tv Documentary RT January 7, 2014 4:30pm-5:01pm EST
doesn't the us. hello there i marinate and this is boom bust here are some of the stories we're tracking for you today. first up the winkle vi brothers enter the world of microcap trading with their new hedge good hedge fund scuse me briarwood chase and management now does this mean that they're ballin out of the big one race i'll tell you it come in a break up and also jim hamilton he's going to try and join me later on the show we think we have him will find out soon enough he's coming from san diego to talk about oil economy and the first lady of the fed janet yellen hopefully we'll get back to you and finally branding it's a powerful powerful marketing tool but why do so many companies get it so so wrong rachel corrie's is and i discuss this in today's that big deal it's also coming up it all starts right now.
the winds of also twins cameron and tyler are making headlines this week the thirty two year old twin brothers who are well versed in the world of big coin last summer they launched a file to launch an exchange traded fund that will track the price of decline but for now they're back in a new hedge fund called briarwood chase management now the fund is slated to be run by a friend and fellow harvard graduate and will focus mainly on global microcap stocks or those with a market capitalization between fifty and three hundred million dollars now this investment marks the winklevoss is entry into more traditional world of wall street
the briarwood fund will be the first hedge fund investment of the paris family office. capital. elsewhere jury selection will begin tuesday in the insider trading case against mathew martoma a former portfolio manager at steve cohen's s.t.c. capital now mark thomas accused of passing insider information to see founder steve cohen about clinical trials for an all time drug which ultimately earned the firm two hundred seventy six million dollars back in two thousand and eight. to chevy now it's the latest in a string of cases against sac which last year pleaded guilty to federal insider trading charges were turned outside investor money and became a family office what's interesting though about tuesday's trial is that more thomas lawyers attempted to ban the use of the word green to during the trial sally martoma it didn't work for him and prosecutors can use the term green was fired by mr cohen in two thousand and ten however cohen is currently paying mark thomas
legal fees and martoma has not implicated steve cohen on any charges. and finally she is in janet yellen was confirmed on monday as the first woman of the central bank's one hundred year history to serve as head of the federal reserve now yellen will take over for ben bernanke on february first and share her first meeting in mid march the biggest challenge facing both yellen and the central bank will be scaling back the fed's seventy five billion dollars a month stimulus program. well there you have it as always we'll be tracking these stories and keeping you posted on all the latest. were ever know about that now we've seen an unprecedented expansion in the monetary base over the past decade and this phenomenon is not just limited to the u.s. canada south africa japan they've all facilitated extraordinary expansions of their money expansions of their monetary base leading some to call this
a competitive debasement of currency now in two thousand and ten we don't month brazil's financed. minister famously procrit proclaimed quote we're in the midst of an international currency war general weakening of currency that was three years ago so where are we now i spoke with james record and asked if we have passed the point of no return take a look. we may be past the point of no return although it takes a while for the consequences to play out it's a very good point we're in uncharted waters in some ways certainly quantitative easing is a massive experiment we're all just you know consumers and everyday americans and people around the world are just guinea pigs of a fact and essential bearing experiment so there really is no precedent for that there is a precedent for money printing and currency wars those have happened several times before and talk about this in my book currency wars there was a current who are from one thousand twenty one to the one nine hundred thirty six and another one from one nine hundred sixty seven to one nine hundred eighty seven the point is we're not always in a currency war but when we are they can last for
a very long period of time years sometimes decades so this present parents who were there when started in two thousand and ten still going on it's actually a new round today where in the past few days we've seen the e.c.b. and czechoslovakia explained the czech republic explicitly cutting rates to cheap in the currency we saw this last year in japan we saw it in two thousand and twelve with results was going on around the world i expect this will continue for years so that competitive devaluation scenario is continuing by the way countries think they're going to prove exports that's not how you improve exports you improve exports with you know technology innovation education good business climate low taxes value added there a lot of ways to promote exports but you've been in your currency is not one of them all chipping in the currency does it get inflation but that's the point the reason central banks are cheapening the currency they tell the politicians the central bankers say is to promote exports for that's not true the real reason is to import inflation in the form of higher import prices you know the us is
a net importer we import more than we export japan imports may. amounts of energy so for them a cheap currency means higher import prices that means inflation that's what the central banks really want now you previously said that you expected the fed to taper in september or never but i kind of like that rhyme right there but meaning september was burned actually the last chance to start winding down this third round of q.e. do you still believe this or do you see the possibility of yellen implementing a taper anytime soon. now i mean by the way what i what i said when i said september never ice i said all summer that the fed would not taper but if they were going to taper september is there a way of chance but no i did not expect tapering at all and i still don't as a matter of fact because you know in may when bernanke you start talking about this he said we're going to taper you know is reduce our support says before the end of the year if the economy performs in accordance with our forecast the markets focused on the first part which was the tapering part but they ignored the second
part which was the forecast the fed has the worst forecasting record of any major institution i can think of so when they said we expect the economy to get better my assumption was it would actually get worse which it did because of the say the forecasting is always wrong so my expectation was that they would not taper now they were in december i don't i don't see the i don't see the conditions under which they could possibly taper absent structural changes were in a depression if the fed were to taper i don't expect it but if they did they would be tapering into weakness they would guarantee a recession in two thousand and fourteen and i think the data will bear that out they're not going to taper they painted themselves into a corner and where there are no good ways out if they taper they're going to taper into weakness and cause a recession that's where i don't expect it but if they keep printing eventually they'll destroy confidence in the dollar and create international monetary crisis so there are bad outcomes either way but this is what happens when you manipulate markets you paint yourself into a corner where there are no good ways out now this is actually perfect the way you
set this up because it leads to my next question there were a couple of papers presented last week by. federal open market committee economists and they suggested that the unemployment threshold which currently is that six point five percent be moved down to five point five or five point five percent scuse me and this could suggest keeping rates low through two thousand and seventeen now like you kind of mentioned before is this just the fed testing waters here are how long can they delay the inevitable taper like you said we're in a depression how long can they wait before they take very. well couple things on the on that paper i mean the fed always speaks in code when they say you know we're lowering unemployment the unemployment target from six and a half to five and a half by the way if we go back to december two thousand and twelve i'm sorry december two thousand and. december two thousand and twelve when the fed first announced that target it was never a trigger it was always a threshold in other words they didn't say we will raise interest rates went on a plan i guess a six and a half percent they said we won't raise interest rates until it gets to six and
a half percent but it could get a lot lower than that before we've raised in this paper this confirms the same five and a half but the point is unemployment is going down for the wrong reasons unemployment is not going down because we're create a lot creating a lot of jobs it's going down because labor force participation is collapsing that's extremely negative for the economy g.d.p. is really just the sum of labor force participation plus productivity so how many people are working how productive are they that's all there is there's nothing else to the economy and the number of people shrinking at a president rate going back to levels last seen i think in one thousand nine hundred eighty eight and that that's when women were you know entering the workforce in very large numbers of so we were we've gone backwards in time to a time when women did not participate in the workforce to the extent they do today so our labor pool was in fact dropping that's extremely negative for the economy what the paper really says is that they've given up on real growth and they're targeting nominal growth and inflation this is just nominal g.d.p.
targeting by another name and if we're growth isn't good enough and you have to get nominal growth to a certain level you make up the difference with inflation. that's what the paper really says let's bring on the inflation to do that it is going to print money and so that's what yellen the still laying you all of that by the way is in the paper is completely in accord with her views as expressed in prior speeches and papers and other interviews she's given so i just think they'll keep reading at the level actually i expect the next change in policy will not be tapering it will be an increase announce a purchase as. well there you have it time now for a quick break but when we come back jim hamilton is going to join me to talk about the fed and janet yellen confirmation plus rachel currently is joins me to discuss the power of branding and today's big deal you won't want to miss that stage and.
monday jenny yellen was approved by a senate vote of fifty six to twenty six and now she serves as the new chairwoman of the u.s. central bank many senators were unable to make it to the vote due to bad weather including elizabeth warren who would have voted yes for yellen as well however many challenges lie ahead for the federal reserve as it begins to wind down its massive asset purchase program here to talk fed and far more is jim hamilton so glad we can get you he's cut coming to us from san diego and it's an economics professor at the university of california san diego welcome jim now before we get into the fed i
want to ask you about the economists now most economists are pretty upbeat twenty fourteen and i want to know your opinion what do you think twenty fourteen is going to look like. you know i'm with the majority on that i think it's going to be a better year than twenty thirty certainly g.d.p. growth above three percent which historically is not that great but compared to what we've been seeing the last several years i think we're in for a little bit of improvement on most of the indicators for this coming year. now which is they haven't increased significantly and unemployment benefits are now being cut where is the consumer demand going to go from here. consumer demand has been strong but i think the real growth is going to come from the housing sector continuing to recover i think we'll see stronger housing investment . sales are going to continue strong our export situation it's been improving we're exporting more importing less that means that that positive contribution to g.d.p.
and also the fiscal drag both at the federal level and the state and local levels that we've been seeing for several years i think is going to be less of a drag on the economy for twenty fourteen so it's not so much we have to count on the consumer to pull the whole load for the coming year. i think all the other fundamentals are in place for a little better performance than we've seen last year now jim you mentioned that we have strong on that net exports right now what specifically are we export. well the key there is petroleum we're importing fewer barrels of oil and we're exporting refined petroleum products and in addition the energy improvements in the u.s. economy over the last several years have been a big help to manufacturing lowering costs for variety of manufactured goods we're also doing well with natural gas a few years ago we were thinking of importing that and we're probably going to move to an exporter of natural gas shortly so. that's the biggest story we've had
more success than anybody else the world really in the energy front of the united states and that's going to help our bottom line now i want to i want to come back to energy and a little bit but first let's let's return to fed policy i want to ask you how does that policy play into the economy and consumer demand. i think if it has been a little overrated everybody watches their every word and they're trying to do what they can but the real momentum i'm talking about isn't coming from anything the fed has done they've promised to keep interest rates very low for a number of years ok but interest rates have a really bad the limiting factor on much of spend big and as far as the large scale asset purchases go that maybe is holding down the yields a little bit on the longer end of the yield curve i don't think it's been that huge an effect so the fed has been trying to provide a little stimulus and they have been providing some but i think the main story is
really elsewhere now back in july when it was still unclear who president obama would select to succeed ben bernanke u.s. fed chair you wrote the following in support of now chairman janet yellen here and i read this quote yellen is one of the people i would trust most to be able to sort out with. key problems are and what needs to be done in any new situation and i think her track record supports that conclusion i want to ask you jim do you still feel this way. boy absolutely i think she's clearly the best person for the job delighted she's going to be taking over the helm she's very intelligent has a very good understanding of what's going on with the economy has as i mentioned in that quote one of the best records of anybody within the fed of accurately predicting what's going to happen there were some caricaturists of her that were part of the politics and that is politics that's the way things go but i think anybody who bought into some of that is going to be pleasantly surprised when they
see governor yellen now chair yellen in operation she has a very direct and straightforward way of expressing yourself a whole lot of common sense i think she's going to connect with main street and with wall street and it will be a better communicator really thin either greenspan or bernanke you were able to be now what do you think are some of the bigger problems that yellen will have to face in twenty fourteen. well hopefully as we said earlier twenty fourteen is going to be a little bit better year and assuming that unfolds the fed is going to step back from the large scale up asset purchases that they've been conducting they've started that process i expect them to cut back another five or ten billion dollars of purchases maybe every. meeting or so by the end of the year i think they will have stabilized their balance sheet. so that's in the cards that's assuming that the
economy does improve a bit is high and many others are anticipating. but that's that's more or less what the fed has already communicated they're going to do. i think that's not is as tricky a process as many people thought there was some excitement in markets last june when the fed first. talked about this but i think the fed has now done a good job of separating its asset purchase program from the decision it's going to make on short term interest rates that the fed under yellen or anybody else is not going to be raising the overnight rate anytime soon and so i think markets got in the sense of that now and i think it should be a fairly stable process for the fed to gradually wind down its asset purchase program now is yellen or someone who means towards policy accommodation. well that's part of the caricature of that i think is a reasonable yes she's been a dovish member of the f o c for the last several years but that's turned out to be
the correct position this inflation that some people warned us about were scared was right around the corner that hasn't come at all we've had the lowest inflation rate in years and the so-called doves were the ones who were saying that was the likely outcome they turned out to be right but what i want to emphasize is that if you put that description on her that label as she was dovish for the last few years that doesn't mean she's always going to have that mindset no matter what happens i'm quite convinced that if we do see an increase in inflation above the fed's long term target that yellen will be one of the very first people to recognize that change and take a propre to actions in response ok now jim i want to take a turn now to energy and oil specifically like you mentioned before even more specifically fracking now what type of impact is fracking having on the oil industry today. well it's been a huge story so just earlier this year the a was forecasting that we might
eventually get two point eight million barrels a day in the united states from the fracking of the title formations and now they've upped that to four point eight million which is a big deal where we're seeing u.s. production go back up to levels that we. we haven't seen in decades and it's also a big story because that's really pretty much the one success story anywhere in the world we've increased production of oil in the us with fracking they've increased production in canada from the oil sands but everywhere else in the world when you add it all together there's been no increase in production of oil. crude production field oil. since two thousand and five all of the increase globally has come from the u.s. and canada and that hasn't been enough of an increase to satisfy the growing demand from places like china so what's been happening is that even as we increase
production here we're also decreasing consumption of oil in the united states basically being out bid for the product internationally now and if it hadn't been for that added production from north america we'd really be in a much tighter oil market situation today than we are now how much oil are we talking about in terms of actual consumption can you give me a figure in a daily or a year we use. so as i say the forecasts now of the day and they may be wrong is that will eventually get up to under five million barrels a day of oil being produced from. from the us from the title formations before that starts his decline after about twenty twenty or twenty twenty one so that's a significant part of the total u.s. production as i say it's more than all of the increase it u.s. production over the last five years has come from this new source if it hadn't been
for that our production would be down rather than up but the reason it hasn't brought any relief to consumers in terms of prices so far is that as i say well we've been increasing production the rest of the world has been increasing their consumption no net left over for us where it really shows. in the lower net imports of oil for the united states that is a benefit to the economy but it's not meaning lower prices and another reason it doesn't translate into lower prices is because this is a very expensive technology we like to think of technological improvements as a better way to do things with fracking is not a better way to get oil it's very expensive the companies doing it are not making huge profits and if we had a better cheaper way to get oil we'd certainly be using it in some ways were scraping the bottom of the barrel to be going with these methods very costly but it is something at this price of oil that makes sense and this helping us get by now
the oil provided by fracking seems to have debunked the theory of peak oil which says we will reach an oil production limit fairly soon do you believe this to be true. production is going to continue to increase for several years and fracking is the main reason for that i think that expression peak oil has been associated with different things to different people's minds some people interpret it the way you did that we're just about to lose production and there's nothing anybody can do about it i think there's another sense in which some people use the word which is that this is ultimately inexhaustible resource you take the oil out of the ground and burn it it's gone and you've got to find some more oil somewhere else and there are limits to what you could do with that certainly there are limits to the cheap and easy or a loop we're counting on for the first hundred years of the industry that's gone today we're looking for oil. under the ocean miles through rock after that
we're trying to get oil out of this fracking process going increasingly with. other expensive sources biofuels and. to the extent that that's the case i think you could say that peak oil was right where even even with the success i do not expect the us ever to get back to the levels of total field production that we had nine hundred seventy now if you do add in. natural gas leak would say yeah the biofuels maybe you get an increase but but the. field production probably peaked for good in the united states in one nine hundred seventy i'm so sorry that i have to cut you off for running out of time but we thank you for your insight and taking the time to join us from san diego that was jim hamilton professor of economics at the university of california san diego time now for today's big deal.
rachel curtis she joins me now to talk about brandy's and that doesn't just mean a logo that a company uses not anymore that's for sure or at least that's what author steve mccurry argues in his new book power branding leveraging the success of the world's best friends now sure fonts and colors are helpful but it's more than that mickey writes in bloomberg business week quote britain includes everything a company does from the logo on its letterhead to what it handles the way it candles customer complaints to whether it's uniformed you know uniformed personnel keep their shirts tucked and wow what to do. so first and foremost i want to ask you what do you talk to insurance have to do with this yes so it's part of the company's reputation is with key argues it's everything that a customer gets
a sense of when they're interacting with a company so that could be as we're talking about a logo you know how they feel when they look at what how a company presents itself but it could also be how they interact with the company's employees so whether that means how they're talking to somebody working there or how that person is dressed all of that plays into a fact that a company like we just saw a target there now we have. yes so those are. yes those are those are the physical brands but for something like target the fact that it's successful means you don't even need to say target or need you see that the bulls are right and you immediately think target you'll notice in their commercials they won't even say target underneath it will just have that bulls eye when i first got to augur don't even know what breed the dog is but the target dog you know you have that little guy with a target well anyway moving right along effective areas not. going to target target no what are some other examples of how brands can get hurt beyond
just their logo so google for instance google is a company that was very effective in the sense that it actually branded a word accidentally if used to of i tell you. well that branagh google that dog or something like that that means go to a search engine and search for that dog so they so that's accessible but something unsuccessful the google did was their brand was damaged potentially irreparably by those n.s.a. leaks that came out so that's something that's going to affect their brand and their bottom line negatively moving forward so the way not only they interact with customers but also governments and the press it's crazy governments got to work on their brand and particularly and i know you very well as always that's all over now but you can see all segments featured in today's show on you tube or you tube dot com slash boom bust archie we also love hearing from you so please check out our facebook page at facebook dot com slash boom bust r t from all of us here boom bust thank you for watching a c n x time but i.
got a quote for you. it's pretty tough. if they were it's not a story. it's just this guy like me are about guns that are working for the people most missions the beach. ritual bridegrooms days. of the world. for three to. take a bus back to slow motion housing time bomb ticks away of the british economy over which george osborne presides he says twenty fourteen will be a year of hard truths the hardest of all being that many must live so that the few
marginal seat voters he needs may win at the property roulette wheel so the hard truth for twenty fourteen is that in the boom bust. property market never must supply meet demand for those. market products and you know so very radical right now to get the job they no jobs get a loan because if you don't get the government back the scheme will face a year of bourne's hard last thirty troops.
coming up on r t battle and pollution iraqi government forces continue to battle against al qaeda militants taking over two strategic cities in the country secretary kerry says no troops will be sent but we'll tell you how the u.s. plans to get involved just ahead and in chicago the battle over gun control rages on a federal judge has just overturned key legislation banning the sale and transfer of guns within city limits but what does this mean for a city with high crime we'll take a look at that debate coming up and cruising down the highway of life the american public has long had a love affair with the automobile buckle up later in the show our team will take you for a spin in the cars of the future.