tv Boom Bust RT October 21, 2017 3:29am-4:01am EDT
president trump's director of the national economic council gary collins says clearing houses could be a risk to our financial system is he right unpack it for you stand by him but start right. for a wells fargo's foreign exchange bankers are fired as both regulators and the company look into shady practices in the investment banking arm wells fargo is no stranger to lawsuits arbitration and committee hearings recently the bank's new c.e.o. was questioned on capitol hill over a separate seven year long sales practice scandal which saw employees open customer accounts without their knowledge in order to meet sales targets it was followed by the dismissal of the former c.e.o.
and some of its executives the retail banking arm is also in trouble for setting up an authorised bill pay programs for customers and needless car insurance. the senate has narrowly backed the four trillion dollar budget plan it sets the stage for the first major tax reform package in three decades the republican party vows to push through a bill before the end of the year and that message reverberated through wall street today the dow jones industrial average gained point seven one percent closing at twenty three thousand three hundred twenty eight the s. and p. five hundred index rose point five one percent to close it two thousand five hundred seventy five and forty nine cents. and strong reaction to a key piece of anticipated reform put forward by the white house a fifteen percent cut in corporate tax this takes it from thirty five percent all the way down to twenty percent. and it paves the way for the first overhaul in three decades as i mentioned come questions now whether the ruling party on the
hell can get it done the devil is in the details here to answer that is conservative t.v. and radio host steve malzberg we've got to go to you and ask can the republicans actually pull this off. i love the numbers from wall street the trump bump continue and no no and inside look what they did yesterday in the senate they actually you know coalesce around each other as a party the only no vote was rand paul who didn't like many things including the fact that they increased defense spending in the budget but this vote now enables them to pass tax reform as you said with fifty one votes to reconciliation and they also had an amendment in there which is very important originally we thought the senate would pass their budget the house already did and they'd have to go to committee and come up with a budget know now the house could vote on this senate bill and they plan to do so in the near future the question is first and foremost will this budget pass because
you have a lot of you know conservatives who are very very strict when it comes to increasing the budget this this in and increasing the deficit in this increases the deficit by one point five trillion dollars over ten years so that step number one getting this budget through and then going back and working on tax reform and we've talked about the problems we talked about how republicans from states like california new york where property taxes very very high their constituents would lose the right along with everybody else in the country to deduct their property tax and state local taxes. from their income taxes now it seems like they're backing off that so we still haven't seen a five final finished product and we don't know what it's going to contain we had a lot of trial balloons over the past few weeks but we don't know when push comes to shove what exactly is going to be in there and let's talk about one of the
problems you pointed out senator rand paul from kentucky the final vote fifty one forty nine he contributed to that he's a deficit hawk. what do you what do you think about him and the problems he may pose for the party with tax reform yeah well you know it's again it's not just him . john mccain was happy with this budget but that doesn't mean that john mccain is going to vote for tax reform he might still love to stick it to donald trump and i don't put that past him susan collins might find something wrong and when push comes to shove and the bill is in its final you know piece of legislation so you're going to have people in the senate where every single republican vote counts as you alluded to and in the house you know what will the the financial conservatives the the deficit hawks what will they say when they see it see that this is not going to be deficit neutral that it will add to the deficit over ten years a trillion and a half dollars and what will that i said certain people who lose certain deductions
that affects their constituents what will they do i mean this is all the unknown but i'd like to believe that for once under donald trump they will say we have to get this done nothing is perfect let's do it right actually getting something finished let's talk though about this tax reform these brackets paul ryan says they're going to go ahead with nearly forty percent tax for a fourth tax bracket for the highest earners is that going to gain them some traction. i mean they're not going to get a democratic vote period so i don't see how that's going to gain him traction you're penalizing the wealthy i mean i don't understand the whole concept i really don't i think they're trying to be like they're trying to say look at us we're going against the rich like us the media will never like you the left will never like you don't alienate your base don't alienate the supporters i don't see the purpose and it's an airplane trouble for bringing it up and saying i'll go along
with that if congress passes that i just think it's a ridiculous feature of the bill do you think that there's anything the president can do that's going to really gum up the works on congress getting this done on the g.o.p. really hitting a home run as i mentioned earlier you mean going up the works getting in the way of it. no i mean what no i mean the people that he sold so lashes back at after they lash out at him he's done that we know what the problem people are in the senate the house they're sincere they're in their heart they have their principles but it's time for the republicans to get this done and have a landmark piece of legislation that everybody will like but get rid of punishing the rich that's ridiculous thank you so much for your time and your input on this conservative t.v. and radio host steve malzberg thank you thank you. it's been a tricky week for gold it had a two week low following the senate passage i think budget framework it's resting
now in one thousand two hundred eighty and fifty cents the lowest since october sixth where do we go from here question the man to tell us peter schiff c.e.o. of euro pacific capital joins us now. look at a bit wobbly not looking too good going into the weekend it was suggested that donald trump may be favoring economist john taylor for the federal reserve chair i bring that up because some people say that might have a you know indicate some bad things for the price of gold moving forward. well first of all i doubt that but taylor's a long shot i think there was some rumors because trump had a favorable meeting supposedly with taylor but i don't think donald trump would take a chance on someone like taylor i think he wants somebody who's going to be more of a team player who's going to be more actively involved in helping to prop up the stock market especially now that donald trump has basically attached his presidency to the fate of the stock market so he's not going to take a chance on
a wild card where rates might go up you want someone to keep rates down that's willing to do another round of quantitative easing of that's what it takes and so i don't think john taylor says guy. let's talk about economist harry dent saying that we could see falling prices as low as seven hundred big companies like goldman sachs will still prefer he would maintain a positive or a negative outlook on gold prices in the near future based on what we seen from october sixth now. you know well harry's been a bear on goal for a long time and you know actually seven hundred is a higher target i mean for a while you had a target of two or three hundred so you had to adjust that upwards but you know i think i think kerry's wrong i think you know there are a lot of things that harry says that i agree with but his price target on gold is not one of them i think he has too much confidence in the u.s. dollar and doesn't really understand the nature of money and the fact that of all the things that harry believes are going to happen happen that that is very bearish
for the dollar because the federal reserve is going to print a lot of money he's looking for massive deflation but i don't think the fed is going to allow that to happen they have the ability to stop that by printing money and that's exactly what they're going to do you know early before i got on you were talking about these tax cuts and one of the reasons that gold has gone down a little bit recently is the markets are anticipating the tax cut and that's also been a positive for the dollar but what traders don't seem to understand is these tax cuts are very bearish for the dollar and they are bullish for gold because all that's happening is the government will be replacing tax revenue with debt right so we're not cutting the size of government government's going to keep getting bigger and bigger and bigger but what we're going to do is pay for that bigger government by issuing more debt and that means more money printing it means more inflation and ultimately that's a lot more expensive it's more expensive than pay for government by borrowing then
by taxing and so this is going to be a big negative for the dollar because we're debasing the dollar in order to cut taxes so ultimately this is going to be a by the rule. or sell the fact if we get these tax cuts the dollar is going down not up and gold is going to go way up not down let's say we face these fed rate hike in december like a lot of people are talking about to do you see the dollar gaining strength on that . not really i mean the fed has been raising rates since december of two thousand and fifteen and the dollar is lower today than it was then gold is higher now than it was then so it was the anticipation of rate hikes that helped the dollar by the time they actually started hiking rates the dollar was going the other way and i think the same thing is going to happen this time i think the dollar has caught a bit on the interest of patient of another hike but i think if we get one they're going to sell the fact and the dollar down friend i think is firmly in place i think you had tremendous dollar bullishness when the year began the trade was very
crowded and very wrong and i think this is the beginning of this is the first year of what is going to be a major major dollar bear market that is going to take the dollar to new all time record lows and in the process and gold to do all time record highs peter schiff c.e.o. of euro pacific capital thank you. thank you. time now for a quick break but stick around because when we return we've got another and take trust case related to a giant automaker in the european union and clearing houses are they a danger to the financial health of the united states president trunks director of the national economic council says yes my guest says you know as we go to break here are the numbers of the closing down.
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this is big business against health. as it started. old. master card and green lighted the use of its in-house blog chain technology and its business to business base to address beauty transparency and cost challenges in cross border payments the transactions one have to run through several foreign banks so cutting out the middleman means cutting out those fees master card has invested in digital currency which builds and seeds block chain technology and currency for tech related companies nasser card may have filed thirty five patents in block chain but of fortune five hundred companies facilitating block chain
payments mastercard arrived on the scene second i. by days the south pacific is its focus as it handles payments over its proprietary block chain between banks but there is a difference i.b.m. uses a virtual currency called lumines to transmit money master card except payments in traditional local money. and carry cone president trumps director of the national economic council says clearing houses could be a systemic risk these clearing houses were told reserves to ensure that all traders remain solvent even if there's a failure of several traders have been growing as volumes have increase. coming says that clearing houses have probably expanded beyond the limits of their useful existence i asked the man who wrote many of the clearing house rules former us trade and commissioner art shelton for his take on whether khan has a point about clearing houses being the new systemic risk i don't think so lindsay i mean these things have existed for decades and and the clearing houses again i
mean you described it but there are intermediaries so you get traders on both sides and if somebody loses a bet then you want to make sure that that person pays up if the that that person about energy goes bust then the clearing house holds enough reserve to ensure that everybody on the other side of the bus traders position is paid it's worked pretty well over the years and my old agency and i talk with them all the time you know they say the clearing houses are strong and robust and serving a useful mission we as you noted i wrote some of the new trading house rules clearing house rules rather as a result of dodd frank and we ensured that the margin that is the amount of money that's held back in these reserves was really robust and in fact it's it's a higher level of margin than any of the clearing houses anyplace else in the world you know they hold three four five billion dollars
a day these clearing houses to ensure that there is an adequate reserve so i don't think he has a point it was really curious actually that he talked about this well we have to talk about the treasury earlier this month we've got a report out saying that you know they need to call for a greater regulations of the clearing houses and then given the centralization of the risk that was cited as a reason are there more regulations that are needed in this area are we kind of going to go with your opinion on this is like puts me in such a weird space because i'm a guy that's thought that regulations are needed over the years and here we have you know a guy that. working for the president who wants to repeal dodd frank and part of the treasury port says just in this once place that clearing house regulations are needed more but no i don't think they're needed so mark this day in history you know bart chilton said more regulations are not needed in this area i mean there
are probably some things they can do to fine tune whether or not they need things going forward i've said before that these all need to be living breathing rules and you know people need to look at what's happening and look around the corner in the future but. i don't think more regulations are needed for clearing houses lindsay ok well let's talk about dodd frank. required federal reserve to do these stress tests for certain financial and it is are there similar types of stress tests for clearing houses well there are a good question not a lot of people know everybody knows about these systemically important financial institutions the cities they call them and those cities are the large investment banks and a couple of insurance companies remember it was a big problem over with in the financial crisis so they are required to do these stress tests and there are clearing house stress tests we call them something else we call them resolution and recovery test and they're done all the time i mean they
they they do big test they did too in the last couple years but our regulations and the old our as as a society seaguy required that those are up to date every single day and so there are stress tests for clearing houses they have gotten larger so i understand that people are saying hey they're pretty big but i don't know what the alternative is you know some of these large investment banks were they don't necessarily like the fact that all of their money is being held back in margin they think hey we're strong enough by ourselves and you. the loneliness alone let us take on the risk ourselves we're a big bank and so they don't like the clearing houses right to some extent so maybe that's where mr cohen is coming from but sort of miffed me quite ok what would you you say it's pretty clear cut that they're valuable for the financial system we need them why is gary come say in that they could be such
a risk which have outlived which of outlived their usefulness i mean you know we were coming from what's his reasoning behind i've been really turning it off to us i've been trying to think about this for the last several days lindsay and i can't get into the fellow's head. so let me say what the best i could come up with. and before i say it let me just i'm really glad he's there i think he's one of the super sane guys and he's needed for the financial system you know took a big salary cut to go into government and so you know kudos to him and i am glad that he is in the administration doing what he's going to do that said back in the day when he was c.e.o. of a large investment bank goldman sachs two thousand six seven eight i sure wish he would have told us then that there's a big problem with the investment banks taking all these enormous risks on exotic over the counter to right like credit default swaps. so and if you had checked with
my former agency to see f.t.c. he would have told them no don't go there that's you know everything's fine there but i think what happened this took place he's on a panel at one of these association meeting and you're looking for something to say you know been there done that and he starts talking about systemic risk because that's what you know federal reserve chair's do and he's being considered for that he said no well you would think no it remains to be seeing alien air but anyway the bottom line is i think it was just an off the cuff comment i think was a little cavalier i hope that you know some of the president a little cavalier i hope is a little cavalier and maybe none of the president's shoot from the hip style is rubbing off on mr cohen i don't think you know i think this is a one off i think he'll check with the agency and realize that everything's fine on the clearing houses but it was a little bit worrisome and maybe there's something to do with the fed chair thing in the back how little of it on this who knows it also coincides with president
trump possibly interviewing janet yellen for the fed chair job there's been a lot of talk about in recent months about will he won't he will she won't she her term expires as we know in february if you're a betting man what do you think what would you bet on her taking it her even receiving the offer well new guy gary condit like mr cone. i think chair yellen has done a really good job but she has the distinction which i think the president trump doesn't like of being an obama person and he seems to like you dislike anything anything. and so i think that's a negative for her and she has said that regulations that existing regulations are important so look if tax reform were to somehow miraculously pass this year you know what i think about that not and now we would if we did gary cohen could write his own ticket and be the fed chair i think so we'll have to see but i think it's probably either going to go to gary cohn or somebody else even though my personal
preference is that you know and it stays there because i think she's been doing a great job with monetary policy over the years i think probably there's not going to be a lot of love from the president given where from what she came and it's true and last tax reform goes through kerik on pulls a rabbit out of a hat and then as you said right on take at look we know you're going to hong kong next week keynote speech for the fed tech convention their big issues right now we've talked about it a ton on the show can't wait to hear that of course we'll be talking to you from hong kong thank you so much for coming in on this former u.s. attorney commissioner thanks. ever since news of volkswagens diesel scandal broke germany's auto industry has been struggling to get back to normal and it looks like getting there could become even more difficult. for she has more on that for us on friday the legislative body revealed that it's looking into yet another antitrust case in the automotive industry in a press release the european commission said it recently conducted in unannounced
inspection at an unnamed car manufacturer in germany officials said the inspection is related to commission concerns that several german car manufacturers have violated antitrust rules that prohibit cartels and were stripped of business practices commissions said the inspections. a preliminary step in that there is no deadline to complete the inquiry as of now the press release didn't name names but b.m.w. confirmed its munich headquarters were raided and knowledge on friday that itself reported to the commission and applied for leniency this comes three months after a report in germany's der spiegel magazine that alleged collusion between b.m.w. dimler volkswagen porsche and the report suggested all five auto companies colluded on prices suppliers and strategy since the one nine hundred ninety s. if it's true it could be the biggest antitrust case in the history it could also cost the automakers
a lot in penalties following the diesel date scandal in two thousand and fifteen volkswagen paid tens of billions of euros in fines globally but also profits dropped nearly twenty percent and was sued dozens of times this time around we can see that happen simultaneously to all of them except for as long as they cooperate with you investigators. as long as it cooperates that means i'm in the clear that i mean as of now that's what it looks like because the e.u. has a leniency program that allows companies to dodge fines if they are the first to report on whatever illegal activities and. yes all right there's the snitch so they're fine which is funny because volkswagen tried to beat them to it but dialer got to you authorities first that's why we're so agonise yet again in another very scandalous problem but again it doesn't fully protect them from everything if you look at what happened to volkswagen in twenty fifteen they had billions and fines which were terrible but on top of that they also had to pay out of pocket to
replace all of the cheat devices in the cars to pay for legal fees they were sued of course and then their revenue dropped their profits drop stock prices and everything so it certainly doesn't protect them from everything and right now the investigation looks to be in the very early stages so right now john wilkes fine because they were the one that reported this but for all we know a loophole could pop up and they might have to pay something have they actually spoken publicly or issued any real information for us they have not so the only people that have spoken publicly are dying learned b.m.w. because they acknowledge that there are there were investigated or they were the ones to report this obviously i think a lot of people are eager to hear what volkswagen has to say since they have a very extensive background in car scandals but just earlier this week on thursday they volkswagen was in the news for another reason because their c.e.o. took a shot at tesla for all of the recent layoffs that they've had this c.e.o.
was saying you know this is a company you thought it could step to test because of massive layoffs in the light of what volkswagen i think many of you were trying to shift the attention to that many. but he took a shot at tesla because obviously tesla promotes itself as a very socially responsible. and he's saying well how are you socially responsible if you're laying off tons of people and it was not making any money yeah. maybe we'll hear more from next maybe sometime next week thank you so much from bust down to fishing. thanks for watching be sure to catch us on directv united states you can find us on the r t three two one if you miss us on directv on youtube youtube dot com. thanks for watching see you next time.
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