tv [untitled] January 28, 2014 4:30pm-5:01pm EST
led to a. hello there i'm marinating this is boom bust and these are the stories that we're tracking for you today. first job we're going to trip across the pond with a heavy u.k. lineup on today's show the first of many of us many of us we struggle to keep up with our financial house and keep it all in order and the queen of england is no exception i'll tell you all about it coming on up and former banker and financial blogger francis coppola joined me earlier today from our london studio to discuss fiscal policy interest rates and the overall you care donna mia won't want to miss that interview and finally a big big player in the big coin world was arrested on monday so what does this mean for the cryptocurrency community ed harris and i discuss this in today's big
deal it all starts right now. no one ever said that managing a household budget was easy it requires a frank and thorough assessment of your needs versus your wants along with critical thinking mathematics projected earnings not to mention a cold or dose of your financial reality and not even monarchs are exempt from this unpleasant exercise now a new report from britain's house of commons shows deep concern for the bank balance and plain elizabeth in only ten years old from thirty five million pounds
to just one million pounds today the report found that the royal household spent so much last year that their reserve funds are now at the lowest levels in history. the public accounts committee found that the treasury which is responsible for overseeing the royal household finances is failing to do enough last year the royal household net expenditures was thirty three point three million pounds for received thirty one million pounds from the sovereign grants chairwoman of the public accounts committee margaret hodge said more can be done to increase revenue for the royal household. you can look at raising more income they've done a bit of work in that but if you just look at buckingham palace it has about half a million businesses a year now that the tower of london has over two million visitors a year and of course buckingham palace is in student politics so the things are different but nevertheless the queen is not that all of the time and i think more income could be generated if smarter use was made of the if they did but it is the
palace when the queen is not in residence. the crown estate is worth more than seven point three eight billion pounds and includes properties across the u.k. let's just hope that royal baby george grows up to be a bit more savvy when it comes to money matters than the rest of his family is today. well there you have it as always we'll be tracking this story and keeping you posted on all the latest. with the money in her household budget or not the british economy appears to be on the mend the menu would say and with growth from last year coming in at one point nine percent the u.k. had its best performance since the financial crisis the coalition government says it knows a lot of improvements to its economic policy and crucial to the central bank's
quantitative easing was that economic policy whereby government bonds with newly printed reserve money is this really the truth that's the big question our next guest former banker and finance blogger francis coppola is here to break this down with us for us and by us speaking with her earlier today i began by asking how well she thought the british economy was doing here's what she had to say. ticket fish government well we do seem to be climbing up the cup. the latest growth figures look much better particulate service is actually so i suspect that's a property bubble that's making of the story. now the bank of england and the federal reserve are among central banks that have turned to quantitative easing buying assets with newly printed reserve money to keep the economy marching forward now in your view what impact has this had on the british economy. what the quantity of
these things but it's done several things we had two rounds of quantitative easing which i think probably did help to protect this city from the effects of the financial crisis and then subsequently from the effects of the eurozone crisis because of see the europe is our major trading partner and what happened there did have quite a big impact on our economy they've also done all the measures as well such as funding for lending scheme which has helped to provide cheaper funds to banks which helps to improve lending to particular property in the u.k. . it hasn't had quite effect on business lending that we would have liked but it is about to change so that hopefully in future if the funding for lending will be directed much more towards businesses rails and residential property now you mention property which i do want to get to a little bit later on but i want to start by asking you are george osborne the chancellor of the exchequer the u.k.'s treasury secretary he would say because the
government's economic agenda which includes you includes q.e. is just what the doctor ordered one hundred percent he's says that the banks they're sitting on reserves and need to lend them out and that q.e. is designed to do exactly that in fact he says it's forces them to do just that what do you make of this argument. he's arguing that the loose munchie policy the quantitative easing and the very low interest rates and other measures such we've had in the last few years has enabled him to conduct a program of fiscal austerity without. it's causing major damage the economy i'm afraid i disagree and i know i'm not the only person who disagrees with him on that i don't think the money policy can be used to offset fiscal tightening and i do think that we would have had a recovery fall sooner if we hadn't had some really quite ill considered fiscal tightening in the last few years so you obviously don't consider q.e. a good policy but it's since it's not a good policy in your opinion why are central banks doing it. i'm not saying
that q.e. isn't a bad policy it does prop up asset prices which when your asset prices are in freefall as they were after the financial crisis come the good thing and they said we had the euro zone crisis as well but we also had a falling asset prices so that can be a good thing it does help to keep the economy afloat to reflate it when we've got a risk of deflation quantitative easing does help with that. and it may be has helped with things like funding for large corporations that kind of thing my argument is that it doesn't kind of reach the parts that it really needs to reach it doesn't reach what's in america you call main streets it doesn't economy and so we've had very rich the assets holders to quite well out to this same time as other people poor people have been suffering falls in wages savers have been hit by a lack of savings interest and savings those kind of things so we've had
a bit of give one hand and take it away but the other really ok now it seems in the u.k. they're getting hit pretty hard by the decline in interest rates and some of come together now to lobby the u.k. to raise rates and there is some indication that the bank of england may do just that by the end of the year are these savers just asking for extra returns that they don't necessarily deserve effectively rent seeking if you will. but i'm i'm wondering who you've been listening to because i listen to your news not the other night and he said that he didn't expect him to interest rates rise anytime soon i think there's a fair amount of wishful thinking going on here. where we are at the moment is we have subdued inflation and we have stagnant wage rises there is no inflationary pressure in the economy at all apart from in the housing market and even that is not across the whole country the whole country so i'm wondering what the justification is for raising interest rates just saying oh the economy is recovering and therefore we ought to raise interest rates isn't really good enough
as far as say this is concerned you know i have some sympathy from their point of view but they're not the only people who've had to squeeze on their incomes people in jobs. as well everybody's in this together it doesn't seem right to me that we raise interest rates to improve the incomes of one group and risk hurting another group in consequence raising unemployment or whatever as a result of prematurely raising interest rates i don't myself see the fundamentals in place to justify an interest rate rise at the moment and on the subject of rational person you know. there's basically a lot of the i want to start again. on the subject of iran's leaders why do you think savers are rent seeking a risk free returns when there are so many indicators that fixed income investors are reaching for yields and junk bonds or emerging markets. i think there are two different sorts of savers there are people who really are reaching for yield they're moving into riskier assets which was the point of the low interest rates
and quantitative easing was to encourage people to invest in the really cause me to take more risk with their savings that was the point and to an extent it's working . we have that going on but we also have people who are sitting tight on insured bank accounts and government bonds which are risk free ass it's a moaning about returns on them they're the people that i would. it is rent seeking because what they're basically saying is we want high returns on risk free assets when the economy is just not generating the productivity the income needed to pay those returns they're the people that i'm criticizing not the people who are reaching field i think the issues with people who are reaching for you know the slightly different that they're maybe taking risks that they shouldn't be taking now you know in conclusion on your blog you've written that you believe that coin is a bubble but what do you think of big quiet as a technology in and of itself. there are two sides to pick one is its.
currency states its use as an alternative currency and the second is the payments platform the actual technology i think we should separate the two out as a technological payments platform is very good it really is it's kind of represents where we need to go in the future and these very promising points you know i don't regard that's a bubble it is used as a currency the thai question and that's very much also linked with the proliferation of other currencies that we're getting a lot of movement into these kind of things when we look at these it reminds me here should the dot com bubble where there were lots and lots and lots of dot coms and then eventually it crashed lots of them died but what. was the internet technology of the future that google some. of the future and i think the same thing will happen with these cryptocurrency is that we will see a few survivors which will become our future tony currencies we do think that's
where we're going as a society is to tell it when the currency is francis very well said and i actually think i agree with you completely out of it cohen thank you so much for your time and your insight we hope to have you back on the show very thank you thank you that was francis koppel our finance and economic blogger in our london studio. time now for a very quick little break but stick around because when we return they're e do i'll joins me to talk about his new book in bed with wall street you want to miss it then in today's big deal i did harrison and i discussed the arrest of charlie shrem c.e.o. a bit instant shrum was arrested on charges of scheming to sell the fair appearances to the operator of silk road that another one you won't want to miss much as we head to a quick break here is a look at some of today's closing numbers stick around.
we welcome marinate in abby martin truly terrific osho on the our team at work. is going to give you the numbers might give you one stock never i'll give you the information you make the decision don't worry about it i'll bring you the word the revolution of the mind it's a revolution of ideas and consciousness. extremely probably would be described as angry i think in a strong. under single. on
our show we've talked a lot about the washington for wall street connection and how government and banks work together and what at times seems to be a cooperative agreement to run the country well joining us to discuss this very issue is larry doyle former former mortgage backed security trader for bear stearns j.p. morgan and bank of america now he is also author of the new book in bed with wall
street conspiracy crippling our global economy his book paints a disturbing picture of uncle sam and big banks conspiring for personal gain against the people they're supposed to serve now i began by asking him what led him to the conclusion that there was a conspiracy between the banks and the government. are in first thought thanks for having me on what led me to that conclusion. was looking at the evidence looking at the facts over a number of years because coming out of two thousand and eight i was massively intrigued as to how that crisis happened and looking deep inside the regulatory system. you could just see overwhelming amount of objective view of the evidence that these regulators were protecting the industry so you know hundreds of millions of dollars if not billions of dollars going to washington lax regulatory oversight you would call it payoffs if not protection money coming back to wall street but
the this story in my book. cites specific situations of failed regulation in which investors consumers and ultimately the american taxpayer are are bearing the brunt of this pain ok now how has your experience on wall street made it easier for you to understand what actually is happening with the financial services industry here in the u.s. . and great question my trading instincts in ability to to follow the money. fall of the flow of information through various financial reports documentation investor lawsuits also legal briefs and went to went down into the court house and followed some of these lawsuits so just instinctively rather than just taking things on the surface you know i dug deep inside a lot of situations and start looking instead of specifically at you know
individual instances all of a sudden the forest started to really take shape and i think the case that i make in my book which is written in a narrative fashion you don't need to work on wall street to understand this it's an overwhelming case and people from inside the industry have not only called to endorse my book but but to praise me for writing it now i want to move to a kind of different angle here some analysts they point to the housing bubbles and financial turmoil in europe as strong evidence that unique regulatory issues here in the us like the community reinvestment act were not i repeat not primary causes of the housing bubble now here's the question doesn't the fact that europe has many of the same regulatory capital issues as the united states suggests that the causes of dysfunction are not unique to the us alone. very much so i mean no doubt about that i mean the again what does it all boil down to leverage excessive
leverage without sufficient capital and proper proper regulatory oversight those are those situations are not unique to the u.s. i mean there are certainly not only in europe but but elsewhere in the world as well now why don't more people within the financial system become whistleblowers and expose what's going on here again great question the fact of the matter is there were there were people on wall street who did speak up and in my book i cite about nine or ten specific individual cases and what happened to these people they were ignored even worse they were intimidated or even worse than that they were fired and they were not just junior level people they were also senior level people from within the firms but then also within the regular you know the main regulators of wall street who tried to blow the whistle but they suffered they suffered those
those shameless those shameless sacks from the hands of you know the people running those those agencies. now can you give our viewers a specific example of situations or regulators that show where the corruption specifically lies. with pleasure. and again there the the number of instances are almost too many to mention but i would cite the very merger of the the n.a.s.d. the national association of securities dealers with the regulatory arm of the new york stock exchange i tracked this case very closely. the case was ultimately appealed all the way to the u.s. supreme court regrettably the supreme court chose not to hear it but the overwhelming evidence in that case showed that the the proxy statement that was used for that merger was filled with lies there was a significant misappropriation of funds from you know the small and medium sized
broker dealers for the benefit of the major banks on wall street and for the the executives running fenris i agree i understand this is an aggressive exposé but the fact is that was a public case that just didn't get enough enough attention and what was finger is defense fenriz defense in this case as in other cases is absolute immunity absolute immunity which is the same privilege that the f.c.c. and other get government agencies receive i maintain though that absolute immunity without total transparency is nothing more than a license to steal that actually leaves well into my next question now you paint a picture of wall street as wall street relying heavily very heavily on self regulation can you explain this type of self-regulating feature to our viewers. i mean first off i think the overwhelming percentage of people in our nation and elsewhere do not appreciate that wall street is to a very large extent
a self regulated industry and the conflicts of interest that go along with that i mean to think that goldman sachs j.p. morgan every other not only major bank but also medium sized and smaller broker dealer can fund a regulator so that that regulator that being federal will in turn aggressively regulate the industry is is a stretch and in looking at the evidence you know the amount of fines that imposes on the industry i end up defining them as little more than meter maids now what specific solutions would you recommend fix too big to fail. well to fix the too big to fail model alternately these banks need to be broken up wall street right now is is nothing more than an oligopoly in which you have a handful of you know incredibly large organizations that control the financial system. the implications of that are too many to mention but they're not healthy
for the economy but for the very simple reason that the primary one is their ability to hoard information. and ultimately control prices if not manipulate markets and ultimately collusion we've seen you know massive evidence of that so how do you go about breaking up these banks you can't just do it unilaterally it needs to be a couple step process initially i believe that they should ring fence certain activities. within their investment banking business is the biggest challenge there will be getting their hands around the derivatives exposure but once they do this you know ultimately they we need to reinstitute glass steagall and bring a meaningful sense of integrity back into the regulatory system. and so that consumer deposits are not at risk the way that they are currently larry thank you so much for your time in here and say we have having you on the show and good luck with your book and excited to get through it aaron thanks thanks for having me on i
appreciate it thank you you thank. that was larry joy author of in bed with wall street the conspiracy crippling our global economy and now it's time for today's big deal. and harrison joins me now to talk about the recent of arrest of a major player major player now charlie shrem a big point millionaire and one of the most prominent players in the big one world was arrested on monday and charged with money laundering along with cooperating and excuse me operating an unlicensed money transmitting business whatever that means now is room with co-founder and c.e.o. of bit instant a big point exchange where a big point can be bought and sold using dollars now the criminal charges against the sram claim that he used his company to knowingly convert money into virtual
currency for people interested in buying narcotics on the now defunct silk road website shawn is also accused of personally buying drugs on the site and according to the complaint this scheme was operated with with and in cooperation with another man robert fadia he's fifty two lives in florida known best as the t.c. king was also arrested on monday in florida now i turn to you have lately it seems like we're hearing so much positive stuff about bitcoin and how it's becoming more mainstream do you think that these charges though are a huge blow to crypto currencies in general. i think basically what you see is move out of the shadows in terms of certain illicit activities you know the government is cracking down on as things are becoming more mainstream we do see less and less focus on you know there was the big sting operation against silk road that's been this in particular is related to. one of those kinds of things that you know those kinds of things are going to happen we're going to move into the. more
mainstream activity what we've seen basically is the fact that people who thought that because it was another myth and they can get away with illegal activity or not realizing that's not the case here here's the question though it seems that big can't shake its nefarious connotation especially when it comes to it as a vehicle for curing illegal drugs perhaps there's a good reason for that you know it is a vehicle for procuring drugs online no no i think the really what it is is it's a payment system a platform in general and you know as it becomes more mainstream we're going to see the benefits of the payment system i mean the way i like to look at it is that it is a. bearer instrument it's just like you know with when you have a dollar in your pocket you're the bearer of that dollar you can give that to someone the benefit of big coin is that no one can actually fraudulently take that money or it's digitally. imprinted that you were the owner and therefore it's
a great vehicle you know to digitally that this person definitely own this particular product so it's a very robust platform and now this kind of interesting cameron and tyler when called boss the one provides wins were major backers charlie strums firm bit instant and after news broke of arrests they released a statement saying quote when we invested in bit instant in the fall of two thousand and twelve its management made a commitment to us that they would abide by all of political laws including money laundering laws and we expected nothing less although it instead is not named in today's indictment of charlie sram we're obviously deeply concerned about his arrest we were passive investors in bit instant and will do everything we can to help law enforcement officials we fully support any and all government efforts to ensure that money laundering requirements are enforced and look forward to clear regulations being implemented on the purchase and sale of a point clear or regulations is a crafty way of saying saying that they have
a good p.r. person on their side but it's. is that the feds are really zeroing in on big wigs and pioneers do you think the winklevoss is our next. really interesting. passive investor. that is you know what they're saying that you know basically we like to call it but by the way you know we are really active investors at it but you know so there really depth. and this and see. the early read the perspectives that we think. the interesting bit actually is today that we saw benjamin lawsky talking about regulating because right and one of the winkle by was down there saying that you know don't overregulate so it's very. knowledgeable see what happened that's all the time we have for now but you can see all segments featured in today's show on you tube at youtube dot com slash boom bust our t. we also love love hearing from you to check out our facebook page at facebook dot com slash boom bust our t. you can also tweet us at aaron aid at edward n.h.
from all of us here us thanks for watching c.n.n. . gentlemen i give. you the few hundred a day coming. up we've got. criminals we've got people. who knows where in the world this is the united states i'm very touched by the way you know. i was worried that they may not know. the live on mars you know mars.
so we pick up things like the rand. turbans prayer rugs and we know that they're coming from the middle east to the current situation. concentration trip to the new study this is the one not even one of the schools the fact that he is a stranger. slipped under a little more than a lot of these policies he said you know. the pleasure to have you with us here on t.v. today i roll researchers.
coming up on our t.v. arms in america over the weekend a shooting inside of maryland mall left three people dead we'll take an in-depth look at the growing trend for gun violence apothegm us just ahead and more silk road fallout now two men involved in between exchanges have been arrested and charged for money laundering authorities say they wandered one million dollars of virtual currency for the black market website forum that coming up and see it was a blow or john kiriakou is calling out corruption from his prison cell in pennsylvania his latest letter accuses prison officials of violating his rights by censoring his communication with the press the details from kiriakou behind bars later in the show.