tv Prime Interest RT August 9, 2013 4:30pm-5:01pm EDT
that. good afternoon and welcome to prime interest i'm harry and boring in above a good a good since it is headlined. so if you're going to fight the fad do it legislatively today a twenty two year old bangladeshi man was sentenced to thirty years for attempting to blow up the new york federal reserve building his cell phone was ample traded by the f.b.i. who supplied him with one thousand pounds of fake explosives according to the justice department the attempted bomber asserted the plan was his own and that his goal was to quote destroy america by targeting it's economy no evidence was introduced in court of him scoping out the new york stock exchange he eventually chose or hope to choose the new york fed itself and it is the london whale simply john corps minus slash m.f. global read
a few stories are being floated in the media today the first by bloomberg regards j.p. morgan which is negotiating with regulators over the derivatives debacle that cost the farm over six billion dollars according to quote people mr diamond's firm will likely get off with only a fine or a slot and according to sources the london will himself will not face u.s. charges so why the possible john corazon redux the media was repeatedly used as a tool to float the idea that would walk free and now we have this london whale story doesn't have nearly the grassroots movement that a global did but members of congress don't like angry phone calls or answering them and bed bob togs fake former assistant treasury secretary paul craig roberts and i profiled purdue pharma and here's what the air prime minister.
i. despite massive debts the u.s. is now able to borrow at record low rates thanks in part to quantitative easing it is a world of this information and misinformation and which facts are fiction and abstract theories are substituted for empirical reality not unlike the movie the matrix in which an entire population lives in an alternate reality now those are the thoughts and words of paul craig roberts who i spoke with earlier he is the author of the failure of laissez faire capitalism and former assistant secretary of the us treasury so i first asked
him about the federal reserve expansion of the monetary base. create that many new dollars you threaten the dollars exchange
value and lo and behold the gold price was taking off and nineteen hundred dollars an ounce and that signaled to the federal reserve that the dollar's exchange rate of return shoes would be collapsing and so in order to in order to keep reading the bond market they had to start reading the gold market. they rig the gold market by going in and selling neck and shorts they dump tons and tons of nonexistent gold paper shorts in the market at the worst possible times of day in order to drive down the price so to say to save the quantitative easing they have to rig the gold market and another consequence all the quantitative easing is the stock market and stock market
has been winning it's it's very high and it's all based on the fact the bed is creating enormous amounts of money and the money that
goes into the bikes in exchange for bonds mortgage backed securities for example goes into the stock market so we now know three bubbles on stocks and dollar. and that is the financial matrix and that's how it's rigged now if you are an investor where you're going to invest. and you're going to go into markets that depend entirely on the fed printing of thousand billion new dollars each year so you don't know where to go now where do it go and what's what's the future when the fed is it looks like they're going to taper at the end of the year what happens when the largest marginal bond buyer gets out of the market. yes well they can't take those they do the prices the bonds will fall which means in the interest rates will rise the stock market crash the banks will again
be insolvent. and so they can't there's trapped how do they get out of it they can speak about tapering. but remember now they're tapering they have made that conditional on the. united states congress cheating a certain growth in certain unemployment rate but the only way the unemployment rate is falling is because people who can't find jobs drop out of the workforce they're no longer counted it as i didn't lower it so so it's really a trap i don't i expected something i would just blow up and i don't think they can show it well i'd like to talk about unemployment in a second but first let's get to some of the modern metrics our politicians are using to so-called steer the economy and we actually have a clip here of a famous politician opining on the relative worth of national accounting statistics . not in
a particular count on him and think about average i. am going to clear our highway a carny. account based on a lot of pride going and mchale the people of great. so of course i was robert kennedy and he was talking about g.n.p. that would be a gross national product and under the first bush regime we suddenly started following gross domestic product or g.d.p. so why the change. well all the criticisms that robert kennedy made the gross national product also applied to gross domestic law now the reason they changed it is the gross domestic product excludes the trade balance the imports and exports. which are included in the national problem and in because the united states has such a huge trade deficit moving from g n p g d p makes growth look higher because it excludes the loss from the trade deficit.
you know it any your trade deficit is a subtraction from the gross national product but it's not a subtraction from gross domestic product so that's why they made the ship that makes it look like they're counting money is stronger on growing higher so are any of these national accounting identities that we're pretty much invented in the mid one thousand forties by keynes himself are they valuable in any way. i don't think so any longer it goes like robert kennedy emphasized increasingly for corporations they're called star x. terminal there they are social cause they're imposed on the environment and those don't third parties for example the large dead zone in the gulf of mexico. they're the product of the runoff from chemical agriculture
farming. and the cost of those dead zones is not included in the. cost of the farming or the price of the farm products so the whole trouble with these accountings systems is they don't include the external cost of production. and they they don't really include the use of nature's resources the only natural resource cost associated is extraction cost. but you see the resources used up and there's that's a cost it's not included and the pollution of the air the warmer the land this is not included so you would have to say that the measure of g.d.p. greatly only states the value of production in fact it's entirely possible
that there are many economic activities today in which the cost that is the the social cost exceed the value of the outlay if they're not included so as soon not measured we can't tell whether you're an increase in production is really a good thing or a bad thing yeah and it seems like g.d.p. is almost an it's an aggregate of apples to oranges comparison then one could almost argue that were it not for the fact that the government produces the statistic itself and people react to it how valuable would it be in a free market but i do want to move on here to unemployment because in the twenty first century the jobs created by the world's largest economy have been lowly paid non tradeable domestic third third world service jobs so how how are we going to improve the situation. well you can't unless you can bring the
middle class manufacturing engineering jobs such as software jobs back to the united states on much india and china and the other lower wage countries where they were moved you see what what globalism is it's simply labor arbitrage and wall street and the large american retailers pressed corporations to move their production for american markets all shore where labor cost floor and the retail stores hope to get lower prices out of that and wall street look to get more profits and so what's been going on in the twenty first century is that the american economy is being simply empted of employment opportunities jobs are moved offshore and with the jobs go and the tax base the careers the consumers incomes and so there's nothing to drive the economy you can't have
a consumer economy if you take the consumers jobs and you give them to the chinese and then the ins and then you bring the goods that the chinese and indians made back to the united states to sell to to the consumers who haven't got good jobs and so the economy hasn't gone anywhere in the twenty first century initially the federal reserve on the alan greenspan compensated for the lack of growth in consumer income by creating a credit bubble in other words the lower interest rates let people refinance their homes it's been the activity and that kept the economy going until everybody drownded in debt right and now there's nothing that can get your county going i just want to get one more question and you're right about the american people who have been placed outside the system of democratic capitalism is democratic capitalism in its pure form sustainable or does it inevitably devolve into some
kind of tyranny. yes i think it. but an unregulated capitalism. ends up being. run by a few people. it's what we see today you know wall street runs treasury runs the financial regulatory agencies that runs the federal reserve so once you think that deregulation free market deregulation is the answer and we have pursued that now for a quarter of a century both here in england in france indeed just about all over the world the net result is that our accumulates and if you're into your hands and so you have an oligarchy and that crowds out the markets that. that was my interview with paul craig roberts off of the failure of laissez faire capitalism also former assistant secretary of the us treasury coming up area and profiles produce pharma
and their fencing of the opiate oxycontin he got them in a trouble and she explains how they're multi billion dollars cash cow is leading to more deaths in suburbia than i do in the always outspoken mark levine over a favorite markets giants fannie and freddie and also get into some of the nitty gritty of greenspan and bernanke use manipulation of interest rates. i would rather as persons to keep building positions of power instead of speaking on their behalf and that's why you can find my show larry king now right here on our t.v. question more. or
want the drug commonly used in major us metropolitan cities it's now found in rural suburban towns and talking about heroin use is dangerously addictive drug has crept its way into many middle class homes the face of the addict has turned to more affluent people and some of the most unlikely to become smacked users according to the substance abuse and mental health services administration the number of people who say they've used heroin in the past year jumped fifty three point five percent to six hundred twenty thousand between two thousand and two and two thousand and eleven the number of fatal overdose hair when deaths also increased fifty five percent from two thousand in the us that number comes from the center for disease control and prevention as well documented that many heroin users turn to the illegal drug after being prescribed synthetic heroin for pain relief also known as
opioids according to open medicine it since one thousand nine hundred seven retail sales of prescription opioids have increased six hundred fifty percent oxy code on is leaving this industry sadly fatal overdoses involving prescription opioids is following this trend according to the c.d.c. prescription painkillers are the leading cause of accidental deaths in the u.s. and april two thousand and eleven the white house declared prescription drug misuse and abuse an epidemic heroin used to be widely prescribed in the u.s. but it was pulled from the markets around the one nine hundred twenty s. because of its highly addictive nature today heroin has made a comeback in the form of oxy kowtowed a synthetic opioid that purdue pharma holds a patent on in the u.s. and is there f.d.a. approved. cash cow over fifteen years ago sales for oxy cotton have exceeded twenty billion dollars over you i've used to be reserved for chronic cancer pain but in
the late one nine hundred ninety s. produce pharma would on an aggressive marketing campaign to get oxy cotton prescribe for a wider pain management produce distributed videos to doctors across the country to encourage widespread prescribe ing of the drug. there's no question that best strongest pain medicines opioids but these are the same drugs that have a reputation for causing addiction and all the terrible things we don't do is we're wrong in thinking that opioids can't be used long term they can be and they should be we used to think they'd stop working all the patients would become addicts or they'd be sedated and typically these six cases show how wrong those views were when pain treatment is successful studies successful. but what wasn't successful was produced branding of the drug in two thousand and seven purdue pleaded guilty to misleading the public about oxy cottons risk of addiction and agreed to pay six hundred million dollars making it one of the largest
pharmaceutical settlements in the us history three the top producer executives also plead guilty said ms branding and faulty marketing of the drug cover six hundred million dollars is nothing compared to the billions of dollars in sales the drug has brought in now states are trying to hold the pharmaceutical company accountable first in line at the blue grass state kentucky supra do farm in two thousand and seven seeking reimbursements of money spent on law enforcement drug treatment programs and medicaid prescriptions the suit is still open as police in kentucky blame oxy cotton for hundreds of deaths and millions of dollars in costs to the state canadians have also filed a class action lawsuit against purdue is seeking roughly three hundred fifty million dollars for negligent distribution and. of oxycontin pretty you have taken steps to rein in abuse of the drug last year they changed the formula of oxy cotton making it more difficult to inject or snort the new england journal of medicine
says this is why abusers are switching to heroin a street drug can be more lethal than the prescription drug because dealers mix it with other ingredients as more people switch to heroin the medical community expects overdoses to increase yes the story is sad and the numbers are staggering and it's difficult to find someone who hasn't been affected by drug abuse in america but the billions of dollars spent on heroin use and treatment is nothing compared to the trillions of dollars the fat is pumping into the financial veins of our economy which affects everybody and like our financial system doping can only be as absolutely fatal to weigh in on this and other issues please follow me on twitter at perry and r.t. now let's get to the real.
all right joining me as host of the inside scoop mark levine let me ask you something how long have you been in the broadcasting business about ten years now years you had an edge on me but i have these things called facts so let's get to her first i don't mean to be cheat i don't already make it look better already this week thirty minutes to ten billion dollars second quarter profit of partially due to surge in home prices meanwhile on tuesday president obama laid out a plan to wind down both mortgage giants fannie and freddie so would this be the same freddie that led to a collapse in the housing market and i'm sure glad that president obama did such a great job in bailing them out they're not only going to pay every penny that they borrowed they're going to make progress substantial. it's in the best part is the american taxpayer owns eighty percent of freddie mae and freddie that's how that happened that would never have happened were enough for the federal reserve buying over actually over
a trillion dollars worth of those securities the market was tanking and were it not for the federal reserve's manipulation of interest rates we would have never had paying all this money but it gets to moral hazard so what do you think about the moral hazard involves it to me look i've always argued that we shouldn't have things that are too big to fail fannie mae and freddie mac. were private enterprises like. countrywide frankly. well they were completely private remember they've been private since nine hundred sixty eight they're only public now because they were bailed out by president obama ok but in a they were private in the sense that you could buy shares in them but also the public government was backstopping you know you know you know if you look securities you bought from fannie mae and freddie mac. said very clearly you as a government are not backing any of this with the way they did it and they actually ended up backing them and at the last minute no more of the day i.g. no less than a i.g. also a private private company that actually did a lot worse than fannie mae or freddie mac. yes they did but the federal reserve was buying agency bonds that would be freddie and fannie and freddie agency for instance in one nine hundred ninety nine so that
fred had already given support i don't think china would have bought all those bonds in the first place had the fed not been active in the market so to say that they were private enterprise i think is a false misconstruction here's the heart of it the end of the day we're getting all the money back and we're making a profit which shows that it was a good idea to bail them out now should we have anything too big to fail in the future no we shouldn't that's why as you know i support the dodd frank regulation bill that's why i think that all of these entities private and public need to be regulated so they're not to big to fail the future i agree that we shouldn't have too big to fail but how did we get here in the first place ok let's talk about how we got here in a very quickly we got here because the republican congress got rid of regulations they got rid of glass steagall got rid of the bucket shop laws that have been around since the early one nine hundred that prevented you from gambling on other people's things look if i buy a house insurance all right and i have a fire i get coverage. but i should be able to bet on whether your house burns down or bet ten times that what you're saying here house burns down the road and i might have an incentive to bring the house down ok those are two separate argument so let
me get to glass steagall first first if we have to live with the banking system that we have i'm all in favor of that wall are we going to get that wall again i doubt it unless there's another financial crisis but then what was your second point my point is you should give it a bet on other people's mistakes the whole point of insurance the whole point of hedging is to protect yourself like i said like fire insurance what credit derivative swaps did is you know it lets you bet on other people's mistakes so goldman sachs could sell these terrible terrible collateralized debt obligations to people at the same time as they bet against the same things they were selling that kind of betting and that kind of non regulated capitalism that is the cause of the crisis spending made for the mag they jumped in no question about it they jumped in late they jumped in much smaller than everybody else and frankly they are partly to blame but very very small part to blame well i would say that a lot of the blame gets back to the federal reserve because when you look at studios and the derivatives markets seven hundred trillion dollars back up to the pre-crisis levels c.d.o. didn't make up that big of a part its interest rate swaps and other things those are the things that are going to detonate the system in the future and getting to the point of should you be able
to bet on other people's houses i think it's a non sequitur because the reason we have the seven hundred trillion derivatives market in the first place is because the fed has been giving away free money for over a decade now the reason we have this debate is market is because wall street has found that this is a fancy way to act without regulation you know why they call quid rid of swaps and not insurance which is really what they are or did because swaps weren't regulated this was this new word created by some brilliant guy at merrill lynch i want to call it swaps because that's not sure if that's not banks the federal deposit insurance corporation has had a very good job at regulating banks that's why we haven't seen a run on the treasury with that we need to exact same thing a federal mortgage insurance corporation make sure that non-banks have the same regulations this won't happen again i don't think we're sitting here i think the so let's what we have above i don't know let's move on to other americas. well theists are stashing their cash according to a survey by american express publishing the harrison group the top one percent of americans save thirty seven cents for every dollar earned this is triple the
savings rate of the top one percent in two thousand and seven so interest rates are already is near zero we've been talking about this what do you think about cash hoarding it seems to me that obviously the rich have so much cash that they have no place to put it look the top one percent earn eleven percent more each year in the last three four years while the bottom ninety nine percent which is the vast majority of us lose money year after year we have assisted let's face it that rewards the super rich at the expense of everybody else that's what that's what barack obama's been arguing for a long time we need to tax the rich more fairly so that the money gets distributed more fairly cross the public ok but how does the money get there in the first place how do we how come we've seen this huge disparity in wealth grow throughout the years is it because of lax regulations i mean is that partly the heart of it that you know basically we've just been giving money away to corporations we've had a crony capitalist system and some of these corporations themselves are almost too big to fail and a lot of these defense contractors like g.e. derive a significant portion of their income from you know the federal government look i'm
not going to offend corporate welfare i've been opposed to corporate welfare all the time i've been in politics but the heart of the problem is is that if you're a middle class family and you have a small business and you do badly at the business you fail you lose your business but if you're extremely rich you can ruin a company that had the stock price decrease by two thirds still got hundreds of millions of dollars in bailout that's not capitalism the way it should be it goldman sachs went to jail or lost a lot of money that would be keep people from making these kinds of mistakes in the future but here is the moral hazard argument that goes to the bailout and everything else is that when the government picks winners and losers it does hurt the small businesses and that's the final word i'm afraid we're out of time thank you much so much for joining me if you want to weigh in and today's show be sure to like us on facebook at facebook dot com slash prime interest you can follow mark being talk and you can follow me at p.r.i. . thank you so much for joining me on today's daily duel my pleasure bob.
and it was an aggressive day on prime interest the man who tried to fight bomb the federal service thirty years better than mine and the feds are battling it j.p. morgan and the london whale mr excel except not the only kentucky and hammer that took pretty pharma for reckless marketing that cost needless lives and paul craig roberts questioned the legitimacy of our favorite econ stats i think gross disputed product and forget dueling bob went to war with mark levine over capitalism itself so thanks for watching and come back on monday from everyone at prime interest i'm sorry and boring and have a great weekend. i
with mike stronger for a no holds barred look at the global financial headlines tune into cons a report. coming up president obama met the media just a short time ago here in d.c. a large part of his news conference dealt with concerns over the n.s.a. surveillance state and edward snowden's leaks are political commentator was at the white house he'll join us in the coming up with more. and this week marks the sixty eighth anniversary of of the atomic bombs being dropped on hiroshima and nagasaki japan but activists now fear that americans are forgetting the horrific lessons of these bombings that story is coming up in today's show. and relations between the u.s. and russia remain cold over edward snowden's asylum and now today in d.c. there were bilateral talks between top u.s. and russian officials so what's the focus of the meeting find out ahead.