tv Breaking the Set RT January 16, 2014 11:30pm-12:01am EST
a no holds barred look at the global financial headlines tune into kinds a report on our g. . pattern though there i marinate it this is boom bust and these are the stories that we're tracking for you today. first up dr james go over the joins me on today's show to talk about predators states which also happens to be the title of his new book then outspoken british politician nigel kharaj gives the prime minister and tennis a mars a proverbial smack you won't want to miss that's pretty funny and in today's big deal at harrison and i talk mismanagement misuse and abuse of government funds well some enough and it all starts right now.
british politician and the u.k. independence party leader nigel for raj has never been called a wallflower and in a strongly worded speech to the european parliament on wednesday kharaj made his views on the president greek prime minister and tennis and maurice x. but with that only clear take a look. around him is to stop sabras and you tell us that you represent the sovereign will of the greek people well i'm sorry but you're not in charge of greece i suggest you remain even rebrand your policy it's called mutual for see i suggest you call it the democracy because greece is now full run contro you can't make any decisions you've been bailed out. but you should read good chrissy the
thing you'll cover three invented in the first place. who now during the diatribe we argued that people don't want a united states of europe but a europe of sovereign states treaties and working together for ours also says the european elections would mark a watershed in the battle for national democracy. elsewhere some economists are predicting an approaching oil glut which they say may push the global economy into deflation georgia bank estimates that crude oil is now the most richly priced commodity in the world america is on track to overtake saudi arabia as the top of global producer of oil by two thousand and sixteen and this year the u.s. accounts for more than half of the world's non opec oil supply us shell will add one million barrels a day to the global supply while libya will also improve shipments and now with iran coming out of hibernation some believe this will push opec standby capacity to
levels not seen since the depths of the financial crisis in two thousand and nine the u.s. energy department says u.s. oil imports will drop five point five million barrels by next year turning the world's eighty nine million barrel a day market said now those bullish on oil say that the global economic recovery is strong enough to soak up rising supplies. and finally federal federal regulators are already easy off the gas on the vocal role this american bankers association threatened to sue federal regulators say that they will now allow smaller banks to hold certain c.e.o.'s of trust preferred securities the a.b.a. said the provision would have forced two hundred seventy five smaller banks to take a six hundred million dollars hit to capital that change would apply to any bank with assets under fifteen billion dollars. well there you have it as always we'll be tracking these headlines and keeping you posted on. all the latest.
professor golf refuges economics at the university of texas is the son of john galt birth author of the great crash of one nine hundred twenty nine and a must read for economic historians now when we last spoke to james galbraith in november our interview sparked huge interest but also huge questions questions about national solvency and sovereign defaults so when and how exactly did national solvency become an issue earlier today i spoke with dr gahl birth about the national solvency issue and about his book at the predator state i started our conversation by asking him about money legal tender without any intrinsic value and i asked him where specifically money derived its value this is what he has. though i'm not aware of any significant economy that does anything else that it will or.
money is a part of generally speaking the national economic system so that it gets its authority from the. front from from the state from the promise that it is a legal tender that you could use it to retire any debts that you may have whether a private debt to another individual or company or or a debt to the state what you can use it to pay your taxes now is fear of monies position is the only legal tender within an economy important to maintaining its value as a medium of exchange. yes of course it's it is the foundation of that that it was central you know can you expand upon that a little. well if you oh oh. were not able to use your national currency to pay debts that were contracted in
a particular country and. there would be very good reason to go and hold somebody else's currency you might expect that. there would be a general flight for international currency into. into another countries and that would be that would cause problems does cause problems for countries where there is some doubt about either the stability of the currency or the willingness of the of the rest of the world to hold it that actually means well it's my next question what about money as a store of value now if citizens lose faith in government won't they turn away from state money as a store of value altogether and thus eroding the value of money. so it can happen sure it does happen it happens and and particularly in countries that are not all large economies of the world system because they have their citizens who have the option of take hold of their wealth in other in other countries assets and
so that is the system which tends to benefit the large and largest of wealthiest countries at the expense of some of the others now i'm going to read a passage from your book the predatory the predator state and now you're a quote a coalition of relentless opponents of the regulatory framework on which public purpose depends where the enterprises major lines of business compete with or encroach on the principal public function of the enduring new deal now i got to ask you would you explain this core to me. ok. the major argument of that book and the. case that i make in the. end that protectionist is twofold one is that. our economy is built around. the public institutions that were created in the twentieth century into big waves one of them in the new deal that was social security and other institutions like
the minimum wage and the fair labor standards act and a great many other things that gave us the modern american government and the second wave was in that ice and sixty's mainly under lyndon johnson when we began to get major elements of the health insurance medicare medicaid and a quite a number of other things. that we needed at that time and those institutions are often treated by economists as being. supporting structures peripheral if you like to the core function of the economy but i would argue that in the world in which we live. with time and security and health security basic public infrastructure all are central institutions of economic life they are they are fundamental to the way we function interact with each other and one of the things that we observe and what i call the predator state is that a lot of our politics turns on private entities who are
historically enemies of these institutions and who would like to see the rollback or who would like to see the redesigned so that particular private sector entities can make additional money out of them and one can see this in the way in which recent additions to the social structure social security system have been managed to an example of this is medicare part d. which came in in the bush administration which was a drug benefit itself a significant extension to the system of social protections but designed in a way that it made it very very lucrative to the big pharmaceutical companies that's just a nice example of how. the the what i call the predator state functions now why are we see this dynamic within the united states today. because we have the large public institutions and so they become a. a. target if you like an object of interest to
major political players think that's clear enough another big area of course is the military budget we obviously need to have. a. an adequate. national security system but there are all kinds of players here whose object is. who are at least conflicted and who are advocates of weapon systems which are they have no clear relationship to the actual security dates of the country so you see that image just see that in every and any country in which you have a large government sector and private players who are interacting with the government you're going to see that kind of dual interest and conflict of interest being. at play here how do you reconcile the predator state dynamic with calls for government activism and what i'm basically asking is once the predator states siphon off any
gains from government spending to special interests. well it doesn't siphon off all of them and it is given how small a number of the of the private sector players actually are. it may not size that off a very large fraction of the of a total flow of of benefits so again in the case of medicare part d. i don't doubt that the drug benefit was great value to a large part of the of the elderly population but as i say it was designed in such a way that part of that. bit excessive part of it was shared with with with big pharma so the answer is it's always going to be a mixed bag and the way you have to deal with it is to focus on how effectively these programs are run and how. how focused the benefits are on the population that really deserves to have them or. a really nice example of
this is proposals to privatized social security. social security is run the basic retirement benefit in the extremely efficient way by federal civil servants who were not very numerous not that highly paid to do a little an excellent job with the basic information management that's required if you put that in their heads if you put the funding of the management of the funds in private hands you would be paid off bad address of all kinds of people whose and couple levels are much much higher and you would be the basically move subtracting from the pool of benefits that would be available to the two. now we have to take a very very quick break but more when we return with dr james then in today's big deal i did harrison and i take on the matter of reckless and government spending and truly you will not believe we're some of your taxpayer dollars they're going through a truly you won't believe it it's kind of disgusting but as we head to
global economy with mike stronger for a no holds barred look at the global financial headlines tune into cars a report on our. plus i was a new alert animation scripts scare me a little bit. there is breaking news tonight and we are continuing to follow the breaking news. the alexander family cry tears of joy at great things out there that there had to be edible red dark and of course a wall around alive there's a story made for a movie is playing out in real life. please . look.
welcome back we now continue our conversation with university of texas professor dr james gall britt i asked dr gahl birth whether governments can be rendered in voluntarily insolvent. in their own currencies the risk that a government can run is that the rest of the world may not wish to hold their currency or their own nationals medo wish to hold it in which case you'll see depreciation and that means goods that report become more expensive that you run your experience that is some fleishman in the domestic economy so that's that's a risk that's a risk which is much more serious for small countries which are vulnerable to being
hit by runs by private investors that it is to a large country like the united states or britain and germany where fundamentally the players in the economy are going to continue to use the national currency and are going to continue to hold their wealth in assets denominated in that currency and so the stability of those currencies that may go up and down some but there it's not deeply at risk from a widespread financial panic now in greece society broke down under austerity and eventually government debt that was restructured is this something that the u.s. and the u.k. should here. the restructuring of the greek debt was absolutely essential. they added and indeed inadequate to the purpose of. providing some stability restoring some growth and to the greek economy. is there any risk that the united
states would have to do such a similar restructuring it actually impose a and or an involuntary haircut on the holders of united states treasury bonds no risk of that at all simply no reason to expect it could ever happen and the reason is that the greek government could not pay the interest principal repayments that were due on debts that were owed in the euro a currency that the greek government actually has to earn via taxation before. pay that interest the u.s. government. simply owes its interest in a currency that is the dollar which is as we've said is a fee at currency that the u.s. government itself controls so that all the congress has to do when the congress has done it always will do is order the treasury department to continue paying the interest of the treasury department watch the checks there is therefore no risk that you're going to suffer a capital loss measured in dollars from this very now is there a long term budget constraint first sovern currency issuers basically how long can
a sovereign government deficit spend before people we are spacing the currency and force to follow. and in a large country there is no way that they. that that is this that the public can force the government to default all the public can do is it is move its assets to an other unit that again leads to a depreciation so default is not a threat which is on the table for a large. sovereign currency issuers how long does it take before people lose faith in any significant numbers. in a country like the united states i think the answer to that is a very long time the united states can have and has run budget deficits for its entire history with half a dozen very short term exceptions it will continue to run
a budget deficit for the rest of its history. the budget deficit. at present levels is actually not increasing the ratio of debt to g.d.p. that stable ratio stable is probably clouding now so in the current school students of the united states government there are. no no reason to believe that the private investors are going to be leaving the dollar for other currencies for any reason they haven't done so yet there's there's no cause on the horizon we see no reason why. that was james goldberg economics professor at the university of texas texas at austin it's time now for today's big deal.
as always i'm joined by my doppelganger no not really want to know me yet harrison my favorite who's going to help me talk today about government misuse mismanagement and abuse of funds so let's get right to it now it's fair to say that no one particularly likes over use of government funds and for those who can understand him tolerate the occasional spending inefficiencies even they know that there must be a line drawn somewhere somewhere anywhere now the federal government is well aware of how wasteful it is and this is why each and every agency has an inspector general whose sole job his only job his or her only job is to investigate and identify a government with within the body that is supposed to investigate and identify waste well anyway we hear it groomed us we decided to investigate some of the more so don't need examples of government waste waste that ends up costing the
government views of you the taxpayer tens of billions of dollars a year now here are some of the worst offenses check these. now for certain office number five the employment and training administration failed to track down one hundred forty million dollars an overpaid government checks due to calculation errors just calculation errors you know like when you put in a calculator that seems like a silly mistake and now the army on the other hand they wasted almost three hundred forty million dollars maintaining the stryker vehicle contract this is despite having to rebuild over a thousand one thousand of those eight wheeled armored vehicles due to wear and tear so clearly they were built well first time whirling talking with no bs no reason that we're only going to be the rope will get to be zero don't you worry now the department of health and human services they could have saved two point seven b. billion. talking point seven billion if they simply took the time to look at how much medicaid and medicare should have been paying for wholesale prescription drugs oh
and let's not forget afghanistan boy oh boy where our government watchdog found almost two billion dollars in potential waste fraud and abuse now this includes the thirty four million dollar military facility built just last year that will be used and vacant building forty four million with nothing and finally and the most egregious and kind of embarrassing sent television however going to do it peanuts prompts a straight. from two thousand and six to two thousand and seven pissed because the us government one hundred seventy two million dollars for actually no be there one hundred seventy million dollars that's twice as much as the consumer would have paid a retail value. now to me need a loan for an inspector general is a mission that these bodies are set up to govern stink of government you know well you know i have to say we're going to we're never going to go back. to that wasn't
of behavior rather it. goes back to from my perspective to what james gall with was talking about in terms of the predator state it was interesting one of his questions that you. you asked him out isn't the. way of all these people who are trying to get their hands in on government money from the private sector isn't that going to mean anytime we spend money there's going to be ways he essentially said yes but you know we need to be able to come up with ways to spend that money in the most efficient efficacious way and that's part of the political process that was in russia and i thought that was actually a pretty good in its own this is a good answer but the question is clearly today as we see it penis pumps are taking one hundred seventy million and that's not working today no no not at all and you know the interesting bit about this illegal and a little bit of detail about the whole thing of medical device maker because this is a big deal here in d.c. with the government shutdown and part of the what people want to do was to repeal
the stats from obamacare that started in january on medical device makers now the medical device makers have their own lobbyist here in d.c. and part of obamacare was to say that you know we get all these uninsured people they're now going to be using health care and therefore this is a windfall to the health care industry so we're going to tax them we actually you know bring some of that money that part of that money is going to be on medical device makers the same who are making these he has you had a lot of that wasn't so basic. but the whole nexus here of government spending. in law is corporatism whatever you want to call plain part and that's how the sausage gets made in the decision to shut down of government so i mean it's a very messy process and especially when you have special interests involved in
everything that you do this is what's going to happen and know if this really kind of leads me to my next thought and if the size of these numbers let's talk about that now have historically we ever. seen you know waist on this grander scale. my blood take is that we have seen on this great scale in the sense that. as a percentage of g.d.p. you can't necessarily say that there's more government waste now than there was before if you recall back in the eighty's we were talking about you know five hundred dollars toilet seats and screws you know that cost one hundred dollars so you know this that we're talking about is in terms of the actual amount of government spending the scale of g.d.p. the fact that we're bigger country the government is a bigger part of our society so you know as a result all of these things are a bit larger but is that just a different metric on which that we're on which we're calculating these things it seems like the same thing just the bigger the country gets the more it's going to grow the more the g.d.p. is going to grow the more government is going to grow on the more the car more
spending on things that don't need to be spent money on it's going to it's going to increase is that not just the case you know it is the stuff of the case and i think that it's a big problem in terms of what how people think about the whole concept of economics economics isn't just. people in economics want to tell you that this is the and therefore you know we can use all these equations to come up with answers but the reality is at the end of the day you have to make policy decisions based on this economics and that is a political issue and a theoretical one of that as always you rock that's all for now but you can see all segments featured in today's show on you tube dot com slash boom bust our teeth we also love hearing from you so please check out our facebook page send us messages say hi whatever that's facebook dot com slash boom bust r t you can also tweet us at aaron eight and at edward and a.j. and from all of us here at memphis thank you for watching we'll see an x. time check out.
it took. over. did you know the price is the only industry specifically mentioned in the constitution and. that's because a free and open press is critical to our democracy schreck albus. role. in fact the single biggest threat facing our nation today is the corporate takeover of our government and across the cynical we've been hijacked trying handful of transnational corporations that will profit by destroying what our founding fathers one still just my job market and on this show we reveal the big picture of what's actually going on in the world we go beyond identifying the problem to try rational debate and a real discussion critical issues facing up to five different job ready to join the
that was. president obama is set to deliver a speech on the n.s.a. is a so very lonesome method says many question whether the government is ready to limit the agency's spying reach. russia spearheads a final diplomatic push. at next week's international peace conference on syria. and the u.k. foreign secretary william hague heads north or to try and convince a scotland no to go it alone with an independence referendum eight months away.