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tv   Boom Bust  RT  June 27, 2018 8:30am-9:01am EDT

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tory topic today financial and business headlines the supreme court of the united states has issued a ruling in the case of ohio versus american express siding with m x five before the majority opinion up held the provision of amex's contracts with vendors that prohibits vendors from encouraging the use of competing cards to amex with discounts or promotions the majority opinion written by justice clarence thomas found part platforms are quote two sided platforms and quote that interact with both customers and vendors and that it is a unique feature that justifies what would seem to be an eye competitive practice justice thomas wrote that in the absence of restrictive clause vendors could effectively capture sales from amex card holders while evading the fees by simply encouraging them to use different cards with a lower swipe fee at the time of purchase the decision expected have major consequences for resale and the race to capture market share in the growing cashless transaction sector allowing american express to retain
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a tactic that has given them a major foothold in. jumping over the atlantic it looks as if some businesses operating in the united kingdom are preparing to jump over to the continent bank of america or b. of a says they will move the offices of three executives currently working in london to paris the redeployment is meant to staff up the bank's operation in france but also reflects a growing recognition of the reality of brics and concerns over the troubled process that the current british government has seen an able to manage additionally b. of a says that dublin will be their post brecht it headquarters from for european operations and is in the process of merging that office with their london hub and another bad breakfast news a senior board member at the german automaker b.m.w. is warning that the company is prepared to shutter factories in the u.k. if importing parts becomes difficult. well after breakfast pm b.m.w.
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customer manager stephen move told from london financial times we quote we always said we can do our best and prepare everything but if at the end of the day the supply chain will have to stop at the border then we cannot produce our products in the u.k. and one bright spot london tribunals has ruled that over must treat drivers that work for the company as workers who are reportedly employees fifty thousand drivers in the u.k. any vetting basic employer obligations has been central to growth we will perch it will pursue appeals and the case may not be decided for years to come. bond markets may be sending an important signal but how many people are really listening here discuss is the founder and c.e.o. of money strong danielle de martino both the author of fed up danielle thank you as
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always for being with us let's start with the e.u. actually we just talking about them a moment ago and how are they doing it how is the e.c.b. the european central bank doing recently. well i think the european central bank appears to be having a deer in the headlights moment we had expected i think a little bit tougher talk out of the european central bank when it last met but instead we were told that it might not be until the end of next summer that we see the first rate hike come out of the e.c.b. there was an official on the wires in the last twenty four hours who actually through october two thousand and nineteen out there bart my greatest concern for the e.c.b. i've been writing about this recently is that they actually go into recession with interest rates still in negative territory that would put policymakers there and of in a very tough position in a very tight bind you know what do you do when you are already less than zero i mean where would you go you go back to me that they call it quantitive easing but
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you go back to bond buying again danielle i mean horrible search from since we don't want to go there but is that the only real avenue. well you know they they have been actually talking lately about some other alternatives to their bond buying program which they're trying to taper back they're hoping to complete that process by the end of the year one of the reasons that they're compelled to get out of the business of q.e. in europe is because they're running out of things to buy art so they're running up against the natural limitations of what the market actually has on supply and that's why they ended up turning to us based corporate bonds for example because there was simply not enough of the supply of high quality securities to be able to put on their balance sheet earlier this year there was a very splashy default where avon sitting on the east nice balance sheet was downgraded to junk and is on the verge of going out of business so tricky times for the e.c.b. running out of options and this is particularly at
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a time when we see germany and even the u.k. not going gangbusters with the economy so well to keep an eye on it as you say you know it wasn't but maybe ten days two weeks ago danielle we spoke about this said you're going to end the bond buying and they're going to maybe look at starting to increase interest rates that year and now they've sort of said wait a minute they're like the g.p.s. right there recalibrating so we'll keep an eye on it reprieve you helping us with that let's move back to the u.s. and here in the states with all the rising trade rhetoric with china and other nations in the trumpet ministration there's been some pretty ominous projections in predictions not yours i've just raised them because they're out there but recently the bond yield yield curve the difference between the short and longer term bonds has been touted as a potential problem and you know this may be one of these in some you know the financial system things explain to all the boom busters what the yield curve is why
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it matters and why some people look at it as a potential indicator of recession. well if your joke you bank you theoretically are going to charge somebody a higher interest rate bart if they're going to be borrowing out for longer because of your joke you bank you're taking on their credit risk for a longer period of time now if you're just making them alone for thirty days then you're not going to charge of nearly as much and that is what we call a normal yield curve where the short rates are lower reflecting that the risk is going to be taken on for a shorter period of time versus the longer you go on the curve in the case of michael sam in the u.s. treasury market that's the thirty year long bond you know economists start to get very nervous when they see short rates moving above long rates that's actually called a yield curve inverting right now the difference between the two year treasury and the ten year treasury is that thirty five basis points it's at the lowest level
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since two thousand and seven it is at a cycle low and it is flashing that there is concern growing at least view through the prism of the bond market that the u.s. is at risk of sliding into a recession even as the federal reserve as was reiterated by jay powell just last week in portugal that the federal reserve intends to raise interest rates four more times before all is said and done to get from two percent to three percent the implication for the yield curve is that it would indeed invert based on federal reserve actions to come that's very interesting thank you for explaining it are you personally concerned right now or are you think it's going to be ok. well look today we saw some consumer confidence numbers come out and it's very distressing to me when households report that their expectations for income growth are falling and yet that's what we were starting to see come out of the household
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sector we know that in certain pockets of the labor market that you could name your price as an employee and that that is having a detrimental effect on employers and their profits and my concern is again if hell soldier starting to see that there are fewer job opportunities out there and or that they have less in terms of power to ask for that price raise then we'll start to see a ratcheting back in consumption and that means that the communication the message that's coming out of the yield curve could very well be spot on yield curves never live art never forget that yield curves they never lie we will remember that we will take that with us and we appreciate you explaining it to us you're such an expert on this stuff and we're better for it danielle de martino boothby author of fed up thanks for your time danielle. a massive phone recall is underway in france cell phones after it was revealed that most cell phones exceed government radiation limits what does that mean for cell phone users
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here in the u.s. are to scurry when it didn't cohen takes a look in part two of his continuing series. for nearly three years the french government withheld the results of tests showing that most phones exceed the manufacturer's reported radiation test levels when they're held in contact with the body in the pocket in a shirt or in a brazil or c. manufacturers are not required to test cell phones against the body virtually everyone uses them they're tested at various distances some almost an inch away while that doesn't sound like much of a difference each millimeter significantly decreases the body's absorption of radiation so a tiny distance can be critical when a court filing and public pressure compel the french government to reveal its conclusions the public learned that some phones emit triple the amount of radiation manufacturer's previously reported among the phones tested or popular models made
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by apple motorola samsung and nokia it's being called phone gate in europe a reference to diesel gate the ongoing scandal in which german car manufacturer volkswagen manipulated tests to make the toxic emissions the vehicle spewed appear as environmentally friendly the bottom line is if phones were a drug they would be illegal because we monitor drugs we continue to look at the adverse reactions to them and we see whether they're in compliance with certain standards just like we know that drugs can kill you if they're not used properly phones can worsen the quality of your life and i think increase your risk of death from certain types of illnesses as well the phones recalled they're forced to reduce their radiation emissions with a software update or the echo star plus the alcatel pixy for the under eight the nephew x one and the orange happy thirty here in the united states our test systems
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are different and scientists say that almost all the phones france tested would exceed the u.s. cell phone radiation limits at body contact felgate has given us an. i opening in to what really goes on in the rig test systems for phones the i phone is the most popular smartphone in the world but few users know it contains a fine print warning deep inside if you go to settings then general then about then legal and finally r.f. exposure it says i phones are tested quote when warner carried against the torso of the body with five millimeter separation that means it's not tested where many people carry the phone kept in the pocket samsung is among the most popular smartphone brands in the world and its galaxy x nine is being hailed in media outlets but the user manual doesn't even contain any information about keeping the phone a distance from the body and f.c.c. filing shows that the galaxy s nine is tested at fifteen millimeters more than half
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an inch away from the body with rigged tests and the lack of reliable information available to the public phone may be the tip of the iceberg reporting for boom bust dan cohen r t. and time now for a quick break but hang here because when we return we'll be joined by britain's the author of collusion how the central bankers rigged the world to talk about global banking habits and their impact on the economy and i'll ask are we edging back to a problematic place with banks plus united parcel service has been around for about a century but has there delivered meant nothing change actually not that much when we come back we'll be joined by our discourse fine it's pretty obvious we take a long walk as we go to break here the numbers the closing bell oil up sharply today and general electric has the best day in three years with the price really up eight percent at the closing bell on the news of their sale of their distributed
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power unit at the order yesterday as well as today's news that they will also sell off their health care you will be right there. in the heart of the swiss alps this is a place probably more secretive than the pentagon more mysterious than the cia and better guarded than for knox swiss customs. it is controlled by them and they impose the opening times. opposite it is from his office the procedures in place of the strictest in all europe masterpieces by artists like pecan so and modigliani i can't boards and sold inside this warehouse that's where the report comes in it covers a deals which are naturally discreet commercially discreet step but also discreet because they concern fraud. some of those paintings are linked to dark secrets nobody knows how many of these secrets
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a kept inside the geneva freeport system you'll never obtain an inventory of all the works in the freeport who knows how many there are three hundred three thousand three hundred thousand is it a matter of confidentiality only is it the world's black box of the op business. camera. roughly once they showed some new play you for them. to. shoot your own cool videos during the boom. and some of them with the broken string and. down more on string i don't roughly don't t.v. . right we're all set to start in five. to seven and the studio has a signal. it's not going to talk about. just
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the right after the arse explorers one knew it would have their. food record. to sing last week. ok let's. hold them to sophie and tell him says the sheriff not sad today we've got lots to talk about in our program and our gas to. the right kind of. welcome back the consequences of recent tensions and tit for tat retaliations seem to be filtering into currency markets as china's you one fell to
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a six month low against the us dollar yesterday market watchers expect chinese policymakers to allow you on to slide even lower a weaker yuan in dollar terms would reduce the effect of u.s. tariffs by making chinese exports to the u.s. relatively more affordable the dollar's rise yesterday broke. four years a four day slide rather but analysts and investors seem to still be trying to figure out who will be the ultimate winners and losers of the tariff fight among the u.s. china and the e.u. the pound sterling fell by nearly a third in value also yesterday against the dollar and another currency news the turkish lira has been volatile in the wake of president heir to one's reelection climbing three percent in early trading before falling back to a one point five percent gain the. european leaders will gather in brussels on thursday for a regularly scheduled summit just a few days after an emergency mini summit on immigration issues failed to produce
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any agreement or consensus the mini summit was tagged by some as the summit to save merkel that's german chancellor angela merkel whose governing coalition is showing strains and stress fractures over immigration and refugee issues italian prime minister decepticon to effect only diverted the summit from the goal of an agreement on the distribution of refugees and migrants among e.u. nations by tabling what he called quote a proposal aimed at completely surpassing the doublet agreement which governs distribution of refugees now ms merkel will arrive in brussels hoping that her colleagues will be motivated to help her relieve domestic political pressure yesterday the president the european parliament published an essay calling for a hard line on immigration writing quote our citizens are no longer willing to accept defenselessness of europe the e.u. leaders agenda walsall include other thorny issues a european stabilisation mechanism to tamp down economic crisis that we're speaking
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about with danielle the euro zone budget and the european deposit insurance scheme to cover euro zone banks. and we have spent a little bit of time talking about european central banks and. economic issues with danielle de martino booth now we're taking a look at them again however we're not going to be talking rates or the yield curve in her latest book collusion how central bankers rigged the world nomi prins says that central banks have colluded not to help create growth but to simply create global artificial money and subsidies as they see fit joining us now is the author nomi prins nomi thank you so much for being with us a real pleasure to have you thank you so much ok so now you're a former banker right so you're not just you're writing from the outside you worked at goldman sachs you know this stuff so in your book you have a pretty interesting tale of monetary policy poor decisions and what you call quote
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gross negligence of their regulatory responsibilities contain to contain bank risk and fraud take us through this how did this all come about and what were the central bankers what was their ultimate goal here. well this goes back decades really but in the last decade since the financial crisis we had a situation where the major central banks in the world particular federal reserve were completely asleep at their job of being the regulatory body that is supposed to ensure the stability of financial system that is to say to secure some semblance of lack of crime of lack of broad of normalcy from the perspective of the rules that govern the types of things that banks can and cannot do and in the run up to the financial crisis of two thousand and eight as we found out the biggest banks in particular in the united states were manufacturing trillions of dollars of will now
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call them toxic assets were basically scooping up subprime loans and rejiggering them into many many multiples more of toxic assets leave and sold out the to the world and lent to investors and other financial institutions and cities and countries and so forth to buy more of for their own arsenals and as a result this massive amount of leverage of faulty of fraudulent assets proliferated the world when that all came to light and fell apart the banks got scared they came to the federal reserve and different governments throughout the world and said look if you do not subsidize us if you do not sustain us we're all going to basically close the former treasury secretary at the time hank paulson who had been the c.e.o. and chairman of goldman sachs when i was there and then moved on to the position of head treasury secretary under george bush at the time was on his knees in front of congress woman and speaker of the house nancy pelosi saying if you don't congress help the banks they will cease to give money to people so there's lots of fear all
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around in the result of which was the federal reserve turning around and saying ok we're going to bring rates to zero that will render the availability and the level of payment of money to banks the federal reserve's rate at zero so they will be able to receive through access to us whatever they. we need to sustain themselves throughout this emergency period we now know that emergency has gone on for a decade when i say collusion in this book what's happened over that decade as well is that it wasn't enough for the federal reserve to manufacture four and a half trillion dollars of money to buy assets and government securities from these banks in order to liquefy them but they required other g seven central banks around the world the european central bank the bank of japan the bank of england to basically create a whole subsidy for the entire financial system or the most elite banks of that system in order to be able to first sustain the u.s. banks and then sustain their partner banks banks are codependent like door to bank
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and so forth that's the system that we have now artificial subsidies of the financial institutions at the core of the financial crisis by the central banks colluded upon by the central banks that have distorted and manipulated markets and savings rates for people throughout the world so you gave a lot there but i want to dig into it and thank you for your patience with some of these questions so it was one the quantitative easing essentially zero interest rates but you alluded to it but just to be clear for our viewers this is after the seven hundred billion dollar bailout so that they were they were backed up so they made these irresponsible bets in part on these things that used to deal with the goldman sachs these c.v.s. is these credit default swaps based upon home mortgages that were some were good some were bad they mixed them up they spread them around and one of the problems that the financial crisis inquiry commission noted was that the valuation of those c.d.'s is was in the eye of the ball holders so nobody trades with bart and you put
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what is good for your books and i put what's good for my book and is that really when you say that it was propped up not after the crisis but before the crisis is that part and parcel to the problem normally. well it was because credit derivatives a credit default swap studios collateralized debt obligations which had credit default swaps attached and these are all bets on the ability of whatever's being better upon to repay their debt to repay interest along the way to repaying debt that's what a credit default swap is and so the idea of what they're valued at really depends upon what market participants are willing to pay if someone believes the market participant or a bank believes that there's credit worthiness behalf of something underlying a credit default swap and that that company will repay that mortgage will repay
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honor their debt honor their interest payments then then that is one thing that has a higher value if they believe that there's more risk in that repayment coming that value is lower and what happened going into the financial crisis with all of these instruments floating around is that these values were largely floating around as well so one bank could say all right will my credit default swap my credit risk is mitigated because for example i have an insurance company backing my credit risk which was one of the other players in this whole saga some can say it's not and so forth so when i wrote actually after i left goldman sachs my first book other people's money the corporate mugging of america i specifically said that it would be credit default swaps it would be c.e.o.'s because they are so hard to price because the fluctuations of value are so great depending on as you mentioned the eye of the beholder that these can cause without proper regulation a massive ripple in a massive destabilization in a crisis in the financial system which is ultimately what happened normally are
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we're out of time but i love to have you back to talk about whether or not given what's going on with the volcker rule and other deregulatory things whether or not we are edging closer and closer to a place similar to we were where we were in two thousand and seven two thousand and eight but we're out of time now normally prince the author of collusion how central banks rid the world bank not me for your time. thank you. united parcel service u.p.s. is about a century old and since its sept inception its delivery methods as crazy as it may seem haven't changed all that much for more on the development or lack there of here's our two correspondent trinity chose while online shopping is becoming increasingly popular it's a constant challenge for package delivery carriers to keep up with the demand but while some package delivery services are thriving like that axe others like u.p.s. are struggling to keep up and it's costing the company billions of dollars. and
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while u.k.'s is trying to satisfy america's twenty first century shopping mania parts of the package network are still stuck in the twentieth century according to the wall street journal the company still relies on equipment that's outdated and manual processes in fact several u.p.s. facilities haven't automated much over the last few decades despite the rush of new warehouse technologies in many industries c u p s's delivery networks still rely on hubs where workers store packages by hand only about half of its packages are processed through automated facility. whereas its competitor fed ex moves ninety six percent of ground packages through automated facilities that scan and group boxes with fewer workers and while u.p.s. workers are unionized fed ex workers are not but now the century old delivery giant is trying to play catch up but it's paying a hefty price to the tune of twenty billion dollars over the next three years which
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will go to opening new automated facilities and technology upgrades the company says it plans to process all packages except larger ones or packages traveling a shorter distance through automated hubs by two thousand and twenty two meanwhile the company also faces competition from online retailer amazon which is building a delivery network of planes trucks and vans to handle more of its own. on line orders according to the report profit margins at u.p.s. is domestic unit fell to twelve point one percent last year from thirteen point five percent in two thousand and thirteen while the unit in this same period added more than six billion dollars in revenue which hit more than forty billion dollars last year investors accustomed to u.p.s. as low spending sent its stock tumbling in january after executives disclosed that they would increase capital outlays while u.p.s. plans to implement more automated sites around the country the package delivery service has recently reached a handshake deal with teamster negotiators for higher wages that will impact
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a two hundred sixty thousand of its employees over a five year period however the deal still hasa be finalized reporting in new york today the charges are taking. and that's it for this time thanks for being with us you can catch bust on direct t.v. channel three twenty one dish network channel two eighty or streaming twenty four seven on pluto t.v. the free t.v. channel one thirty two or as always get us up at youtube dot com slash boom bust r t we'll catch you next time.
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i'm not. f.o.c. played golf. with the three hundred world and russian managers architects visionary stuff the largest international congress on the development of magazine july seventeenth twenty
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second so do your part business program interactive exhibition urban details on my suburban forum dot com. get into the world cup spirits ahead of their teams clash with brazil on wednesday a day that will see a number of other crucial games being played. while full many of the world cup is a nonstop callable of footballing following some seventeen thousand volunteers are working hard to keep it that way because shop with a fleet of helpless. and. national security adviser in moscow where he has already met the russian president vladimir putin.


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