tv Boom Bust RT September 19, 2019 8:30am-9:00am EDT
i. this is boom bust broadcasting around the world and covering all aspects of our 21st century global economy i'm daniel burrito in washington christiane is on assignment today shows just roaming with hot content and you start here in the united states where the federal reserve has cut interest rates yet again as demanded by president trump but what will this move mean for markets richard wolffe the prescient professor is on hand today to break down the future of the fed was amazon's algorithm is under a harsh spotlight today as recent reports allege the company's search tool favors the company's products offer and take executive alex out of earth joins us show today to give us insight into what the e-commerce giant has been up to and what legal challenges they could be facing so we guy just a little bit global business news to bring you the best market moving information let's go. another cut in u.s.
interest rates leads our leads our global report today as the federal reserve unveils an expected quarter point interest rate cut the 2nd in 2019 after 2 days of policy meetings a federal open market committee of the u.s. central bank said it would lower the target rate for the benchmark federal funds rate to between 1.75 percent and 2 percent in a policy statement the fed committee reference quote the implications of global developments for the economic outlook as well as muted inflation pressures as reasons for the cut 7 of the 10 members of the f o m c voted for the new policy while the fed was meeting it has been an interesting week for the overnight funding market as interest rates temporarily rose as high as 10 percent for some transactions on monday and tuesday the uncommon rate jumps cause u.s. central bank to rein them in stabilizing markets by wednesday morning. and while the u.s. central bank makes their latest. as he moves their counterpart in the european
union is marking an official leadership transition on tuesday christine legarde officially became the new president of the european central bank and the former managing director of the international monetary fund with 394 votes to confirm her in the european parliament 206 members of the european parliament voted against muslim garb and 49 abstained from the vote reuters reports the guard's latest financial policymaking position she will likely have to decide on whether and how the e.c.b. takes on a new investigatory role in a year's long cascade of scandals at deutsche bank reuters reported that e.c.b. staff are considering opening a formal investigation deutsche bank for alleged authorized purchases of their own securities specifically bonds classified as 8182. joining us now to once again orient as to the global effect economic events of the day is richard wolfe professor emeritus of economics at the famed you mass amhurst and author of
democracy at work a cure for capitalism richard wolffe professor wolf there is so much to get to here since we saw you last but 1st. let's go to the u.s. central bank the federal reserve which as expected lower the target range on the key federal funds rate by $25.00 basis points wall street seems to be giving another thumbs down on the rate cut so looking at this let's go to. let's go to the jay powell explaining the fed's choices they're cutting rates to boost the economy but here's what a poll said recently about the state of the u.s. economy. so we're not forecasting we were expecting a recession as i mentioned incoming data for the united states suggests that the most likely outgoing outcome i would look for the united states economy is still moderate growth a strong labor market and inflation continuing to back up i went through the numbers so the consumer is in good shape and really there's there's. or
or main expectation is not at all that they'll be a recession. and we've identified this disconnect before but mr powell says there's no expectation of a recession so then why the rate cuts we've been over this contradiction before but it's becoming quite glaring and i have to wonder how much longer can mr powell try to square his takes with the fed's actions. oh here's my suspicion of what's going on mr powell on the fed are under incredible pressure from president trump he is desperate and he's desperate for a simple reason if he expected recession and let me underscore that the recession is expected our capitalist economic system for 200 years wherever it is settled it has had an economic downturn on average every 4 to 7 years from the last downturn in the united states it's now 9 or 10 years therefore we're due and everyone who
pays attention knows it if the recession hits over the next 6 to 12 months mr trump can kiss his reelection effort goodbye it's over and he knows it so he wants the federal reserve to cut interest rates drastically which is why he was angry at mr powell today for doing it only a quarter of bowling the reason mr powell. paul said recently that we're not facing a recession is that's as much as he's willing to do for mr trump to join mr trump in saying something that is patently untrue namely that we have no recession to fear we do not only is it the normal pattern of our economy the type we have been has been for 200 years but we have the added problem economic war with china and drone attack in saudi arabia that revs up the risk of war between the united states
and the iran the collapse of the negotiations between britain and europe around the brags that question and a decline in economic growth in both china and europe those are more than enough complicating factors to make any reasonable economist very worried about recession mr powell statements are to mollify a president squeezing forward much greater costs than mr powell is ready to do and so we sit there with this contradiction as you rightly describe it seems like he mr powell is performing for an audience of one and that one audience member is still not happy with his quarter rate cut but we noted some important concepts for this action the federal funds target rate cut lands after 2 days of irregularity that in the overnight funding market that reportedly required perhaps $50000000000.00 or $75000000000.00 of unusual 3rd intervention we got peter schiff take on this
a nominal anomalous pronominal on yesterday but give us your take what's been happening with the overnight financing rate and what does this anomaly mean. this is a very serious matter starting on monday and then again yesterday and again this morning the federal reserve has now pumped in listen to this 123000000000 dollars 53 the 1st 70 or roughly 70000000000. the 2nd this is serious this is a breakdown in the credit market it's a short term credit market overnight borrowing and lending but that is a crucial part of the financial system of this country and of the world and has been for a long time to see a sudden move in interest rates from roughly 2.2 percent to as high as 10 percent in the course of a day and a half tells you something is wrong the normal planning hasn't happened the normal liquidity that the different players need to have isn't available so the federal
reserve has to come in and once again bail out the financial system all the authorities keep telling us is all what's a glitch it's a technical issue nothing to worry about that makes me even more frightened because that's the kind of thing they told us late in 2007 and $8.00 and we all know what happened after that we need much more explanation than we've been given for what this problem is and much more concern at the highest levels of figuring this out before we are going to be in a deep recession again wondering why we didn't pay attention to those signs and in retrospect were always there right back to mr powell is prognosis on the u.s. economy he may not see a recession in the near future but as you alluded to many people do and apparently that includes a majority of $225.00 corporate c.f.o. 53 percent of them polled by duke university said they expect
a recession in the u.s. within a year 67 percent see it starting before the end of 2020 so in soon enough to interfere with the election is mr powell in danger of developing a crisis of personal credibility and systemic business confidence based on his prognostication on the economy and also his reasoning for why the fed is doing what it's doing when it seems to be. clearly not credible. yeah i do want to save and though i find myself ironic about this mr powell is under extraordinary pressure he knows that there's a recession coming he knows on some level that he has to deal with it on the other hand he doesn't want to be seen as the patsy doing what mr trump is doing helping him to get reelected since he like mr dudley who said it publicly knows that mr trump is a big fat problem for the american economy let me point out that in addition to
those see if those you mention some of the most important industrial association the american grocers association the american retail association publicly yesterday and today excoriated mr trump for the global trade war on china which they say is threatening their business hurting their profits and in that way contributing again to the recession that we all know is coming mr trump is trying to hold it back and putting mr powell in an impossible position so he waffles which mr powell maybe could decide for doing but wow was he under conflicting pressures in terms of wanting to maintain the credibility wanting to do what's right not wanting to appear to be mr trump's willing to all this is a very difficult position for him and reflects the gap between what's actually going on with the american economy and what the president and people around him
keep telling us because they want us to vote for them next fall and we noted also christine legarde today formally taking charge of the european central bank while the question of investigating deutsche bank for a monopolist excel for dealing is working its way through the e.c.b. bureaucracy quickly do you have any insight or expectation about how that process might play out under ms the guards leadership. well she's been a very pliant and conservative friend of the banking system if she goes after deutsche bank it will be for one of 2 reasons either the behavior of deutsche bank is so much worse than what other banks are doing that it has to be done because of the risk of what it will look like if that bank folds which some people think it will and she will have not done something about it on the other hand she has to be very careful because if she goes after deutsche bank for
a whole list of misbehaviors you have to understand that many other banks do dollars things also and then the question will be raised by her subordinates if not by her if we're going after the bad guy what about all the others waiting in the wings how do we justify not going after them and that this point in a fragile global financial system major exposure of misbehavior by banks could be the famous straw that breaks the bank or the back of our economic system fascinating dilemma professor richard wolffe thanks as always for your time. thank you. and in international sanctions news the president of the united states claims that he has tighten the screws once again on iran the u.s. president who earlier this week suggested he was waiting for directions from saudi arabia on how to respond to suspected drone attacks on major oil facilities tweeted
that he has directed treasury secretary steven nugent to quote substantially increase u.s. sanctions on iran though president trump cited no specifics white house officials declined to clarify what if any specific measures had been approved experts suggest there may not be much space left for tightening the current punishing u.s. economic pressure methods being deployed against iran. president notably did not cite in his tweets the recent attacks on saudi oil facilities which is ministration have tried to blame on iran. time now for a quick break but stay tuned because when we return amazon's algorithm is under the spotlight today as recent reports allege this company's search engine favors their own products author and tech executives. in the show today to give us insight into what he has been up to and what could happen in the coming months and as we go to break here are those opposing market numbers.
to put themselves on the line to get accepted or rejected. so when you want to be president and you. want. to go right to be close this is what before 3 of the more people. interested always in the water. so what we've got to do is identify the threats that we have it's crazy. let it be an arms race. spearing dramatic developments only really. i
welcome back catching up with the corporate crime beat brazilian police reportedly are such a veil the 1st formal criminal accusations in the case of the collapse of a mining waste damn created near the valley by the mining valley mining company near the town of burma deano prosecutors would have to forward the accusations as formal charges but more bundles of formal accusations by the police are expected in a long investigation they collapse of the pile of water soil and toxic mining tailings out through medina was believed to have killed at least $240.00 people multiple outlets now reports that the charges against $8.00 to $12.00 individuals
will center on alleged false vacation and safety certificates by a paid safety auditor previous reporting by the wall street journal in 2 major stories documented apparent awareness of the risks among valley management and contractors including direct urgent warning by valley wharton. and india announced a ban on east cigarettes on one say citing the need to prevent a health epidemic among younger citizens the. she's finance minister amala sitara mon said the executive order will ban the manufacturing import export transport sale distribution storage and advertising isa great product and the country adding quote its use has increased exponentially and has acquired epidemic deportment proportions in developed countries especially among youth and children violators of the new law could face up to a year in prison and or a fine of 100000 rupees on the 1st offense with up to 3 years in prison and a 500000 rupee fine for additional infractions it is not yet known if there will be
a penalty for simple use of the products in the us the debate over cigarettes is isa gretz is still heating up this week it was reported that a 7th person has died from being related a long illness individual states have also taken varying measures including the state of new york which banned flavored cigarettes and while of a ping death reports certainly demand attention from us public health officials cigarettes the nicotine delivery devices that they were supposed to displace account 448-0000 deaths annually in the united states india for their part is the world's 2nd largest consumer of tobacco products behind china according to the ward world health organization nearly 29 percent of the mean adults use tobacco w.h.o. report also states that $1000000.00 any and die every year from tobacco use.
an economist in commerce giant amazon has been accused of adjusting their product search results to feature listings of amazon's own brands and products from other sellers that may and from other sellers that make the greatest contribution to amazon's take according to a report from the wall street journal amazon optimize a secret algorithm to push. said are more profitable for the company in favor of more relevant or popular items the journal reports the move was internally contested by teams working on the project more than 60 percent of purchases on amazon come from the 1st page of search results according to analytics firm jumpshot with this type of drastic change in the algorithm it could have a massive negative effect on those pushed off the 1st results page joining us now it's a breakthrough technology executive and bestselling author of the driver in the driverless car recently out in paperback alex welcome to the show alex thanks for having me on
i appreciate it now 1st of all just lay out for those of us non-experts what is this algorithm why is so important and how is amazon accused of monopoly. stickley skewing the results here. so any time you type of product search into amazon ok you're talking to its algorithm you're saying i'm looking for this it's almost the same as google when it spits back results to you it's algorithm on the back and is saying oh this person types nike air jordan sneakers and it will send you back a list of results that it thinks matches most closely your query. and amazon and there's literally hundreds of millions of products so because of that it can only send back a limited number of queries that will fit on the 1st page and in fact on your phone or on your app it will be even smaller because the window smaller you know why this is so controversial which you alluded to in the opening statement is because the
1st page of results tend to disproportionately capture more of the clicks and buys . and getting into the details of journals reporting they say that one rejected proposal for altering it went even farther and was rejected by lawyers within amazon is creating too much risk of antitrust issues the change to the algorithm that was approved was rejected by amazon's internal search team. a 9 on the basis that they said it conflicted with the company's own stated principle of what is doing best doing what is best for the company so i understand it's legal standard and this internal corporate standard are not identical but does that statement by amazon's own employees that they thought the customer was not well served create a significant additional legal risk for amazon in terms of building an antitrust case so i'm not an attorney 1st want to caution that i think though that that admission internally implies that the team that's building search is worried that
the best interests of the customer which is the essence of antitrust cases are not necessarily being served if the algorithm is skewed to have only now let's be clear there are skewed algorithms or skewed choices all over the economy any time you walk into a grocery store people pay or companies pay what are called stocking fees to get in on the 1st shelf or the top shelf so it's not like this is an unheard of practice it's about trying to strike a balance and in particular because amazon own such a large percentage of online searches for products by some estimates 50 percent of 1st products search of land on amazon people worry or the company worries and maybe the u.s. government worries that this constitutes antitrust and i can tell you for sure that authorities in europe are watching this very closely they've already gone after google for what they allege were similar behaviors in its maps in and search results. right and you know you're very apt to note the context here of the u.s. and europe diverging on exactly how we should regulate big tech and but doesn't
that point doesn't the mystery around this key element of the amazon apparatus the search rhythm doesn't that secrecy starkly illuminate just how one regulated big tech and online commerce are we saw some definite awakening in interest in the u.s. congress on search engines and european regulators are obviously gearing up to take that issue on and have a reckoning reg. reckoning with big tech and so that's becoming obvious as well a white house versus europe conflict but how does this latest report play out into that tangled transatlantic flight over profits and power. so i think this latest report as it gets digested on the other side of the pond in europe will become more fodder for any trust activities over there i think amazon is wise to be considering this internally and start to think about the implications of what's happening in terms of the secrecy of the algorithm i don't necessarily see that is the issue
because google's algorithm is secret almost all these companies when they have search algorithms or facebook's algorithms those are secret they're considered trade secrets so they're not going to publish them they're not going to the public know what the how they work but if they disperse results which are you know really skewed one way or the other then yes they're going to come better and to trust scrutiny and i would also say that under g.d.p. our which is the european data law data protection regulation companies are mandated to be able to explain algorithms in clear terms if they are questioned by users or by authorities so this may force amazon or google or others to give more clearer or more transparent explanation of exactly how they are making these type of selections interesting and getting specific here aside from the algorithm there's also the issue of amazon competing with their own vendors with their own branded products is it possible to any regulatory crackdown could go as far as
making amazon get out of this so-called private label business of their own branded products. i think that that's a much harder one to push i think it's possible but around that for example you don't see supermarkets being forced to get out of the private label product lines in fact they're growing that wal-mart's which is one of the largest retailers in the u.s. could be viewed as amazon la. and terms of its market share it has a lot of private label things and it also squeezes its vendors so i'm not as concerned about that for amazon i see some of the ways that they behave there's sometimes a bit of bait and switch or sometimes maybe it's really tough on the vendors on the other hand it's very different than serving up search results to consumers which may not at all 'd reflect the best interest of the of the consumers themselves right so you're saying they may very well be able to stay in the private label business but they'll probably have to tweak the algorithm. yes i think much more of
the question is separating search from commerce if it's possible to do that because it was you don't have search right people walk into a store they want to buy something and there's private label products and we see that there really limits i'm sorry and you see it there physically and you see it there physically that's right search you don't know what you don't know and even more so as we move into voice platforms like alexa the number of search results returned to you will probably go down and so 'd in that case the top results there maybe through results become even more valuable and more clickable. brave new world alex author of driver in the driverless car just out on paperback thanks for joining us thank you. and turning from amazon's e-commerce business to their streaming service amazon studios has announced that they will shoot their new lord of the rings' television show in new zealand the country was also the setting for middle earth in peter jackson's at the lord of the rings movie trilogy which was
released from 2001 to 2003 the t.v. show is expected to be the most expensive ever produced with the budget to be more than $1000000000.00 new zealand is hoping the program will boost their economy once again as filming of this nature creates jobs and the initial films greatly reduced and tourism to the country the series is expected to follow the characters of the films prior to the events featured in the movies the. production was eyeing the beautiful countryside of scotland for this for the series but reports of uncertainty over brooks that caused the studio to decide to stick with new zealand and that's it for this time you can always catch boom bust on direct t.v. channel 321 dish network channel 2 or streaming 247 on t.v. to free t.v. channel 279 or you tube. archie see you next time.
thousands of american men and women choose to serve in the country's military and the decision. every song came to a complete. the day that i was right. you know what they'd kill me and i see how it destroyed my life any screamed at me and he made me come in and you grab my arm and he write me. if you take into account that women don't report because of the extreme retaliation it's probably somewhere near about half a 1000000 women have now been sexually assaulted in the us military rape is a very very traumatizing tapping but i've never seen trauma like i've seen women who are veterans who have suffered military sexual trauma reporting rape is more likely to get the victim punished than the offender and almost 10 year career which i was very invested in and i gave a sex offender who was not even put to justice or put on the registry this is simply an hour in violence male sexual predators for the large part of target
whoever is there to prey upon whether that's a man or woman. this is a story about what happens auster a stray bullet kills a young girl in the streets. what happens to her family my daughter's in florida you know the mother daughter is everything is going terri is healing this is we are . your head what happens to the community the public was screaming for a scapegoat the police need is a scapegoat so why not choose a 19 year old black kid with a criminal record who better to pin this on than him and what happens in court be the. shock shock smar society we deal. we don't know she'll just from. the end of this trial unfortunately you. will still not know childress.
saudi arabia points the finger at iran over last week's drone missile strike on its oil refineries citing the sophistication and direction of the attack as evidence to run against the. us keep sought an allegation is found as well as self-proclaimed interim president has links to a drug gang on the spot washington making the same claims against the country's previous leader hugo chavez. and a new report reveals that thousands of children in nigeria were being held in dire conditions without trial over their alleged association with terrorists we spoke to one of the authors of the report.