funding stream. to adequately support staffing inspiring. any change must allow for continued growth in the aviation system and must be dynamic to provide all services for all segments of the community. any change that we make needs to be precision like to interrupt the day-to-day operation of the airspace it is an american treasure. aviation is uniquely in american tradition. we cannot continue to shortchange it. we're still currently recovering from sequestration cuts of 2013. another round of cuts better set to take place this year will shrink the footprint for ever we need to make appropriate changes to secure a stable funding stream and establish a proper governance structure that is not laden with your credit lines of business or burgeoned with bureaucratic process we need a dynamic structure that will allow was to grow aviation and not shrink it and to modernize facilities and equipment procedures in a realistic time frame to give us the competitive edge to ensure the future leadership in the global aviation community. thank you for the opportunity to testify collophore to answering your questions. thank you. >> mr. chairman and members of the committee general aviation is an important industry representing target billion dollars to our economy with over 1 million workers business aviation unit states foster's economic development and small town and roll committees and helps companies of all sizes be efficient and productive to help with a humanitarian efforts whether responding to forest fires or flooding or transplant organs. we're honored to be here today. we represent over 10,000 member companies of all sizes. and in all types of industry we represent hospitals, universities and nonprofit. 85% of the numbers are small and mid-sized generally operating out this small towns and secondary markets generally flying tour from an airport with no commercial service. business aviation is fundamental to the economy smalltown and mid-sized communities in the united states. typical of membership status:washington schweitzer is a high-tech engineering company in a community with very little commercial service. but it can compete effectively in the international market because it has access to business aviation. mr. chairman, every member of this committee has a company like schweitzer in a community. as a matter of perspective there are fewer than 500 communities in the united states with any type of airline service. 5,000 in the communities that rely on business aviation for support. the faa reauthorization bill has a lot to do with communities and companies like those. because the airspace above our heads belongs to the american public not to anyone stakeholder or industry segment the air transportation system must continue to serve all americans across this country the question on the table the fundamental question of reauthorization is who will ensure that the public airspace serves the public benefit? will it be the public elected officials? or a combination of self interested parties? for decades suggestions have been made that congress wash their hands of the air traffic control system. to give over to other parties taxing authority to determine if you can access airports and airspace. this is something pushed long before next gen was the concept in before sequestration they have wanted sweeping authority to determine who gets taxed and who can fly where and when. mr. chairman the power to tax is called the power to destroy. today that authority resides with the elected officials for also the power to insure nondiscriminatory access to airports and airspace. congress should not abdicate or relegate delegate or outsource its authority over taxes and access to. the congressional research service said to do so could become such -- and constitutional united states has the measures the largest and safest and most efficient and most complex and diverse air transportation system in the world. but the business aviation community is not content with status quo and no american should be. to be the best today does not mean the customer and complacency is our enemy. that is why the business aviation community has been active and outspoken for its support for next general industry segment has done more. we have invested in technology we urge congress to do the same. serious problems to exist with the nextgen program programs have been delayed and implementation has been slow. we still have a lot of work to do to certify technologies it is time to focus like a laser on those problems. it is time to not be distracted by what we need to do. we need to use the faa reauthorization bill to make sure we make nextgen a reality and improve the certification we are protecting our nation's system of airports to certify end employment and integrate in a safe way there is a lot of work to be done the member companies look forward to working closely with you but let's never forget the public airspace should serve a public benefit. >> thank you mr. bolen your very efficient everybody came very close to the five minute rule even hour former colleague. [laughter] over the weekend indicating is security research claim could barely take control by hacking into the in-flight entertainment system of true it is a disturbing incident and to analyze those on passenger aircraft? >> so what they are finding is as it relates to the larger question of cyberit is something we've looked very carefully at that only in the operation of our system to how it changes for those rare of security to access to critical systems but a cyberis it will continue to be a challenge not just with aviation and but a technology based sector tuesday ahead of. >> nothing to report at this time? >> the academy's student would require significant effort with those challenges going forward. to talk about that issue with the agency's efforts with the government faces of the private sector employers? >> do we offer a competitive job and composition? to ensure the net debt it is important 2.0 there is a significant portion of the pool interested coming to work for the faa because of their belief of the mission in public service. >> we will never paid the top salaries that top technology companies pays so the focus to have an orderly process. >> to be interested in the cybersecurity support to begin touched with that subject. to turn back to the subject at hand talk about status quo is not be acceptable situation. in bed with the system of the courage government model >> we have been studying the last 18 months the other countries when they broke off air-traffic control services from their government entity some have done well summer struggling. what we are looking at is a funding stream to change the structure was a thing we know for sure that we don't want is to put another hurdle in front of us to provide the most efficient system is the world's. >> there is a lot of discussion as the model for comparison. to a understand with some reluctance to copy that effort to that he finds most appealing. >> i was there last week to look at the technical center to have day true collaboration to develop a the nextgen technology to work together from conceptual stage through training and implementation and deployment with their facilities to save time and money with the 30 year time frame because of the procure reprocess. >> in the context of the independent services provider some of the referenced of preference several different models. can you speak to the difference of a federal corporation or federally chartered nine profit from the approach? >> reconvened this group in the consensus was a nonprofit corporation allowed to maximize shareholder corporation but also what happened is the ability to have that bombing authority to talk about the nextgen capital project we we're done in a fairly short period of time to continuously improve. it is the entity but i would say those people tend to rely on the nonprofit corporation with the shareholder management if you will. it gets you the most bang for your buck and gets us out to the edge where we are not today. >> mr. cherry have submitted a research document for the folks that were involved have produced this shows the strength and weakness for what other countries have done but what it has indicated is the most important point the stability of funding of this type is essential i served in congress 30 years in the lot i don't know but in the time of spending restraint is an sequestration and multiple continuing resolutions there will not be stable funding for this type of project in the future unless it comes through a bonding capability through another organization. i support and belief this will not get done unless we decide to do in a different structure. with the input including the of government. >> the user fee structure as was mentioned as a stable stream of funding with stability and second this is governed by the board of directors from the department of defense said u.s. government the air carriers said union representatives said they are present with fiduciary duties and let not the employees with those fiduciary duties. also of the efficiencies driven from a nonprofit corporation we have evidence from canada to the north. and with that management with the ability to attract and retain a workforce including cybersecurity experts. in that's enterprise is free of the political influence found today's. >>. >> i want to follow-up with the introduction of cyber attack. part of what we are looking to do with this next generation is air-traffic control of the of satellites you can be a lot more efficient and a lot more awareness from the cockpit from the other airlines with that transition there is the question of the back up of the ground-based radar. so what happens if there is a cyberattack:the gps to shut down with mr. smisek with the ring true that you talk about who would bear the cost of the back up since that is the last efficient operation and? america i am not an expert on the cybersecurity but it is necessary in any enterprise to have paid very expert investment. it is a risk as we become with the attack, and the gps system it would affect everything. >> given the private corporation. >> if as a result of concerns that were sufficient with the ability to bring down the gps system of which i have no knowledge at all. . . >> that is one of the costs. mr. administrator, why is dod weighing in on this so heavily? they are concerned about this privatization? can you speculate how privatization would impact there relationship with dod? would you be able to interact with a private entity or nonprofit corporation in the same way that you have existing opportunities to interact with dod? >> sen. nelson, i can certainly speak about the relationship and the working procedures that we have with the department of defense as they exist today. they are an they are an important partner in the provision of air traffic control services and they control certain airspace in the country. we control certain no space the country. we have a shared responsibility for an efficient and effective management of the safety of the air traffic control system. we often we often take advantage of the airspace they use exclusively during peak travel time to overcome eight additional traffic loads and work collaboratively with them to ensure that they have access to airspace that they need for their mission requirements for training. >> i understand you were collaboratively with the. why do you think they are weighing and so vigorously? >> i cannot speak to why they are weighing and but what it ultimately depends upon is what would be the structure and an alternative model under which they would interact with their partners in the air traffic system? it would strike me that there would be a way to build protocols but it is entirely dependent upon the structure selected. >> why are the general aviation business manufacturer so concerned? folks like breyer -- we will go through all of them. gulfstream cessna etc. >> the business aviation committee as i mentioned earlier 85% of our members are small and midsize companies flying into and out of airports with little or no commercial airline service. and so they are concerned about their access and are concerned about ensuring that their access to safe predictable, and affordable. i think one of the questions that came up earlier was financing the system. what we heard is that one of the plans for the future is to have bonding authority which is a euphemism for borrowing. the reality reality is what we have today is our system generates a largely but not entirely self-sufficient system. we have a combination of user funded taxes plus a general fund contribution they currently funds the faa the question on the table as if we pull it out me will have a situation where all of those industry charges don't equal the amount we have today we can either raise good taxes to get to that amount, cut the system to get to that amount we will as you have heard go borrow the money. borrowing money comes at a cost. that has to be serviced. prolonged borrowing ends up creating an interest nightmare. there are issues that must be addressed. what we want to do is make sure the small towns and rural communities, secondary and tertiary communities are able to have business aviation located in their communities and are able to access airports and no space in major markets such. >> thank you. >> thank you. let me just begin. is every witness a part of this working group? >> no. >> i tell you what. i think this is an excellent report. kudos. would you do this? in reading through this at some time there needs to be a page where the owners take ownership command i don't see that. we checked the website. spread that on the record for us. >> happy to do that. >> there are three -- are you part of this working group? >> we were part of the working group but did not feel our concerns were being reflected. we are no longer. >> that is probably accurate three options involve major structural change. an independent nonprofit and private for-profit. the 4th option sort of basically tells congress that we ought to do our job. get the funding straight and make sure that it is reliable and steady. the 4th option system funding stream maintaining the system current government structure going on to say that this option could alleviate transition issues that are concerned with completely knew government structures. fair to say that your organization is more in tune with that 4th option. >> we have studied various structures around the world. we have looked at australia, new zealand, england, canada in none of these markets do we see a robust business aviation community that is providing economic development in small and rural communities. serious access issues. australia business aviation is not allowed access to airspace in melbourne or sydney on a prioritize basis at all. we all. we end up waiting sometimes three, four, five hours on the tarmac for access. i was on i was on a panel recently with the head of the irish air traffic control system who said he just have to understand you will get priority. that is part of the natural selection process. as we have looked we saw after an economic downturn that privatize group needed a bailout from the taxpayers. canada has instituted user charges while continuing fuel taxes. what we have seen as we look around his a lot of fundamental problems with some of the different structures, and we want to make sure in the united states we identify problems and finding targeted solutions to them. to simply to simply say we will pull this out and give it borrowing authority leaves concern about our ability to safely, predictably, and affordably access airspace and airports >> you are saying that the united states is unique in that we have the 5,000 communities that rely on business aviation as you mentioned and that access will not be the same if we go to one of these three structural changes. >> our study of the systems around the world has taken this action in a serious access and affordability concerns. >> it sounds like you have a good.there. >> it depends on who is listening. >> i i spoke on the importance to the country. but the question before this committee is are we in fact going to have the system built and completed? the answer is without a change in structure we will not get their's. there are a lot of opposing interests. i will give you a list of everyone who participated. but you can't reach everyone because everyone has their own set of interests that they bring to these issues. i mentioned that this is a heavy left. we didn't put together a pattern for important reasons. we would not have gotten agreement on a specific pattern. once asked if he would engage in a debate. zero yes if i if i can take the negative side. the negative side takes no preparation. look i understand that this is big and controversial and will make one more.if i might. >> one more. >> he came to our organization. he was not a participant but we invited them. i have great respect for him that is why we invited them. all of us should want the same thing. there will not be stable funding in time is spending restraints which will probably include sequester uppermost in the budget as we saw it is year because $365 million out of we equipment account trying to climb this hill of in the modernization. >> a stunning indictment which may be correct. this one quick.most several weeks ago april 14th you appear before the full community on a similar topic faa reauthorization. we asked questions for the record particularly with regard to the contract our program still awaiting details and look forward to receiving answers. >> absolutely. i think we're trying to schedule a step briefing to go over the methodology. >> okay. if we can squeeze those questions in. you could have answered them right on the spot. but do your best. we served together in the state. i i was a state senator. i recall you coming before me on the finance committee. here we are just a different capacity. it's great to see you again. i would like to pick up briefly on senator workers comments. as i heard the testimony concerns about funding and budget. that 4th option it falls back on congress that we are not doing our job here in providing the resources necessary. the proposals put the proposals put together. that is where focus needs to be having said that i have a question. i understand the 2nd largest air carrier has a major presence in my state of michigan major have as well as a large employer has declined to endorse the a a4 a position that you have been advocating for today suggesting the current system can become more efficient and deliver substantial benefits through improved collaboration efforts. delta fears that separating vat see system would lead the operational risks and pitfalls bureaucratic silos unforeseen costs that will accompany the transition and the loss of expert personnel a long list of concerns. please comment on those concerns and whether you agree those in the risks are ones that we need to consider? >> i would be happy to's. as you can imagine like congress we don't always get unanimity. however, we do except for one member. that member has expressed its concerns. i will say that i think that our colleagues at delta have no evidence that the fa can become more efficient or deliver effective services. a perfect example of that. today the best technology in the world. i think you would agree. they they brought down the cost of the system to the users by 50 percent from our model of safety and are selling a technology to 3rd parties because they are so adept at working collaboratively with unions, working collaboratively with experts attracting and retaining experts. i would say that lacks evidence. in terms of risks of transitions of course there is. what we know is what we have today does not work. we have candidly little to no confidence that there will be a stream of stable funding for the ability of the faa to attract and retain to implement stakeholders in collaboration. collaboration. this nation should reach for greatness and this is an opportunity to do so. if we keep doing the same thing we have been doing we will get what we deserve. >> administrator under the center proposal adc has spun off. the government must maintain a role in governance's. since the faa is the guarantor of the public interest. the role of the faa to put safety of the traveling public 1st. are you concerned this might be diminished? >> well, i would envision that there would be a couple of different roles. the question of who oversees the safety. under under our current structure today we have an independent safety organization that provides safety oversight. with respect to some of the other questions that have been raised relating to access to the system or ensuring the public interest those interest those are all questions that would need to be carefully considered by this committee 's and would need to be reflected should there be a change in the governance model and whatever structure is put in place. >> i think it is clear and certainly in the expanded testimony i submitted it is clear that the faa remains the safety -- they other regulator. i think you get better regulation by separating. right now we have an inherent conflict. they are judge and jury. i think that the separation allows them to do their job very effectively as they do in a lot of areas. there is a benefit in many respects to that command i don't think there's ever been a suggestion that somehow safety -- we are talking about the air traffic control system itself the operation of it the vision for it, the leadership has to come back. the other thing we need a more effective way for the faa to modernize its own procedures. now they focus on that and get up-to-date on things where it does help improve the way we fly the way airlines manage operations. literally rules being months of my years behind. the ability to have a separation division of labor is one of what i believe to be the benefits. and i would suggest also as you pointed out in the structures it really isn't -- it is moving to a government corporation. a nonprofit corporation. far different than a private enterprise. >> first i want to thank all of you. i think we look at the sizable we are dealing with your. i heard i heard all of you and all your statements and thoughts and beliefs and what we should be doing. statements coming from you all does not work. when you start looking at the size canada has 42 towers and seven centers. france. france, 82 towers five centers 16 towers for centers. mexico 58 hours for centers. united kingdom 16 towers and to centers. united states of america 512 towers 21 centers. they don't even come close. how are we saying the system does not work and we are not able to maintain? the most used in the world. let me just go. my little state of west virginia told us that if you deregulate it is going to improve air service in rural west virginia. we were told that. a pioneer at that time's. 122 air force 86 of them are private strips. only seven of them have commercial flights and seven have towers. this is diminished because of the what's going on. and i'm just looking at the situation to where we are supposed to be improving a system by privatizing it. in some cases i have been all for privatization. i am also for public-private partnerships. they still come under the purview of the faa told that they are in a private stream. that seems to have worked in west virginia. our towers would have been eliminated. five would have been gone. i'm looking at everything. go home and explain that we are making the system better and and start charging. if it wasn't for aviation we would be out of the communication completely. little towns were not have any industry whatsoever. they cannot go back and forth. with that if we take congress out of the equation and spin off the air traffic control system to some nongovernment organization how would that speak for rural america? >> sen. no one is suggesting that the government not be a a stakeholder in whatever is proposed. i do not support privatization. but i spent a lot of time on this committee talking about how you can fly twice as far for half the price. you are talking about a different subject. you and i agree on that subject and it has nothing to do with the question of how you move airplanes' from one airport to another and whether we will continue to use a world war ii ground-based radar system or whether we will move to a different type of system using modern technology. this is not a question of what is but what will be. there is no conflict at all. unbelievably safe system. no conflict in saying that and observing that we are not moving as rapidly as some others are in order to embrace the knew technology and retain america's leadership. i met with the europeans and others will retain our leadership. they will not be funding to do it. i believe we need to find a new structure but not one in which the government is not a stakeholder. >> sooner or later we will have to get a budget that works for this country. we have not done that because the political toxicity of this place we call washington has got to change. we can be picking and choosing. there have been reports congressional research service highlighted constitutional concerns of what we're talking about. one of my biggest concerns is the delegation of taxing authority to an unelected unaccountable board of directors to adjust user fees and living in taxes. often driving federal appropriations. i would ask any of you all here do you think it is legal and appropriate to relinquish a constitutional authority? >> i don't purport to be an expert on the constitutional law. this these structures designed to cover the cost of the system. an appropriate reserve fund if there were reductions in travel in terms of the general aviation issues and canada and it can be done here that sticker you put on your car. it's a process. today's the proportion of fun -- funding. we see the vast enormous efficiencies that can be driven from a nonprofit corporation. >> the amount of money being generated today from industry is less than what the faa costs. it's all the same thing. funding the system have to go up or as has been discussed we can borrow the money if we can do that we would need to know pretty clearly what we are going tomorrow, what we will get to know when it will be ready, how we will pay it back and who will pay back. this authority tax was set by the 1st chief justice of the supreme court to be the power to destroy. we are concerned about that. we have heard some of the press announcements. cost shifting is been part of that. it it is a concern. >> the gentleman's time has expired. >> thank you very much. welcome back. it is good to see you. you. i was just at the canadian embassy with the premier of ontario talking about some of there funding. .. smaller airports on public safety and other things and i wonder how compares to canada and compares to what they have done with their roads and bridges and some of that which i found an interesting model. mr. rinaldi. >> thank you senator. i don't call myself an expert on this but i have been researching and canada along with the u.k. and mr. leah system. as far as from what i know of the system they haven't reduced services. that would be one of the things i would be deeply concerned about. they moved out of air transport canada which was their government structure in the early 90s and they started to transition about 1994. it took about five years to go through a full transition. it was a big transition that they went through and then stood up there corp.. they do have as ed bolen would say they did keep their gas tax and that is to fund the safety and regulatory function that still remained in government and established a user fee of all the users in the system. >> and as i was looking at someone else brought up the delta letter since they have been out front on this. they talked about increase in the provision of service cost increases and airports look up to make up the trust fund money. this is a different model but in canada. any comments on that? >> i could speak to the u.s.. the amount of money that is raised from tax structure pays for the entire traffic control system that contributes additional monies to the operation of the faa and we don't propose that would change. i think the 15 year average of the fund contribution is around $3000 -- $3 quintillion so with user fees to run the system initially it would certainly be with the current level of taxation a portion replaced by user fees and a portion retained by congress there would be money that with continued to be contributed to the faa whether that would go into their aib or the general faa -- >> in this reform system would you be willing to pay more? >> we would certainly from the u.s. aviation airline industry we are as you know one of the most heavily taxed industries. we are taxed like alcohol and tobacco like a sin and we are not a sin. i believe over time personally based on air canada and air canada model that the user fees would actually go down because of the efficiencies that would be driven and operating system for example canada has gone down by 30%. >> senator from the business aviation perception it looks different in canada than in the united states. they don't have a lot of the small and midsize companies in the small and midsize communities that we do in the united states and as paul mentioned they do have user fees and the feel top -- packs up there so a double tax situation and it's fundamentally different because in addition to privatizing air traffic control they have privatized airports which have their own costs associated with it so for a lot of different reasons we don't believe in apples-to-apples comparisons. >> how would smaller airports fared under this model? i guess i asked the same thing as -- >> from my perspective we are very concerned about that access to those airports and airspace. today received a letter from operations and are concerned that we copy that model. what we hear from our members operate in canada is a concern about the way it works up there with regard to paying the user fees as opposed to the fuel tax. it's not nearly as efficient. it creates a costly administrative burden and they think it is harmed business aviation. senator dorgan. >> one of the arguments i would make those in the opposite direction that today we have technology that would allow for more airport access services to the small airports that we can't get fully deployed who are running behind and would be of benefit. as i look at this do we like what we have got and are we confident we can do better if we stay the course and if we want to change what would that entail? we are getting into some the debate about what may be in the bill that questions that are being asked are able to be responded to through some of the work of the center is done in what the reporters looked at. >> senator dorgan. >> i think mr. bolen is concerned about the uncertainty and i understand that. my interest is not in creating a system and we have offered an approach here that doesn't have a lot of specifics. i have no interest in entering business aviation general aviation or small airports. one of the principle issues it here is every major airport has bonding investment so on. i think one of the significant issues here is to give a new structure bonding capability to build the system and a robust way and we have explicitly not described a user fee or a structure system beyond that and i think mr. bolen and i fully understand his point. i don't have any interest in seeing a system that is going to injure general aviation business aviation or small airports. >> thank you. >> senator markey followed by senator mccaskill. >> thank you chairman very much. it's good to see byron dorgan bachan congress. i spoke along with ranking member nelson senator cantwell booker blumenthal and frank and i sent a letter to the department of transportation asking about airline's ability to engage in personalized pricing. personal license pricing is a practice that would allow an airline to charge different prices to consumers that are trying to buy the same seat on the same flight at the same time time. the difference in airfare would be based upon personal situations that the airline has collected about the passenger. i and the other members are deeply concerned that if airlines are about to engage in personalized pricing they could discriminate amongst consumers charging customers different prices based on zip codes, income levels marital status or other characteristics. what if for example airlines consumers at good information offered special fares to consumers who live in more affluent zip codes to entice them to travel more frequently while failing to provide the same in lower income areas so mr. huerta the faa publicly refused last year to determine whether discrimination based on income level marital status would constitute unreasonable discrimination. i believe that practice is discrimination. what can you tell the committee today? >> will the faa revisit that determination? >> first of all senator to clarify the economic regulation and oversight is authority held by the office of the secretary not at the faa and we can get your response for the record. >> i think that's important for the committee. mr. smisek your airline, would you discriminate based upon income status or merit of status or trip purpose? >> sir up what you are describing redistribution capability at a auto which is a technological advance for the ability of airlines to offer through third parties additional services that the customers cannot get today, i don't view it as discriminatory. i view it as pro-consumer. >> i'm asking are you going to use marital status? >> we have no desire in doing anything like that. for example if you are primary member at united and buying through a third-party site today if you bought directly from us directly on united.com he would be able to get an economy plus seat for free but if you're buying three third party and don't know your loyalty status because of technology today where they are not able to offer that flight for free which is requires you to put through third party and come back to united.com and get your upgrade. >> on train to clarify is that you will not be using income status or marital status so is zip code to in any way in make any of these -- >> senator united airlines has no desire to discriminate. >> that's very helpful, thanks. we have heard recent reports about cybersecurity threats there are travelers face. one security researcher claims to have hacked into the airline's control systems to the entertainment system changing the direction of the plane. i'm concerned about recent claims that the wi-fi on plains lacks basic security that make it easy for hackers to spy on customers using the network so let me first ask about hacking into airplane control. i know that chairman thune earlier asked administrator huerta about the faa separates and let me turn to you again mr. smisek. what is american airlines doing to prevent hacking into the vital controls of the airline's? >> sir . once the architecture so it's that kind of management of process and design and money there's no question i would say it's 50/50. >> is interesting i don't know how we ensure we get better at management by just changing the structure. unit look at the u.s. postal service. look at amtrak babies pay these are all examples of things we have done better structures were we have tried to do something other than the traditional this is an inherently governmental function and the government is going to do it to. >> i would say look at fedex. >> yet but those are privatized for-profit. are we advocating going to for-profit? if that's the case my rural airports are totally host. >> we are not saying that but a private non-corporate is in my mind when i look at some of the decisions made in other countries and how they have approached it, i think they really to me offer that kind of flexibility. the faa is still the rule setter here. they are still the boss but now it's basically in the hands of the private company. one of the things on the funding side mr. bolen said
>> we have on our panel today a community developer, in investment maker, a next general banker and another. they all have a complex role to play. let me introduce each one quickly. first, bart harvey. he joined enterprise in 1984 shortly after james rouse. he ran the foundation from 1993 until 19 98. he help form the foundations and the financial institutions trying to scale capacity of around the country. like jennifer, bart lives in baltimore and has been in integral part that we will hear about in a moment. know -- was started as a small housing program in harlem in the late 1970's. today, it is a program that has scaled. it is now in a 100 programs across 10 countries, helping disconnected youth to become leaders in rebuilding their own communities. and joel is one of those leaders. he is a graduate and now a director in the organization. on top of that, he is involved with my brothers keepers. next to him is donald brown, the president of an investment firm. they are experts in financing revitalization, increasing the wealth and assets of people in communities. you will hear a lot about the neighborhood. derek douglas, he is the vice president for specific -- for pacific engagement at the university of chicago. he is working on partnerships around the south side chicago neighborhoods. around urban economic development. the other hat he wears, he was special assistant to obama in the first administration, helping to lead domestic policy and metropolitan policy in the white house. and michael smith, the philanthropist i talked about. he is the special assistant to the president and helps run my brother's keepers. before that, he oversaw the social innovation fund and others at the case foundation. we have a dynamic discussion. just as a reminder, we will have this conversation for about 45 minutes. think about your questions and we will open it up, again folks on the webcast are welcome to join the conversation. let me start with bart. bart went to help contribute with the cleanup, start with what you saw and experienced their -- there. bart: thank you. i was raised in baltimore and came back and settled there, i was heartbroken. when you saw that cvs on the loop that kept burning, i wondered what had really happened. the next day, i went to look for my self and to help clean up and it was a very different scene than you might have expected. there were about 200 people out from churches, from the community, they were cleaning up . and on north and pennsylvania avenue, where the cvs was and also in a couple of other areas, small stores had been impacted. i toured all of the investments that enterprise had made, homes that we had directly contributed to about 250 through habitat for humanity. they looked better than they would -- then they looked 20 years ago. the homeowners were there, they were in great shape. no property damage in any of them. there was a beating heart at the center of winchester. that was very positive and reassuring. and then yesterday, i was -- how does baltimore react to this? basically, they surveyed everything that had been touched by the rioting. there were 350 different businesses, half of them with broken window something on the exterior. the serious ones you saw on the clips, and a very large shoe store, the cvs, one senior center that burned to the ground. if you take those 350 and look at the cost that is estimated about $12.5 billion just from the initial estimate. a third of them have full insurance, third of them have partial insurance, and a third have none. so banks, philanthropists, community financial institutions, they are getting together a pool to try and put everyone back in business. so it is a hopeful situation more than what you might see or watch. i am sure jennifer has the same thing. i got 67 e-mails saying, are you ok baltimore is burning? so put it in perspective. it is a huge issue, and we should get into those issues. >> what were the original plans the effort made by enterprise, habitat for humanity, and all your partners? what is your reaction to the assumption that the money spent their did work -- there did work? bart: i will say at the outset that this was the view of a neighborhood transparent -- information -- transformation. what would happen if the schools, the housing, the employment, the health care and all these systems worked to really help people become productive, more productive and really integrate into part of the system so that there is a path upwards for them or their kids, going forward. we did undertake a major effort around that. we learned a lot. a part of it was successful and part of it was not successful. i was interested -- it said $130 million wasted. i went back and, and if you just take the housing and infrastructure as a major part of that expenditure, there were others, but that was the major part. $139 is a mix of private and public -- one to $39 million is a mix of private and public financing. if you if you took just what we know about ours, which is chicky grace and enterprise homes of the 524 units cost $58 million and it's all there and it's all owned by people that are working and a significant portion of that's being paid back to the state in mortgages over time. so -- and then if you look at the amount that was spent with habitat for humanity, that's being paid back, back into habitat that goes into other houses along the way. so that's all there. now, let me just do one thing if i may on this. not to avoid your question, but just put it into context. if you took 524 people and put them into starter houses in the county and in some of the wealthier metro areas at a $350,000 home over the same period with the same interest rate you would spend more in the mortgage interest deduction on them. they have their houses, the cost to the government would be more than it is in sandtown winchester if you do the math over the same period of time. so you have these houses almost 700 if you count ours and habitat's together that are there, are effective, they are a heartbeat. what didn't happen? the connection to jobs was incredibly difficult. there is a large number of ex offenders in the area, they are an automatic exclude by law. we went round and round on that. that was a failure. economic development did not occur. so you can see where sandtown's investment begins and ends. where freddie gray lived was on the outskirts of the area that had been improved dramatically and had the strongest home ownership portion of all of sandtown winchester. and what didn't happen was there wasn't an economic driver that kept that redevelopment going past where the homeowners and were and past where the stability in sandtown winchester was. the employment did not occur. the healthcare systems we -- and i'm sorry i'm probably taking too long -- the healthcare systems, we organized all of the various healthcare providers all the payment systems changed, very hard thing to do, but we signed up every -- almost every kid this sandtown for the chips program, et cetera, so there is more healthcare available than when we started. the schools, we took on two public schools under an agreement and combined them into one from k through 6 to k through 8 and it went from one of the worst schools into the top half by all statistical measures along the way. so that improvement is still there. more needs to be done. so there are positives and negatives to this whole situation. most of that investment is still there, it's in -- and it's amazing that it's in better shape than it was when it was first done. amy: so i think that positive progress, the one outstanding issue was jobs. bart: jobs and development economic development. and which takes us really naturally to joel, and he and i talked a bit before this about how what we see is that despite some of this positive progress a lot of young people still very frustrated and so youth build works directly with those young people and it's, by the way, it is not lost on me that we are having this conversation at an institution that is like the symbol of privilege. so i asked joelle to just get us out of our ivory tower and really make everyone in this room really uncomfortable. and tell a story about how youth build really works with kids who feel left out and how you get to a place of promise. joel: thank you, amy. so youth build, just to give you some background on youth build youth build is in its 36th year as a program, it started in 1978 in east harlem became a national -- federally funded program in 1993 under the department of housing and urban development and is a federal funded program under the department of labor. as far as the numbers go, we went from this one tiny program in harlem to 268 programs nationwide which sounds great, right, but there are over 2000 communities have applied to have a youth build program in their communities and only 368 are able to operate because of lack of funding. here are the needs if in those communities, the young people who come to our programs they come to our programs, we don't have to do very much advertising, word-of-mouth gets them in. they have a brother, a sister, and uncle who graduated from youth build and talks about this as a unique experience that helped them tap into their potential it. they're coming to us from fragmented homes, some of our young people were or are currently gang members, single parents, struggling with substance abuse, homelessness. i mean, they're really feeling the sting of poverty every day and they're feeling of sting of generations of poverty. so they're coming to our programs sort of saying i need something to change. they're survivors. in the youth build program they're engaged by a loving and supportive community that believes in their innate and abundant potential and we provide economic enrichment, career redness skills, life skills development, leadership development, the opportunity to engage if meaningful service and we tap into that desire, right to want to change their communities. the story isn't all linear. i will give you an example. myself. i dropped out of high school when i was 17 and i literally walked out in front of high school officials and i remember at the moment feeling like i didn't want to go back but wondering why no one was coming after me. wondering why no one was telling me to turn around. at the age of 17 when that happened and you feel disconnected from the rest of the world and see that some of the people who are supposed to be responsible for your education, for developing you aren't doing that and don't bother to say, hey, wait. you believe that the world doesn't care. young people who come to the program in addition to the many stings of poverty that they're suffering they're coming angry because they feel like they've been disappointed. but when you come to the program we believe in them. they nurture them. we provide a place for them to heal, to develop real world skills, to tap into what i call, i compare this to the laws of energy which is that their ability is neither created more destroyed but transformed from one form to another and we take these amazing skills and talents that they bring and within the walls of our program we are that reactor and we tap into the leadership that they already have and we help them come out and find a sense of self efficacy, make better decisions about their lives. they're able to succeed if n career and post secondary education. we provide this ongoing love and support. we have this motto, this mantra amongst graduates that says once in youth build always in youth , build. so we're a family. i have 140,000 brothers and sisters nationwide who have graduated from youth build programs over the years. these 140,000 brothers and sisters have engaged in the building of 28,000 units of affordable housing. so not only are they building themselves, they are building their community. those two things go hand in hand. so we take the young mother who is coming out of an abusive relationship and she comes to us and we provide the healing, we provide the real world skills. the young man who is suffering because he has been the victim of poverty but also has also been the aggressor of the many things that come with poverty, violence on others, violence on a partner, violent on himself. and so, we work with a group of young people that to many in society are not that attractive. i was having a conversation earlier with you, bart, about, you know, there are some programs that have scaled really quickly but they're working with the people who are a little more attractive. folks from more affluent communities, college graduates they're easier to talk to they're easier to deal with they're not going to blow up in your face the minute you confront them with some of the problems they're facing. but these are young people that need us. we really are living in two americas. one that looks pretty and is pretty to talk about because we're doing something about the problems that kpi in that -- that exist in america and one that we're not really dealing with and one that we know is there because we saw the anger come out, right, in baltimore. and, you know, i think back, a colleague of mine pointed me to an interview on one of the news stations and i can't remember which one it is at the moment, but a young man, the reporter turned to the young man and the young man said, we are hurting. we are hurting. we are not being listened to. and at that moment the reporter turned away because he wanted to focus on the riots. so that is who we are working with. we are working with young people who are hurting and our goal is not only to them them heal but to become productive responsible citizens who are not just living in their communities and not just part of their families but they are building their families, building their communities, they're becoming leaders. what i mentioned earlier that's who our young people were, today they are community leaders, they are police liaisons, they are working to go into the prison system and work with young people before they're released to give them some hope, to let them know once they get on the other side there are opportunities for them. that was long, i'm sorry. amy: no. no. i don't want to ever cut you off. tell us about youth build's experience in ferguson because i think you do have a chapter there or working in st. louis, and in baltimore, too. joel: so youth build has a chapter in st. louis and soon after the events in ferguson we got a call from the director in st. louis and she said, you know michael brown's uncle is actually a graduate of the st. louis program. he needed some help for funeral costs, clothing related to the funeral, we provided that. and the young people at the st. louis program and the staff at the st. louis program said we are close by, we need to be doing something. they were going into the community, sort of just being there, being part of it and beginning conversations with officials approximate in the community. it's taken longer than anyone would have liked, but recently the mayor of ferguson actually gave youth build st. louis two plots why they can begin to build homes, affordable housing units. and the hope is that this grows so that the young people in ferguson are then able to build real community assets. and, you know, where we've seen this work we've seen in the young people once they're building these community assets they remember that for a lifetime. they drive by that house, that building that they helped build and they say, i built that. and, therefore, i am taking care of that. you cannot touch this. and so what we hope is that that is where we get into ferguson and we think we're on our way there. >> you mentioned in the green room that for every student that come into youth build there are so many more. joel: for every young person that make it into the youth build program we have at least five young people who can't because of lack of funding. so, you know we hope that the following year those young people come back. many of them do. there are some times when they don't. and we'll go out into the community and search for them, but we worry about where they ended up. so if they're not -- if we're not able to capture them when they're saying, hey, we want this, right, we're going to lose them. it's the responsibility of everyone, right, it's the responsibility of our government, our corporate partners of everyone in the community, it takes a village, right, and we've got to take a look at who is answering the call and most of them are. amy: that's great. lots to cover, but, don, why don't we go to you and talk about your work in baltimore and how that's a reflection of your theory of change at trf. donald: sure. the reinvestment fund is both a cfi, financial institution that's a nonprofit but also we've founded a development company, very specifically for baltimore, but it is working across the mid-atlantic as well. then we also are a data and analytics company and that's part of both the development entity and our data business are really -- reveal our theory of change. we were invited to baltimore by by an organization just after the dawson fire bombing, an event that today would spark a riot, but then it sparked a tremendous amount of despair. the neighborhood and all of it organized with build's assistant ce, and they wanted something positive to follow that horrible , heinous event and they invited us to come and help them develop a redevelopment strategy. amy: can you tell the audience what oliver is, where that is. donald: oliver is in east baltimore, it is where they film the wire. it is adjacent to the ebdi region around johns hopkins medical. it is between johns hopkins medical and amtrak station. and we work there near the station, station north through green mount down through johnson square and oliver. we have built about 230-some units across that region and we have reduced vacancy from over 40% to 8% thus far, we believe we will reach 5% vacancy in a couple more years with a bit more effort. we have increased median incomes within that region which was pretty consistently homogenous impoverished population. median income have raised 64% since we'ven investing there and we have been performing in the city a series of neighborhood iterations over time. i believe baltimore has done four different iterations. they have a time series of the market trajectories value trajectories of place and can then adjust their programs individual communities can adjust their strategies or make their case based on data for why they need resources and of what kind. the cities in this current environment of scarcity and ever diminishing resources need to be able to aim their resources. you know, equity 20 years ago was provide every service everywhere and then you provide it to the next person in line. equity today in a sense of scarcity is you had better use your resources where they are most effective. one of our theories of change is around those data advised decision makings for efficient use of resources and amplification of resources. the others to go from strength. we specifically picked oliver not just because of the fire bombing and the organizing effort, we originally told the folks we can't guarantee you that that's the neighborhood we would pick. we scanned the whole region and found that the combination of factors around there presented an actionable development that over a number of years with a specific amount of money we believe we could reactivate the marketplace. a build from strength strategy around community development and the reason why that is our strategy is we want the private marketplace to scissor with us around market activities. so when we started our work in east baltimore we represented 80% or 90% of building permits over $50,000. today we are a minority of the building permits over $50,000. when we started we were the majority of home sales over $150,000. today we are a minority of the home sales over $150,000. the private market is drafting on our wind and that is what makes it manageable in terms of public subsidy in today's environment of shrinking budgets and it allows you to then shift your focus to the next neighborhood while the existing neighborhood is still being drafted with market activity and you can build a crescendo. it is planned change and, you know, the last topic we need to cover given the context is gentrification, but justification -- gentrification is just unmanaged change where the public sector is disengaged. what we're trying to do is manage a joint effort to building value and opportunity for existing residents and new residents in a way that's managed change and self sustaining then once we're able to move on to the next neighborhood. amy: we promised to get beyond baltimore, so the next is chicago. i'm going to bring tark into the conversation. as you know university of chicago is on the south side of the city and since he has arrived at university of chicago in his role he has really reinvented , the role of an anchor institution in sort of economic opportunity. so can you talk about that particularly in the context of sort of distress and inequality because i think many of us who are observers of the news cycle know that the mayoral race in chicago was very much defined by the frustrations in some of these neighborhoods and the inequality in chicago. so talk about the conditions and your role. >> thanks, amy, for inviting me, it's good to be here and see so many people i haven't seen in a long time. the issues that chicago faces are not dissimilar to the issues in baltimore and many of the cities in the united states and around the world. you have this phenomenon in chicago where you have a very growing and thriving downtown area and then when you get out to the neighborhoods particularly on the south and the west sides, you see the population, disinvestment, high unemployment. and in my estimation the main issue driving that is is that the neighborhoods are not connected at all to what's driving the economy. i think one of the big challenges that neighborhoods often face is this disconnection that needs to be spoken to. what you saw in the mayoral race was some of that feeling and some of that frustration. the mayor did a lot of positive things, but a lot of people still frustrated. they felt they weren't listened to, they felt that things were not getting better. and so that was why it was such a contentious race and went to a runoff and all of that. what we have been doing at the university of chicago has been trying to reimagine what the role of an anchor institution is in the city and in the community. looking at it not just as the traditional anchor things that a lot of institutions do which are very important, like our buy local, higher local, and those sorts of things, but trying to really look at what are all the things that universities do and how can we leverage those things to have an impact in the community and the city? and so it's important to emphasize what are the things universities do. so we try to develop a civic engagement policy that doesn't have us trying to become the city, it doesn't have us trying to be a bank, doesn't have us trying to be a foundation, it's be a university, but there are a lot of things universities do that can be leveraged for impact. the anchor stuff is very clear the amount of -- you know, the university of chicago is the largest employer on the south side, largest purchaser on the south side, largest developer on the south side. we run four charter schools, we have the largest medical provider on the south side. you can go down the list and so there's a lot of things and a lot of tools that we can use and have been using to try to reorient those to have an impact in the city, in the region, in the local community. but we also -- universities are also educators, that's what they do, so we've been trying to develop initiatives to support and provide more access to the educational resources of the university and the city. things like college readiness, college access types of programs. we've been recently doing a lot more work around leadership development in the public sector, in the nonprofit sector. we created a new program to incubate and accelerate nonprofits kind of at an organizational level which is another big issue. universities are also research discussion institutions, that's the core mission. so we've been thinking about ways in which we could try to encourage and incentivize more of our faculty as they're doing their scholarship that's getting published in the best journals to do things that also can have an impact on policy evidence-based kinds of approaches and we've been seeing a lot more of that. i will give you an example in a second. and the last area we've been really focusing on is around invasion and entrepreneurship. a lot of chicagoans become high priority for the mayor and a lot of effort in the city around had -- and that, and universities are, you know, with the research that goes on, the ideas they're a huge opportunity to create new companies, new commercialized research, new technologies, new products and so to correct those -- connect those into the neighborhoods and the community and we created new centers. the first one on the south side that ties kind of the neighborhood and the south side into the broader economy. a couple of examples, if i could just highlight that are focused on, one is this initiative called case, chicago anchors for a strong economy, where we at the university brought it to the world business chicago, which is an organization in the city that leads a lot of its economic development, business attraction types of initiatives and the polk brothers foundation was an instrumental partner. the idea was to leverage the procurement power not just of one anchor, but of multiple anchors. and also anchors in different sectors. a lot of times you will see educational institutions or medical institutions band together, but here we have the major universities, the major medical centers, the city is a partner as well as city agencies like cha and cta, the county is a partner, we have the private sector, banks, health providers and energy company, we have the -- all the largest museums in the city that are part of this consortium and the idea -- the motivation is really to think about ways in which these anchors can come together to pull their resources to connect the neighborhoods that are most in need on the south and west sides to the economy. so a big -- one big pillar of the work is around our purchasing and so we do both capacity building for businesses, which is a big issue, to how they can grow their businesses and get contracts with these institutions. we try to do -- work together to do big plays where we can go to one of our joint vendors and say we like you to set up an operation on the south side and we will give you a long-term contract and it creates jobs, we also are coming together to borrow from each other's networks. so one of the big challenges we might have from local suppliers, this vendor doesn't know who we work with and so it helps in that regard. we're going to be building out a work force development pillar as well. another example of something that i think is relevant to the difficulty urban lab. it is a project that is focused on doing very rigorous research to inform policy. it is building on the success we have at the crime lab. it shows how being in the program would reduce youth violent arrests. the program got scaled. the president met with those young men. they went back. that helped his bond my brother's keeper initiative. there is one of poverty. one in the environment. it is a way in which we leverage what we do have an impact. those are just a couple of the ways. >> thanks. michael, you have a lot of interest around what the administration will do in this moment. let's start about my brother's keeper. it is a little over a year. explain to people in the room cannot be familiar with it. what is the approach? >> sure. good morning. not only restoring economic prosperity, making sure people have an opportunity to reach their full potential. that is what my brother's keeper is all about. i think many of you remember he shared some wrong emotion -- raw emotion. the has to be something that we can do about it. six months after that, the president going -- it is about addressing these gaps in making sure that all young people could reach of their potential. look at the data. the data is staggering. they are ready to learn. they are trailing behind their peers. high school graduation rate -- over 80% graduation rate. look at blacks and latinos and tribal boys. just about three years ago their graduation is 90%. look at the criminal justice system. look at homicide. more than half of the nation's murder victims. we did two pies and ask what is going on here? he grade at my brothers keeper -- we have to ask, what is going on here? he created my brother's keeper. come back with a strategy on a series of recommendations. they did that. we're looking at key milestones in their lives. you have seen in the past year from the my brother's keeper task force all new grant programs and federal guidance. everything from the department of labor and their partnership program. nature we are looking -- make sure we are looking at guidance has come from the department of education. kids of color being suspended at extraordinarily high rates. you get put in the corner from that -- for that sort of thing. it is exciting to see what is happening on the policy side. the president lunch something called my brother's keeper community -- launched something called my brother's keeper community challenge. we know that real progress begins and ends with you. many of you have a working on this anyway. we have 227 mayors, tribal leaders, and county executives who have stepped up to the challenge. they have taken the president and have said able own -- they will do the county stance on what works and what doesn't work. we will release a local action plan. until the community how to address these opportunity gaps. philadelphia was a first release its local plan. they have a bold gold to reduce juvenile arrests. they will that through a diversion program. literacy specialist to work with the highest needs kids. they are expanding the police athletic league and doing pious training for all police officers . they might be a risk for crime and violence. what is exciting about my brother's keeper is your seen people be serious about this and planning for the long-term. hopefully prevent challenges in the future. lastly, the president called the private sector to action. what we have seen is more than $500 million in commitment. they launch the my brother's keeper alliance. they launched with a real commitments and will give grants and support to get behind these communities so these plans could be implemented. you name it. many corporations have gone behind this work. there is good momentum here. we're really shine a spotlight on what is working. >> we will build off of that. i want to move to the next set of topics. i will do one last round of questions here. start think about what you want to ask. start sending your questions to the hash tag. there's a lot of excitement and momentum here and energy are the leaders on the panel. we know work is unfinished. as we think about what is next, we had to build on what we have learned. i think there has been a lot of learning. we do want to make sure we don't replicate mistakes. sort of tell us what you have learned that wroorks that we can build on. being on the ground, what do you think is scaling at the national level looks like given the reality on the ground. i think your work on social innovation -- leveraging -- i think that is where the dialogue is. what you are learning from that that we need to continue to hold onto. let's run through that really quick. >> i think a lot has been learned. part of it next to it is being done in east baltimore. the neighborhood can't exceed because just south of it you have john hopkins hospital. a lot of the old industrial cities -- they are now the major employer. you have got to connect the investment and employment that is going into those. it is because of politics it was elsewhere. it is community -- really basic organization out of the community that hold politicians accountable. what is happening -- it is absolutely right. the buying power and everything is in effect as well as the new school that hopkins is knee-deep into. the economic development and employment have to follow. it has to be connected. it just of really hard and difficult. anna price doing similar kinds of efforts. and in other places that it is operating. the final thing i will say is you need patient long-term capital. they are trying to tap this longer-term capital that can come in and be a part of the effort. have -- i think a lot of people would like to see that their capital can go to rebuild their city in a really constructive way. i think there are positive lessons to learn. the biggest issue is -- do we have an intentional jobs program that really gets down to the -- that is concentrated positively after the great recession in a major way i really threaten our city? this is not as much a race issue. the mayor, prosecutor, etc. it is a poverty issue. there is real anger. it is all over. >> do you want to build off of that? >> sure. if you simply stop and ask the young person what they would like to do for the community they will have many ideas. they need to listen. i've seen it consistently. we ask them what they would like to see happen and the community? i love the energy behind a lot of the research going into finding what works. it really is about the instructions. mentored chips -- mentorships. everything happens in a vacuum. practices, attitudes, and behaviors. it allows them to heal. this is a poverty issue. we had to confront that at some point. i have many latino friends and african-american brothers who think this doesn't exist. but they can all point to an example where they were treated differently because of who they were. i had many white friends who i would not label as racist, but there are things that we do that come from history. at some point we have to acknowledge and confront that. there is abundant energy. all we have to do is ask. engage in decision making. put energy and resources -- right? we want to make sure we are listening. on the list of attendees, i some registered. [laughter] let's bring everyone to the conversation. >> i want to follow up. this issue about leadership to jobs. talk about this. when the recession hit construction stop. how did you build create demand, find a demand so that young people could get work ready and end up in a place of employment? >> we had to look at what other industries were in demand? starting as a nurses assistant. go to community college. other is an rn program there -- there is an rn program. there is a need for people of color in the telemanagement. engage in people to meet the needs of the community. we have something called construction plus. build homes. we are looking at other kinds of industry. >> i think this is about capital integrated approaches. >> one thing i didn't emphasize as much was you definitely learn that our work is more impactful when we connect will organize data and will organized money to organized people. we can connect data and money to transactions all the long. some of those transactions are self-sustaining and have a tier one kind of positive affect on people. connecting to resources to organize people in executing on what they want to have happen is a different tier. it is much more likely to have value in the neighborhood. it's bonds affects -- it spawns affects. a series of successes led to a grocery store organized with build in other organizations. it led to the credibility that help for a billion-dollar -- these things are not completely detached. success builds upon success. it is the hardest money in the world to get. organizing money. no one really wants these people to have an organized voice. there is a risk of what they will say or ask for? silence is easier managed. they can manage decline quite well. they could manage silence will. giving voice is threatening, but it is important. the places where we were are broken markets. it is disconnected from any particular pipeline. taking it farther and trying to invest -- you're not just in a broken market. there is the other kind of market. the residents of these neighborhoods are given input to a false and upside down economy which is keeping them in poverty. it is fueled by the status quo. we see this in payday lending. we see it in abusive landlords not maintaining quality residences heard it just perpetuates itself. this builds up a level of cynicism and anger. we are giving equitable access. we're rescuing people from a bad economy that is using them as fuel. we listen to the radio and watch tv. we are the product. in port-au-prince, residents are being sold into an economy -- the -- poor economies, residents are sold into economy where the weight is on their shoulders. as we talk about jobs, we need to come together. different motivations. jobs are jobs. jobs with suburban pickup trucks coming into the city. have a new opportunities. public health. a different profession. another silo. it we could ring together the new world of health care community in a fit and public health with the classic municipal county silo around economic development -- that is where the big opportunity is. >> he said something earlier about capital. it talked about scissors and how that is important to make sure that we have good leveraged investment before you move on. what is the lesson around capital now? thoughts on that? >> we went out and raised about $10 million. that patient capital comes from a wide lens of civic and immunities stakeholders. they invested in our wealth. providing a channel with the broadest audience could be involved it mitigates the risk down the road. six degrees separation. if all of your money comes from one agency and you have no connection and you're not invested, that is a challenge. sharing ownership over the transactions. >> i was reflecting on this panel. i had been working more in that community and on the ground. if i knew then what i know now it would be different. >> tell me. [laughter] >> sounds like you are on the right track. but think that i think we do a lot in government that when you are on the ground it becomes an issue is that we need to do more doing unless planning. not that planning is a problem but if you go into these communities, they have 50 plant and every year some group comes in with a plan. the city will announce a new plan. they feel that they are essentially planned, but nothing ever happens. it is negative from the community's. it creates disillusionment. it is the new thing of what we are going to do, but nothing ever comes of it. the balance needs to be maybe -- make an investment. >> apply research. >> that is one thing that i think is important. the second thing we did that i think he figured out is we spend a lot of time focusing on the cities for urban policy strategy and how to work with sydney's and resources. i don't think we did enough to get the institutions with resources involved. the reality is cities are broke for the most part. states are broke. the federal government is always struggling. if you don't the private sector or are or other places that have resources to see that investing in communities is in their interest, that it is good for the city and the economy, you are not going to make things happen. there are so many ideas, but there's no money to ever do this stuff. you have to bring them more into the game. the last thing i would say is we're focused on the capacity of things, but not nearly enough on the capacities in the neighborhoods. you have some neighborhoods with strong leaderships and strong capacity. they get all the money and resources. every foundation wants to give to them. you have some neighborhoods that don't have any of that. people want to get to places they -- if you don't have that fabric, you have neighborhoods and communities that are cut out. i think we should have that i would encourage them to focus on how to build up that capacity and infrastructure in the community so you have strong, will organized, and strategic organizations that can do stuff. worked through them to make things happen. >> i'm sure you have got a lot of lessons you want to do, but i want you to talk about scale. the one thing that folks experienced out of all of the proactive things they have done lots of pilots. you see a lot of programs. you walk into any city and there are five pilots. how do you get to scale? i think that is what they're trying to figure out. how do you respond to that? >> it is about proving and approving and scaling what works. he had talk about what works. with the apple watches and trip advisor, when it comes to organization, the initiatives that most ring board and safety net, window at the window. we keep investing in them because our grandparents started it -- when we have an economy -- philanthropic government investment in to these organizations is flat at best. we've got to do something differently. we realize that good is not good enough. they are not counting real meaningful impact. that is the first thing. kept it on crowd the feel a little bit. often times, we are making decisions with our hearts. it little money here. a little money there. we are not investing of the you the builds of the world. that is what we tried to do. what we do, we give real money. we make grants for foundations. there are five-year grants. realizing that this work is not overnight. the grantmakers matched that. they helped us define nonprofits across the country who also matched up with corporate dollars. you are to clean the federal investment. they used the money to improve the model. 50% of the kids -- it may be a little bit more anecdotal. we let them spend a portion of their budget to really -- at the end of their funding, they could go to under funders and say we have causal connections that this works. at the same time, we are giving real money to scale. we have organizations that have gone from a handful of sites to dozens of sites across the country. they could use these real dollars. those of the types of things that we think are important to scale. scaling takes on a couple of different forms. as some think we will take this model and mcdonald's it. sometimes scale is taking a model and sharing it. you take it. run with it. the last thing i would say -- everybody loves spam -- bam. but they are really about smart growth. there are getting dozens of calls a day from all over the world. bring bam he they smartly saidre. , we need to shore up -- bring bam here. they lisette, we need to shore up -- they smartly said, we need to shore up first. teach for america, they created a whole separate unit. teach for all. bringing some of it to scale so wouldn't distract from the poor work. -- their core work. >> questions. lots. >> thank you. i would like to piggyback onto what they said on what keeps these communities down. i think he mentioned payday lenders. credit card debt. somebody could lose their house. i think policy needs to be implemented. i would call this cannibalistic capitalism. we are eating our own. i like making money, but not of somebody else's back. can we talk about how policies could be changed? thank you. >> i resonated with what they said. a couple of the issues -- health . elevated blood levels over 20. how do we have interventions early on? also older adults need resources in communities. [inaudible] is this on? i want to hear other examples. >> let's keep common short so we could get -- let's keep comments short so we could get to other questions. >> first question, we worked with philadelphia. we found eight years later it turned out to be quite effective. i don't know if it is relevant. they may skirt that process. it was more about the bankers. there are policy recommendations that have been studied in a couple of places. >> second question, you are absolutely right. a lot of people had elevated lead levels. there is a another unit that is working on a healthy housing initiative that is doing terrific work. you will find it does not solve for the older cases but you will see that the incidence of led poisoning in kids is way down. -- lead poisoning. that is one of the places where positive progress is being made. the model is being shared across the country will stop this is an elemental issue of led a -- lead paing. -- lead paint lead poisoning. >> one thing that i have learned is people are coming to our program and they are already in debt. why? because energy costs are so high. keeping the lights on, keeping the house warm, is hard. by the time these kids are 18 and adult, they are not able to. this is way more common than you would ring. a community that cannot afford to go green are going to face surcharges, and higher energy costs. it is another layer, another thing that adds to poverty. the role of caring adults. none of anything new that we try to implement is going to work if the young people do not believe we care about them. if they do not believe we are approaching this with a deep and profound respect for who they are. there is a role for caring adults. when people refer to me, they say my mentor, my case manager later on -- my friend. that is the impact we have on a loving adult. i realized that the day i started referring to them not as young people but my young people my mentees later on my friends. we have to have the courage to care. to engage. to value the diversity of their experience and let them know we care about them. that is why we are doing this. >> we are going to ask everyone to keep their questions tight. >> good morning, thank you very much. i lived in baltimore with friends. on and off for almost one year. i took local buses. i saw the whole city. for the think tank people in the room and for the people appear first of all i would suggest that you know how much a quart of milk costs in some of this neighborhoods in how far you need to go to get it, into the expiration date and maybe a couple other products and rent. because, there is this concept of their that people who live in poverty can live cheap. in my experience, particularly in baltimore, if you are poor and you are in a predominantly black neighborhood, your access to milk is going to have a low expiration date and it is going to be expensive because 7-11 and cvs are your grocery stores. so, i would like you to respond to the need for people to understand that that living in poverty is not cheap living. >> i am lawrence freeman, i work at [indiscernible] . my heart ached when i saw the places burning that night. they hit the nail right on the head will stop without jobs -- cannot development, these kids do not see the future. i see this in major parts of africa as well. someone put it very directly, he said the conditions are so bad in these areas that it does not take much to set them off. even though baltimore does not have that exact profile, it does have this economic profile. and when i ran for mayor in 1983, i fought for three and dictation of baltimore for --. we need a national federal credit program. like franklin roosevelt had. we do not see this from bush or obama. the former governor raised these questions of building jobs, building cities. separating banks. we have to answer the problem. can we raise the economic conditions in the city? >> this is a question from the webcast. from twitter. from christina. christina would like to hear the panelists thoughts on inequities in our school and how to improve k-12 programs. >> first, we were able to perform a for the state of maryland a low access food program and identify the food deserts with great specificity. identify those neighborhoods and the state just appropriated $1 million toward creating a fresh food access program. we have financed to or three grocery stores in baltimore in there needs to be a lot more. >> i would add a point about how expensive it is to be poor. there is also, at least in chicago, a transportation issue as well. because a lot of neighborhoods that are the poorest do not have the same access to public transportation. they have to travel further to get to their jobs and whatnot. it is another component of the cost that more folks race that people do not often think about. the food desert, the cities are focusing on that issue, we are trying to work with the city on infrastructure. particularly holding. we found out we're going to get the presidential obama library and we hope that will bring more investments into the community that we have not had in a while. >> we are going to go to another question after we answer this. >> this is validating your point on validation. these secretary and had our part of that. there is a lot of interesting work. we are starting to see cities try to have better transportation routes. there are neighborhoods where there used to be jobs. in the same neighborhoods were used to have folks from low income neighborhoods, now they have no weight to get there. the other thing we do not think about in cities like deep. c. for instance where you do not have gentrification, people are having to commute longer. that extends that it'll doubt where kids are home alone for longer hours. this is an issue we are seeing city start to tackle and address. >> i know we talked about reforming and building charter schools in the neighborhoods where you are working. are those inequitable? are those higher performing in these low income neighborhoods? >> we need a lot more than just charter schools. we need a whole continuum of experimentation in education. the school that was build in the neighborhood where we are building, that was a contact school. it sits between a conventional school and a charter school. it took a heck of a lot of public and private resources to lift that off the ground. the bond issue that has come off the ground to refurbish public schools, it is essential money that often state and local jurisdictions lack. baltimore could not have a forwarded that. there needs to be a whole continuum around this alternative models that reach the population. >> and in downtown winchester, we took public schools and had an agreement with the mirror as to what could and could not be done within the union structure and really moved the needle on them and brought in direct instruction and took the teachers invested in them. we showed examples of work and brought them back in. we ran afoul of the union transferring out our principles after we totally educated them. they both quit and went into the county and cousin was 24-7. there are lots of issues. thankfully, there is a lot of experimentation going on right now in juice into in new york in juicy and and other places. new orleans is the biggest example. they blew everything up and started over again. there is hope there. but it is not easy. the final thing i will say on this is we watched go into high schools that we could not control. we lost a lot of that investment because they had been in a very nurturing environment and they ended up in something out of control. so, we had to go to alternative schools. send them to alternative schools. so, it is a hard, long-term continuum you are dealing with. to the jobs issue, row quickly i often thought or has to be, if you take a real lead in the country of infrastructure, bridges and everything else, if you do that, you hopefully can do something that may not need the most efficient but that is the most affect if forgetting people to a practice aunt work in be able to be part of a program that is not shovel-ready but is longer-term, aimed at integrating jobs that go all the way down to our cities. so the kids that have been left out of it can be trained for. the problem with jobs training that we ran across, people got trained and there was not jobs. and, read jennifer's report. it is terrific. she has done a report on how to connect to the new economy in baltimore. it is terrific. >> we have time for three more questions. we got a go with sandy, i think this gentleman has had his hand up and you have also. [laughter] let's do these three. keep your questions tight. andy? >> what are two or three game-changers that is news can initiate at the local level and national level that would actually have a major event in the problem? i am taking, for example, in chicago of the internal revolution of whole foods that they are going through to change the business model to enter tanglewood. any like that? >> right. >> looking at the intersection, regarding jobs -- >> introduce yourself. >> we worked in the americas on these same issues. i am also chairman of the board of a company in essex, maryland, that hires youths. the issue is the reform of the penal system. what it does to create here air, isolation, and lack of trust. we talk a lot about the conductivity issue that we need, but they are always disconnected. my son hired 153, they show up and they all have offenses, they show up and he goes, dad, these are high-risk youth. why would we take this risk? we have to. but, who was working on penal reform? >> let's hold, i think there are a lot of comments on that question. this gentleman in the back into then one more. >> to quit questions, one is the connection between nutrition and community development. my wife works at hhs and she has been hammering at me on this for the last three years. i did not hear any discussion on community gardens. we are working in pittsburgh with a group of community gardeners. kids not only grow and eat their own food, but sell their own food at farmers markets and learn business skills. the second issue is a leadership issue. it's poor, again, where he do a lot of of work, has a program modeled after the children's village and as i said to the director of that comedy skits, if you get them to graduate from high school and you can get them into college, when they graduate they are not coming back to home one and hazlewood and some of these other communities. how do we keep the young leadership in those communities? >> ma'am? >> thanks, i am debbie goldberg. we have had a lot of of conversation about jobs, we have not talked at all about wealth. there is a huge racial wealth gap in this country. i saw some research recently that an african-american college graduate has less wealth then a white high school dropout. that was the gist of it. we have decades worth of government policies that have helped to create this wealth gap. it needs to be changed to promote future prosperity economic security. how do we get over this huge gap? a lot of this conversation has been on systemic issues, but it is hard to connect back. >> getting ready to put out a new regulation, furthering fair housing, does not necessarily seem like it might that into this conversation but it is time to connect some of these different structures and systems and streams of work at the neighborhood level. i am interested in whether you have thoughts on how this might be a tool to help address these problems at the neighborhood level. >> man please remind you of the topics. business models, criminal justice reform, healthy foods and farming, leadership retention, wealth gap housing and stickiness in neighborhoods. if you would all take two at the most to address those, then we will wrap up. >> i would like to speak to criminal justice. so i will give you the experience of me working in the program. over 50% of the students were involved in the criminal justice system from being on probation to misdemeanor felony offenses. where the federal and state policies were employed, that was really hard to work around. at the national level, we are bringing this to our programs. we convened a group, a number of groups, internal, of amazing students. young leaders that are graduates of 11 of their national youth development organizations like national gateway to college. many more. jobs for the future. they put together a set of recommendations that i am kicking my head it -- myself in the head for not bringing with me. recommendations for increasing opportunity and decreasing poverty and america. they are recommendations around criminal justice reform coming from the young people from a cross-section group of young people who are coming from all communities. current and former use that are saying -- youth. i highly recommend you google this. >> to add onto that, downtown west chester has a connection. it has a large number of expert figures. we ran into one problem after the automatic exclude by maryland law. we had to go all the way back into the parole and prison system, etc., to try to find jobs. very expensive, very long-term. one of our big issues, it remains a big issue. getting it changed, which we attempted for many years is very very difficult because it is a sound bite for any politician. >> i would jump on two quick issues. on the crime, i want to say there is a no other issue that is very relevant. i did not know that much about it will stop you may. the cook county president, and aldermen for 20 years, when she got there, she looked at the budget in the jails. she looked at the data and it showed that, first, the vast majority of the offenses were not ireland. more surprising, 80% or something like that of the people in jail had not even been convict it. they were awaiting trial. and so, she said, you know, you have a huge number of people sitting there that maybe they did not do that they cannot afford to bond. they cannot afford to get out. those with resources do not sit in jail. she is working with the state attorney to try to reduce the number of people who are awaiting trial sitting in prison where it is very costly and has a big impact on the family and community. it is a county jail. so, the game changer, you know, foods coming into inglewood and inglewood, as you know, is one of the most challenging communities in the city of chicago, that has been a game changer. another game changer i think is one i talked about earlier, the coalition of institutions we formed in chicago that is now interested in neighborhoods. we have not got there yet, but we spoke to folks in cleveland. university circle or whatever they call it, they created a partnership that got a major facility in a neighborhood that has physical presence, creating a couple hundred jobs and the way they got to do it was to give them a 10 year contract. when you can get that kind of collective, between all the institutions you are talking about billions of dollars that we spent collectively. if you can use that influence on the people that service, i think it has potential and the mayor did this for -- >> quickly i think we have to realize there is an economic imperative here and we are beginning to see that shift in businesses across the country. there are 6 million kids disconnected from school and work. we cannot have that. we cannot be globally competitive. a couple game changing things we are saying, one thing is what the president talks about all the time, the mistakes of your youth should not come limiting factors for the rest of your life. one thing we are seeing around the country is the idea of handing the box. every single job where you fill out an application, you have to fill that out on whether you have been arrested or had a felony connection. there are almost 6 million americans that would have to check that box. data shows, there is no difference in these jobs. what we are seeing, companies like walmart are getting rid of that walks in the earliest phases so they at least release folks in and interview them. see if there is a skill set before they get to this background check. the other thing on these kids disconnected from school or work as we have to hire them. you are seeing organizations like jp chase making this a core part of their recruitment practice where they are bringing in young kids for their sophomore years and they are training them, giving the mentors, following them, working with them, getting them through college and bringing them back for summer experience said they are making sure they are preparing them for the work horse of the future. there has to be more forgiveness and second chances and affirmative action to make sure we are hiring niche mp all in giving them the skills they may not have learned to make sure they are going to be part of our workforce will stop >> -- part of our workforce. >> the wealth and income question pops up. i am not going to criticize the two-dimensional picture for not being three-imaginal. we are talking about the needle. the needle, in a snapshot photographs is income and and another is wealth. there are programmatic limits in the silos which prohibit wealth. by not activating the market, by not letting neighbors share. some do not participate in private marketplace. it won't build wealth in a spillover effect. there are a number of policies that need to change around wealth. wealth is a very appropriate thing to study and needle to look at. but it is a time series, longitudinal. nobody helps us be longitudinal. that is a real challenge. >> i want to go back on one quick one. somebody who has taken an upon themselves in the service industry who to say you were going to get something extra by standing up and being there. >> it is about training and development. starbucks is doing this. to provide barista training to young people. to get a certificate. they now have the skills to get a job at starbucks, work up into management. we know there is a great benefit of working for starbucks. college reimbursement. starbucks is now committed to hiring low economic youth. walmart is. we are working on health career exposure and training. j.p. morgan is working with programs around very financial training. this is going to prepare young people for these jobs. >> so, we knew we could not while the entire ocean of poverty in a two-hour session. i think what you heard as a lot of energy, commitment, and leadership in cities around the country to not give up. please join me in thanking our leaders for a dynamic discussion. [applause] thank you again for joining us and please have a great day. >> next, a senate hearing on the federal aviation administration. after that, relations between the u.s. and russia. then, the former cia deputy director talks about combating isis and other terrorist groups. on newsmakers, georgia senator johnny isakson discusses efforts to reform the department of veterans affairs and other issues affecting america's veterans. newsmakers, sunday at 10:00 a.m. and 6:00 p.m. eastern on c-span. >> tuesday, the senate commerce science, and transportation committee held a hearing on the reauthorization of the federal aviation administration. faa administrator michael weber testified on efforts to modernize the system and next generation initiatives. this is just over two hours. [captions copyright national cable satellite corp. 2015] [captioning performed by the national captioning institute, which is responsible for its caption content and accuracy. visit ncicap.org] sen. thune: this hearing will come to order. good morning. today the commerce committee concludes its series of planned hearings on reauthorization of the federal aviation administration with an examination of the nation's air traffic control system. let me begin by thanking aviation subcommittee chair a out and make a member cap well for taking through several valuable hearings on the way to the school committee hearing. it's been a busy work period and a great deal of progress has been made thanks to their efforts. u.s. air traffic control or atc system involves thousands of dedicated air traffic controllers guiding tens of thousands of flights safely across the country on a daily basis. we can be proud of the system's safety record. the same time increasing demand the need to improve efficiency and changes in technology all underscore the need to modernize the system that is still radar base and operated using concepts and procedures developed decades ago. cord. the same time increasing demand the need to improve efficiency and changes in technology efforts to modernize software and hardware have made progress but the long view negates modernization programs have often taken too much time and cost too much. taken too much time and cost too much. we have sex or portion the deity's office of inspector general the government accountability office detailing the implementation delays the cost overruns that have plagued these efforts for decades and stymied leadership for multiple administrations. the most recent visible initiative is the next generation it air transportation system or nextgen. before was given the name the original goal was something called free flight which was expected to result in a genuine transformation of the system away from air traffic control to air traffic management to taking advantage of gps for navigation and surveillance was at the heart of this idea. faa would save money eliminating most radar and airspace operators would save time and money and fuel by choosing their own direct routes. with more than 15 years after the faa began talking about free flight we still seem to be more than a decade away from anything resembling it. in fact a recent study by the national research council completed the nextgen currently seems to be more about increments of programs and improvements rather than a transformational change. also airlines
"real money." ♪ >> this is "real money," and you are the most important part of the show, to tell us what is on your mine by tweeting at, and facebook.com. this was a day of protests in cities across america and around the world. hundreds of fast-food workers demanding higher pay walked off of their jobs. it was part of a cou court -- coordinated one day strike. here in the united states labor organizers from the service employ international union join the protest to call for raising the minimum wage in this country to $15 an hour. right now the federal minimum wage is stuck at 7:25 an hour. president obama is calling on congress to raise the federal minimum to $10.10 an hour. most fast-food workers make more than the national minimum, but not by much. they bring home an annual income just under $19,000 a year for full-time work. that falls behind the poverty line for a household of three. but businesses like mcdonald's don't like higher wage mandates. they say the increases cut into profits, raise prices, and lead to layoffs. america compares pretty poorly with other countries. the national minimum in canada comes in a little bit higher, whereas france leads the pack with the equivalent of $10.60 an hour. only japan comes out below the united states. but countries like japan offer universal health coverage, so analysts argue that a japanese worker has fewer costs to worry about. either way today's protests may signify a new era for labor activism in this country. patricia sabga explains. >> reporter: london. chicago. new york. a global fast-food worker movement supported by traditional unions, but which spraing from known union groups. >> when i first started working about worker centers by 2003 there were about 140, and now there's about 220. >> reporter: none union labor groups have proliferated as the economy has shifted away there manufacturing. to services where small groups of employees are scattered around many location and often separated from a corporate parent through a middleman like a franchiser. >> there is a corporate food chain. the workers at the bottom who work for franchises, but at the time, it's the corporations that are really setting the wage. >> reporter: that has forced a change in tactics. a traditional union tactic would be to call a worker strike, shut down a place of business to put economic pressure on an employer. non-union labor takes a very different approach. this franchise is still open. many of the people protesting outside may work in fast-food but not necessarily at that franchise. moreover there are people here from the community who have come out to lend support. the aim here is to raise awareness of fast-food worker conditions and wages to put public pressure on fast-food corporations. some of the protesters at that strike in new york are with a traditional union. >> we're here in sol dare with the workers who are out on strike fighting for their rights, and the rights of all of us. >> reporter: lending support to raise awareness, whether they can force fast-food corporations together to improve worker pair conditions is still an open question. >> every job was a bad job until workers and employers came together to make them better. that could be the story of fast-food workers today. >> reporter: patricia sabga, al jazeera, new york. ken is an independented consult important and senior associate for the worker institute. ken thanks for joining us. >> you're welcome. >> first of all, what did you make of the protests today? >> i think it's a building of something that has started and keeping building, and the fact that it can keep that momentum going shows it is likely to make changes. >> what are the other countries doing differently to better bridge the wage gap? >> there's a theory called the high road economic development which is based on high-skill jobs, good pay, and then there's the other road, which is like drive wages down as low as possible to make more profits, and i think those other countries more doing the high road. and when people have more money to spend. it stimulates the economy. >> and you would say the united states is taking the low road. >> most corporations are. >> and what is the impact on a country taking the low road. >> it lowers all boats. a situation where wages are being driven down lowers everybody's wages, so it's harder to get raises for people union or not. but what about the argument from these companies that say fine you want to raise wages, but that will make the cost of the hamburgers more expensive, and we may have to layoff workers. >> the layoff argument has been made for years and years and years, and has never proved to be true. it is a theory that doesn't play out in reality. >> it doesn't? >> there might be some here and there, but it has a minimal impact on the economy. if you get -- but the more wages in people's pocket has a better impact on the economy because people spending it and it generates jobs. >> what about the argument, though there the companies in terms of their profits? companies have a if iedishary responsible to maximize profits for shareholders, and if they say this is going to hurt us, why not? >> it's a fact of life. they have to pay for energy and a lot of other things, and they try to pay as little as possible, and workers are no different. >> you have got a lot of experience working with unions. why have the unions taken it on the chin, particularly the last several years, and it's particularly difficult to unionize low-wage workers. >> the answer to why is a long one. but there has been unprecedented assault. the political climate has changed, and international globalization, where you can move a factory where people are paid much less. >> does it matter that we have gone there a manufacturing-based economy to one that has much more of a focus on service type jobs? >> sure. service jobs generally are paying less, although that's what the folks today were trying to do something about. and unions in some of the service industries have made some great strides. >> for folks who are out there, thinking what does this mean for my family? what is the answer. let's say wages are raised to $10.10 like president obama wants? >> i think it's a shot in the arm to the economy, number one. what we see is -- a recovery that's -- we're hoping is going to keep growing. we'll get a shot in the arm. and i think that people who are like sort of on the margins or in the middle will see the pressure to go lower will start to stop. >> have you found information or data that backs up that people are also willing to pay a little bit more for certain services such as fast-food hamburgers in order to make sure that workers get a better wage? >> yeah, there are polls, but the biggest thing is the amount they would have to raise is almost always overstated by the corporations and it is usually quite minimal. a study on wal-mart showed they could raise the wages quite a bit, and maybe it would cost $0.49 a visit each time somebody shops there. >> ken is with the school of industrial and a labor relations at cornell university. thanks for coming in the studio. >> you're welcome. some investors of chipotle almost choked when they heard the salaries of the two ceos. together they were paid about $50 million. the super sized compensation lead an investors group to urge the shareholders to jekt the salary, and today they did. they voted against ratifying the current compensation plan. chip -- chipotle says it's too soon to say how the board will respond. we received positive news about the u.s. job market. the number of americans applying for unemployment benefits fell to the lowest level in seven years. the level is below what economists forecast. in april employers added 288,000 jobs and today's data could mean another month of solid gains. it's a man versus nature battling in california. wildfires are threatening lives and livelihoods. plus our voracious appetite for natural gas is running straight into aging infrastructures in cities with potentially deadly results. that story and more as "real money" continues. . >> on techknow... >> so, this is the smart home... >> saving the environment >> the start point for energy efficiency, is to work with the sun... >> saving you money >> we harvest a lot of free energy >> and so we're completely off grid here >> how many of the appliances were almost a little too smart for us? 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and you'll get... the inside story ray suarez hosts inside story weekdays at 5 eastern only on al jazeera america ♪ at least eight wildfires are burning in san diego county, california, scorching nearly 10,000 acres. more than 150 firefighters are trying to stop the fire. evacuation orders have been issued in some areas, and local schools remain closed. brian rooney joins us from san marcus, california. about 20 minutes ago we weren't shure you were going to be able to join us. explain what happened. >> about a half hour ago, we were waiting to go on live. there's a ravine right down here behind me, and we were keeping an eye on, and within about two minutes it came right up behieng me. and i was standing right there on the edge of the ravine. and the whole area burned out. so it was exciting for a few minutes there. >> how is southern california doing? are these fires in control or out of control right now? >> well, that's a technical question. they will give a percentage of how much of a line has been drawn around a fire. but you can get an idea as to whether they are out of control. some are, some are not. but even out of control doesn't mean they are necessarily burning anything. and i think what has been remarkable about this set of fires is how few houses it has actually burned. we're in the middle of a residential area, high up in the hills. there are houses all over the hills, and very few of them have burned. four confirm sod far. an apartment complex did burn, but the firefighters are doing very well. a lot of hospital attack, airplanes, and then they spread out in the neighborhoods, and protect neighborhoods. pretty much when the firefighters are there, a fire is not going to get a house. >> you have a lot of experience in southern california, how do the current drought conditions compare? and what are you hearing from firefighters about what they are expecting the rest of this season? >> you will very often get a prediction of a bad firefighting s season, and you just have to wait for it to play out. the fire season has come early, usually it is september and october. now we have it in may and june. so that's a concern. it's burning through the firefighting budget already. but this season could just as well go flat. just because it's bad now, doesn't necessarily mean it will be bad all through the summer. >> brian rooney reporting from san diego county, california. thanks for that report. the wildfires are the latest example of what could be a new reality in the area. bigger fire seasons that start earlier in the year, with increased loss overall to property and higher costs to the economy. california has had 1244 wildfires this year. and costs have also hit new highs. forcing the state to use emergency funding to supplement its firefighting budget. we have reporter for the orange county business journal. she joins us from irvine, california. and never mind the cost of the firefighters and state funds, as far as infrastructure, i understand the fires have been blocking roads in california. >> absolutely. yesterday amtrak and metro link train service had been interrupted as well. and roadways had been blocked in orange county and san diego count county. >> and what is the economic impact in those areas when roads are blocked and highways are impassable and commuters can't get back and forth? >> well, of course, people cannot get home from jobs and vice versa. specifically in carlsbad, structure damage, a city official estimates to be at $22.5 million. >> how does this season compare to others that you have experienced? >> well, this is not close to the big cedar fire that this area experienced in 2003 where about 280,000 acres scorched and lost about 2,200 homes. so it's still okay. >> you cover business affairs, business reporting. explain what the expectations are in terms of how this all -- the new sort of reality of will effect southern california's economy. >> well, of course -- of course news about the drought and the fire combination of those two is never good news on the economy. so we'll see how it plays out. >> is this a new reality? the idea that california -- businesses and computers are going to have to get used to the idea that fire season will be longer, there may be interrupts to get goods and services from point a to point b? >> absolutely. and that there may not be a job to come to. for example, in carlsbad, a diagnostic imaging company has recorded that its headquarters have been severely damaged by this recent fire. so 70 people will not have a place to go to work to. >> do you hear other business owners talking about their fears, and is this becoming a bigger topic of conversation in the business community? >> in orange county, not specifically. >> okay. and any expectations about what you expect to see in this fire season in terms of the economic impact? >> well, definitely, it's going to have an impact if it plays out this way as it is. this is supposed to be the rainy season, but it's not. it looks like fall all over again. >> thanks for joining us. recall plagued general motors is doing it again. recalling another 2.7 million cars for a variety of problems involving brake lights, power lamps, and wind shield wiper. gm says it will take a $200 million charge to cover the repairs. this follows the recall of faulty ignition switches linked to at least 13 deaths. the auto industry is on pace this year for a recall record. attention shoppers wal-mart is looking for you. the retailer used the harsh winter weather card in explaining poor first quarter sales. they say profits fell 5% from a year ago. and they issued a very lukewarm outlook for the future. it's a border battle with billions of dollars of opportunity on the line. coming up a look at the money america might be losing without immigration reform. plus the new technology that has uncovered a very old problem, our out of infrastructure, we'll show you how frac-ing and need for natural gas has made it even worse. you are watching "real money." ♪ real reporting that brings you the world. >> this is a pretty dangerous trip. >> security in beirut is tight. >> more reporters. >> they don't have the resources to take the fight to al shabaab. >> more bureaus, more stories. >> this is where the typhoon came ashore. giving you a real global perspective like no other can. >> al jazeera, nairobi. >> on the turkey-syria border. >> venezuela. >> beijing. >> kabul. >> hong kong. >> ukraine. >> the artic. real reporting from around the world. this is what we do. al jazeera america. ♪ >> president obama this week tried to ratchet up the pressure on house republicans to pass an immigration reform bill. he said they have a window of two or three months before the midterm elections make it unrealistic. the senate has passed a bill. the president isn't the only one applying pressure on house republicans. tom donohue spoke out this week and had this stern message for the g.o.p. >> we're absolutely crazy if we don't take advantage of having passed an immigration bill out of the senate. if the republicans don't do it. they shouldn't bother running as candidates in 2016. >> a new report found that companies in both the united states and mexico would benefit significantly from establishing a frictionless border. richard joins us now. richard welcome to the program. what is a frictionless border? >> well, we have created a border that is filled with friction. i live part-time in toronto. bossing that border -- and i'm an american, but crossing that border is an inintegration zone. and when you think about it, combining the united states, mexico and canada, building an integrated north american economy which could leverage the knowledge base of the united states with the energy fortunes with great countries like canada and mexico, it would create an unrivalled powerhouse. we have got to do it. >> explain for somebody at home how does it work? >> well, just in the san diego area, where we are did this study from san diego to tijuana. a region producing about $200 billion in economic output, you know, we're losing a couple of billion dollars a year because of that border -- actually $3 billion a year because of that border, and it makes no sense. san diego has technology. advanced knowledge-driven industries. over in tijuana, you don't have to make stuff in china. you can make lower costed manufactured goods right in the region. but the boarder is so backed up, the trucks can't get across. tens of thousands of trucks that can't get across, and it's a tremendous inefficiency and waste of money. >> and inefficiency is a productivity cost. what about for business owners? >> it would enable us to have commerce without all of the hassles and hangups. think about this just from the point of view of the united states. people complain labor costs are high, manufacturing -- having access to a great manufacturing base in a place lite -- tijuana, for those products that are being competed and eroded with the chinese market, having this for u.s. companies to leverage, and of course what is happening in mexico now is it's getting economic development. wages are rising, so it builds a cycle of competitiveness, benefiting business, but also benefiting american consumers and workers over time. what about the issue that tom donohue seems most worried about and that is immigrant labor. they want some settlement to know here is what we have to do with immigrant labor. >> if you ask me what is the corben fit of the united states, it has long been immigrants. in silicon valley a third of those high-tech businesses were formed by people not from america. what is going to make america competitive is keeping our borders open for trade, and this flow of talent from all over the world, that flow of talent, we have got to get immigration reform done. >> but there are also people who are against immigration reform who would say, look, the cost of security issues would also be severe; that if you are allowing people who have broeng the law, that if you have a porous border, we're going to pay one way or another because of potential security breaches. do you buy it? >> there are smarter ways to keep on the lookout for bad guys than stopping everybody and queueing them up. it is crazy what we're doing. in the name of homeland security, we're eroding our economic security. use technology. make people -- i have a nexus card or global entry card, but this idea that you are backing everybody up and causing these log jams. we're wasting money on something we know is not effective. >> has the eu provided a model for us, because their borders are much more efficient. >> i think they have. we are dealing with canada to our north, and mexico to our south. these are good neighbors. they are our friends. i mean, it makes no sense to erect the equivalent of virtual fences -- and we worked with the people at san diego, the business community of san diego knows how important this is. the business community in detroit and ontario knows how important this is, they want it. they are dying for it. but our government has a one size fits all policy that is all about, again, unfortunately, homeland security. not economic competitiveness. yes, we have to secure our borders, but let's think about our economic future at the same time and balance those concerns. >> richard is the founder of creative class group. thanks for coming on the program. >> thanks for having me. america's energy boom has uncovered a very complicated problem. see for yourself. >> in big cities like new york you have these layers of underground pipeline from water mains to phone to electric that make for a very muddled and expensive process of removing and replacing natural gas lines. plus more of ali velshi's one on one with former presidential candidate ron paul, and what surprised the libertarian about young americans today. "real money" continues right after this break. ♪ primetime news. >> welcome to al jazeera america. >> stories that impact the world, affect the nation and touch your life. >> i'm back. i'm not going anywhere this time. >> only on al jazeera america. consider this. the news of the day plus so much more. answers to the questions no one else will ask. >> it seems like they can't agree to anything in washington no matter what. ♪ >> a 40-foot geyser of oil sprued from a busted pipeline earlier this morning in los angeles. about 10,000 gallons spilled into the streets. it forced five businesses to shut down, one of them was a strip club, which had to be evacuated. none of it they say leaked into the los angeles river. the incident today is shining another spotlight on the condition of america's infrastructure. by most accounts many of the nation's older pipelines are not up to snuff and prone to leaks, and the consequences can turn deadly. but fixing the problem costs tens of billions of dollars and could take decades. we examine the benefits of cheap natural gas as well as those dangers hidden just below the surface. >> reporter: for ed donly a real estate executive in manhattan, the choice to convert this apartment building from using oil to natural gas seemed an obvious one. he made the switch last year at a lost of nearly $3 million. so far this building has achieved approximately a 47% savings by converting from fuel oil to natural gas. with the recent energy boom that has driven down the price of natural gas, many businesses and governments are also looking to make the switch. this seems to be the wave of the future. pipeline expansions in states like pennsylvania where production has ramped up over the past two years, are also bringing more gas online, reducing cost and feeding consumer demand across the east. >> were it not for the additional natural gas coming in, a few years we wouldn't be able to meet demand. >> reporter: switching can cause problems, in cities where many pipelines date back to the turn of the century. >> they have cast iron pipes, and they are much more likely to leak than newer plastic pipes. so that is one of the concerns. >> reporter: one spark is all it takes for an explosion after a leak. more than 6,000 miles of pipelines carrying natural gas run beneath new york city, nearly half were installed before 1940, when cast iron and unprotected steel were the order of the day. and that raises questions about how the infrastructure will handle the energy boom. the big problem is cost. in big cities like new york, you have got these layers of underground pipeline from water mains to phone, to election, that all make for a very expensive process of removing and replacing. here in manhattan it costs about $2,000 a foot. but when you get out to rural areas the price drops to about $300. replacing it all could take decades and cost around $10 million. at the current place efforts to replace all leak prone pipelines in philadelphia could take as much as 80 years. and without upgrades soon, analysts say the emphasis on gas may bring more incidents like what happened in east harlem where a gas leek leveled two apartment buildings. the gas main was 125 years old. joining us now to discuss just how sustainable the energy boom is here in the united states, giving the aging infrastructure is michael weber from the university of texas. he is a professor of mechanical engineering. he is also the executive producer and host of the pbs series. there seems to be a conflict between our appetite for energy and our infrastructure. how great a problem is this? >> yeah, there is a gap. our boom is really taking off, which is great news. but the pace of our infrastructure investments have not kept up with the boom. and that introduces safety and environmental risks. >> how much has frac-ing contributed to that misalignment in terms of fuelling the natural gas boom that we have. >> frac-ing has been the main enabling technology. and it has created a glut of natural gas. so natural gas prices are low, which means we want to use it, but we have to move more gas to our end users in pipes that are pretty old. sometimes the gas is flowing different directions. so our infrastructure is not designed for today's energy production, energy needs. >> and given that it was designed for an older system is there a certain responsibility that you think some of these companies have in terms of helping build up the infrastructure that is carrying their gas. >> that's a good question. they are different companies in many cases, so we need to get everybody involved. government plays a role in funding infrastructure. so we need to reinvest, do it more quickly, make it more safe. we need government and the midstream companies who build the pipeline and the oil and gas guys, they all have a stake in getting it done the right way. >> if we don't build up the infrastructure are we going to see more incidents like in new york and other cities like that as time goes on? >> that's the risk. natural gas burns really easily, and that's a nice feature, but it's also a safety risk. and we can have environment risks from spills, and if we don't build pipelines we might find ourselves flaring gas, like is happening in north dakota where about a third of the gas is flared because we don't have the infrastructure to get it to market. it's all bad news if we don't have our infrastructure up to the standards we need and with the right resiliency. >> i want to ask you about the environmental impact of some of the spills, whether it's los angeles or the gas spill, how serious of an environmental concern is it? >> it's a real concern. it's a manageable concern, it's an avoidable concern. but it's a real risk. any time you do any energy production or any energy consumption, there's an environmental risk, so we need to make sure we manage and reduce those risks as much as possible. and that means inspections, good materials, and doing it the right way to avoid spills. >> and the other risk is methane leakage. a lot of environmentalists say that can be worse sometimes than coal. >> sure. yeah with the liquids you have to worry about a spill. with gases you have to worry about a leak where gases get in to the atmosphere. methane is more active as a greenhouse gas than carbon dioxide. so we have the safety concerns and the environmental concerns. and economically that's wasted product. it doesn't make sense to waist it. in terms of the overall environmental impact. natural gas is better for than coal from a climate perspective, but if you leak too much, some of those gains are lost. >> dr. webber thanks for being on the program. >> thank you. add home builders to the list of people who don't think the housing market will turn around very quickly. it's the latest indication that the housing market has lost momentum in the last several months. right credit conditions and financial instability are dragging down sale. he is the political renegade who somehow stuck a chord with voters less than half his age when he ran for president. >> the jobs, the good jobs aren't forthcoming. so they know there is something structurally wrong, so there is a good appeal to young people to say well, maybe we need to think about the whole system. >> plus campaign finance in america, and why it's tough to find out who is trying to buy influence in washington today. that's ahead. ♪ jazeera. >> only on al jazeera america. >> oh my! >> before there was rand paul, there was ron paul, rand's dad and a libertarian folk hero. while the son is a senator who may run for president in 2016, the father isn't exactly fade going the background. ron paul remains outspoken and makes his opinions known loud and clear. you can find those opinions on ronpaulchannel.com. some of the content is free and some requires a subscription that constitutionals $9.95 a month. ali velshi sat down with ron paul this week. >> i was delighted with it, matter of fact it was sort of surprising, because, you know, i took a position which is a libertarian position that you have to be responsible for yourself, and most people paint young people, well they are totally dependent, the only thing they care about is student scholarships and loans, and what is the government going to do for them? and there's plenty of that. but no, the students when you offered it up to them, they were very open. but i think conditions helped me on that. not only was i firmly believing in what i was saying, but they are also seeing the failure of the system that they have been involved in, and because of the crisis of the last six years, we know about the debt the students are, you know, undergoing. they are getting out of college, paying a lot of money, they owe this debt. they can't event gept out of that debt like other people can. and the good jobs aren't forthcoming, so they know there is something structurally wrong, so there is a good appeal to young people to say maybe we have to think about the whole system, rather than just saying how can we patch this up and get another approa approach -- appropriation, and overconfidence in government just means you are going to get more government. >> but this is an interesting idea. because a lot of those young people are not necessarily conservative in their approach to things. they worry about the economy and they do want perhaps some government leadership on that front. and probably want government leadership on the environment and other concerns. they are sometimes interventionists, they think america should have a role in dealing with some problems in the world, and yet you were running amongst conservatives. the libertarian message seems to fits more comfortably amongst conservatives than liberals. >> i'm not convinced of that. i believe the message of liberty is appealing across the board. and when you present it to them that you are not going to be judgmental, except one thing we want our freedoms, but if you want to use your freedoms to do something i don't approve of, they don't see me in attacking their standards in what they want to do, of course you can't take advantage of others, cheat, or defraud people. and then they see this as less threatening. so theoretically, you should have as much appeal to liberals as to conservatives, because liberals were supposed to be -- sometimes they come up short on defending personal liberties, and liberals were considered to be more anti-war, which i think is questionable too because it's so mixed. but if there is a principal progressive, i felt very comfortable and excited in working with them. dennis ka sinnage, and ralph nader, and even bernie sanders, because they based their beliefs on basic principles, so that's why i think the message of liberty should be appealing across the board. there is a quote that nixon made one time. he says we're all cane see ans now. he was right, but it was philosophically, they were caneseeians. so they are all caneseeans. so i see it in philosophical terms. and it's not so neat. >> you are from an elect ability perspective the most compelling libertarian who has run for presidential office in a very long time. and yet you hit ceiling there. why couldn't you get -- you were so compelling and in fact on a hot streak for a while. why does there seem to be a ceiling for a libertarian candidate? >> well, i don't believe there is. i believe there's limitations from the coverage. but for instance when i was hitting the peak, we had a debate, and i had 89 seconds in the whole debate. and my supporters that were very much involved were a lot more critical. i always try to say it's politics. that's the way it works, but others were pretty critical about the whole process, hot it worked and what kind of things i had to fight -- like during the convenings, there were conventioned that were closed down. rules change. you take a state like maine, they just threw out our delegate. but in spite of that type of thing, i figure that goes on all the time in politics, and it's dirty politics, the part i didn't like, but ultimately the reason i can tolerate that is i think ultimately it is a philosophic fight that we're involved in. i don't want people to say we're all caneseeians. >> the federal communications commission proposed new rules that rule out internet service providers to deliver fast lanest. today more than 100 activists protested at the scc, and four people very escorted out of the meeting room for shouting protest. it leaves open the door to fast lanes but not specifically banning them. the plan is now open for public comment for four months the final rules may be modified and adopted in the fall. coming up we'll tell you about one part of the economy where inflation is out of control. that's when "real money" returns. ♪ >> i'm ali velshi, the news has become this thing where you talk to experts about people, and al jazeera has really tried to talk to people, about their stories. we are not meant to be your first choice for entertainment. we are ment to be your first choice for the news. congress comes back into session on monday and that got us thinking about the influence of money and politics. so we looked at the latest day to on financing federal elections. spending by groups not required to disclose their donors is going through the roof. these groups are known by their tax statuses, they have become an increasingly attractive place for wealthy individuals and corporations to influence elections. in the 2006 midterms, these non-disclosing groups spent just $5.2 million. in the following midterms in 2010, the total spending rose to $131 million. in the 2012 presidential election cycle the total tripled to $311 million. and now despite 2014 being a midterm election, spending so far by non-disclosing groups is three times higher than the presidential cycle of 2012. it means more money, more ads, and less information for the public. it's up to congress to pass campaign finance disclosure laws. oh, well. we're back tomorrow night, of course, but we want to give you the early scoop on a new series we're working on for next week. philadelphia's rocky middle class. almost 400,000 people have left philadelphia. 43% of them were in this economically important group. so we're going to take a frank look at the current state of philadelphia's rocky middle class next week on "real money." that is our show for today, i'm david shuster if for ali velshi. on behalf of the entire team at "real money," thanks for watching. ♪ >> hi, jeff, welcome to al jazeera america. >> atrocities car bombings, chemical weapons and a new global push to end the horror in syria. >> outrage of protestor kicked by an aid to turkey's prime minister, as turks bury the dead after the coal mine disaster. ink person know, dozens of wild fires in bone dry southern california, a look at the science fueling the flames. cancer killer, why a
♪ >> this is "real money," and you are the most important part of the show, to tell us what is on your mine by tweeting at, and facebook.com. this was a day of protests in cities across america and around the world. hundreds of fast-food workers demanding higher pay walked off of their jobs. it was part of court -- coordinated one day strike. here in the united states labor organizers from the service employ international union join the protest to call for raising the minimum wage in this country to $15 an hour. right now the federal minimum wage is stuck at 7:25 an hour. president obama is calling on congress to raise the federal minimum to $10.10 an hour. most fast-food workers make more than the national minimum, but not by much. they bring home an annual income just under $19,000 a year for full-time work. that falls behind the poverty line for a household of three. but businesses like mcdonald's don't like higher wage mandates. they say the increases cut into profits, raise prices, and lead to layoffs. america compares pretty poorly with other countries. the national minimum in canada comes in a little bit higher, whereas france leads the pack with the equivalent of $10.60 an hour. only japan comes out below the united states. but countries like japan offer universal health coverage, so analysts argue that a japanese worker has fewer costs to worry about. either way today's protests may signify a new era for labor activism in this country. patricia sabga explains. >> reporter: london. chicago. new york. a global fast-food worker movement supported by traditional unions, but which spraing from known union groups. >> when i first started working about worker centers by 2003 there were about 140, and now there's about 220. >> reporter: none union labor groups have proliferated as the economy has shifted away there manufacturing. to services where small groups of employees are scattered around many location and often separated from a corporate parent through a middleman like a franchiser. >> there is a corporate food chain. the workers at the bottom who work for franchises, but at the time, it's the corporations that are really setting the wage. >> reporter: that has forced a change in tactics. a traditional union tactic would be to call a worker strike, shut down a place of business to put economic pressure on an employer. non-union labor takes a very different approach. this franchise is still open. many of the people protesting outside may work in fast-food but not necessarily at that franchise. moreover there are people here from the community who have come out to lend support. the aim here is to raise awareness of fast-food worker conditions and wages to put public pressure on fast-food corporations. some of the protesters at that strike in new york are with a traditional union. >> we're here in sol dare with the workers who are out on strike fighting for their us. >> reporter: lending support to raise awareness, whether they can force fast-food corporations together to improve worker pair conditions is still an open question. >> every job was a bad job until workers and employers came together to make them better. that could be the story of fast-food workers today. >> reporter: patricia sabga, al jazeera, new york. ken is an independented consult important and senior associate for the worker institute. ken thanks for joining us. >> you're welcome. >> first of all, what did you make of the protests today? >> i think it's a building of something that has started and keeping building, and the fact that it can keep that momentum changes. >> what are the other countries doing differently to better bridge the wage gap? >> there's a theory called the high road economic development which is based on high-skill jobs, good pay, and then there's the other road, which is like drive wages down as low as possible to make more profits, and i think those other countries more doing the high road. and when people have more money to spend. it stimulates the economy. >> and you would say the united states is taking the low road. >> most corporations are. >> and what is the impact on a country taking the low road. >> it lowers all boats. a situation where wages are being driven down lowers everybody's wages, so it's harder to get raises for people union or not. but what about the argument from these companies that say fine you want to raise wages, but that will make the cost of the hamburgers more expensive, and we may have to layoff workers. >> the layoff argument has been made for years and years and years, and has never proved to be true. it is a theory that doesn't play out in reality. >> it doesn't? >> there might be some here and there, but it has a minimal impact on the economy. if you get -- but the more wages in people's pocket has a better impact on the economy because people spending it and it generates jobs. >> what about the argument, though there the companies in terms of their profits? companies have a if iedishary responsible to maximize profits for shareholders, and if they say this is going to hurt us, why not? >> it's a fact of life. they have to pay for energy and a lot of other things, and they try to pay as little as possible, and workers are no different. >> you have got a lot of experience working with unions. why have the unions taken it on the chin, particularly the last several years, and it's particularly difficult to unionize low-wage workers. >> the answer to why is a long one. but there has been unprecedented assault. the political climate has changed, and international globalization, where you can move a factory where people are paid much less. >> does it matter that we have gone there a manufacturing-based economy to one that has much jobs? >> sure. service jobs generally are paying less, although that's what the folks today were trying to do something about. and unions in some of the service industries have made some great strides. >> for folks who are out there, thinking what does this mean for my family? what is the answer. let's say wages are raised to wants? >> i think it's a shot in the arm to the economy, number one. what we see is -- a recovery that's -- we're hoping is going to keep growing. we'll get a shot in the arm. and i think that people who are like sort of on the margins or in the middle will see the pressure to go lower will start to stop. >> have you found information or data that backs up that people are also willing to pay a little bit more for certain services such as fast-food hamburgers in order to make sure that workers get a better wage? >> yeah, there are polls, but the biggest thing is the amount they would have to raise is almost always overstated by the corporations and it is usually quite minimal. a study on wal-mart showed they could raise the wages quite a bit, and maybe it would cost $0.49 a visit each time somebody shops there. >> ken is with the school of industrial and a labor relations at cornell university. thanks for coming in the studio. >> you're welcome. some investors of chipotle almost choked when they heard the salaries of the two ceos. together they were paid about $50 million. the super sized compensation lead an investors group to urge the shareholders to jekt the salary, and today they did. they voted against ratifying the current compensation plan. chip -- chipotle says it's too soon to say how the board will respond. we received positive news about the u.s. job market. the number of americans applying for unemployment benefits fell to the lowest level in seven years. the level is below what economists forecast. in april employers added 288,000 jobs and today's data could mean another month of solid gains. it's a man versus nature battling in california. wildfires are threatening lives and livelihoods. plus our voracious appetite for natural gas is running straight into aging infrastructures in cities with potentially deadly results. that story and more as "real money" continues. >> on techknow... >> so, this is the smart home... >> saving the environment >> the start point for energy efficiency, is to work with the sun... >> saving you money >> we harvest a lot of free energy >> and so we're completely off grid here >> how many of the appliances were almost a little too smart for us? >> techknow every saturday, go where science, meets humanity. >> this is some of the best driving i've ever done, even though i can't see. driving i've ever done, even though i can't see. >>techknow true business-grade internet comes driving i've ever done, even though i can't see. >>techknow with secure wifi for your business. it also comes with public wifi for your customers. not so with internet from the phone company. i would email the phone company to inquire as to why they have shortchanged these customers. but that would require wifi. switch to comcast business internet and get two wifi networks included. comcast business built for business. could mean less waiting for things like security backups and file downloads you'd take that test, right? well, what are you waiting for? you could literally be done with the test by now. now you could have done it twice. this is awkward. check your speed. see how fast your internet can be. switch now and add voice and tv for $34.90. comcast business built for business. >> we have to move out of here right now >> i think we have a problem... >> we have to get out of here... >> they're telling that they they don't wanna show what's really going on... >> mr. drumfield, i'd like to speak to you for a minute... >> this is where columbia's war continues... >> ...still occupied... >> police have arrived... you see the blast scars from a bomb that went off... >> now inroducing, the new al jazeea america mobile news app. get our exclusive in depth, reporting when you want it. a global perspective wherever you are. the major headlines in context. mashable says... you'll never miss the latest news >> they will continue looking for suvivors... >> the potential for energy production is huge... >> no noise, no clutter, just real reporting. the new al jazeera america mobile app, available for your apple and android mobile device. download it now ♪ at least eight wildfires are burning in san diego county, california, scorching nearly 10,000 acres. more than 150 firefighters are trying to stop the fire. evacuation orders have been issued in some areas, and local schools remain closed. brian rooney joins us from san marcus, california. about 20 minutes ago we weren't shure you were going to be able to join us. explain what happened. >> about a half hour ago, we were waiting to go on live. there's a ravine right down here behind me, and we were keeping an eye on, and within about two minutes it came right up behieng me. and i was standing right there on the edge of the ravine. and the whole area burned out. so it was exciting for a few minutes there. >> how is southern california doing? are these fires in control or out of control right now? >> well, that's a technical question. they will give a percentage of how much of a line has been drawn around a fire. but you can get an idea as to whether they are out of control. some are, some are not. but even out of control doesn't mean they are necessarily burning anything. and i think what has been remarkable about this set of fires is how few houses it has actually burned. we're in the middle of a residential area, high up in the hills. there are houses all over the hills, and very few of them have burned. four confirm sod far. an apartment complex did burn, but the firefighters are doing very well. a lot of hospital attack, airplanes, and then they spread out in the neighborhoods, and protect neighborhoods. pretty much when the firefighters are there, a fire is not going to get a house. >> you have a lot of experience in southern california, how do the current drought conditions compare? and what are you hearing from firefighters about what they are season? >> you will very often get a prediction of a bad firefighti g season, and you just have to wait for it to play out. the fire season has come early, usually it is september and october. now we have it in may and june. so that's a concern. it's burning through the firefighting budget already. but this season could just as well go flat. just because it's bad now, doesn't necessarily mean it will be bad all through the summer. >> brian rooney reporting from san diego county, california. thanks for that report. the wildfires are the latest example of what could be a new reality in the area. bigger fire seasons that start earlier in the year, with increased loss overall to property and higher costs to the economy. california has had 1244 wildfires this year. and costs have also hit new highs. forcing the state to use emergency funding to supplement its firefighting budget. we have reporter for the orange county business journal. she joins us from irvine, california. and never mind the cost of the firefighters and state funds, as far as infrastructure, i understand the fires have been blocking roads in california. >> absolutely. yesterday amtrak and metro link train service had been interrupted as well. and roadways had been blocked in orange county and san diego county. county. >> and what is the economic impact in those areas when roads are blocked and highways are impassable and commuters can't get back and forth? >> well, of course, people cannot get home from jobs and vice versa. specifically in carlsbad, structure damage, a city official estimates to be at $22.5 million. >> how does this season compare to others that you have experienced? >> well, this is not close to the big cedar fire that this area experienced in 2003 where about 280,000 acres scorched and lost about 2,200 homes. so it's still okay. >> you cover business affairs, business reporting. explain what the expectations are in terms of how this all -- the new sort of reality of will effect southern california's economy. >> well, of course -- of course news about the drought and the fire combination of those two is never good news on the economy. so we'll see how it plays out. >> is this a new reality? the idea that california -- businesses and computers are going to have to get used to the idea that fire season will be longer, there may be interrupts to get goods and b? >> absolutely. and that there may not be a job to come to. for example, in carlsbad, a diagnostic imaging company has recorded that its headquarters have been severely damaged by this recent fire. so 70 people will not have a place to go to work to. >> do you hear other business owners talking about their fears, and is this becoming a bigger topic of conversation in the business community? >> in orange county, not specifically. >> okay. and any expectations about what you expect to see in this fire season in terms of the economic impact? >> well, definitely, it's going to have an impact if it plays out this way as it is. this is supposed to be the rainy season, but it's not. again. >> thanks for joining us. recall plagued general motors is doing it again. recalling another 2.7 million cars for a variety of problems involving brake lights, power lamps, and wind shield wiper. gm says it will take a $200 million charge to cover the repairs. this follows the recall of faulty ignition switches linked to at least 13 deaths. the auto industry is on pace this year for a recall record. attention shoppers wal-mart is looking for you. the retailer used the harsh winter weather card in explaining poor first quarter sales. they say profits fell 5% from a year ago. and they issued a very lukewarm outlook for the future. it's a border battle with billions of dollars of opportunity on the line. coming up a look at the money america might be losing without immigration reform. plus the new technology that has uncovered a very old problem, our out of infrastructure, we'll show you how frac-ing and need for natural gas has made it even worse. you are watching "real money." ♪ >> our current system has gone very far awry... >> there's huge pressure on the police to arrest and find somebody guilty >> i think the system is going to fail a lot of other people. >> you convicted the wrong person >> i find that extraordinarily disappointing... >> to keep me from going to jail, i needed to cooperate. >> the evidence was inaccurate >> they still refuse to test the dna >> somebody can put you in a death chamber >> it's not a joke >> award winning producer and director joe berlinger exposes the truth. from the inside... >> a justice system run by human beings, can run off the rails. >> some say there's justice for all, but they're not in the system.. >> it shouldn't be easy to just lock somebody up and throw away the key >> it's a nightmarish alternative reality, sometimes you can't win... >> an original investigative series. al jazeera america presents the system with joe beringer >> i'm joie chen, i'm the host of america tonight, we're revolutionary because we're going back to doing best of storytelling. we have an ouportunity to really reach out and really talk to voices that we haven't heard before... i think al jazeera america is a watershed moment for american journalism ♪ >> president obama this week tried to ratchet up the pressure on house republicans to pass an immigration reform bill. he said they have a window of two or three months before the midterm elections make it unrealistic. the senate has passed a bill. the president isn't the only one applying pressure on house republicans. tom donohue spoke out this week and had this stern message for the g.o.p. >> we're absolutely crazy if we don't take advantage of having passed an immigration bill out of the senate. if the republicans don't do it. they shouldn't bother running as candidates in 2016. >> a new report found that companies in both the united states and mexico would benefit significantly from establishing a frictionless border. richard joins us now. richard welcome to the program. what is a frictionless border? >> well, we have created a border that is filled with friction. i live part-time in toronto. bossing that border -- and i'm an american, but crossing that border is an inintegration zone. and when you think about it, combining the united states, mexico and canada, building an integrated north american economy which could leverage the knowledge base of the united states with the energy fortunes with great countries like canada and mexico, it would create an unrivalled powerhouse. we have got to do it. >> explain for somebody at home how does it work? >> well, just in the san diego area, where we are did this study from san diego to tijuana. a region producing about $200 billion in economic output, you know, we're losing a couple of billion dollars a year because of that border -- actually $3 billion a year because of that border, and it makes no sense. san diego has technology. advanced knowledge-driven industries. over in tijuana, you don't have to make stuff in china. you can make lower costed manufactured goods right in the region. but the boarder is so backed up, the trucks can't get across. tens of thousands of trucks that can't get across, and it's a tremendous inefficiency and waste of money. >> and inefficiency is a productivity cost. what about for business owners? >> it would enable us to have commerce without all of the hassles and hangups. think about this just from the point of view of the united states. people complain labor costs are high, manufacturing -- having access to a great manufacturing base in a place lite -- tijuana, for those products that are being competed and eroded with the chinese market, having this for u.s. companies to leverage, and of course what is happening in mexico now is it's getting economic development. wages are rising, so it builds a cycle of competitiveness, benefiting business, but also benefiting american consumers and workers over time. what about the issue that tom donohue seems most worried about and that is immigrant labor. they want some settlement to know here is what we have to do with immigrant labor. >> if you ask me what is the corben fit of the united states, it has long been immigrants. in silicon valley a third of those high-tech businesses were formed by people not from america. what is going to make america competitive is keeping our borders open for trade, and this flow of talent from all over the world, that flow of talent, we have got to get immigration reform done. >> but there are also people who are against immigration reform who would say, look, the cost of security issues would also be severe; that if you are allowing people who have broeng the law, that if you have a porous border, we're going to pay one way or another because of potential security breaches. do you buy it? >> there are smarter ways to keep on the lookout for bad guys than stopping everybody and queueing them up. it is crazy what we're doing. in the name of homeland security, we're eroding our economic security. use technology. make people -- i have a nexus card or global entry card, but this idea that you are backing everybody up and causing these log jams. we're wasting money on something we know is not effective. >> has the eu provided a model for us, because their borders are much more efficient. >> i think they have. we are dealing with canada to our north, and mexico to our south. these are good neighbors. they are our friends. i mean, it makes no sense to erect the equivalent of virtual fences -- and we worked with the people at san diego, the business community of san diego knows how important this is. the business community in detroit and ontario knows how important this is, they want it. they are dying for it. but our government has a one size fits all policy that is all about, again, unfortunately, homeland security. not economic competitiveness. yes, we have to secure our borders, but let's think about our economic future at the same time and balance those concerns. >> richard is the founder of creative class group. program. >> thanks for having me. america's energy boom has uncovered a very complicated problem. see for yourself. >> in big cities like new york you have these layers of underground pipeline from water mains to phone to electric that make for a very muddled and expensive process of removing and replacing natural gas lines. plus more of ali velshi's one on one with former presidential candidate ron paul, and what surprised the libertarian about young americans today. "real money" continues right after this break. ♪ >>america tonight investigates a controverseal addition treatment. it could be a life saver... >>the reset button has been hit what is this teach us about the brain? >> can ibogaine cure heroin addiction? only on al jazeera america >> weekday mornings on al jazeera america >> we do have breaking news this morning... >> start your day with in depth coverage from around the world. first hand reporting from across the country and real news keeping you up to date. the big stories of the day, from around the world... >> these people need help, this is were the worst of the attack took place... >> and throughout the morning, get a global perspective on the news... >> the life of doha... >> this is the international news hour... >> an informed look on the night's events, a smarter start to your day. mornings on al jazeera america al jazeera america gives you the total news experience anytime, anywhere. more on every screen. digital, mobile, social. visit aljazeera.com. follow @ajam on twitter. and like aljazeera america on facebook for more stories, more access, more conversations. so you don't just stay on top of the news, go deeper and get more perspectives on every issue. al jazeera america. >> now inroducing, the new al jazeea america mobile news app. get our exclusive in depth, reporting when you want it. a global perspective wherever you are. the major headlines in context. mashable says... you'll never miss the latest news >> they will continue looking for suvivors... >> the potential for energy production is huge... >> no noise, no clutter, just real reporting. the new al jazeera america mobile app, available for your apple and android mobile device. download it now >> these protestors have decided that today they will be arrested >> these people have chased a president from power, they've torn down a state... >> what's clear is that people don't just need protection, they need assistance. ♪ >> a 40-foot geyser of oil sprued from a busted pipeline earlier this morning in los angeles. about 10,000 gallons spilled into the streets. it forced five businesses to shut down, one of them was a strip club, which had to be evacuated. none of it they say leaked into the los angeles river. the incident today is shining another spotlight on the condition of america's infrastructure. by most accounts many of the nation's older pipelines are not up to snuff and prone to leaks, and the consequences can turn deadly. but fixing the problem costs tens of billions of dollars and could take decades. we examine the benefits of cheap natural gas as well as those dangers hidden just below the surface. >> reporter: for ed donly a real estate executive in manhattan, the choice to convert this apartment building from using oil to natural gas seemed an obvious one. he made the switch last year at a lost of nearly $3 million. so far this building has achieved approximately a 47% savings by converting from fuel oil to natural gas. with the recent energy boom that has driven down the price of natural gas, many businesses and governments are also looking to make the switch. this seems to be the wave of the future. pipeline expansions in states like pennsylvania where production has ramped up over the past two years, are also bringing more gas online, reducing cost and feeding consumer demand across the east. >> were it not for the additional natural gas coming in, a few years we wouldn't be able to meet demand. >> reporter: switching can cause problems, in cities where many pipelines date back to the turn of the century. >> they have cast iron pipes, and they are much more likely to leak than newer plastic pipes. so that is one of the concerns. >> reporter: one spark is all it takes for an explosion after a leak. more than 6,000 miles of pipelines carrying natural gas run beneath new york city, nearly half were installed before 1940, when cast iron and unprotected steel were the order of the day. and that raises questions about how the infrastructure will handle the energy boom. the big problem is cost. in big cities like new york, you have got these layers of underground pipeline from water mains to phone, to election, that all make for a very expensive process of removing and replacing. here in manhattan it costs about $2,000 a foot. but when you get out to rural areas the price drops to about $300. replacing it all could take decades and cost around $10 million. at the current place efforts to replace all leak prone pipelines in philadelphia could take as much as 80 years. and without upgrades soon, analysts say the emphasis on gas may bring more incidents like what happened in east harlem where a gas leek leveled two apartment buildings. the gas main was 125 years old. joining us now to discuss just how sustainable the energy boom is here in the united states, giving the aging infrastructure is michael weber from the university of texas. he is a professor of mechanical engineering. he is also the executive producer and host of the pbs series. there seems to be a conflict between our appetite for energy and our infrastructure. how great a problem is this? >> yeah, there is a gap. our boom is really taking off, which is great news. but the pace of our infrastructure investments have not kept up with the boom. and that introduces safety and environmental risks. >> how much has frac-ing contributed to that misalignment in terms of fuelling the natural gas boom that we have. >> frac-ing has been the main enabling technology. and it has created a glut of natural gas. so natural gas prices are low, which means we want to use it, but we have to move more gas to our end users in pipes that are pretty old. sometimes the gas is flowing different directions. so our infrastructure is not designed for today's energy production, energy needs. >> and given that it was designed for an older system is there a certain responsibility that you think some of these companies have in terms of helping build up the infrastructure that is carrying their gas. >> that's a good question. they are different companies in many cases, so we need to get everybody involved. government plays a role in funding infrastructure. so we need to reinvest, do it more quickly, make it more safe. we need government and the midstream companies who build the pipeline and the oil and gas guys, they all have a stake in getting it done the right way. >> if we don't build up the infrastructure are we going to see more incidents like in new york and other cities like that as time goes on? >> that's the risk. natural gas burns really easily, and that's a nice feature, but it's also a safety risk. and we can have environment risks from spills, and if we don't build pipelines we might find ourselves flaring gas, like is happening in north dakota where about a third of the gas is flared because we don't have the infrastructure to get it to market. it's all bad news if we don't have our infrastructure up to the standards we need and with the right resiliency. >> i want to ask you about the environmental impact of some of the spills, whether it's los angeles or the gas spill, how serious of an environmental concern is it? >> it's a real concern. it's a manageable concern, it's an avoidable concern. but it's a real risk. any time you do any energy production or any energy consumption, there's an environmental risk, so we need to make sure we manage and reduce those risks as much as possible. and that means inspections, good materials, and doing it the right way to avoid spills. >> and the other risk is methane leakage. a lot of environmentalists say coal. >> sure. yeah with the liquids you have to worry about a spill. with gases you have to worry about a leak where gases get in to the atmosphere. methane is more active as a greenhouse gas than carbon dioxide. so we have the safety concerns and the environmental concerns. and economically that's wasted product. it doesn't make sense to waist it. in terms of the overall environmental impact. natural gas is better for than coal from a climate perspective, but if you leak too much, some of those gains are lost. >> dr. webber thanks for being on the program. >> thank you. add home builders to the list of people who don't think the housing market will turn around very quickly. it's the latest indication that the housing market has lost momentum in the last several months. right credit conditions and financial instability are dragging down sale. he is the political renegade who somehow stuck a chord with voters less than half his age when he ran for president. >> the jobs, the good jobs aren't forthcoming. so they know there is something structurally wrong, so there is a good appeal to young people to say well, maybe we need to think about the whole system. >> plus campaign finance in america, and why it's tough to find out who is trying to buy that's ahead. ♪ >> every saturday, al jazeera america 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a month. ali velshi sat down with ron paul this week. >> i was delighted with it, matter of fact it was sort of surprising, because, you know, i took a position which is a libertarian position that you have to be responsible for yourself, and most people paint young people, well they are totally dependent, the only thing they care about is student scholarships and loans, and what is the government going to do for them? and there's plenty of that. but no, the students when you offered it up to them, they were very open. but i think conditions helped me on that. not only was i firmly believing in what i was saying, but they are also seeing the failure of the system that they have been involved in, and because of the crisis of the last six years, we know about the debt the students are, you know, undergoing. they are getting out of college, paying a lot of money, they owe this debt. they can't event gept out of that debt like other people can. and the good jobs aren't forthcoming, so they know there is something structurally wrong, so there is a good appeal to young people to say maybe we have to think about the whole system, rather than just saying how can we patch this up and get another approach approach -- appropriation, and overconfidence in government just means you are going to get more government. >> but this is an interesting idea. because a lot of those young people are not necessarily conservative in their approach to things. they worry about the economy and they do want perhaps some government leadership on that front. and probably want government leadership on the environment and other concerns. they are sometimes interventionists, they think america should have a role in dealing with some problems in the world, and yet you were running amongst conservatives. the libertarian message seems to fits more comfortably amongst conservatives than liberals. >> i'm not convinced of that. i believe the message of liberty is appealing across the board. and when you present it to them that you are not going to be judgmental, except one thing we want our freedoms, but if you want to use your freedoms to do something i don't approve of, they don't see me in attacking their standards in what they want to do, of course you can't take advantage of others, cheat, or defraud people. and then they see this as less threatening. so theoretically, you should have as much appeal to liberals as to conservatives, because liberals were supposed to be -- sometimes they come up short on defending personal liberties, and liberals were considered to be more anti-war, which i think is questionable too because it's so mixed. but if there is a principal progressive, i felt very comfortable and excited in working with them. dennis ka sinnage, and ralph nader, and even bernie sanders, because they based their beliefs on basic principles, so that's why i think the message of liberty should be appealing across the board. there is a quote that nixon made one time. he says we're all cane see ans now. he was right, but it was philosophically, they were caneseeians. so they are all caneseeans. so i see it in philosophical terms. and it's not so neat. >> you are from an elect ability perspective the most compelling libertarian who has run for presidential office in a very long time. and yet you hit ceiling there. why couldn't you get -- you were so compelling and in fact on a hot streak for a while. why does there seem to be a ceiling for a libertarian candidate? >> well, i don't believe there is. i believe there's limitations from the coverage. but for instance when i was hitting the peak, we had a debate, and i had 89 seconds in the whole debate. and my supporters that were very much involved were a lot more critical. i always try to say it's politics. that's the way it works, but others were pretty critical about the whole process, hot it worked and what kind of things i had to fight -- like during the convenings, there were conventioned that were closed down. rules change. you take a state like maine, they just threw out our delegate. but in spite of that type of thing, i figure that goes on all the time in politics, and it's dirty politics, the part i didn't like, but ultimately the reason i can tolerate that is i think ultimately it is a philosophic fight that we're involved in. i don't want people to say we're all caneseeians. >> the federal communications commission proposed new rules that rule out internet service providers to deliver fast lanest. today more than 100 activists protested at the scc, and four people very escorted out of the meeting room for shouting protest. it leaves open the door to fast lanes but not specifically banning them. the plan is now open for public comment for four months the final rules may be modified and adopted in the fall. coming up we'll tell you about one part of the economy where inflation is out of control. returns. ♪ al jazeera america. we understand that every news story begins and ends with 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creation... climate change... tax policy... the economy... iran... healthcare... ad guests on all sides of the debate. >> this is a right we should all have... >> it's just the way it is... >> there's something seriously wrong... >> there's been acrimony... >> the conservative ideal... >> it's an urgent need... and a host willing to ask the tough questions >> how do you explain it to yourself? and you'll get... the inside story ray suarez hosts inside story weekdays at 5 eastern only on al jazeera america >> india's next prime minister, narendra modi, the hindu national party leader set to win the election. hello from me, david foster. you are watching al jazeera. also coming up, protests turn violent in turkey after the worst-ever mining disaster. rally against the world cup - protests across brazil at the cost of staging the world's biggest football