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tv   Prime Interest  RT  July 30, 2013 4:30pm-5:01pm EDT

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oh. that afternoon and welcome to private interests i'm harry i'm boring and i'm bob inglis let's get serious today's headline. it's official what bitcoins are under intense scrutiny and thailand the central the central bank of the former kingdom of siam said big points are not a currency and the nation's a legal infrastructure which includes capital controls simply does not have a use for big coins so it's illegal for thai residents to buy sell or trade crypto no one currency and issue and try authority said bitcoins cannot be moved into or out of the country rendering any current stockpiles worthless just contemplate that for a moment apparently alaska senator ted stevens internet tube simply don't exist in thailand which you would think renders the entire argument moot of course it
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doesn't so up next with senate laws gravity when here in the us the big points immunity is getting proactive about getting ahead of such legal threats there is now a committee for the establishment of the digital assets transfer authority or data that is working with regulators and authorities in fact there is another big conference going on today and we'll be covering these issues and this week and the meantime i'll be breaking down and other legal issue the volcker rule and just a bit and i'll be talking to richard wolffe about dysfunctional detroit in just a minute and speaking of dysfunction or capital markets might have a shining night we'll have to see but there's a new exchange in town. and it's expressly designed for large investors who do not want to be gamed by high frequency trading so instead of allowing client computers to sit right next to the extreme his own servers will be in a separate building so instead of the delay of ten million service like in the current industry standard the delay will be three hundred fifty million so the
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seriously folks this is what trading has come to. and this is what's in your prime interest. the troy its historic eighteen billion dollars bankruptcy has highlighted issues of inequality the divide in detroit between the city where per capita income is fifteen thousand dollars and the suburbs with some counties averaging income above sixty thousand dollars has fueled speculation over what exactly caused the city's decline was it the lackluster auto industry the unions the population slump or was it capitalism itself earlier i spoke with richard wolfe perceptor professor of
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economics emeritus at the university of massachusetts about the role of capitalism in detroit's boom and subsequent bust. just like cotton textiles made britain the capitalist leader in the nineteenth century the automobile really was what made american capitalism great in the twentieth century it took this small city and made it into a world city in one thousand nine hundred fifty there were almost two million people in the city of detroit as it official population and nothing talks about the reverse of detroit has to point out that today it's seven hundred thousand population less than a half of what it was capitalism was successful in making automobiles for a long time and it built the city up and it made this city successful by the way not just successful as an automobile center but it produced some of the greatest music of the twentieth century motown sound was as important
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a shape of world music as detroit was a shaper of world automobiles. and world capitalism and along the way the workers demanded a share of all of this capitalist prosperity they after all did the work and the united auto workers became an emblematic union it won good wages it won good benefits it can arguably be stated that the auto workers shaped the whole notion of the american middle class the american dream of that middle class that they could have a standard of living that included a home a car a college education for your child so yes this was capitalism as it works best up until the one nine hundred sixty s. at that point and this has to be faced as an honest statement detroit has been the emblem of capitalism at its worst of forty year decline that neither the
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auto industry nor the government of the state of michigan nor the government of this city of detroit nor the federal government had any clue how to reverse and so we now must sit in a final chapter of this stunning sale year of this same capitalism that brought the city up couldn't sustain it and has watched it deteriorate i want to learn a little bit more about your view of capitalism and you recently wrote an article for the guardian called detroit's decline is a distinctively capitalist failure so i'd like to first read two different quotes from your article and then kind of ask you a question about it now the first point is the automobile driven economic growth of the one nine hundred fifty s. in the one nine hundred sixty s. made detroit a globally recognized symbol of successful capitalist renewal then this was after the great depression and the war and then the next quote is true quality jobs in detroit were forced from the automobile capitalist by long and hard union struggles
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especially across in one thousand thirty s. so my question is if the jobs in the automobile industry were. forced from capitalism captured by unions been did we truly have a capitalist to troy during the boom cycles that you cite during the one nine hundred fifty s. and sixty's. sure we did because capitalism always repeat certain patterns and these patterns include the following capitalism discovers a new region or a new commodity or a new technology it takes advantage of it it makes needles of money out of it and then the workers who do all the work slowly observing how profitable it is how expansive it is begin to agitate for a piece of that action in eventually capitalists understand if they're not going to have perpetual warfare with the workers upon whom they rely they're going to have to share a little bit of the wealth that this system and those workers make possible you see
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exactly the same thing happening in china today where the workers particularly over the last year and a half have begun to put upward pressure on the wages that companies like general motors in china is being forced to give them capitalism typically displays the period of time when the wages are low and the profits i and then the transition when some of that has to be shared well certainly in china we see a number of problems i think not the least of which is that they're pegging to the u.s. dollar which artificially devalues their own currency and makes it difficult for people there to purchase their own goods but i want to get back to the role of the bailouts because you talked about companies finding a way to get around union contracts and they were hard fought but when it came to the chrysler bailout in two thousand and eight the united auto workers got forty cents on the dollar for their stake while senior bondholders got twenty nine cents
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on the dollar so it seems like contract law was violated by the government in favor of the unions. yes that sometimes happens if the if the stars are aligned right but the more the more interesting example would be the more recent bailout and in the more recent bailout you have exactly the opposite in the more recent bailout the one two thousand and nine basically the deal struck was not only to bail out general motors and chrysler with tens of billions of taxpayer dollars but to extract from the united auto workers an agreement for what's called a two tier wage system and what that meant was that the union agreed that after a period of time not very much if the auto companies came back and could hire more workers they would not be required to pay those new workers what they were paying the old workers the older workers were to continue to get their twenty eight twenty nine dollars an hour basic pay but the new workers which included the same people
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that had been laid off earlier would be pay eligible to be paid union accepted half that fourteen to sixteen to seventeen dollars an hour which guaranteed that when the automobile industry came back it would be very profitable for the company because they would be paying half the wages they had to pay for before which is exactly what has now happened but it also meant the death sentence of detroit because it meant that if the automobile industry comes back upon which detroit depends it wouldn't boost the city of new of detroit because the south. poverty line which is where you walk if you get fourteen or fifteen or sixteen dollars an hour as an auto worker so i think how these particular bailouts work the first thing to remember is bailouts happened because the private enterprises can't
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function anymore that's why washington went to detroit because g.m. said we're going belly up if you don't save us and chrysler pretty much the same and then the second question is when you go in and you use taxpayer money to bail everybody out how do you deal with the various parties that are part of any kind of general bailout arrangement and that will depend on who's strong when in this story you told we would going back several decades when the united auto workers was a large powerful successful union in two thousand and nine the auto workers is a former shadow of its former self much smaller much weaker when you see what the result was i just would like to clarify the example i was given where they got forty cents on the dollar was from the two thousand and nine bailout of chrysler but i just want to get i want to shift over to another city that went into economic decline during the similar period which would be the city of pittsburgh now they
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were able to grow back and they had a steel industry that was defunct but they were able to remake themselves why can't i can't detroit do this. well i think that has to do with where we are now we're not just in a crisis that affects detroit and women not just in a crisis that affects all the many other cities cleveland camden new jersey youngstown ohio where i was born these cities are like detroit they're variations on the same theme there are too many of them by not attending to these things long ago it's like a disease you catch it early you have a chance you let it fester you make it harder and. arguer today in the world we have a whole new situation which most americans have not yet been willing to face capitalists have decided having paid higher wages for one hundred years in the united states giving american workers the standard of living that was the envy of the world they
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now want to take advantage of modern telecommunications modern jet travel and have their cake and eat it to move production out of the united states manufacturing now also services and they have the whole world at their disposal and they're going to go where the profits are highest leaving the united states behind without the resources without the commitment and so you're not going to see what happened in an isolated example in the past when these conditions were present in the situation we face now with the kinds of problems require a massive government program if even that could succeed and instead we see throwing up of the hands the city of detroit can handle it pass the buck to the state they can handle it pass the buck to the president of the united states who says i'm going to rely on the local area well that's what got us into this mess in the first
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place if we don't do something we're watching a system fall apart which is why i insist that detroit is an emblem a model if we want a credit for a vibrant capitalism when detroit was rising we have to face what different kind of capitalism we have now when detroit is in such terrible shape we just have a bill that was my interview with richard wolffe professor emeritus at the university of massachusetts now coming up here again breaks down the volcker rule you know that little thing that was passed in the last three years ago to separate banking from gambling but is yet to be implemented then i do all our tea correspondent home via over iranians. in the conflict in syria.
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i would rather as questions to keep building positions with instead of speak on their behalf and that's why you can find my show larry king now right here on r.g.p. question more. look
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for every dollar something the feel good luck you won't find it here if you're looking for relevant stories unique perspectives on top of my skins an entire team . these senate banking committee held a hearing today on a mitigating systemic risk in the financial markets the focus of the hearing was to touch base with rule makers at the security and exchange commission and the commodity futures trading commission who. are implementing the expansive financial reform law that seeks to end too big to fail one of the provisions discussed today with six nineteen to ban proprietary trading by commercial banks this is also known as the volcker rule we've talked about this rule before and it's come up on under
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other names so why don't we stop here break down the volcker rule and make sure we're all on the same page by definition the volcker rule where the separate investment banking private act equity and proprietary trading sections of financial institutions from their consumer lending arms to put this in layman's terms it keeps a bank from gambling customer bank deposits to make a profit for the bank unless that is done on behalf of the customer theoretically a bank couldn't take funds out of your checking or savings accounts and invest it in the derivatives market now the second arm of the volcker rule attempts to put a limit on the size of banks to keep them from becoming too big to fail the volcker rule was proposed by former federal reserve chairman paul volcker he was appointed by president obama to head the economic recovery advisory board and proposed the volcker rule and response to the financial panic of two thousand and eight it was
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passed into law under the dodd frank act and is currently being implemented by the f c c c f t c o c c and the federal reserve but this has turned into a bit of a drawn out process today the f.c.c. chair white said implementation of the volcker rule under extraordinary complex rule making quickly walk you through this process first before regulators publish their joint proposed rules all the way back in october two thousand and eleven there was a four month comment period after that which got extreme pushback from banking groups saying it would be way too costly and that it was just filled it with loopholes even paul volcker. criticize the rules saying that they were too complicated and should be no more than just four pages then the c. f.t.c. who published their proposed rules which were over one hundred pages and during that comment period over seventeen thousand comments were made in july of last year
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the fed announced the banks have two years to conform with the rules but these rules have yet to be implemented occupied the as the c. filed a suit asking the courts to set a deadline for implementation and they also submitted a comment letter to the f.c.c. having found a number of holes in the rules so before glass steagall was amended and one nine hundred ninety nine proprietary trading and investments in hedge funds ag government backstop banks was illegal the volcker rule was intended to return banking to glass steagall standard but has been described as toothless and a necessarily complex riddled with examples so for example according to occupy d.c. there is a blanket exemption for repurchase agreements or repo which seems to deny the intent of the rule as it is a major source of funding in the bond and derivatives markets so while regulators are busy trying to implement this two hundred page volcker rule congress is working
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to expedite the process by passing its own laws a bipartisan group of senators introduced the twenty first century glass steagall actor earlier this year to separate traditional banks from investment banking so now that we've been over the volcker rule and glass steagall let's quickly review the purpose of these rules and laws their intention is to curb too big to fail or systemic risk however it's disputed whether these rules would have prevented the financial panic in two thousand and eight even senator warren has stated they probably would not and according to her reinstating glass steagall or the volcker rule was about building public attention around the risky practices lending. this is financial institutions are involved and the need for reform in two thousand and twelve the outstanding notional value of over the counter derivatives contracts was more than six hundred thirty two which were willian dollar. the gross world product
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that is the market value for the end higher world is only about seventy one trillion dollars our walk side of financial structure cannot stay this way forever to discuss more about how the volcker rule affects you follow me on twitter at parry n r t and now let's get to today's illegal. welcome to the daily duel joining me is already arabic correspondent rima. how are you good how are you doing great it's great to have you back here let's get to our first topic the cost of war is never easy to calculate but the a.p. recently compiled some numbers on the cost of war in syria since the start of the conflict syrian g.d.p. has been cut in half and unemployment has surged by five hundred percent what's
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going on in syria it's the war and that is what happens in times of war and people lose their jobs and the country cannot afford to keep up with the demands of the people and you have the war going on on one side you have the refugees fleeing the country you have all kinds of trouble that syria is facing right now and that's just a minor part maybe if there were these refugees going into how is this affecting other countries in the sorites and also putting a strain on other countries as well the they're basically going to jordan turkey and lebanon and these except for turkey maybe jordan and lebanon are poor country their resources they depend mainly on the. and so more refugees is definitely more trouble to their economy as well that's very unfortunate i just want to rattle off a couple more statistics here one in five schools and one in three hospitals are out of service of the total estimated one hundred thousand six hundred thousand more than a third have been civilians what are the collateral costs of this war and i mean
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can this be prevented is there anything we can do to prevent this in the future the war itself the word self and i think that's million dollars a lot of people are talking about how to end this there is only one solution to this which is a political solution and the pollution solution not because you can reach an agreement for the two parties but also because you can cut down the. you know the collapse of the tree is you know i mean about who are record the real backers of these two parties that's what i want to know major players international players they all have to say this is not quite right this is a proxy war everyone knows that this is a proxy war taking place on syrian soil like it did before and in lebanon and in other countries in the arab recent can we see what are the parallels that we see here between syria and lebanon in some of these areas i mean are we seeing the same kinds of instigation in even going back to the the revolution in egypt is there
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a pattern here it's history repeating itself there's a lot of it in soon i think and i wish people would just learn from history was so what the civil war and lebanon did to that country not only you know when it comes to the economy but also to the death toll of that country and what happened later on with the consolation efforts that are still network and other the same in syria and we saw that in iraq as well we saw that in libya and even tunisia even tunisia let's get to our second topic which is related and it has to do with the house of representatives is expected to vote on in iran and iran sanctions bill tomorrow the bill is expected to put further pressure on iran's oil exports so in order to get around the. dollar in europe sanctions iran plans to accept rupee payments for oil from india this is just one of those you know collateral things that's happening but what are the what are the effects of sanctions in the country a lot of people would say that the sanctions only affect the normal people the government is doing business as usual maybe not as efficient as they would like it
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to be but does the fact that people are only going to like we might not necessarily be friends of the iranian regime but it does have it does take a toll on the people and i mean even albright was famous kind of saying herself in the mid ninety's that five hundred thousand iraqi deaths you know which were children would be acceptable so the cost of sanctions i would say is quite palpable i mean what are your thoughts. again it's probably very unfortunate that madeleine albright said we don't know what's happening in iran right now but probably there is you know the implication of these tensions are very vivid and i know people who are in iran who tell me about things that they were able to do five years ago to do you know a lot a lot of a lot of things they have to do with their daily lives that have to do with their can you back and forth with their families they have to do with their education that have to do with
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a lot of things that really affect their lives and the quality of their lives that is prevented because of these sanctions my understanding is the iranian people historically have been pretty positive on the u.s. is that your understanding is that changing though is are these sanctions having an effect on the spirit of the people there and their thoughts about the u.s. . is there was a sense the across what what do you think i mean it's hard not to it's hard for people not to see how they're being punished for something that they haven't done and they have no control over it's the government doing things but they are being punished for it because they're the ones who are feeling the effects of this sanctions so i'm sure they have a lot of maybe towards the government they have a lot. of negative feelings toward the government not necessarily where the american people only saw jon stewart's piece on iran it was vivid least it was that iranian people you know are welcoming of the american people we have just less than a minute here is the us simply goading it everything is not just the us but the
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westerns the western powers that be are they just goading iran into war with the us is this really just a tool or sanctions actually a force for change for good or are they just really just a way to encourage a war in the future a lot of a lot of people a lot of people in the run itself would tell you that what the u.s. is trying to do is regime change and this is why a lot of people are opposing what the u.s. is doing not because they necessarily agree with the iranian government but because they don't think that it's the job of the u.s. to tell them which government they need to elect exactly rima thank you so much for joining me if you want to weigh in today's show be sure to like us on facebook at facebook dot com slash prime interest you can follow. and you can follow me on english p.r.i. thank you so much for joining me. and
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it was a day of truthiness here on private interest while it's true that thailand wants to outlaw big going out while the internet they are here to stay and the largest bankruptcy in america is to or now whether we're speaking with lou rockwell or richard wall the decline of detroit is obvious as the framework for an example that says and can use is the mass a while the senate banking committee is grilling regulators over mitigating systemic risk it seems the separation embedded in the propose. the poker world is a fun see as those various separations imbedded in our founding documents so here is a human history thanks for tuning in and will be back tomorrow from everyone at prime interest time period boring have a great night. wealthy
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the verdict is in army private bradley manning is found not guilty of aiding the enemy that charge carries a potential life sentence however manning will not be a free man any time soon coming up next more on the guilty charges handed down in the lengthy appeals process. and the world of medical tech advances we'll tell you about new technology being developed to influence body and mind the tools being used a beam of light or in this remarkable study coming up. and the government has given subsidies to nate to the nation's farmers but what would you say of taxpayer dollars were given to people who aren't even alive i'll tell you about this spending beyond the grave in today's show.


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