again, is interesting. could be. you can't prove -- >> no, that can't be! >> you cannot prove that that is false. >> what?! >> disprove it! >> i am not your lover, dylan. >> all right, fine. all right, fine. i feel like we need to be clear -- anyway. i wouldn't, why do you think the people feel that way? i was thinking about this, and i think it has to do with the fact that you are -- let's be honest, there are certain clear differences between the two of us, right? >> there are. >> you're short. >> so you continue to remind the audience. >> and i amç tall. and yet we're able to find common ground by virtue -- like, we're proving that tall and short people around the world can get along. >> i don't think that's particularly revolutionary, but i'll tell you what, stretch, take it away. >> all right. here we go. show starts right now. well, the big story today is

dysfunction in d.c. surprise, surprise. good afternoon to you. i am dylan ratigan with a candy cane pen, i might add. next hour, our house republicans, who could certainly be -- well, they're not festive, okay? they're forcing a vote on the payroll tax cut extension and long-term unemployment benefits, which are marginal benefits to those who are most desperately in need of assistance in the short-term in a country that's being extracted, okay? but the republicans have decided, even though this is an issue that we should try to help in the short-term with the people who are most desperately in need, the republicans have tied a completely unrelated issue to unemployment, to tax -- nothing. which is a pipeline rider to try to force the approval of a pipeline, something that has nothing to do with tax policy, nothing to do with unemployment benefits, not to mention that the votes aren't even there to do this, and even if the votes were there, the president has

promised to veto this pipeline until further review. so once again, the politicians that we elect and pay are holding us and our fellow countrymen hostage, the most vulnerable, the most particularly put upon in our country, are being held hostage by a faction in this case of the republicanç party. democrats love to do it too, by the way, for their own special interest-driven agendas. i'm sure these politicians are getting money from the pipeline people. >> the house will work its will today. >> the president also says that we can't wait. well, exactly, mr. president. we can't wait. that's why we're putting forth this bill. >> this house will not wait. this house will pass the bill. >> if senator reid wants to hold up the jobs bill, then he will go on santa's naughty list. >> i don't know if our politicians really think that we're just morons. why they think they can get away with that is beyond me.

i guess it's because they know that it's a bought system that's gerrymandered, and as a result, even though we all know it's corrupt, they feel confident that we can't change it, because taif they've got the whole thing coming. and by the way, the government shuts down without a spending deal by friday night. nbc's luke russert is live on the hill. we thought this tweet put it well. it says, "for what feels like the 624th time this year, the federal government will run out of money unless congress acts." i want you to play psychologist with me. >> reporter: i'm on the couch. >> it's observable that six industries, energy, health, banking, trade, agriculture, communications give money to both political parties to ensure that both political parties do not resize the tax code, trade policies, or bank policies, so as to harm their interests. it doesn't matter if you're democrat or republicans, they are paid to not do this. now we are watching, literally,

a small piece of assistance to those who could most benefit from it, at a time whenç there this tremendous extraction, there's record unemployment, record poverty, and instead, they're putting a special interest rider for an oil pipeline into a tax and unemployment bill that's a temporary fix. and they believe that this is a credible treatment of the american people. do they actually think that what they're doing is not criminal and abusive and destructive to this country? in their head. >> well, it's being done to try to garner votes for the republican package, dylan. and the thing you have to look at here is that unemployment benefits and an extension of the payroll tax cut holiday, as a lot of ideological opposition from very conservative house republicans that view that as two programs that don't work. they see the extension of the payroll tax holiday as a, quote, sugar high. they see extending unemployment benefits as partaking in a failed program that will not help people get back to work -- >> can i interrupt you there? >> reporter: sure, go ahead.

i don't even necessarily disagree with them, by the way. these are temporary, stopgap measures. the real issue is a multi-trillion dollar extraction through a trade deficit, a tax code that looks like swiss cheese, and a banking system that's fundamentally corrupt in purchasing our government, so that we'll subsidize a $700 trillion swaps market. so i agree with them. here's where i have issue with the republican rhetoric. they say, okay, these short-term stopgap measures that are only short-term -- okay, you want to object to them? then why don't you get after it and fix the hole in the bucket, but these very same republicans that you speak of are happy to take money from the banks to facilitate the extraction, are happy to make money to rig the tax code, and are happy to take money to rig the trade policies, so quite candidly, i don't see how they have any credibility to indict what you're talking about, when they have every opportunity to stop the major problem and take money t] actually create it. does that make sense? >> what you're talking about, dylan, is if you want to take a big, broad look at it is the money in politics, and i'm here every day, it's real.

don't kid yourself. the amount of money that goes to both sides from those industries that you mentioned, those kind of six or seven ones, have a real effect on policy. and the reason why is the best chance of getting re-elected is to have money in the bank to go against any attack that's going to come against you. you mentioned gerrymandering. the majority of congressional districts now are safe as can be, even after this new redistricting that went off in 2010 census. the big story here, though, is if all the things you want to come true, for them to happen, the only real way to do that is, both sides will admit to you behind closed doors, is you've got to get money out of politics. and how well does campaign finance reform go? mccain/feingold, that got gutted. >> but how well is the 28th amendment debate going? so there wasn't even a debate about this a few months ago, and at this point, the american people are ready -- >> that's the thing you mention there had. occupy wall street and the

favorite, i'm sure if you polled a lot of them and said, let's get money out of politics completely, let it be a government of the people and let the ideas flourish, you would probably see a lot of agreement there. >> and we do. >> reporter: and the status quo lives on as long as money is in politics and that's going to be answered and debated by the supreme court, which after citizens united said, let it go, let it flow. >> thus the need to amend the constitution, luke. thank you so much. >> take care, dylan. >> now to a man who knows how to navigate through the pro wrestling, in fact, he wasç a o wrestler, ed rendell, former democratic party leader. we know what the issue is. i do not -- what's interesting for me, governor, is this. it is so important, the disingenuous nature of attaching the pipeline legislation to this or indicting this as a short-term fix while taking money from the people that are creating the long-term problem, on both sides of the aisle, i just wonder how long the people in washington actually think they can continue to behave this

way and not deal with an extraordinary set of consequences from the people of this country, from every side of whatever aisle you want to stand on. >> well, it is cynicism of the highest degree. throw something like this in a bill that's all about jobs and all about financial security for working people, it's reprehensible. in fact, in most states, it's not allowed. most states have something called a single source doctrine. so if the bill itself is about jobs and finances, you can't throw something completely extraneous in. now, i happen to support the keystone pipeline. i think with proper environmental controls, it's very important to energy independence in our country. but it should be part, dylan, of an overall energy bill. an energy bill. not a jobs bill or a bill to protect the middle class. and that's how we should vote on it and that's how we should debate on it. not stick it in as an amendment without debate. >> just to understand how this happens, and tell me whether i'm being too cynical, the bill's coming forth, everybody knows it. ultimately, i presume, this will

pass in some fashion. meaning the payroll tax cut and these extensions, all this is sort of nonsense, right? >> well, i'm not -- go ahead. >> well, my question is, are these politicians that attach the keystone pipeline to this bill literally just gettingç money from the energy people that want to make this happen and saying, listen, we'll fund your campaign for 2012 if you guys get in there and nail this pipeline on to whatever you can? >> well, it's not quite as blatant as that, but it's true. a lot of the key movers here get money from those energy interests. and, again, those energy interests, under the current system, have the right to have this issue brought before the congress. but it should be debated. the pros and cons should be debated. it shouldn't be rushed through without debate and tagged on to a bill that has nothing to do with energy at all. so it's really cynical. and, look, the public's got to stand up and say, enough. and the way they stand up and say enough is to start getting rid of a lot of the incumbents

here. a lot of the incumbents who are doing this stuff have to be punished. there have been to be consequences in politics. and the public can do that. even with the money perverting the system, the public can still do that. >> what about the jergerrymandeg that allows the politicians to draw their own districts to guarantee that the only way you can get rid of an incumbent will be with a primary challenge and that a primary challenge is basically a very high-risk act, particularly for a well-established incumbent, where the political establishment doesn't want you to engage. and we were told 2010, excuse me, was one of the biggest wave rejection elections in recent american history, and in that election, more than 75 of the congressional seats did not change hands, because of the gerrymandering. and i just don't see how we're not pushing people into yet another rigged system. >> that's another disgrace in our american political system, that we let the political parties decide the lines, rather than an independent commission. there are a few states that have an independent commission, and it pays off in a lot of fairer

districts, a lot more representative districts and a lot more competitive districts. it doesn't matter whether it's republicans or democrats. ifç one party controls the legislature and the governor's office, they brutalize the lines. and both parties are guilty of doing it. we should take it out of the hands of the politicians, tle s elected officials and put it in the hands of a citizens' committee. and that stuff can work. california passed a proposition to establish it. other states have done it. we should continue to press for that. i put it on the table in pennsylvania. it didn't get very far, but you've got to keep the momentum going. and look, it goes back to your 28th amendment. that is so important. and i just wish the occupy folks had taken that up as their main effort, because it would be an effort that would benefit by their energy. and it's something that would cure a lot of the things they're complaining about. >> and it could actually harness all that anger and use as fuel

for something productive. >> absolutely. you get contributions above $2,000 out of the federal system and you change the dynamic of this country dramatically. >> governor, always a pleasure. thanks for the time. >> thanks, dylan. >> governor ed rendell. coming up here "the d.r. show," the surprising turn of events from the jerry sandusky case. live from the scene of what was expected to be a dramatic hearing for the accused former coach today. the mega panel weighs in ppt. plus, one of the top banking names in finance, who has a book out saying that we all need to save the big banks from themselves. and would you give up sex for an entire year in order to see your favorite team take the bcs championship? the survey proving all's fair in love and sports, still to come. [ female announcer ] need help keeping your digestive balance?

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well, a big day of developments in the sexual abuse scandal that has rocked a couple of major university sports programs. alleged victims of ex-syracuse basketball are suing the school. criminal charges will not be coming against fine, because in our country, if you rape a small child, if you wait along enough, you are not held to account for that. there's a statute of limitations, which strikes me as curious. anyway, meantime, a courtroom stunner in the penn state scandal today, as former penn state coach jerry sandusky surprising everyone but his defense team by waiving his right to a preliminary hearing,

which would have given the opportunity to hear some of the evidence that would be used against him in the trial. next up is the arraignment on january 11th. nbc's jay gray was in the courtroom in bellfont. by waiving this, he gives up his ability to see what the body of evidence would be against him. is there any, from a legal strategic standpoint, is there any rational way to do this? >> reporter: yeah, dylan. basically, what joe amendola tells me is this was a trade-off. i have asked him relentlessly, will you waive this pre-trial hearing, will you waive it? no, no. up until today. he said he made a deal. basically, he did not get to hear some of the testimony from some of the alleged victims here, but what he did get in return is that jerry sandusky's bail will not change. it will stay the same and he will be able to stay in home confinement. he also was promised, he says, by the prosecutors that if more charges come in this case, that they will, in fact, call him and allow him to turn sandusky in,

instead of showing up and arresting him like they did last time. he also says that he will get some access to discovery issues a bit earlier than he would have without this deal. he said it was a close decision, about 51% to 49% on whether he would actually waive the hearing this morning. and this is something to consider. and i know you're talking with the panel, so maybe this is something you guys can broach, but everybody has talked all along about joe amendola and how he has handled this case, he said it's been uncharacteristic that he's trying everything he can. but consider this, you and i would have been talking about these horrible stories of abuse that the victims had given today in the courtroom. instead, what we're talking about is jerry sandusky, we're talking about his attorney today. so he had the media gathered here before he decided to waive that hearing. a lot of people saying that now maybe he's crazy like a fox, dylan. >> well, thank you. you agree? >> yeah, susan and i actually were just talking about this. the this was a very calculated

strategy, it seems, to ensure that what you don't have are these victims coming forward, telling their stories, with that being in people's minds between now and the time we go to trial. instead, what do you have? you have jerry sandusky, you've got, well, we were just horsing around. >> confusion. >> but also, they're going with this whole theory that this was just about money. >> they get to change the whole dynamic now and go after the witness instead of having everyone, quote, feel sorry -- you know, hearing their stories and then saying, oh, listen to what happened today. they get to hear this attorney basically spin that they're after money. >> that they're gold diggers. >> yeah. >> last word to you, james, before i move on. >> within the next six months, jerry sandusky kills himself. >> you believe that? >> absolutely. guarantee. let's talk about our president. the interesting thing about stopping for this conversation is it makes the conversation that we have about our political problems seem a little less burdensome, doesn't it? obama, the professor or the president? an op-ed in the paper today from

dennis cardoza, democrat from california, says the following. he says, "early in his administration," referring to president obama, "president/professor obama repeatedly referred to teaching moments. he would admonish staff, members of the congress, and the public in speeches and in private about what they could learn from him. rather than the ideological or corrupt i'm above the law attitudes of some past administrations, president obama projected an arrogant i'm right/you're wrong demeanor that alienated many potential allies." he goes on to say that the president prefers lecturing to listening, prefers to keep people at arm's length, prefers top speak to huge audiences, rather than interpersonal interactions, small groups of people. this strikes me really as a sort of guessing game. there's a sort of fantasy as to what the president could have or should've done in a given individual's narrative, whether it's me or anybody else. and -- who knows why the president's doing what he's doing. everybody just sort of grasping

at why he's not doing whatever they thought he was going to do. >> isn't that why they put biden on the ticket to begin with? this is nothing surprising. it's not surprising that he didn't do -- >> not only that, there were those who thought it was appealing. it goes both ways. >> but there's always, you know, all of this -- what i love is that after the fact, you get the books where you find out what was really going on, right? because there was all this, like, everybody loves to read the tea leaves, but one of the things about president obama, and i'm a democrat, but there are things that i don't agree with that they've done. i would have done them differently. >> sure. >> but one of the problems is, everything is being compared to how so-and-so did it or so-and-so did it, and i wonder if sometimes we do a disservice to the person to not just say, this is who this guy is. >> and what if we did that, where we say, listen, it is not about president obama versus president bush and president clinton, it's about the largest poverty since the history of the census. it's about the 20% unemployment.

it's about the $700 trillion banking extraction, it's about the largest trade deficit in america. it doesn't matter whether what the shrink says about president obama or president bush or president clinton's mental issues or personality characters, we are judging a government in aggregate that we pay, all of us, to facilitate, a just culture with a fair system that invests in hiring people to solve our problems, right? am i insane? >> well, you might be, but not what you said. that's certainly possible. 1992, everybody say george bush is out of touch, george h.w. bush is out of touch, he has no clue. he doesn't like broccoli. he doesn't know how the scanners work in the markets, et cetera, et cetera, and he's not a man of the people. and i think he lost in large part because the economy was tanking at that point in time. fast forward to today. i think you have a president who the economy is not in good shape, even though it is growing, albeit anomineeically,

and i think the american people are hurting. all those things you described are not crazy. they're looking at this guy and saying, you didn't deliver on what you said you were going to do. but, but in four or five years, let's say he doesn't get re-elected, and the economy does turn -- >> i grruarantee you, the econo won't turn around -- remember, the gdp is wrong, it was invented in the 1930s, and it is wrong. it is measuring extraction. the reason it goes up right now is because it's a good sign that the trade deficit and banking is sucking jobs out of this country. unless someone has magically created out a new way to create jobs without money, iv've never seen. >> hindsight is 2020. we look back at bush sr., and he wasn't that bad of a president. >> i've got mike mayo lined up. as long as you have a country that's having the money sucked out of it, you will never have

growth. period. i believe mike mayo agrees with me, and that's why i said that. up next, our specialist calling truth to power, not because i'm trying to make up the case, because i'm saying one of the top wall street analysts in the history of wall street will tell you if you don't have capital and you don't invest in your country, it doesn't matter whether your president is mickey mouse, barack obama, or george bush, you'll never have a penny invested in your country and you'll never have a job. and as long as both political parties are getting bought off to do it, you're screwed! it's why we have to get money out of politics. it's why we have to restructure debt. and it's why we have to restore capital requirements, so we can get out of the idiocy of these conversations in general with our politicians. mike mayo after this. ♪

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i never gave any instruction to misuse customer funds. i never intended anyone at mf global to misuse customer funds. i was stunned to learn that hundreds of millions of dollars

funds were unreconciled on sunday evening, october 30th. >> that, former senator, former new jersey governor, former goldman sachs ceo. one of the most respected and prestigious and esteemed men in american society. jon corzine, who along with two other former executives, spent today answering questions on capitol hill about the collapse of a highly leveraged system that really reflects the fact that we haven't reformed our financial markets. and, perhaps more importantly, the odd disappearance -- where'd i put my keys, no? oh, i lost $1.2 billion of client money that by law should have been kept separate from client funds. it doesn't appear there's going to be any consequences for the man as of yet. our specialist knows more about this than all of us combined. it, in fact, has been his profession for a very long time. the inner workings of financial institutions and the mechanisms that they use to make money by investing, lending, or speculating with money. joining us now, mike mayo, ba

banking analyst at clsa. he has worked at six different wall street firms and is currently the author of a book exposing the current set of practices that have choked out the true functionality of capitalism in the capital markets, to have money, to pursue ideas, to develop those ideas, to create jobs, and instead it's become nothing more than, obviously, a wide variety of problems. "exile on wall street" is the title of the book. what are we saving the big banks from? >> we're saving them from themselves. this mf global example, that's why i wrote the book, because the problems are still taking place today. after the housing crisis, after the largest corporate bankruptcies in history, at the start of last decade, it's still taking place. look at mf global. how many looked over their shoulder. the accounting firms, the rating agencies, the regulators all failed. but you know what the root cause is here? how much skin in the game did jon corzine have? >> capital requirements? >> no, i mean his own money. >> right. but his -- if you want to to

assume the risk, you have to have your own money on the table. how much did he have? >> not much! >> right. >> if you had 90% of your net worth in that company, would you take those sorts of bets? that's not capitalism. the point of my book is capitalism didn't get us where we are today, but a lack of capitalism. and the root of that is the ill-conceived incentives. he was not incentived to act as a stuard of this company so stld last for generations. what he news to do and the ceos today need to do is act as stewards, something bigger than yourself. like you're managing a national forest. mf global had a big forest fire and it destroyed it. >> one question and i'll release you to the panel. in the late '90s, we watched the advent of technology in the financial services universe. it annihilated the traditional profitability of stock trading. it annihilated bond trading, bloomberg terminals. it annihilated all sorts of traditional profit models. so the choice on wall street either was to take a lower paycheck for what was now a lower paying gig, or come up

with another mechanism to make money, which appeared to be the credit default swap and leverage. is that an unfair interpretation? and, really, if they did what you say that they should do, would they not all take massive pay cuts, personally, as a result of supervising a very healthy forest, but one that quite honestly is not nearly as profitable as it was before the markets were so transparent? >> well, there's many cooks in the crisis kitchen. and definitely, the ability of these banks to take on too much leverage has gotten us here. the boards of directors are not being held accountable. and yet, they have a gun now, and you can use it for safety or to get yourself into some big problems, and that certainly has been the case. >> susan? >> you talk about holding the board accountable and folks like corzine. and i'm wondering, in order to hold them accountable, getting fined has just been another cost of doing business. don't we have to seek criminal charges on some of these folks? i think corzine will be a perfect example of they're going

to go after him hard and fast, they're going to use him as a very good example, now that you have jpmorgan also going in as part of this investigation. isn't that really the only thing at this point that's going to scare these guys? >> well, looking back, by all means. if somebody broke the law, you should prosecute them. what i'm talking about is holding the boards accountable today. the boards are the biggest banks from today on forward. making sure they drill these ceos, second-guess their moves, say, why are you owning $6 billion of european sovereign debt in this environment, and actually enforcing their powers. the boards too often are entrenched and they just say, yes, sir, to someone like jon corzine, who's been governor. >> but how do you hold them accountable? you're saying hold them accountable -- >> i would like to have shareholders with more right. so shareholder-driven capitalism. that's what's missing in the equation. the s.e.c. should make it easier for shareholders to speak up about compensation of the ceos and the boards of directors. and if they've owned a couple percentage of the company for a couple years, they should have more of a say. >> jimmy? i agree with that, by the way. >> i agree.

the largest fund investor -- public pension funds, they should say something about it. sarbanes-oxley, by the way, does allow you to do it, they just don't use it. went did wall street turn -- when did wall street turn into what it is today? remember the commercial, we earn money the old-fashioned way, we earn it. when did wall street turn into what it is today, where we can't be proud of our system? >> jimmy, may day, 1975, i believe, that's when you reduced commissions on stock trading. so at the time, these brokerage firms earned as much from investors as they did from corporations. fast forward a few decades later, they made three, four times as much from the corporations as they did from investors. that changed the incentives to go ahead and serve the big corporations as opposed to the owners. >> it strikes me that so much of the mind-set is, now, though how to make more money, not how to invest and make more good things, whether it's good product. great story on the front page of "the new york times" today about education. companies making a ton of money, kids aren't learning. how do we -- and you talk about holding people accountable, but

how do we incentivize the right kinds of behaviors or regulate to get those kind of stewardship behaviors like you're talking about. because it seems like no matter what happens, there's always the desire, we'll just figure out another way to cheat the system and make more money. >> karen, you're so right. my solution is it starts from the top. so let's have the ceos not take their incentive pay until two years after they retire. because we all know how you can dress up the results of company. now, more extreme scenarios, at private equity firms, you might be required to have 90% of your net worth in the company. in brazil, statutory directors of banks are personally liable. >> meaning you could lose your house, your car, your boat, your lifestyle if mike mayo, who's the ceo -- we're the board and he's the ceo and he screws us, they'll take all of our stuff, which makes us pay more attention to the ceo. >> we don't have to go that far. but i would like to have more stock ownership. let's have more skin in the game. that still is not in place today. >> are you disappointed in the

political apparatus for its failure to be able to do this? >> oh, my. where do we start? i mean -- >> i actually left cnbc and started with a tv show to harass them, i was so irate about the whole thing. but, seriously, your thoughts on the political failure? >> by the way, no matter where you are, if you're way on the right or way on the left, you are in agreement here. we all hate indecision and uncertainty and politics over economics. if you look at the new bank law called dodd/frank, it's 20 times longer than the old bank law, glass-steagall. and guess what, you could make it 100 times larger, 1,000 times longer, a million times longer. at some point, it doesn't make a difference. as you mentioned, jimmy, we had sarbanes-oxley, we have some rules. a lot of people dislike aspects of sarbanes-oxley. the one thing it does is it requires the cfo and ceo, the top dogs of these companies to attest to the financials at these large corporations and that hasn't been enforced. if you aren't going to enforce,

why make all these new laws that just make it complicated. the ten commandments fits on one page. >> capital requirements is two words. anyway, it's an absolute pleasure, mike. congratulations on the book. and again, if you're going to read a book about wall street, i really can't think of somebody who understands better how banks actually work and how they they have worked for a long time than mike. "compile on wall street: one analyst's fight to save the big banks from themselves." congratulations and thanks for the time today. >> thank you. >> and good-bye to the panel. straight ahead, talk about fanatics, as we head into bowl season, a new survey goes inside the minds of college football fans and the results are next. my doctor told me calcium

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well, this weekend marks the beginning of one of the greatest times of the year for football fans, college bowl season. while tigers and hokies and wolverines across the country prepare to paint themselves, don foam fingers or dress their infants in team colors, a new yahoo! sports survey is revealing that when it comes to winning, fans see their favorite

teams in a shade of grey. after a recent rash of college football cheating scandals from ohio state to usc, an astonishing 52% of men and 63% of women do not think that teams are capable of winning a national championship without cheating. 12% even say they believe there is no way to win without bending the rules. interestingly, though, the fans are willing to pledge 100% fidelity to the teams they love. in fact, one in five people surveyed said that they would give up sex for an entire year if it would bring home the championship for their school. and whether you're saying roll, tide, or go, tigers, for the championship game, do not expect to see a lot of lsu and alabama fans dating each other. one in ten folks say they would never date a die-hard fan of a rival team. my goodness, that would be like banks and rating agencies getting in bed together, right? oh, never mind.

coming up, yesterday what we explained about extractionism. today, the loopholes and tax and banking that make it easy for greedy bastards to extract us. we'll tell you where those loopholes and at least harass the politicians that are getting bought off to do it to us until we can get money out and actually close them. the employee of the month is...

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we're back breaking it down with another page from "greedy bastard$!" and the "greedy bastard$!" glossary. today we're looking at extractionism through the manipulation by greedy bastards of our tax code and banking policy. yesterday we laid out exactly what extractionism, the act of removing money, taking money from others or an entire nation without adding any economic growth, value, or improvement to quality of life. literally, extracting. our nation's rigged tax policy, written by bought government officials allows and even encourages extractionism to take place in this country. we have a tax policy that makes it more profitable to send money overseas and invest it overseas than it is to do so here. and with the extraction of all this money comes the extraction of the jobs that will be created by the money being invested in this country to solve our problems. we also have a banking system, that incentivizes the very same thing, the removal of money from our nation for the personal benefit of those who are the

custodians of that money, who then use a portion of it to pay off our politicians, to perpetuate the theft.guests, ta reporter and reuters colnist, david k. johnson, from whom i have learned plenty about our rigged tax code. he's also author of "perfectly legal," you can see where that one's headed. and former banking regulator, bill black, professor of law at the university of missouri in kansas city, and also someone whom i have had the benefit to learn quite a bit from. nice to see both of you here today. nice to see you in person. we've done some podcasting and what not. walk us through how influential -- before we get to the anecdotes, why are tax and bank policies so determinative as to whether you have investment in value creation or extraction and value destruction. >> well, we have a tax policy that encourages people to put money outside the u.s. and to invest it in ways that are not productive, because people are looking to get immediate, quick returns. so they're buying financial

products and speculation rather than -- and heavily using borrowed money to do that, rather than things that take time to return, investing in ideas, factories, software development, things like that. >> and the same thing on the banking situation? why do we not see more money coming in, and why is there so much money going out? >> the banks drive it the opposite direction. they're like the engine pushing out, creating the pressure, in what david's talking about. because they're saying, invest in only those inteentities repog the highest short-term profits. the best way to report a short-term profit is not to make a good product, it's to cheat on taxes or use abusive tax provisions and reduce your costs massively in minutes. >> so the -- on the one hand, you have this pressure cooker that says, give me money now, and on the other hand, the easiest way to get money now is to extract it using the tax code. >> absolutely.

absolutely. >> okay. so could we, are there examples of other nations, or are there examples in the history of our own nation, where you could renovate tax or reform tax or banking policy, such that you do incentivize, as i talk about in the book, bringing out the long-term greedy in every american. by incentivizing that long-term development, is that even possible, or is that an impossible task? >> oh, no, you can do that. let me give you a real good tax example of this, dylan. when you and i pay our bill for electricity to a corporate-owned utility, embedded in that is federal and state income taxes at the highest possible rate. now, because of the way the tax law works, that money normally doesn't get turned over to the government for years. so the company gets the value of it and inflation erodes the value of that. here's where it gets really bad. now you set up a holding company above that, you pay money up to the holding company. it doesn't pay taxes. and if you're really smart,

you're national grid in britain, you make use of european accounting rules that allow you to pay no taxes in the u.s. so you not only collect your excess profit as a monopoly, but you get to keep the tax money on top of it. that's a great deal! >> but if a government of the earth wanted to facilitate a country where there was investment, that did hire people toll solve its problems, and a fantasy -- let's go to mars. forget earth. >> let's go to 1986. >> is it plausible? >> let's go to 1986, when people looked at what the tax code changes had done, which were creating financial bubbles all over the place and driving investments into the least productive usage. the '86 tax act in a rare thing, cracked down on many of those most abusive shelters. it helped burst a bubble that was developing in southwest real estate, at a point where, before it caused a great recession. so that's one of the

interventions that was relatively more successful. >> so, proving that it can be done. that, in other words, the power of tax and bank policy, that the power we see to extract is actually equal to its power to drive investment, fair? >> done under ronald reagan. >> so ronald reagan intervened on an ethical principle saying, we're incentivizing low productivity use of capital or extraction and we're going to reverse that. which means that the current government, or any current government, at any time, if they were so inclined, would have the -- the math is possible, the power that human beings exist, could solve it, is that all true? >> but no norquist back then. >> and nobody is thinking this way. nobody is thinking the way that you and i and bill are about the way this is happening. because the people that have the here of the white house are wall street people that make money through extraction. >> what's their narrative?

when i'm a wall street person and i'm in the white house and i'm explaining why dylan ratigan is an idiot and bill black, and david k. johnson is a yeehaw, and really, you've got to listen to me, joe wall street, what is their narrative as to why this is good for america? >> it's the opposite of their narrative on everything else. on everything else, it's exporting jobs from the united states, great thing! you know, business simply goes to where it's most efficient. but, ah, we can't lose banking industry. it can't go to the city of london. that would be a national catastrophe. and so it's the race to the bottom in regulation. and by the way, in europe, you just saw this, david cameron, the prime minister of england, just destroyed the entire -- vetoed the entire european response to the crisis because he couldn't get ironclad agreement that the city of london would never, ever be subject to effective regulation. so the race to the bottom on taxes is an age-old story. >> and if you were to point --

where can people learn more about this? because we're not going to solve it at this table, it's a tv show. but with the little bit amount of time left, where would you guys direct people? because people are thirsty to understand what you're talking about. everybody is. >> it's books! >> perfectly legal. >> free lunch. >> my column at reuters. >> wonderful. and then, obviously, we have podcasts up on dylanratigan.com. both with professor black and professor johnson. and i have learned a lot from both of you and i appreciate it. more to come on the "greedy bastard$!" front with both of them, they're both in the book, along with so many others. coming up on "hardball," chris matthews with all the politics of the day, including newt versus mitt versus romney as the midgets try to figure out who's the tallest in this presidential battle. indicates it could be a long, hard slog. but next, david goodfriend with a daily rant on what the greatest generation would think of wall street and washington today. [ baby coughing ]

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now david goodfriend with a history lesson and a daily rant. >> hey, dylan. i wish my grandfather, irving michaelman was alive to see what's happening these days as people come to grips with wall street and what the role of government ought to be in the market. he would have been right in the thick of it. you see, my grandfather was part of the greatest generation and pursued the american dream, but he also developed a keen sense of the role of business and government and how they should work together in our modern american economy. his father, abraham michaelman started a small consumer loan business in new england that my grandfather and his brother took over in the late 1930s. after serving in world war ii,

the michaelman brothers built their loan business, one branch office at a time. they were a community-based lender, grounded in values. ab ram hamlet people take out loans and not pay them back until he found a job. an old company advertisement said, if you become unemployed due to illness, we won't charge you any illness on your loan. people trusted my family. they knew them by name. i remember my grandfather telling me that in the wake of the great depression, he and his peers had to re-think what capitalism was all about. he said, we witnessed mammoth changes from new securities laws to social security, and it was, he said, the right thing to do. he was a believer that capitalism works best when there are rules of the road established by government. he served on the advisory committee that developed a truth in lending act, designed to prevent fraudulent and misleading advertising and interest rates. eventually he quit the business when his company was bought out, because he thought the new

owners were unethical. he never made a lot of money off the teal. instead, he turned to writing. he wrote seven books about business and philosophy, including this one, "the moral limitations of capitalism." in it, he concluded that capitalism and democracy go to together. that private enterprise can be a great engine of wealth creation, but that there must be a moral backstop put in place by our democracy. among other things, he called for a government-sponsored full employment program. if he had lived long enough to see it, what would my grandfather say about the behavior of banks leading up to the 2008 meltdown? about deceptive lending practices, the blatant greed, and to this day, the unwillingness to channel some of financial sector's gains into gainful employment for middle class americans. what would he say about regulators complicity? i suspect that he would be penning articles, letters, and books right now saying, i've been there! i know what sound lending and government oversight practices look like. i know what happens in the

absence of such moral practices. learn! learn from history. save capitalism by strengthening its morality. but since he's no longer with us, i'll say it for him. dylan? >> isn't the morality of capitalism capital? in other words, if you allow an individual to buy a house with no money and no job, have you not corrupted capitalism? if you allow a bank to sell $700 trillion, that's a "texas," of idle credit speculation with no collateral, no money, have you not corrupted the morality of capitalism? is it the morality of capitalism capital? >> you have to put yourself in the game. you have to put skin in the game. and the problem is, i hear my grandfather saying this in my own mind, we learned this once before. why do you think glass-steagall put a wall between commercial banking and personal banking? when that wall was taken down, the whole framework fell apart, and here we are, right back where he was in the great depression. >> and the 1920s was an ise