You think what were talking but here is the end of capitalism . That the Banking System is gotten to the point where we cant accept a market economy with banks that are privately owned . Mr. Kashkari not at all. The market economy is still the key to our future. We just need to have a market economy where you can have a prosperity, and innovation, and take up some of the risk of collapse of the table. Pretty briefly, why now . Yourhy you in terms of leading on this issue . I just started, so im going as fast as i can. I feel at what i bring to this is a unique perspective. Of few people on the front line responding to financial crisis. That really colors my thinking and my views as i look at what has been implemented. Does have a the fed lot of expertise in large banks. I think bringing these things together to say i think we can do more, lets go do more, the last thing i would say im repeating myself there are a lot of experts around the country that have strong ideas about this. Have thesuppose we answers. We are trying to bring those experts together and say lets find a better solution. Welcome back to brookings, it is great to see you. I was concerned that you are not more enthusiastic about the single point of entry approach. It seems like, if you have capacity so income that it would be hard for any bank to run through it you will basically say that taxpayers are not going to support big banks. Single point of entry, you can resolve that. Not disrupt the system. By creating a bridge bank, you can allow subsidiary to operate. Why havent we solved the problem . Why do you want to do things that might warm up the gears more . One of recognize this innovation for what it is . My concern is it really is not go to trigger contagion, then itll probably be price like equities. Why dont we just raise the equity requirement to the banks . Instead of adding all this complexity, there is tremendous complexity and all the regulations. I will give you an example. M memory directly for some thing about fannie and freddie in 08. They were never supposed to be the responsibilities of the u. S. Government. But yet, we had to step in. Hang on, they also had subordinated debt. Thended up protecting subordinated debt. In theory, that was there specifically to provide protection for the senior creditors. Theres two different points here, one is you are saying that basically we cant take the government at its word. In a crisis they will never allow the bondholders to take the hit. Right . Mr. Kashkari that is stronger that i would say it, but yes. Mr. Stern that is separate mr. Wessel that is separate, why are the issuing bonds that can become capital . What is the advantage of that over just having them hold more equity . I think it is diversified, it appeals to different investors. It is probably a little less expensive than equity. It is something we will pay interest on until it converts to equity. Ofhink these are new types instruments. Particularly those convertible bonds that we were talking about earlier. In the u. S. , they are not issuing those. More equity but more preferred shares. And other subordinated debt but i do think it is there are different investors. Different characteristics, i assume it will be , there wasi go back no legal requirement for the banks to bail out. I dont see the analogy here. In the midst of a crisis, all of a sudden, if you to analyze the balance sheet, they look healthier. In the management said we have a reputation requirement to stand behind. Mr. Kohn you think of a concern about the reputation of the convert the bonds . Mr. Kashkari there is that, but im saying the less is that these very clear legal frameworks are not so clear the time of a crisis. Mr. Stern are you going to go to market to market accounting . It seems to me that is critical here. Lossesse regulators, the get delayed. Is swampingd out it capital. I know a lot of people and , there was avices rat running around the room. Model to lead a model, so what is better . Mr. Kohn i think regulators have been pushing more than they have in the past. The market to market is very useful but is tricky on the liability side of the balance sheet. When these bonds a selloff, the banks have more equity. It is a tricky issue. Recognizing the value of the assets, and the impairments, its absolutely critical for the health of the system and the market discipline. The gentleman in the front that will call it a day. I wanted to go back to the announcement of the minneapolis initiative. You look knowledge is that it will eventually require congressional action. That is probably the biggest obstacle given that a lot of members of congress dont agree with your initial premise. How does your initiative address this impasse . We are seeing variations in the Global Economy right now. Possible to next financial crisis could be triggered not from here but from a foreign market . Mr. Wessel are you going to fix congress while your at it . Mr. Kashkari we could go disappear into my closet and come out to nine months and come up with our answer. The reason we are having a public process with bringing the experts in is to also educate the public along with us. Hopefully, we can get members of congress in both sides of the aisle to Pay Attention and take this seriously. We have to do it if we can to try to get there. Will it have its origins somewhere else . I think that is pretty high. Many of the weaknesses be blubbering about is less of the we ared more overseas hearing about is less in the u. S. And more overseas. But also anchoring systems throughout, and to agree on resolution regimes, to agree on higher capital. To agree on a framework that will make the system much safer and more resilient to shocks, wherever they come from. Everyone is very aware they could come from anywhere. Neels point its absolutely true. Whatever trigger something bad coming down we probably wont see it until it is right about the less. Earlier, somebody mentioned oil prices. Should we have seen that . I dont know anybody who said there was an oil bubble and we need to take action to protect various sectors of the economy. Things happen. We need to be humble about how well we can predict them. I dont think we will identify the next source before the crisis happens. I think that is highly unlikely. The best thing we can do is be as prepared for it as we can. Ande, that means getting straightening out the incentives. Mr. Wessel do you think were better off the day before this all started in 2007 . Yes, i think we are clearly better off. We may be on second or third base. Where home plate is. At least, i think i know what home plate is. We have to get there. Mr. Wessel with that, please join me in thanking our panel. [applause] in 2012, statistician nate silver correctly predicted the president ial election outcome and 50 out of 50 states. We hear from him next on cspan. After that, former u. S. Ambassador takes part in the talk about the future of iraq. Later, president obama is asking of the Current Supreme Court vacancy following the death of Justice Scalia over the weekend. [captioning performed by the national captioning institute, which is responsible for its caption content and accuracy. Visit ncicap. Org] [captions Copyright National cable satellite corp. 2016] on our next washington the chicagoalked to tribune and l. A. Times about the death of Justice Scalia. Aaron klien of the Bipartisan Center about the negative changes to interest rates. You can join the conversation by phone on facebook and twitter. Washington Journals Library morning at 7 00 a. M. On cspan. American history tv on cspan3 features programs that tell the american story. This weekend we continue our special series on the vietnam hearings 50 years later. We will hear special consultant to president johnsons opening statement. Followed by committee questions. Our position is equally clear and defined. President johnson did so in the our objective is the independence of South Vietnam and its freedom from attack. We want nothing for ourselves, only that the people of south via be allowed to guide their own country in their own way. This is been our basic objective since 1954. It has been pursued by three successive administrations. And it remains our basic objective today. Next saturday, secretary of state dean rusk gives his testimony. But the complete American History tv we can schedule go to www. Cspan. Org. Next, fivethirtyeight founder nate silver talks about polling data and the election. He spoke at george mason university. Thank you for coming back. It is important for them to take some breaks. Say tyler has many interests as you know. I cannot tell you what tyler and nate are about to discuss. I can promise you this it will be challenging. It will be fascinating. Above all, it will the entertaining. So please join me in welcoming tyler cohen and nate silevr. Silver. [applause] tyler nate doesnt eat much of an introduction. He is a phenomenon in the area of data, sports, politics, online media and all the growth sectors basically. I think of you as dedicated to the idea of numbers, and data. Wanted to apply that to as many different areas as possible. If you had to say, of all the areas of human life, where can data being the bring the biggest improved aware with that the . Nate silver that is a pretty heavy question. You know, look, i think the answers are probably obvious in some sense. Where health is an area. Is incredibly valuable. Doctors are not known for being terribly analytics driven. I dont of the culture enough as to know why. Terms of areas that we are that i would like us to focus on eight, criminality and criminal justice. In part, because you have a lot of issues with data. Know how manyo people are killed by Police Officers you dont really know that very well. Education is another area where he could have a lot of data use. It is used poorly, as well as data used well. Urban planning is something were fascinated by. We did a big analysis of uber data. We spent 2 million of our own which is that uber in new york was not adding car should the streets. Tyler if we applied more data to the law, what kind of improvement can you imagine we might come up with . Nate silver i think them up in the last field where you would have a noncitizen a pejorative way i dont say this in a pejorative way. Answer that is at least approximately right. Whereas the legal sector i think relies more on precision. You want to very sites precise answer. That is kind of what youre avoiding sometimes and fiscal analysis. Tyler i sometimes wonder, how much data to people want . I went back to your High School Yearbook as prep for this. I took a look at the quotation you left it is from the combat. Macbeth. Liars and swimmers are fulls, because there are enough to be the honest man. Nate silver you are entitled that of high school, i think. [laughter] tyler when you give a lot of people a chance to view the quality of the hospital, or doctor, they arent interested. As a citizenry, how much dated you think people want . Do you think it is a kind of entertainment . Do people want to see real data on how good or how honest they actually are . Nate silver my partner got really into 23 and want honesty do. You actually tell you all that much. I dont want to stress about a bunch of things i cant necessarily affect. I dont know. Empowering people to make better decisions with their own health is a noble notion. I am enough of a free marketer that i say you should give people the information, whether or not they use it well it is their right. Im not sure at a firm conclusion whether or not it leads to better decisions. Amongression is that doctors, and hospital administrators, they are not , despitedatadriven their rigorous work in other respects. Tyler i think of you as a kind of super forecaster. Do you think you can beat Prediction Markets . Nate silver not all the time, but a smidgen above average. If this were a game and we were all investors, at the end of 40 years you have some excess returns. I think made by small amount but not enough to make up the variance. Its been to what market you are talking about. I think the market in politics are not all that liquid, or that sophisticated. I know the various sports hubs we have have tended to beat they guess not by a lot vegas. Not by a lot, but 52 of the time. Tyler that is a lot. Nate silver it is a lot, and it does what i spend a lot of my time taking about. Arrogant to for anyone to think they can beat markets. Right . At the same time, the more worshipful we become of markets and the less useful they become as well. Know donaldell, i trump is going to win because hes up to 52 it is lower now but is that fair . That i think doesnt add any value to the conversation. I am more interested as a person in providingrcher, information that other people can aggregate. If you are talking about our political market the first question is how good our markets . The answer to that is pretty is not verye air linear. When it is off they can be off by quite a lot. Is the person who knows when they are off . That is harder to do. Tyler what is the difference between forecasting in futurism . Do you have any predictions for the year 2050 . Not great, just better than the market. Think i am mildly pessimistic in some ways. Tyler what is the biggest source of your pessimism . [laughter] nate silver i dont know. Theres probably some survivorship bias. Willing about how our way persevere forever forever, and ever. We were talking backstage about how you go to asia not as often as you do but if you want to feel optimistic but civilization then go there. But, some of it is thinking about this donald trump phenomena. Tyler i have heard of him. Nate silver it just made me consider that a lot of assumptions people made about how american politics work really based on the relatively narrow slice of history. 2000world war ii through or so. Or 19802000. It is gotten a lot of history. In many other contexts, theyre all types of places run the world where nationalism is a much bigger phenomenon that it is in the United States. And racism is embedded in a great deal of political turmoil in the United States. In some ways, i wondered after the Great Recession how come we havent seen more upheaval, more social upheaval. Maybe were seeing that a little bit delayed. It is more of a revolution of rising expectations. A the same time, there is tendency now to focus on i dont politics to focus on a specific i know in politics to focus on a specific picture. There is a lot of wonderful news in some sense in terms of poverty rates going down globally, income inequality going down, diseases being eradicated. Muchder to some extent how the media culture tends to focus the lens on negative aspects society. Optimistically, do you think data can improve matching . Should we just follow the algorithms, or that a potential that end . Or does it just focus force you to choose someone to get you out of a decision . [laughter] nate silver i think the market would say that people find Online Services fairly useful. Maybe it removes some spontaneity. I met my partner at a bar which feels almost oldfashioned now, really. Pills,ld be like these or the placebo effect. Nate silver i think there was a lot of over optimization. Almost across any sector you want to talk about where data is being used to optimize a shortterm equilibrium. It is much harder to measure the longterm. Before, you couldnt measure anything at all. The navy your shirt then maybe your services were that bad. What is going to get my website the next traffic most traffic 36 hours from now isnt necessarily the best decision in the long run. You can measure some things come and not others, that can make you quite myopic. Tyler you mentioned donald trump a moment ago. I told quite a few people i didnt think trump could get very far. It is not obvious that i was right, paul krugman said early on that hit quite a good chance. What is it that he saw that i did not . Nate silver i was one of the skeptics, too. Let me say, i thought youd ask a version of this question. Tyler i wasnt allowed to blame you. [laughter] that is important, i think. I got a little frustrated because before saying rutrump will instantly evaporate in the polls list up we said that could happen but there were a lot of candidates like pat buchanan and or 30 ofill get 25 the electorate and they have a high floor, low ceiling advantage. That could still wind up being true. Thing,at said, for one were dealing with a fairly small sample of relevant election. People look at the primaries going back to 1972, and one basic lesson is that when you 15, thereple size of is nothing you can do to make it not a sample size of 15. No matter how compelling you can make a rationalization to say we have fear he as well as empirics here. I think maybe making people more conscious about saying unlikely verses never. The record will show we said unlikely, and not never. Still, it is a lot of things to give up. I dont know. You talk about what super forecasters are supposed to do. Priors, and it said that the prior to win the nomination. What signs could i find that would violate that assumption . It is not necessarily performing well in early polls, lots of candidates unusual candidates have done well in early polls. Lots of unusual candidates have won iowa or New Hampshire, not usually both. Tois the ability consolidate the field after that to become a consensus choice of the party this been more unusual. That assumption still might prove to be true. I do think that i, and a lot of other people, overrated the ability of the Republican Party to stop what i think is a radical insurgency within the gop. Tyler the party is weaker than you thought. What other ideas about the world you think we should revise . Paul krugman would say republicans are racist and many other people would believe. Nate silver that is a little bit of what i wanted to resist. I think one lazy, in my thinking are thosep, is there weapons consistent for a long time. I thought the people who were approached trump were generally mp were people whose opinions i would not wait eight as highly. I think it is lazy, and quite dangerous. Tyler does Michael Bloomberg have a chance, if he chooses to run . Nate silver give me a probability. I think as a 2. 8 this morning. Is that too high or too low . Of becoming president. Nate silver probably about right. In some ways, the climate could be as fertile as ever for some type of third candidate running. But bloomberg, i dont know. I dont know if he differentiates that much from clinton, with whom he is a lot trump