tv Prime Interest RT July 9, 2013 8:30pm-9:01pm EDT
good afternoon welcome to prime interest i bob english here in washington d.c. here are the stories we are telling today there's a sea change in the markets that is putting the squeeze on china and other emerging markets not necessarily intentionally that's because when ben finally pulls the plug as he's been signaling those markets get hit hardest we'll be talking about the road in irish banks with reggie middleton a boom bust blog dot com in just a bit. we'll also check out his new google glasses which you said could be bigger than the i phone oh tim cook and speaking of sea changes live or is crossing the pond from the city of london to wall street so nicely your next will cite one of the world's most important interest rates library to which trillions of derivatives are tied so without further ado let's get to what's in your prime interest.
earlier i talked with reggie middleton owner of the boom bust blog dot com he entered the room wearing a pair of google glasses so i asked him how he got them here's what he said. he had a contest i'm not mistaken as a what do you do with glass and they also give it to developers influencers etc i don't know if i fell into the influence of group a developer group or someone who just had fresh and bright ideas hopefully all three. and that was the most likely
would give me the opportunity to progress let me ask about the grass yes. i got the grass because a i been very bullish on google and consequently bearish on a lot of the primary competitors and to date i've been correct and i think the grass is a paradigm shift in mobile computing in telecommunications basically a game changer you know it's grass to google would be much more than the i phone was the apple i think about the reinvention of the cell phone well let's not talk about yeah let's talk about your bullishness on google is this just a result of these glasses themselves or are they developing other products that you think could be game changers as well. my bush is on google is not so much a product issue it's a business model issue. for those who follow me to my site from other parents is i believe google significant misunderstood a lot of people think of google as a tech company that comes out with technology such as android developers things
such as you tube it said it was search what google is google is a business model incubator and it's funded through heavy cash flows from the advertising business which is still growing and is growing faster than the web advertising adoption which you know in the never itself says something the funds from this cash flows then go into what is essentially a gigantic venture capital fund in a private equity fund and they take ideas either internally generated. or they buy you know small medium sized startups and they nurture them hopefully have them flourish through this business model you've gotten you to you have android you have several you have google grass and many of these are the top of their of industry a field from almost nothing in just a few years and went from less than one percent to over fifty percent and in some cases seventy two percent of the market since two thousand and seven talking about
we you know five years phenomenal same thing with you tube you tube is video on the web the grass is the same thing and what google does is google use what i call a negative margin model or a cost shifting mother model where they take very cool technology and very useful services and they offer it for less than free so not only do they that should represent the option but it makes it very difficult for the competitors that come in behind them to compete because they can't make money as a matter of fact you have to give the client money to get the service is just to people google google is able to do that because they take the natural consumer and match it with a natural producer and then they have to cross over to the producer and we from the consumer and you know the result is what you see now in google in android well let me ask you with all this new technology there are several privacy concerns us noted isn't it in the news how do you see google fitting into this privacy landscape.
well google i'd call google basically the big brother trade on exchange who is a company that is data driven it's a data company you know their business model as they i see it is basically to be the cake keeper and shepherd of data and information on the web ok that makes them a very very powerful company with that being said who would do it somebody else would do it so much as stated before google the privacy concerns you know outed by snow through the n.s.a. it's. extremely valid but you know they were there you know they and they say it's a spy agency that's what they do anybody who's concerned about google glass should be concerned about anybody else with a cell phone this is basically a cell phone in a different form factor anybody's afraid it was so phonograph should be free to walk down the street particularly new york city with a camera on every other corner certainly and then there is the united states satellites so probably sees a big issue everybody should be concerned but you should be concerned.
you should be concerned of the problem and not necessarily a proxy for the problem and that's you know new technology etc we have just a couple of minutes left but a lot of these tech companies have been parking money in ireland and i know you've made an interesting discovery about allied irish bank and would you like to share that with us right now. allied average bank among other banks even the pristine relatively pristine bank of ireland anglo irish is in my opinion in and i'm not a lawyer so. misrepresenting investors in a public you know it in layman's terms some people considered for the fortunate but quite misrepresent there is quite misrepresenting in both their reporting and their . presentation of health i like irish is insolvent from my perspective they have a large amount of underperforming loans now before loans and the under reserve for
the on the reserve significantly add on top of that is how does this fit into the rest of europe in other words i know there's an s. and bailout fund and what are they going to do are they going to draw on that and how does that affect the other countries in europe. was different to what they're going to do but still a couple of observations out allied irish if they were to mark to market has roughly twenty billion dollars or twenty billion dollars hole solvency hole so in order to be fully funded fully prepared. for underperforming non-performing loans using their measurements which are most likely. overly aggressive they are roughly a twenty billion dollar hole to be considered solve it is said is roughly sixty five billion dollars you why so one bank in a country that represents roughly two percent pro rata of the economic activity in all the e.u. would take almost one full third of the bailout fund the e.u. and we hear a lot about bailouts but there are also billions could we see that in europe and
could you explain what that is for our viewers and how it relates to cyprus well billion is a term where they force the recapitalization from the depositors versus the taxpayers or any other source. in the layman's term is that you have a savings checking account pension fund at a bank and they simply take your money to recapitalize the bank. that may seem odd but as a deposit or you're basically an investor in a bank very very short term supposedly liquid investment but it's not liquid if you can gain access to even with the new direction of cyprus with insurance insurance is a misnomer for us to have to take a look at who's assuring you. if the n.c.v.s. insuring you is that insolvent such as ireland then you. should be sure by and saw it and city island can afford developed irish banks which is why they had to go to the e.u. and the troika ok now the political environment for such a seems to be inhospitable it's unlikely the germans are going to say ok to another
twenty thirty billion dollars bailout for that bank and i have in my side of name five other banks and insurance companies that are also in their issue so we have almost a guaranteed bill and we have almost from my perspective my observations of how gracious again would see capitalization before us for the deposits. that was the owner of boom bust blog dot com reggie middleton. this week negotiations for the teach hip launched very few are talking about it and it's getting a little media coverage i would bet most of you haven't even heard of to tip so let's break it down the transatlantic trade and investment partnership for short is a trade agreement between the european union and the united states aimed at
removing trade barriers to make it easier to buy and sell goods and services but the e.u. and the us this is a very large trade agreement one of the biggest in history it is a result of the world trade organization negotiations falling through in the so-called doa development agenda the u.s. refused to eliminate agricultural subsidies while india and africa is facing suppressed cotton prices the u.s. has been stubbornly propping up and farmers this is also a contributing factor to the spike the suicide rates among andean farmers cutting out the problem nations the e.u. and the us are looking to reduce tariffs and subsidies of their choice that distort commerce the e.u. is expecting to benefit by one hundred nineteen billion euros a year and the u.s. is expected to add about a million jobs as a result of the deal along with shaving down tariffs and subsidies the negotiations will include measures to reduce inconsistency and u.s. and e.u.
regulations but entrusting li anough the white house is insisting that dodd frank is not included in the transatlantic talks however wall street and european finance ministers do want these financial services regulations included senator sherrod brown have brought up the point that the industry will use any means necessary to roll back dodd frank which could be accomplished in trade talks that many corporations are largely involved in u.s. trade representative assured. during his senate confirmation that the negotiations would not have watered down too big to fail regulations. there's nothing that we are going to do through trade agreement to weaken our financial regulation to roll back to frank or to roll back the efforts of the administration and congress worked on for the last four years to reform our financial regulatory system here and to work for the g twenty and other mechanisms to raise the standards around the world . rules surrounding derivatives trading are some of the most controversial
provisions in dodd framed they fall into multiple jurisdictions and would require international cooperation to be effective the obama administration alleges that the e.u. wants to soften died for a top u.s. official handling the financial services talks so the e.u. is not seeking to weaken its own or the u.s. achievements in developing legislation that strengthens financial stability the negotiations kicked off yesterday in washington d.c. but were not without their own a drama last week a report was weeks that the u.s. had been spying on the e.u. negotiators edward snowden is the source but believed to have leaked these reports france and germany were outraged and some parliamentarians called the first suspension of the talks we've heard of before that trade deals are done behind closed doors and largely secret which is a far cry from the standard of democracy and transparency expected from public
policy only if you have access to what's going on behind those doors but least you know a little bit more about it. stay tuned because coming up geoffrey tucker no talk of both the future of fed policy interest rates and an impossible gold standard then i are to correspondent margaret hold over the recent surge in consumer credit. well. science technology innovation all the latest developments from around russia we've got the future covered. the worst cure for those things. white house sick of the. radio four minutes from a quick fix what you want. to do because you've never seen anything like this on
quickly. with the latest fed meeting minutes being released tomorrow and ben's big speech what could be more relevant than some good old fashioned fed talk earlier i spoke with jeffrey tucker executive editor of laissez faire books i asked him of. the fed's track record since the financial panic of two thousand and eight here's what he said. since two thousand and eight especially the fed has been unable to manage the money and banking system no matter what they try to do it doesn't behave the
way they want it to because there's a medium are really good at printing money but they're not managing it properly. they can take control of the coffers of the banks and that's essentially their job despite all the talk that the fed gives about keeping unemployment you know low and inflation low and of the main job of the fed is to keep the banking system liquid they can do that very well but they can't control the philosophy of money which is a crucial factor in terms of determining moneys value so since two thousand and eight businesses and consumers haven't really cooperated with the fed and things about behaved at all the way but i think he imagined they would be if you notice recently we start to see the bernanke is certain to get very worried about the future because we've got a banking system that's full of reserves most of them phony of course you know one of the one point seven trillion dollars of excess reserves what's going to happen with all this money is he going to be able to keep it in you know in quote the system there's no way that he'll be able to pull back from what's already been done
because you could say he started sort of pulling there is reserves out you threaten a big recession again and you lead to an instability of the banking system so it will eventually leak out once confidence grows and that will be very bad news for everybody else so prices and consumer prices will start to respond in the ways they have it over the last five years are already a very scary situation are there alternatives gold is a very popular alternative money system of course we had a gold standard in the past but what about bitcoins i mean what is the future of money. i would like to see a future of money in which the market was entirely in charge in the same sense that the market managed the shoes and our food supply and. computers and software industry it should also be managing money and that includes even the creation of money or the production of money itself the trouble with the gold standard and it's you know the gold standard is far preferable to our current system in which central
bankers are running the world you know on behalf of the large banks basically but the trouble with the gold sound is that it depends on politicians to implemented you know they have to be ok no we are going clip right the politicians can at the end of the day they can always change the game and that's a problem with public money they've done it already you know they did in the new deal those collected all the gold back in their eyes changed the definition of gold to the dollar and that's the problem with any system that's still in the hands of politicians you know after a high if the end of his life after got the nobel prize in economics said look there's really only one term solution that's a total separation of money and banking some from public policy entirely and that's the beauty of things like crypto currency it's trick crypto meaning cryptography meaning that little bit harder you know because like big clients and they're all they're all clients but because it is sort of the gold a very of a cryptography world right now it relies on a sort of peer to peer system of exchange that doesn't rely on trust of third
parties so you don't have to go through any banks or any credit card companies you don't have to trust anybody you just exchange physical property for other physical property that's a distributed network so it can never go down so you can never lose your money. an open source system so you can always examine the code so you don't have to have you know audit the fed movements i mean anything like that so everything's open source it works it's like the monetary equivalent of really good software like linux or wordpress or something like that and it's suitable to the digital age and it's trying to catch on you know we have to remember that decline was only released into the world and two thousand and nine and it was only in february two thousand and eleven that big kind of cheap dollar parity so you could exchange one big client for one dollar. and that defied everybody's expectations nobody expected it would ever get to that point really and no many many and especially it's as specially getting to over one hundred forty dollars per bitcoin there's been
a lot of volatility though and is let me just as you straight out are bitcoins money. so i would say that and a limited sense because they're already money you know whether something serves as money or not it's not quite a black and white thing in the history of them evolution of monetary institutions certain commodities gradually become money over time as their use spreads and spreads and spreads so we're starting to see massive use of big claim and places like china where they're just wild typically it's ok but i mean can you pay for your groceries in bed coins how do you justify that we have a cheese that achieved that evolutionary step right now why we say because our money right now so i would say that is just a matter of the development of the institutions i would just give you one example until about two months ago i couldn't go into wal-mart and used to climb or to target or into a pizza hut now you can and so you must social where it is right yeah well what
made the difference well it's a special application you know so that you have you know about occasion go through the gift app you know now you can purchase to. get certificates from the stores with decline it just takes a second and they use a gift certificate in the store that's one step removed but it allows you to stay completely away from government money and just buy what you need using because that's a huge step in other parts of the world because they are enormously valuable in argentina for example you can pay all your rants and buy homes and cars and everything crime where big players really popular is where the money has really really failed government money surely fails americans have the kind of luxury of having a relatively stable currency you know the dollar and in terms of all the. currencies in the world is probably one of the least bad for now so we see less demand but in other places like like latin america and africa former soviet republics and china
all over the far east big claim is growing in popularity all the time because because transactions fees are minimal ten being nonexistence it's super secure you know and you can really trade this physical property in a matter of seconds for just a couple of clicks well by bypassing the entire banking system. that was jeffrey tucker the executive editor of laissez faire books. all right welcome to the daily deal margaret margaret how you are having me all right let's jump into our first story according to the washington post america is starting to really leverage itself that's the implication of new data out monday
afternoon that shows that consumer credit cards auto loans student loans basically every form of debt other than mortgages is rising by leaps and bounds now according to the federal reserve monthly report consumer debt rose nineteen point six billion dollars and make an eight point three percent annual rate so if that rate continues to increase and sustain it what made extra two hundred thirty five billion dollars what do you what do you see this trend as maybe you know but i think that neil irwin article he is right unfortunately because we are a consumer driven economy i wish you weren't right unfortunately is you know that two hundred thirty five billion it's being pumped back into the u.s. economy of course it's debt but it means jobs are very cans in outlook you know i mean i'm just calling it like i see it bob you have you have to have jobs in this economy and consumer we're in a consumer driven market you know we have to have jobs were those jobs coming from recently they're coming from housing and who's blowing this latest housing bubble it's a federal reserve it's only because we're keeping interest rates artificially low
over this long period of time that we're seeing this latest rise in consumer spending and it's not a good thing you know why because look these rates are going to go up and they're not going to be able to pay off people are not going to be able to pay off their debts they're going to default and we're going to have another day leveraging cycle like we saw in two thousand and eight that you're not getting any argument from me there i think my grandmother could do a better job at managing the fat and no question about it but we're in this hole already going to be a grandmother you know i mean. this is terrible lady if she would be better at this because it's simple we don't spend money you don't have and portals we don't know we're already in the hole the only medicine that we have is to keep spending or we're going to collapse like we did in two thousand ok but if i what point is that stuff if the only medicine we have is a keep spending and spending and spending ultimately you're going to prolong the pain you're going to have a greater crash than you would have otherwise if you just take your medicine right now you know we could leverage our debt i mean you're the we are looking at here i mean you know i don't i don't know if i'm assuming that term deal leveraging it's a company that attempts to download its bank she they get rid of their debt or they
think well it's ok a deliberate cycle is when you have for instance a seven hundred trillion dollars derivatives market that just collapses in and of itself people default on their loans people default on other things corporates default on their and you know what it causes a cascading reaction throughout the entire economy and if it's not managed properly and otherwise in other words if it's inflated too quickly and too fast in the first place it can't be managed and that's the ultimate problem here ok about so neil's not right what should we be doing i mean i mean we've got to spend i'm telling you until it's the system that they need to change not the fact that people are getting to debt to sustain that middle class you have to have debt there's just no way around it i don't see it that way i think you can have debt but it has to be accompanied by wealth creation and that's one of the things that we haven't seen i'm going to reiterate this point we have not seen true wealth creation over the last four or five years it's been artificial g.d.p. is gamed ok price inflation really is overstated and i think we're understated
rather so i think we're going to see a greater pain in the end just because of all of this ok well economist richard well my colleague pointed out he calls this the crisis of capitalism but until you fix the system i'm sorry my friend i mean we don't have to we don't have a capitalistic system we have crony capitalism you might be right on that you might be right on that ok so let's take the argument to a different place should we be paying higher wages maybe not so concerned with the debt is going to minimum wage and. just people in other i mean come on what's the ideal minimum wage a million dollars two million dollars to twenty an hour i think would be ok good so i've just found another central planning there are parts that i think you're smarter than the rest of us are i hope you're right and i do agree that if you for joining me on the door here if you want to weigh in on today's show be sure to like us on facebook at facebook dot com slash prime interest you can fall of margaret maggie how r.t. and you can follow me at english p.d.i. thank you for joining me and my question.
guess what it was a vagabond day here at prime interest first we hitched a ride on the live board juggernaut landed on wall street only to find the real action was in the brits and ireland after donning some google glasses a new york city with reggie middleton we looked across the atlantic to break down that particular partnership not liking what we saw we took a trip in our car down i ninety five to d.c. right here to spy on our favorite chairman seems he's up to his old tricks finally we hiked the mountain of consumer debt with margaret howell only to find a pool of untenable obligations well guess what our legs are tired so we're going to go rest now thanks for watching and make sure to come back tomorrow from
with mike's concert for a no holds barred look at the global financial headlines kaiser reports. today on larry king. talks politics i want to show a president said if you applied two wars and balance a budget at the same time you should be able. to that of course sex church has had its hand our crotch for over two thousand years plus. if you only knew you remember the first person you kissed i remember our name. that's all ahead on larry king now. welcome to larry.
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