Skip to main content

tv   [untitled]    December 13, 2013 8:30pm-9:01pm EST

8:30 pm
and and there probably are mad as a for now i'm a mirror david have a great night. world . series technology innovation all the developments around russia we've got this huge area covered. and a society that i think corporation kind of can. do and the banks write all that all about money and i think that's like that for a politician right the boss and. that banker somebody out. there is just too much. of a diet. that. ok
8:31 pm
hey i marinate this is boom bust and here are some of the stories we're tracking for you today. first up j.p. morgan is cutting yet another check to the justice department this time for the troubles of bernie made off we'll tell you all about it coming up and you also when you or i print money it's called counterfeiting down my quote directly from jim versus new film money for nothing and the director joins us today from our l.a. studios hopefully to discuss is a bad place later on in the show and finally it would be nice to real life shopping it was just like online shopping what if they were the same thing one startup is trying to make out a reality raise the frontiers and i will tell you all about it and it is a big deal it all starts right now.
8:32 pm
lawmakers this week proposed a bill that would increase missile defense spending by an additional three hundred fifty eight million dollars bumping up the total cost to a little over ten billion dollars now the bill would mandate increases to homeland defense radar systems and increase funding for us israeli operations eighty million dollars in additional funding was included to address problems that caused a missile defense test failure back in july that is one expensive problem solving budget to say the least now the measure backs president barack obama's two hundred twenty million dollar request for israel to buy additional iron dome short range missiles. raytheon has
8:33 pm
a joint marketing agreement with rafael advanced defense systems and is really state owned manufacturer of the iron dome system now the bill also explicitly bans twenty fourteen fiscal funds from being used to integrate chinese and u.s. missile defense systems a move designed to put pressure on turkey to choose u.s. or european defense firms opposed to choosing a chinese on. elsewhere j.p. morgan yet again ponies up billions to the justice department this time to settle a criminal probe into whether or not the bank provided adequate warning about bernie madoff's multibillion dollar ponzi scheme now prosecutors are considering it j.p. morgan deliberately failed to alert regulators to the ponzi scheme despite numerous red flags made off had a two decade long relationship with j.p. morgan prior to his arrest in two thousand and eight and now a central factor in this case is why a formal report was not filed here in the u.s. in regards to concerns about meet us business yet the bank did file such documents
8:34 pm
with authorities in the u.k. well it looks like twenty years and billions of dollars will buy you a little bit of loyalty at j.p. morgan that's for sure now finally dell is really thinking outside the box here when it comes to trimming fat off its business a spokesperson for the company confirmed that dell is asking its employees to quit what dell is calling a quote voluntary separation agreement kind of like an amicable divorce if there ever was such a thing now in a written statement from the company dell says quote a critical element of our strategy has been and always will be about improving our cost structure and freeing up capital to make investments in growth areas that matter to our customers it's clear that dell is looking to free up cash and trim expenses after founder michael dell took the company private this past october and a twenty four point nine billion dollar buyout i must say though in the name of holiday cheer dell's anti layoff option seems pretty civil law as compared to the alternative that just being regularly laid off well there you have it will be
8:35 pm
tracking these stories and keeping you posted on all the latest. the thirty seven words in dodd frank directing regulators to prevent banks from gambling with customer deposits had finally come to fruition this week five financial regulatory agencies approved the volcker rule i spoke with bart naylor financial policy advocate public citizen about what made crafting the rule so difficult for regulators and here's what he had to say. i would say in a nutshell because forty four billion dollars in revenue in the banking industry depends on it that is to say that's how much money the banking industry makes every year. doing these exotic short term trades. and they're not going to say because they're all philanthropists ok it's better social policy that
8:36 pm
we not do this they scrambled i think we counted that goldman sachs met with regulators over a certain eighteen month period two hundred and twenty two times two hundred twenty two times so and that's just goldman sachs in one of the biggest players on the proprietary trading that is what goldman sachs j.p. morgan is the other big one they actually completely change the tone of this debate by conveniently or in conveniently losing six billion dollars on a on a failed trade a couple of springs ago the so-called london whale. they are awesome out and you. know how the record regulators intentionally enforce this rule that seems like a difficult challenge but i would say they they harness peter drucker is maxim from management that you manage what you measure. normally afloat ask trader is kind of a cowboy he is just a basketball player there they are going on muscle memory if you will of trading
8:37 pm
now they will actually have to document things so if there is a trade it's not just because they think it's a good idea it's because there is an actual bona fide customer involved or if there's a hedge or something they're going to call ahead there needs to be a piece of paper that says here is precisely what i'm hedging it should be understood that a hedge is a cost hedges insurance a hedge is just like home insurance you can't make money by buying fire insurance on your house now ideally when your house burns down you will you know insurance company will work cover but the london whale claimed to its regulators even claimed to its own independent review that it was. portfolio hedging well the permanent subcommittee on investigation investigator i don't need to mention her name she asked a very simple question can you tell me on a piece of paper what you were hedging there was no piece of paper that was not hedging now there will be stuff to measure you manage what you measure now like you said hedging it's kind of like being
8:38 pm
a bookie you will be got to make sure your book is balanced on either side but can you explain the difference between market making hedging and proprietary trading because there are very similar but there are nuances and differences yes market making is to is to serve customers who either want to purchase or sell you can do it in it and one of two ways you can be a broker in which you don't take possession of the particular security they say you want to sell i know a buyer. make you take a little commission out or you could say i'll buy your thing and own it for a while then i'll sell it to this person to hazard it that's called dealing hazard and dealing is it's difficult for an observer to say i'm buying a think as i know you're selling it for cheap and this guy i know is going to buy it for more and or i know something about the security because i live and breathe this thing and i know suddenly that that is going to go up and look at did before i sold it to this person now hedging says i'm going to buy your security i'm
8:39 pm
a little worried i'm a little worried so on the side i am going to engage in a side bet such that if things go badly i can i can claim my insurance from this guy so if i buy i.b.m. stock for one hundred i have purchased a put this would be simple a trader would be balancing your book. and now and prop trading well and prop trading is dealing prop trading is the is the market making where i'm a dealer where i actually buy the security of the market maker as opposed to brokering where i am simply an intermediary now that we all know the difference between a home. different systems how and will a regulator be able to distinguish between hedging prop trading and market making primary inforce that mechanism is reporting they will have to keep all this paperwork you raise a very good question because how will we know in the public that the regulators are doing this and the answer is we will not there will not be
8:40 pm
a report saying there are three violations of j.p. morgan last week in one sense because there is no fine. if you are speeding on the highway the cop pulls you over and you know what he says there and slow down he doesn't say and here is your ticket there's no monetary penalty for. fines if you bring that's right in fact in fact if you don't like what the regulator says you can have judicial review you can say you know i wasn't really doing this let's let's talk about this now there are some proxy there are some indirect ways that we can see the new york city tax collectors the controller every january or february i think releases the wall street bonuses it is why they do that those bonuses should go down at least for the f.b.i. see back banks i mean j.p. morgan back to america citi corp goldman sachs and so forth those numbers should go down if they don't you know the london whale desk had about three or four guys all
8:41 pm
of which got paid ten million dollars or more that's not market making that is prop trading that is gambling with with the deposits of j.p. morgan of their clients now the final rule comes down to i want to get this right on the side of a desk by desk yes rather than trade by trade and alice's desk. a desk is like that over there it's ten persons and they're all on computers and they're all quality and extremely you know there's the i.t. guy and they're the three guys running the models they are running blizzards of trades a day they have basic positions the basic areas of expertise the london whale was dealing with. us corporate bonds although in a synthetic index that is to say kind of a side bet on the fate of these bonds. but it wasn't actually the companies themselves or even the debt it was a bet here about what that would do very expert on this that desk will be making reports daily reports and they can be dissected there's
8:42 pm
a human element to this the control of the currency had a grand total of one human being in london during the london whale. so there needs to be more people to the extent that that's where the action is but presumably this will be computerized they can they can just send it right down here to washington d.c. or wherever the controller's office is and they can look carefully again once you are measured and you're managed you're going to have to come up with a little bit better excuse than hey it was just portfolio hedging and but what exactly does this mean for the banks in terms of. trade well it means less specific reporting it's kind of like saying tell me what your paycheck is every hour versus what your paycheck is every month or every week dispenses in a little bit less frequently. that was barton our financial policy advocate at public citizen. coming up. how can you get money for nothing it sounds too good to be true and it's the title of jim versus new film i'll talk with the director
8:43 pm
about the big banks and their inner workings with the federal reserve also next time we go to the mall with her shopping bag get rid of her as is and i discuss how shopping malls may soon become and is on the next big competitor with the same days a livery service that's all coming up. elaine. time has a new alert animation scripts scare me a little. league there is breaking news tonight and we are continuing to follow
8:44 pm
the breaking news even. alexander's family cry tears of the wife and him great things out there that there has to be adequate brander in a court of law found alive there's a story made sort of movies playing out in real life. and. i would rather as questions to people in 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
8:45 pm
t.v. question for. this month marks the one hundred year anniversary of president woodrow wilson signing of the federal reserve act creating one of the most powerful and secretive institutions in the united states and the decisions made by the fed's board of governors have proven to have profound implications for the global economy so what exactly is behind the curtain of the federal reserve joining us now is jim burst director of the film money for nothing inside the federal reserve available this month on d.v.d. thank you so much for being here today now i want to start off by asking you it's clear in your film that you're not a fan of alan greenspan for both his mismanagement of bubbles and keeping rates too
8:46 pm
low for too long however pole booker is clearly portrayed as the hero in your film how do you feel about bowker's latest act of valor the volcker rule coming to fruition this week you know i think we will really know until maybe years from now how the volcker rule works i know he was lobbying for some harder you know rules that i think congress or the lobbies really wanted i think the end result was kind of a draw and i think really you know we'll see what happens in terms of the regulation that comes out of the vocal rule it's really just kind of a start to the process i think you know regulation is such a hard thing to do what i think i think at least the rules a step in the right direction the question is is what comes of it i think we really will know and i want to ask you how you feel about stanley fischer the former head of the bank of israel being named number two at the federal reserve. you know i think as many people have noted he was ben bernanke his advisor at mit so i think
8:47 pm
to me it's just it's it's what i a little bit worry about is is just more of the same you know i think it in our in our film we highlight officials like paul volcker and some of the regional bank presidents at the fed who have a slightly different perspective i think with stanley fischer i think you know he's clearly a very smart guy and an esteemed you know figure in this world the question is will his ideas be any different from what we've been seeing for the last five ten fifteen years out of the fed and i think i think the answer unfortunately is is notably more of the same now in your film you had a lot of access to current and past fed officials what they have to say about quantitative easing and i mean specifically the effects that will have on the economy if and when the fed starts to wind it down yeah i mean i think. a good quantitative easing similar to the vocal rule is the kind of thing i think a lot of people have been judging in the short term and i think we really won't
8:48 pm
know for years to come what quantitative easing that led to i think a number of the officials in our film people be surprised when they see it current fed officials former fed officials really question it and it's not necessarily that quantitative easing as some fear will immediately become you know hyper inflation as some worried were you know in two thousand and ten in two thousand and eleven when the fed first began it but it's more what what are the incentives that point to quantitative easing is created i think they worry and i worry that really the biggest thing quantitative easing has done is create an expectation amongst investors in the stock market in the financial arena that the fed won't let the market go down that they can pump money in and that will protect stocks from going down and when the downside is protected you've seen stocks shooting to the upside and i think that's a dangerous incentive to create it's a it's
8:49 pm
a dangerous. thing to convey to markets because i think the position the fed's and now in trying to unwind quantitative easing is they're trying to take it away and not have markets overreact not have markets fall out of bed because the sort of stimulus this candy has has been taken away from them and i think the big concern is has the fed painted itself into a corner here where any removal of the stimulus will be a signal to markets to go to depict the show that you spoke with acknowledge at all the close connection the fed has with big banks and if so did they see it as a problem or conflict of interest. well i think and then again this will surprise viewers i think there's a number of officials at the fed charles plosser jeffrey lacker richard fisher who are in our film who are currently at the fed who don't like what fed policy has been portraying which i think has been support for the big banks support
8:50 pm
for the stock market ben bernanke has been very explicit about wanting stock prices to go up and recently with with their purchase of mortgage backed securities at five hundred billion dollars a year explicit support for the housing market and so there's a number of people at the fed who think this is a bad precedent this is a bad road they're going down and they would like the fed to get off that road and to unwind q e to stop talking about the stock market to stop talking about the housing market to stop buying mortgages and to go back to what a tradition true to the central bank more traditionally does because you could argue that their policies today are designed for you know massive crisis and right now we're not in a massive crisis so really it represents subsidies to certain groups in the economy and historically you know when governments are central banks do that kind of thing it doesn't work out and be can sort of backfire on them can create a lot of public backlash when people see the fed supporting one group in our
8:51 pm
economy and not another do you think the fed has a handle on its expanding balanchine. i mean again that's was one of those things we what we don't really know you know for now we haven't seen you know huge unintended consequences yet aside from a rapid rise in the stock market you know a return in certain areas like las vegas and phoenix to sort of the good old days in the housing market you know we haven't really seen any danger signs but the fed you know hasn't started to unwind the process or hasn't even slowed down so i think the big question is as the fed's balance sheet you know piles up gets bigger and bigger they're caught they've crossed four trillion recently. you know what happens when the fed tries to shrink the balance sheet i don't think the fed knows and i think again there's a lot of officials at the fed who would say we've gone far enough let's let's start to pull this back because the bigger our balance sheet gets the bigger the risks that we can't manage and exit from this policy now i want to ask you how do you
8:52 pm
feel about fed chair woman to be janet yellen do you think that she perceives all the risks alive in the marketplace today. that's you know that's my biggest concern about janet yellen is i think she's similar to stanley fischer says you know very smart very esteemed very qualified in this world but you know she also she didn't see the housing bubble she didn't see his stock bubble and she's saying now in her testimony that she doesn't see risk in the stock market right now and i think there's a lot of you know very you know successful prominent in many cases self-made billionaire edge fund managers and others who are saying there is something to worry about in the stock market right now the fed's been the biggest contributor to the recent rise in the stock market and so so i would argue looking at the same stock market that the fed should be concerned but i think janet yellen isn't so so i worry that the fed has a tradition of not seeing risks in advance you know ben bernanke he before he
8:53 pm
became fed chair in two thousand and five you know denied the possibility of a u.s. housing bubble let alone the actual existence of one and then came into office and had to deal with all the repercussions of the collapse of that bubble and so i worry we could be repeating history as janet yellen takes over you know again coming into office and saying i don't see wrists things look pretty good you know that there are some areas of froth you know she might say which is what what greenspan said as he was headed out the door in two thousand and five and six and so so again i feel like the fed doesn't have a great track record as a risk manager that's part of what we documented in the film and so the big question is you know do we need a different point of view for these officials or do we need a different mandate so that they are more worried about risk and less focus on trying to create growth which you could argue over history every time they try to create growth they want to you know creating these big booms and busts you know you brought up are not here which is leads to my next question here is on his way out yonder way and what do you think ben bernanke his legacy will look like how will he
8:54 pm
be remembered as a fed chair. you know i think i am going to just keep repeating myself i feel like again we have to look at these things over the long period of time when alan greenspan stepped down in early two thousand and six he was you know seen by many as at the top of his game people were saying the greatest fed chair ever the greatest central banker ever you know two years later things look really differently as the u.s. economy and financial system completely collapsed just after he left so i don't i don't know that were in the position that we were you know under greenspan but i worry that break is really seen as being a hero for the boom that he's created in the last few years but what we've seen recently again it's the title of your show sometimes those booms turn to bust so i worry that he may be seen as a hero on the way out but you really have to look at these things and i would argue that the best fed officials do look at things over
8:55 pm
a longer term they're not looking at this quarter or what's the stock market doing next month they're thinking in terms of years and is our system stable is our system you know building last and i worry that over time he might be considered someone who again sort of created a boom but then ultimately you know undermined or weaken the system in the long run jim bers thank you so much for your time and insight that was jim burst writer and director of the film money for nothing time now for today's big deal. richard curtis is now joins me to talk about mohels laura all that now what is a big in free enterprise roamed by teenyboppers and soccer moms alike today they're
8:56 pm
fighting for a place in a market that values ease and efficiency far more than laidback window shopping and in the ever growing market space that is online retail brick and mortar shops must do everything they can just stay competitive and if this means turning their once found field structures into many distribution centers and they're willing to give it a try more of the nation's largest malls are turning their properties into supply us for rapid delivery now the service promises delivery times for purchases made at the mall and from online tenants not rachel but i ask you what do you think of this new model well erin as you know i grew up in new jersey. i grew up in new jersey and essentially spent most of my teenage years at a mall until we were old enough to drive and go somewhere else so on a personal sentimental note it's a little sad but it certainly seems to be the way things are going i mean haven't you you know even sometimes you don't go to the drugstore at the corner especially the winter because it's cold out and you just wish it could be delivered to you so the fact that now malls are saying we will deliver things you will even not force
8:57 pm
you to come in here in the first place that's that seems like a positive thing or it was just the we did seems like the way the trend the way things are going now to deliver a it's kind of become a key battleground in the war between you know physical and online retailers so i'm wondering who do you think has a better chance of winning this particular battle in the war in just about all the other war out there but it will so it depends what you're purchasing right there are a lot of things for instance. i think clothes are something that a lot of people feel like they can buy online without trying them on whetting dresses maybe not so much dads maybe not so much you actually want to go into the mall or another store and actually jump on the bed to try them out see if there's something that you'd really like so in those cases i could see you know going into the mall trying out all those beds and then saying could you deliver that to my house that seems really great but you know we should say that other than holiday time it is a five dollar delivery fee which is different from the something like amazon from
8:58 pm
which is a membership and then free delivery and you're good virtual as always your insight particularly from a new jersey and tell us all about this is very very helpful that's all the time for now but you can see all segments featured in today's show on you tube at you tube dot com. we love hearing from you check out our facebook page facebook dot com slash boom bust our teeth from all of us here is boom bust thanks for watching by. the site. i'm sick. mind. i'm a writer. and i'm actually sick for a politician the last. eight.
8:59 pm
years just to. peter. a pleasure to have you with us here on t.v. today i'm sure.
9:00 pm
today i. called it to thank you that's what airbrush will do for you what other field other than music particularly country music could you get away with saying hey look i'm having children and i want to just be with them for fourteen years and they say we'll be here when you get back plus i don't know if you know this or not but i don't have these talks with everybody you're one of the rare ones that's all ahead on larry king now. larry king now or over a c.b.s. studios in the valley in california our special guest is god brooks he is the biggest selling country artist in history and he has a new get this eight.


info Stream Only

Uploaded by TV Archive on