smartest guys in the room do what we do best. which is why it was a little embarrassing for jamie dimond had somehow managed to lose more than a billion in credit risks. the position was uncovered and exposed and dealt with quickly enough -- what roar uncovered positions are lurking out there or what the next big wall street screw up might look like. this is the spector that haunts us, the notion that we can't simply trust our elites like jamie dimond to run their corporations -- what followed in the hearing was down right bizarre.

while diamond was there to apologize. many of the senators were there to apologize to him, to seek his wise counsel. >> i would like to come away from the hearing today with some ideas on what you think we need to do. >> is there a true, real version of the vocal rule that you think makes sense? >> what can you suggest to the regulators? >> what would you do? >> to me this entire hearing was a perfect microchasm of -- who have overseen a cascade of crisis. elite's will be plichbtded to the destruction they have caused. in their attempts to -- only too happy to point out that it's the same united states congress, one of the -- as we have previously noted on the show, is even less popular than paris hilton than

the prospect of -- a man who once worked on the senate banking committee put it to me this way, the world has worked on the markets while they have reason to be skeptd kl. so what you have got now is a society that is demoralized because they have nothing to believe in. we have seen a tremendous amount of institutional debt failure. what happens inside that that creates the conditions for incompetence or corruption or both. what is it about the big banks or the culture of wall street where the very prospect of protecting and forming our elites -- what made it possible for enron to implow on that. what about the way our congress works enables the banks to take big profits and makes the taxpayer take on the risk.

i wrote my book because i think understanding elite failure is the moat -- while much has changed in the last three year,s, while our trajectory has gone from-congress has remained in many deep ways remain unreformed. we're going to be talking today about how to avoid exactly that. so right now i am really happy to be joined by the author of "liquidated," a friend lawrence lessik, sharon watkins, enron whistle blower and co-author of "power failure" and cnbc contributor dan dicker. great to have you all here. good morning. what do you make of the dim ond episode.

he kind of turned to say we had all these shave checks in place, nothing deeper here to look into, no cultural examination, we're not going to think about how jp morgan does business. >> i think what's so interesting about jpmorgan's testimony aside from demonstratie ining nationag innateness, i by what was so crucial about his testimony was that he linked finance to productive hedging. linked it to actual risk litigation, when nask most of the-actually have nothing to do with hedging risks. >> the key story he said is,

look, we have this unit of the business, and it was just trying to balance risks, it wasn't trying to generate huge revenues. but if you actually look at what it was done, what it was done was try -- balancing risk on one hand, making a big bet on a certain outcome is another. and as someone who has worked and traded in the markets, it looks like the former. >> i have spent a lifetime trying to understand -- outs difficult for me to understand precisely what was going on here. but one thing it clearly was not is it was not a hedge. it was a tremendous bet on what were very ill liquid swaps in a marketplace where they tried to control the market in some ways. the story inside gasoline in '93, we're going back to enaren.

>> who's that story? >> the story was that -- out of the metal business and into the oil business. they put on some very forward contracts. the point being that they had to roll, in other words take what were prompt -- do this consistently from month to month to month to month. it was just too big a liquidity that was available at the time and the market caught on and buried them, they went broke. >> you have this one trader who everyone's calling the london whale. i have talked to people at hedge funds that we knew, people started to get hip to the fact that this position was growing. one of the lessons of the financial crisis was that there was a lot of power and risk

pooled and concentrated into a lot of different people. it was a guy named joe casano taking on a position that was big enough that it could possibly bring down the entire world economy. have we gotten better, a, at controlling how much risk a small person or group of people can take on? and what is it about the psychology and culture of wall street, about these big firms that you can kind of slide down a slippery slope and you wake up one day and you're like, i own 90% of this instrument in the entire world. >> and the crazy thing s enron collapsed ten years ago and i'm still speaking about the lessons learned at enron. when we talked this morning, when ng collapsed there was a $1 billion trading scandal from

1993. the issue was that even ron was taking a bet and they said it was hedging. >> that's how familiar it was, they claimed it was a hedge then and it blew up. >> they had very restrictive speculative limits and they were constantly reviewing ng's portfolio hedge. >> so the real story here, right, is the fact that these guys are gambling because there's a government that's going to back them up, there's a bail out that's going to come in. here's another explosion that goes off. the fundamental reason why we should be afraid of them is the -- and the senate is filled with a bunch of people who only want to make this guy happy, now

why is that? it's only because they know that this guy has the power to blackmail independent parties. because if you don't have some -- it is the power he has in the political system that makes this so terrifying. this is the first financial crisis in the history of the united states, where the people who caused the crisis have enough power to block any effective reform. >> i want to mention too, enron had 12 people go to prison. 24 felonies associated with enron. >> that's one company e and the thing about enron, we have lost sight of what a big deal enron was at the time. and also what a canary in the coal mine it was, because what happened after was the iraq war and then the financial crisis, which sort of erased our memory of it.

>> no criminal really indictments and here's the problem, the government had such big receivables from these banks they didn't want to stir the pot and start criminal investigations of these very people. >> let's talk about whether we haven't learned any lessons, we have enron in 2002, 2003. what lesson aren't we learning? let's talk about that after the break. [ male announcer ] when a major hospital wanted to provide better employee benefits while balancing the company's bottom line, their very first word was... [ to the tune of "lullaby and good night" ] ♪ af-lac

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>> if there was a crisis, like lehman, like euro zone, it would actually increase it dramatically by making money. it actually created a far larger

portfolio. they were far more complex risks. >> that's jamie dimon. >> what lessons aren't we learning? because the terrifying thing to me is this crisis was so destructive, so monumental destructive. we still have 8% unemployment, just amazing -- i want to be convinced that we have learned lessons and we have approached the problem in the variety of levels we need to make sure it doesn't happen again. >> the reason why i brought up hedging, hedging isn't something they didn't do, it's them laying claim to social purpose. meaning that finances that despite all it's institutional failures, what it does is we are productive to the economy.

they link themselves to a larger productive purpose. shareholder value, tax cuts, tax cuts on investment income, that will create wealth, jobs, exactly. >> the first part of his testimony was we screwed up. and here are all the small business loans we have made. and the sub text is, larry, you need us. that's the terrifying thing about the relationship. >> what surprises me about it is that congress seems to believe this and they're baffled. bp has an oil spill and our government goes no drilling, until we get a handle on what's happening. and wall street has this huge calamity and we don't do anything. >> bp isn't going to be funding

a large part of the 2012 electi elections. you need us to make sure you party is not blown out of the water when it comes up to the next election. everybody understands this, this is not stupidity, this is deep, deep -- >> we had enron, we had prosecutions, then we had under a republican president, let's remember, we passed a big law. so if you stand outside and look at what's happening, washington holds hearings, you testified, as a matter of fact, very famously, it was on the cover of "time" magazine. go forward with the latest financial crisis, washington has hearings and solved the problem. so at a certain level removed,

employment puts back. >> we just pushed back the date for that for two years in the future. >> they have made it -- >> any kind of overrule will be put into effect. >> i mean what's the problem? does that mean we can't regulate them? does that mean the regulations we passed are bad? the thing that passed was exactly the sort of thing that lobbyists could have made for 30 years. they have got the most exthe record fair money making machine. when they screw up, they will get bailed out which means the cost of the capital they pay is a fraction of what it should be. so they're behaving rationally. but they have enough political power to make sure that the united states government will

never remove that ridiculous structure. >> and that's the fate that jamie dimon plays so well, he comes to congress and says i'm so sorry, and we promise it will never happen again, and they're paying all of this money to all of these lawyers to water them down to make sure they don't come into being for years to come and nothing changes in the model. >> enron -- the root of all of these problems is compensation, and compensation with stock options is that i'll be gone, you'll be gone phenomenon. but the issue is, in capitalism, we have had moral problems with child labor, environmental pollution, worker safety, and we, as a society can get behind laws that prevent that. that's partly because we're outraged. you know, you're a ceo of a company and you're still

polluting the rivers and lakes, you're horrible. but there's something about this pay issue, when it's really because you're -- bankrupted companies nationwide, he stilled away with $45 billion. here's my issue, though, society as a whole, we're morally outraged, but i think we're envious first. >> really, really terrible. but a mistake on wall street, where the government is backing upa mistake, like the different between those two things is that they see it in their incentive to gamble. and there's a lot of things that led to them blowing up their company. we're never going to live in a world where companies aren't stupid, they're going to be stupid and they're going to blow themselves up. but what we have to worry about

is stupid companies that blow themselves up and then blow up the economy. >> you found out with lehman brothe brothers, matthew lee was sounding the alarm bills. >> it's compensation that makes it rational for them to ignore -- knowing they'll be gone. when we have these crazy compensation systems, companies will blow themselves up. companies blowing themselves is not a terrible thing. but if a company blows up, it blows the economy up. >> how do you fix it? how do you untangle it? when you see jamie dimon is going to come forward and be contrite and on the other side they're going to be working levels of power. >> the main thing you said at the start of the segment was is

this a crisis in our institutions, our financial institutions, and our educational institutions. two major story lines were being told over the last five, six, seven years that brought us to this place. if you take the money and invest in the stock market. they will take care of you at the end. and the second one which was even worse is if you could go out and anord to buy a house, that will give you the confidence and going forward you will find your retirement there. >> more on how you can rein in wall street if that's possible. . like the dual-defense antioxidants in our food that work around the clock... supporting your dog's immune system on the inside... while helping to keep his skin and coat healthy on the outside. with this kind of thinking going into our food...

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have had institutional failures almost in every sector and it's resulted in this historically low level -- wall street being what's most on people's mind right now because of the crisis and it's aftermath. you talked to me about compensation, you just talked about compensation here and how it creates the phrase i'll be gone, you'll be gone, which comes to testimony for carl levin's testimony when they were doing kind of an undernoticed -- >> a employee of one of the ratings agencies was quoted to him by a banker working on the deal who said, and he was giving the banker a hard time, but he wanted to see more information and more due diligence and the banker said let's do the deal, once the deal is gone, i'll be gone, you'll be gone, we'll get

our payday and we're going to go out. one thing this paints to is the way that huge compensation at the top can skew people's behavior. one of the things you see when you look at enron, when you look at major league baseball, and you look at wall street, it's actually trickier than it seems to reward a system for performance, also a system with huge rewards for cheating. >> you should been so predatory that you kill your customers, but it was the ibgybg. but for me it's all stock options, and what happened in the '90s. we passed a law in this country in '93 that corporate salaries above a million dollars could

not be deducted on corporate tax returns. the simple way to fix this, maul volker before he was tight with obama, he said look, cash only compensation for the c class employees. >> c class means the people at the top. >> repeal that million dollar limit, no shareholder approval, if they're worth $25 million, they're worth $25 million, and then they dampen the stock options throughout the country. >> the stock options issue, you said to me when we were fog before, then it cascades down, at enron everyone's watching the stock price every day, and you're thinking what can we do today to boost the stock tomorrow. >> and the whole organization, as the ceos began to use more and more stock options you have to use employee wide plan, every

employ wree is watching the stock price and you never want it to go down because you're looking at your own remuneration and seeing what it does. >> i completely agree, if the board of directors at enron had been awake, they would have believed the system they built was stupid for enron. but we have to be very careful when we switch to wall street. i don't think the game wall street is playing is not stupid for wall street. we got to recognize that part of the reason we continue to see this, quote, stupidity is that it's really smart, given the stupidity of the structure of regulation. >> lehman blew up and was not rescued. i still think the people within lehman, dick fold is not penniless. he doesn't sit on top of lehman, but the incentive is still there. >> even though he wasn't rescued --

>> nobody went to jail. >> so the point is they know if they gamble and they lose, they don't lose. so they gamble. this is sensible. this is not stupid, this is not crazy. >> they let her know you still have incentivized the gamble. >> is it bail out or no, you're incentive vising the gamble. it's more morally odious to us because ultimately we are going to bear the fruits of it. but if you're looking at the organizational dynamics. think i think is an important point, when we talk about incentives, we're undertaking a huge massive experiment -- we think of it has naturally a good

thing. but we do look at the cost, the kind of costs you talk about. here's mitt romney sighing he supports incentive pay for government workers. >> i do believe in linking my incentives and my commitment to the -- people recognize that anear gotting to get rewarded in substantial ways unless they're able to achieve the objectives that they were elected to carry out. >> in other words pay government workers like wall street e but then maybe you get the perform mants of wall street which i'm not sure we want. we're going to turn our attention to the huge failure this week and the fallout from that, what's happening down at penn state. with beautiful tones and highlights... no other foam lasts longer. and no other foam is product of the year. check out colorblend foam. only from nice'n easy.

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is that now we just get more and more evidence that more people knew what was going on. and not horrible people, just normal folks embedded in an institution who are watching something awful happen in that especial institution and day after day, not doing anything about it. that is in some ways the theme of this deficit. a lot of the things that went wrong inside institutions and people inside them knew

something was going wrong, enron for instance and no one raised enough hackles, no one blue the whistle, no one talked about what was happening. larry, this is something that you run a lab on institutional corruption, you have thought about it a lot? >> people -- i like to distinguish between good soul corruption, and bad soul corruption. which is where people with are just breaking the law, they're doing something they know is wrong. but the point is there's so many good souls in this story who could just simply pick up a phone, they know something's going on, they think something's wrong, and say i think there's

something wrong with jerry's relationship to these kids. buzz they feel there's a loyalty to the institution. i come from central pennsylvania and there's something really great about this institution, why should i blow up this big institution about what this guy is doing. and these are the most important people to think about when we think about solving corruption. in world war ii, we talked about the good germans, they could have stopped it. there story is all through with good germans. >> how we think about not getting sanctioned from our peers and not wanting to rock the boat, and this happened with enron, the reason you became famous is because you wrote a memo saying something awful's going on here. and i think the thinking was why

weren't there more people that did that? >> and from my perspective, you know, i always felt like i was a crewmember of the titanic, warning the captain that the water's coming in, man the lifeboats. now i've sounded the alarm, and now things are going to happen. and when you see people ignoring the problem or not -- mcclusky going to paterno, he's probably thinking, okay, i'll see the guy in handcuffs and then you don't see it, you don't see it. you start to second guess yourself and, especially if the organization makes noise like they're doing something. you know, it's just not as fast as you would like to see it done, you can feel, since you're a low man on the totem pole- >> you start to second guess yourself? >> and feel the pressure. >> this whole thing about wall street and corruption and what's going on at pen state. folks on wall street do not think they're doing bad things.

they think of themselves as being insurrectionists, we're renegades, we're going into bureaucratic institutions. we're going in there and we're shaping them up, we're right sizing them. >> we're doing good, we're doing god's work. >> i think when we try to deal with institutions, we also have to deal with the fact that wall street thinks of themselves as cleaning house. and that's a crucial point. >> karen, i think you make a fantastic point, david brooks has been writing about the abraham lincoln generation that believed in the depravity of man and my soul tends towards evil, so i've got to look out for that, versus the last several generations where we have decided we're morally good, we didn't really cheat, but we just are going to mark deed on a multiple choice. but that is a fundamental shift

that is also part of the root problem, we don't recognize that we can tend towards evil, we cling to this morally good. someone door dings your car, you say hey, man, watch out, they come back with huge anger. >> a lot of times we want to think of this as selfishness versus social. but people are justifying the behavior in light of social good. >> they want to believe they're good. >> and then they punish people like you, what we know from psychological data is that the people hated the most in the story is the people that had the kunch to stand up. >> i worked for enron for eight years. i had a christmas card marked up, take me off your list, and it was someone who wasn't a target, but maybe they were become called from the department of justice.

and i just sent them a christmas card. at enron, i never know when i meet up with an executive, whether they're going to shoot the finger at me or give me a hug. >> it's really important, the way we collectively at institutions treat people that do call out that conduct is it is really key to understanding how we understand conduct. [ male announcer ] this... is the at&t network. a living, breathing intelligence teaching data how to do more for business. [ beeping ] in here, data knows what to do. because the network finds it and tailors it across all the right points, automating all the right actions, to bring all the right results. [ whirring and beeping ] it's the at&t network -- doing more with data to help business do more for customers. ♪ yoo-hoo. hello. it's water from the drinking fountain at the mall.

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tug about the fallout of watching the jerry sandusky trial and the question i think all of us have in watching this, and it's true in other environments that we saw incidents of wrong doing. the catholic church comes to mind. watching the catholic church scandal unfold, and i talked to a lot of people that were affected by it, is the idea is

how could people who saw this and receive the kind of judgment that comes with whistle blowers, that to me is a big part of the story is, if you do stick your neck out, you often are not rewarded. we saw that with some of the guys in the bush administration were treated. we have whistle blower prosecutions now. that's almost a -- that's a legal version of what is a universal experience, institutions tend to not take it very kindly when people inside say this is not rite. >> what we know about were cases like mine, i sounded the alarm bells, they didn't listen and they went bankrupt. now people are listening and correcting and correcting course. but we know of the disasters. like my situation, when it comes out, you're not rewarded, you're

viewed as someone, you know, it's synonymous with troublemaker, whistle blower is. >> you said you had a hard time getting a job after this. you were on "time" magazine as one of the people of the year and you said having whistle blower on your resume was not good. >> i met him in 2003 you and cynthia from world com will never work in corporate america again. and i said why? one basic reason is people see you walking down the hall, they kind of know deep down that you did something that they wouldn't do and you just make them uncomfortable. it's probably not a bad assessment. >> it probably links to greg smith at goldman-sachs, he talks about, oh, i they're screwing their clients over, ripping

their faces off, et cetera. gold man-made responses, he was in goldman for decades. he was an executive, he was not smart enough to be promoted. >> that's the fame mouse line, i'm leaving goldman-sachs. talk a little more about the good soul bad soul distinction. because we all i think operate in organizations where we do have understandings of what is done an what isn't done. and it seems to me that one of the thepgs you track when you write about congress, it's just the norms of what is and isn't done are changing over time in a really worrying direction. and that is responsible for a lot of people that didn't see it happen. >> the change that we see right now is really relatively recent. the head of the armed services

committee in 1982, being asked by a colleague to hold a fund-raiser for defense contracts. and his response was, geez, i hold life and death over these guys, i don't think it would be appropriate for me to raise money from them. and the republicans are further ahead on this that the democrats. committee chairman are increasingly internally within the party auctioned off. >> there are so few people in congress who actually have been there long enough to have a perspective on this. jim cooper who i interview with my book says the problem with capitol hill has become a foreign lead for k. street. it's reflecting back on a time when people were -- now an

increasing number of people, not just members, but staffers in particular, take the whole game about how do i make -- step out and cash in to the lobbying business. those are decent people. these are decent people, these are good people, smart people. >> how do we repair those norms? i think the bigger question is, how do we get people to act better. let's answer that on television after this break. [ male announcer ] you sprayed them.

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you work in financial markets, you trade in this world and so i want to ask you, do you feel like in doing the work that you do, is there -- are there things that are legal that you shouldn't do? or is there behavior that you should have, essentially whatever is in the four square of the law? >> i think it really comes down

to money as -- that's not saying much. i spent a lifetime trading with my own money and i thought that it gave me the boundaries that i needed because my family's livelihood was on the line. and we have those moral -- the banks use to trade with, then you have an entirely different incentive, for example to step outside the lines of what may be -- even in the dodd-frank law, we're going to try to define for the next two years before we even decide what that volker law is even going to look like. everybody in the business knows what is a legitimate hedge for an institutional investor and what's a bad. and everybody's who's been in the business for more than six months understands that. and we could do this very

simply. >> this moral hazard is a key point. the key point is are people -- we talk a big game about accountability in the united states and in fact we have the largest prison system. and we hold 16-year-olds, we hold them to account because we put them through the system and they now have to write that down on every job application. one of the lessons here, the moral hazard is if you take accountability away from the system -- >> legal accountability and economic accountability. you could be prosecuting the guys, and of course we should. but they don't even face economic accountability because we have a system that bails them out. the question is -- the question isn't whether we have banks investing in this particular way, the question is if you have banks protect bid the united states. why should we be backing up your

bad bets. >> i think we need to call out wall street. part of this issue here is they think as inequality is -- they define h define -- the privileged are going to have the particular attributes in abundance because they can define it. >> this is a point about whether the difference between cheating in performance, and what's really morally hazardous is if you have a situation where if you have learned a lot of money, then you have a big pay stay. point to the amount of money. if you have a system that views it that way, you are creating a position for people to cut corners, people to cheat and do bad things. if the actual payout itself is self-justified, when you think about these things, then you're

going to do whatever it takes to get that payment. >> and michael lewis thought he was going to expose wall street for the fraud that it was. i can't tell you within enron how many of us would get our bonuses and go, really? really? i can't believe i'm getting this. and that was over and over and over again. and that corrupts. >> when you get that pay that is so high, you can't help but produce this kichb of corruption. when you get -- people have the assumption that higher pay will get the incentives, but it didn't release that kind of respect. >> thanks a lot, you're going to stick around, we're going to be right back. ♪ pop goes the world ♪ it goes something like this ♪ everybody here is a friend of mine ♪

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good morning from new york, i'm chris hayes. so i think to me, one of the things that defines american public life in our politics at this moment is the crisis of authority. and what that looks like is, we have historically low levels of public trust in all of our higher institutions, when you look at the polling, even going back to 1973, when they started doing this polling, which they started doing because it was like oh, my god, they don't trust our especialinstitutions . you'll get a sense of what the

general trend which is that everything is coming down. tv news and banks and business are all -- it ands everything about the way that we think about politics, we're getting our information from a media that in my cases we don't trust. we're hearing fights from the president and congress, which we don't trust. here's american's trust in the presidency as an institution, which we also see shoots up when barack obama is elected but now is returning back down. despite the tact that the trust in the president himself, barack obama's person remains -- we are going to talk about the substance of the immigration announcement which is extremely important on tomorrow's show, i don't want viewers to think that we're talking about this little back and forth because i think what happened yesterday is really important. we're going to talk about it

tomorrow. but the president was talking about the immigration initiative that was taken by one of hiss cabinet members. and he was interrupted, some say heckled by a reporter. >> it is the right thing to do. excuse me, sir, it's not time for questions, sir. not while i'm speaking and the answer to our question, sir, and the next time i prefer that you let me finish my statements before you ask that question, is this is the right thing to do for the american people. i didn't ask for an argument, i'm answering your question. it is the right thing to do for the american people and here's why. here's the reason. because these young people are going to make extraordinary contributions and are already making contributions to our society. >> a remarkable, remarkable exchange for a whole bunch of reasons and i think particularly

in the context of watching this extension. it does seem like all of our that is right for belief and deference is breaking down all over the place. dave, what do you make of this exchange? you're a political reporter, you know some of the folks at the daily caller, which is a republican -- what do you think of it? >> i was not surprised at all. i kind of predicted the response they would come up with, i was not predicted the claw back that they did. neil monroe mistimed the question. i have mistimed things five times in a row too. it's horrible. but, no, the daily caller was explicitly created and carlson made this challenge -- the essential argument of the daily caller is a free beacon to a certain extent.

the media as we know it is explicitly liberal, it's all biassed, we need to correct it. and journalism, in this mold is about correcting bias, is it about finding truth? first you need to correct the bias. i was surprised, the first response when they tweeted it, he did the job very proud. monroe actually said get your response later. but he's telling reporters at the white house, i wasn't there, i was just talking to people that were there. i was asking a question because you wouldn't ask the question and i would. >> and the question was incredibly hackish, why are you screwing over the american people. foreigners over the american people. he had a reporter, generally when you're asking questions of a reporter, you're going to have some writing implement out or a tape recorder out.

it was interesting to see the response to this online. people feel that this president is disrespected in a way that other previous presidents have, i think there's a racial sub text. there's the famous joe wilson moment, which again was another norm that was violated. you don't yell out at the president at the state of the union. i'm curious how you saw this, because you are someone who famously not deferential to authority, you're someone who's famously a doigged reporter who doesn't sit around waiting for people to ask questions. >> if only reporters had actively, aggressively questioned president bush when he was going after weapons of mass destruction in iraq. that was a matter of lives that took lives and we're talking about hundreds of thousands of lives.

i think the press is clearly, whether it's a republican or a democratic president on bended knee and i think it's critical to stop having these sort of unstated agreements on how the press should operate. i'm not proheckling at all, but i'm very serious about asking serious questions and the kind up consensus in the press -- i remember in the clinton white house, i remember being in the press corps and ask about the sales of weapons to indonesia, and it was the reporters, the peer pressure of the reporters, i didn't respond to it but they would say, oh, please, they would ask where did he get his golf clubs from. it's critical that there not be

this unspoken agreement between the press and the president. that they're there to ask serious questions and not there to be on bended knee. >> in no means was this a serious question. >> that was a good answer. i totally agree, right, but there's form and content, with the question and there's certain just basic did corps rum. for instance i didn't just like bark out something while you were speaking just now because we have a certain set of decor r um about how -- >> compare the bbc, or the irish times interview of the president because of bush, which was quite impressive. i think, respectful, i just want you to answer the question, if you don't answer the question,

i'm going to come back and ask it again. >> and there also is a very clear racial sub text about this. but when it comes -- speaking of european journalists, they eve got the royalty, they've got the kings and queens, but they we treat our president as royalty. >> i want to talk about that irish times interview because it seems that was a very strict partisan left. it was criticized as not being able to tell you the kind of firestorm that -- the other thing to think about is in an environment of very low trust, right, what does the presidential campaign look like? and what does the presses of the relationship look like when we're united as the american public, let's talk about that after this break.

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all right. so nothing can compare to an atmosphere which the politicians themselves and the systems of government are not very trusted and the system to keep them in check are not really trusted, affects -- one democratic political operative described to me as post troop politics. is that it doesn't really matter whether you lie or not, because there's going to be no sanction for it. here's just a small example. this is mitt romney saying that barack obama made the economy worse. >> when he took office, the economy was in recession. and he made it worse. >> how can you continue to say

that things are worse? >> i didn't say that things are worse. >> as we can see, we can track what actually happened there. but the fact of the matter is so much of this was refrakted. i think there's places for all kinds of different perspectives, but there's a place for all different perspectives and there's a place to come together. i wonder as a critic of the main stream media whether you feel na absence as well. >> absolutely, think the real question is who the media has on to answer questions. when you are talking about jamie dimon in general, when we're talking about orr, the corporate

media brings up the other bankers. it's about who is allowed to be at the table to be part of that conversation. so when we're talking about the economy, what about the -- what, the lower 30% of this country, a third of the country the walmart buyers, have amassed a wealth, the 5, 6 -- that is equal to the lower 30% of this entire country. >> in terms of assets and wealth, yes. >> and yes, when we're watching tv, from the beginning the victims of the subprime crisis, to the reason we don't is that they're largely african-american, latino and poor. >> here's the problem with that, even if you show those folks, a certain portion of the electorate is going to say i don't want to be told by them. or they're told by the column -- >> i think voices come through

that they are true. >> i think there's a big part of this that looks at who is running the newsrooms, who's selecting the stories that are told. it does get to who's being put on. for example, i'm from pittsburgh, that's a city that my grand parents could really have gone from being in the coal mine, the steel mills to right now working in biotech or biomedicine. what can we learn from a city that looks the way it does that was as racially stratified as it was, that now has an immigrant population because of the -- how economies turn themselves around, when we look at how education systems turn themselves around, when we look at a city that was really why is lesser white. we're not hearing that type of thing. that has to do with the fact

that those aren't sexy stories, those aren't being chosen. >> this is the idea that -- it actually links up with what the media is, the idea is that the reason we have all this distrust, is that we only hear bad news. that distrust is actually in the a product of bad performance, it's actually a product of the fact that all we get are negative reports, do you think that's true? >> and what about the constant reports about what's happening on wall street. if wall street is doing well, we're all doing well. that's not true. a real street every ten minutes as if what happens on wall street is good for the nation. >> and you didn't see many storying saying here's what the stock market has done.

it's still based on one candidate saying another thing about another candidate. i didn't side with the critique, but so much of it is, somebody said a point, i'm going to get a response to that point and not research it. and i think a lot of real distrust comes from that. i think the problem is people researching the truth why they didn't hear something on tv and hearing junk. but the lack of trust, i think that makes sense because why is there so much coverage of somebody responding to a point and not verifying it. there's a lot of that. >> we spend so much time fighting the business model. the national business model. this is what i did in the wall street story. >> this is modern media, is the way to make money, the way to succeed is to play the base loudly and vigorously. >> i have no idea what you're talking about. >> it was great journalism. and we're kind of playi ining

counter to that a little bit. are we going to blow up the business? well, the constitution says we can't and we won't. and this is where the distribution media of the internet might actually be a help because you get an extraordinary a. of people that do watch regularly in a context that's not the business model. >> but that is not addressing the vacuum of the thing which is the fact that it doesn't seem, you know, walter cronkite used to talk to 7 million people every night. and that's more than every newscast combined. people's experience of what their governments are doing are so disparate because of what some people think is a good -- >> it's a product of competition. and competition and media produces the fact that you need

a niche. we have the conception of the media is that they're telling us the truth. >> i need to keep going back to the iraq war, but this is such a great example. >> hold that thought, but first i want to take a commercial break from one of our sponsors. s a great presentation. so at&t showed corporate caterers how to better collaborate by using a mobile solution, in a whole new way. using real-time photo sharing abilities, they can create and maintain high standards, from kitchen to table. this technology allows us to collaborate with our drivers to make a better experience for our customers. [ male announcer ] it's a network of possibilities -- helping you do what you do... even better. ♪

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comfort of aircool memory foam layered on top of beautyrest pocketed coils to promote proper sleeping posture all night long. the revolutionary recharge sleep system... from beautyrest. it's you, fully charged. the issue here is whether you trust the media, whether you can trust the media and whether they earned it. they looked at like six weeks before tin vegas of iraq in 2003, they looked at the two weeks around colin powell -- at the four major nightly newscasts, abc "world news tonight" and the cbs news with jim lehrer. in those two-week period, there

were 293 interviews done about the war, only three were with aechbt anti-war leaders. that is an extreme media beating the drums for war. and that's why it's one thing for the government to allege things that are lie. but does the media practice a conveyor belt for those lies? i also think that for today, if we go to the ground troops, it was not only by the government, it was about the media accomplices. we apologize and it also gave

rise to a lot of alternatives, kind of the progressive blogosphere, a rose in the wake of that really intensified daily columns and things like that. but the conservatives tell themselves the exact same story, literally the exact same story about the election of barack obama in 2008. >> because the media produced it for them. >> it's the dan rather story, i remember at the time, ed gillespie going on tv, and saying what did john kerry know and when did he know it. and making this really explicit, not quite a dog whistle, hey, fellow conservatives, remember how we were made to eat dog food for this failure? this is the exact same thing. >> their analysis of the 2008

election, would not have shown that -- the facts don't bear up. so this is the line, but it's just not true. >> that's the other thing is that we have -- it's so hard to grouped the conversation, to root it in some kind of empirical analysis and even when you do, right, there is an entire part of the -- particularly the conservative media sphere that's telling its listeners to ignore these things. here's rush limb what describing what he calls the four corners of deceit. >> are so hideous, are so insidious, are so anti-free market, they have to dress their ideas up in a phony cloak of compassion, saving the planet, saving the polar wears, saving the water, saving the earth,

whatever it is. saving the poor. it's infuriating, now we have the four corners of decease, the universe of lies, the universe of reality, and the four corners of deceit, science, government, academia and media. >> how can -- i mean because you know, people trust and listen to that voice, and here is saying, do not what the sub crime crisis has done to working americans. the entirety of climate size is thrown on the floor because that is coming from a corrupt institution.

that is coming from one of the four corners of decease and you should not listen to them. >> he hedged his points quite clearly. and skincience is not an institution, it's a way of taking it and applying it and testing whether there is indeed fact therein. the issue we have right now is born out in the fact that you hear the people, oh, young people get their news from medians anymore. young people are watching comedy central. but when you look at the way kolber and stewart and i also want to bring up liz winstead are looking at the world and saying, hey, we are being told these things,let go back and get the tape, here's what he said on this date, here's what he said on this date, and here's what he said now, there are very few legitimate media institutions

doing that kind of bam, bam, bam, critique. there is a pillar holding up the information base of this country. people are tired of it. how to fix it? well, there are a lot of theories, but we have got the allow comedians for part of it. >> that's just describing the corruption of these institutions. i think we all look at these institutions and describe the corruption, absolutely. junk science is a part of science. junk science is a part of science. i don't agree with the things he picks up, but each of these institutions have their own

problems and it's a problem of corruption. how do you run for re-election under those conditions, right? when the entire idea is to try to create some faith in the possibility of things getting better. that is the whole point and everything that a reporter says about you, how do you undertake an election? >> you're going to answer that right after we take a break. [ m] should've used roundup. it kills weeds to the root, so they don't come back. roundup. no root. no weed. no problem. tdd#: 1-800-345-2550 let's talk about that 401(k) you picked up back in the '80s. tdd#: 1-800-345-2550 like a lot of things, the market has changed, tdd#: 1-800-345-2550 and your plans probably have too. tdd#: 1-800-345-2550 so those old investments might not sound so hot today. tdd#: 1-800-345-2550 at charles schwab, we'll give you personalized recommendations

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don't let anybody tell you that the challenges we face right now are beyond our ability to solve. it's hard not to get cynical when times are tough. >> that's the president speaking in cleveland on thursday night, i think identifying the crucial challenge for him in the election is precisely that, which is times are tough. there's a lot of distrust and

under those conditions, he is attempting to convince people to grant another four years. how do you do that? how is that shaping the campaign and con training what we can and can't say? >> david plouff, please start reporting right now. i think it's tough and i don't think he could have laid the ground work to the area you're talking about. if his plan followed discretionary spending, he and jay carney have both said that discretionary spending is lower than since eisenhower. we're going to concede the argument that government spending -- >> isn't a good thing to do right now. >> but then we're going to get into a cul-de-sac about how we need to hire cops and firefighters. i think actually conservatives are much better at kind of finding the things that make people anxious and putting them

all in one basket. rand paul in 2010 ran a campaign ad that shows mechanical arms gobbling up things that people didn't like, wall street, corruption, kind of putting it all together and saying, if you're angry about all of this, if you're critical of all this, i'm the alternative. and president obama hasn't made specific arguments. >> and here's where the distrust really hits home. i have just started there great new book called "the new new deal." >> no one talks about the recovery act. >> and this book makes an incredibly persuasive case, that it was an incredibly effective piece of legislation. but you can't tell people that, including if you're the president of the united states because people just don't believe it.

>> they're saying, well, you know, we have also cut back on some federal redundancy, you made the argument that i have expanded the government, it's going to work, and we hired more people. this president has resulted in some people being laid off. >> it would have been a wonderful truth for president obama to offer yesterday this week when he was speaking about the economy, let's increase the minimum wage. very little coverage has been done of jesse jackson jr.'s -- by it up to $10. >> minimum wage has been outpaced by inflation. >> 30 million people, i'm talking about conservatives, republicans, democrats, independents would benefit from that. picking up, elevating the level in this country. and it goes to the issue of

money and politics. and who gets called on the carpet, who gets helped. that's what makes it -- >> let's say that he had called for raising the minimum wage and let's say even in -- >> he would have massive support. 70% of people would support it. >> let's say that happened. 70% of the people have supported it. let's say it got passed and it went into law, that would be a good net positive good. i think we should raise the minimum wage, but so is the recovery act. and no one cares. >> i disagree, it's not as much that no one cares and we have talked about this in the past, this is where the president is making a horrible play for himself, he's nothi putting the narrative out there, i don't think it's an issue that people don't care. >> on the recovery act? >> it's not an issue that people don't care, it's an issue that

people aren't hearing about it, i guess maybe main stream media needs to do stories on it to put it out there, is it poor legislation or does it work? >> it made me realize that this was -- he was one of the most progressive achievements of domestic policy standpoint by the president. no one talks about it. very few people in the progressive press talk about it. the only people who talk about is it is the conservatives who talk about the -- >> in the context of politicians, we lose trust because we believe they're being inauthentic, we think they're doing one thing and it turns out that they're just playing to their funders. the recovery act was filled with a whole bunch of things, earmarks that play in the context of americans as just corruption. you could raise the recovery act

and as a economist i would say, it did fantastic things, but it didn't re-enforce the fact that this was an authentic president that was per suing reform. there's 9,000 earmarks inside this recovery ashlgt. >> but the new deal was full of a ton of pork itself. >> what do people look at right now? that this guy sets himself up as a reformer, he's going to change the way washington works. did he change the way washington works? no. it's so easy for people to come back with a response, he walks into that corner because he sets himself up as the reformer. >> if they felt like it worked, and i don't want to make a comparison, but in august 2006, george bush was saying we just need to continue following this policy in iraq and people didn't

buy it. and president obama says i'm not doing as wells i was three years ago. >> the way out of cynicism right after this break. students and teachers get better results in ap courses. together, they raised ap test scores 138%. just imagine our potential... ...if the other states joined them. let's raise our scores. let's invest in our teachers and inspire our students. let's solve this. yoo-hoo. hello. it's water from the drinking fountain at the mall. [ male announcer ] great tasting tap water can come from any faucet anywhere. the brita bottle with the filter inside. a body at rest tends to stay at rest... while a body in motion tends to stay in motion. staying active can actually ease arthritis symptoms.

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our cloud is the cloud other clouds look up to. welcome to the uppernet. verizon. each time a ceo rewards himself for failure or a banker puts his -- each time lobbiest game the system or politicians tear each other down instead of lifting this country up, we lose faith. the more that tv pundits make issues in the sound bites, our citizens turn away. no wonder there's so much cynicism out there. >> that's the president speaking in the state of the union 2010. and larry, you talked about the fundamental thing being about changing the way washington works and that is the way to

kind of repair and restore some of the trust and i think you agree. what does that look like? >> people think that money buys results in congress and they think it's all about money buying results in congress. this isn't the 1%, this is a fraction of 1%. 25% of americans -- .01, the 1% of the 1% gives more than $10,000. so far 196 americans have given 8 0% of the superpac money. people look at this and they think this is a system rigged for the funders and not responsive to the people. the only way to get people to believe in the system again to free the campaign so that -- >> do conservativings agree with that? i agree with you and i'm a liberal and i know liberals believe that and i have done a lot of reporting and talking to tea party folks, it's a frasz

the president's used, i've heard it on occupy wall street, i have heard it from activists. but on the specific thing about, there's 196 people that have given 80% of the superpac money. the liberal in is us like that is crazy and terrible. >> if it was really visceral, they would have nominated mitt romney. conservatively speaking, imgrants are told and believed that you are as rich as you want to be, if you have a billion dollars to hand around it's because you've worked hard for it. barack obama has done a lot to count her money. the president's out of touch because he's doing so many of these funds raisers.

if you go to a american's with prosperity. after a lot of democratic attack ads, you ask for sympathy from david coe, you ask for sympathy from the wealthy people that are bankrolling it. the media needs you to trust rich people. i don't mean to sound patronizing. if i'm successful, i don't want to be torn down. but that's often how a lot of that policy gets made. >> i think the most interesting part of this aside from the actual numbers and how they play out and what it means for the election, sheldoned a writing a $10 million check is the same as someone with $21,000 in the bank

giving $10. in some ways, i think we have now -- the post citizens united era seems to be hitting a rock bottom. our democratic commitments as a society are going to rebel against. >> out of the belt way conservatives look at the system and they think it's corrupt. principal libertarians, a great new boork called "capitalism for the people" talks about the way that money in this system has can -- this is a system that every side should take. >> what do we know that we didn't know last week? my answers after this. [ female announcer ] letting her home be turned into a training facility? ♪ this olympian's mom has been doing it for years. she's got bounty. in this lab demo, one sheet of new bounty leaves this surface cleaner than two sheets of the leading ordinary brand.

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just a moment what we know now that we didn't know last week, but first a quick persona

new book "the elites." i'll be appearing in washington, d.c. on monday and tuesday night and in chicago on thursday night. check out the twilight of the "elites" about other appearances around the country. what do we know that we did not know last week? america's health insurance companies were publicly affording the public health act for america to start doing business with america's insurance companies, behind the scenes the company's ahip spent more than a million dollars to defeat the affordable care act. in the two years following president obama's inauguration, it had secretly donated $104 million to support the passage of it. now we know even though insurance companies stood to profit from the affordable act, they wanted to kill it to profit more without it. in the wake of the killing

of unarmed teenager trayvon martin, we saw how florida passed stand your ground laws. thanks to a stud duh out of texas a&m, it is not just homicides that increase, it's the unjustifiable homicides. when a time that crime was dropping, stand your ground states saw murders increase from 6% to 11%. they still do not hoe how much of the increase was from self-defense and escalation from events remaining non-lethal in the absence of stand your ground. two years before his first presidential campaign the administration of then massachusetts governor mitt romney killed a manual of anti-bullying guidelines because it identified by-gender and transgender members. we know his commissioner was in touch about the governor's office about the guide and

e-mailed the following quote. because this is using the terms "bisexual" and "transgendered" dph's name may not be used in this publication. back in 2006 bernie denied these issues had anything to do with delaying the guidelines, but now we know different. i want to find out what my guests now know when the week began. let me begin with you. >> i want to say i now know thanks to alicia shepherd that thanks to her "new york times" op-ed, very good women writing op-eds, we need to do more of, that investigative journalism, the money is going away for it. when we look at "the times" and other companies laying off, we are not covering our institutions that we do not trust well enough and taking that farther, we are not covering the bigger story that is will lead us to understand our democracy better.

we have to keep watching that and keep talking about it and we have to keep demanding it as consumers of media. >> this is true at the local level what you're seeing is, you have seen a redistribution of resources in media, not a decline but a redistribution which drives hits on websites and away from school boards and things like that. i think that bodes ill. larry, what do we now snow in. >> in the "new yorker" a wonderful article about all the high bases biases that humans have, in general. it turns out smart people have worse than everybody else. the smarter you are, the more biases that are built in. the more unable you are to overcome them. so it turns out smart people are worse off in these biases. >> i called jamie dimon as one of the smartest guys in the room. i thought about that a lot, the way smartness and the cult of

smartness and the celebration of smartness can elevate certain traits over others and the way it doesn't make room for compassion, wisdom and the um prudence and a whole variety of virtues we want good leaders to have. andy goodman? >> i spent thursday night with the news time at the late marley graham's house. i saw your picture with trayvon martin, 18 years old, he was a young african-american teenager in new york who was gunned down in his own home by new york police. the policeman who did it was just indicted for murder. on this father's day tomorrow, there will be thousands marching in the silent march against the new york police department's stop and frisk program. they last year engaged in more than 700 thousand stops and frisks. and overwhelmingly the young african-american and latino

population, it's a different in society and it's about time they come together that we deal with police, violence and surveillance. >> we are seeing a real political backlash that is gaining and growing momentum to the stop and frisk policy. i think it is really getting stronger and stronger. we'll see you at the march on sunday. dave? >> i think we learned the prolegalization, young activists write on politics of something. mitt romney was a good barometer. didn't stay to the right of this. he hugged marco rubio's version of the dream, which is a bit off so far. we were talking about before with the iraq war, who to trust, it turns out people yelling in the streets saying this is a human rights issue. politically we are right. it turns out to be something politically popular. >> and they were getting it.

they were occupying campaign offices. >> that's what did it. that's the counter to money. >> thank you to jamila, larry, amy goodman and dave weigel, thank you for getting up. thank you for joining us today for "up." join us tomorrow morning at 8:00. we'll have steven cohen of tennessee and michael hastings. coming up next is melissa harris perry. in the wake of the white house's bold announcement on immigration, melissa will look at the new way to talk about immigration. more on brain drain and wage left than border control. and she'll talk to undocumented immigrants about their fears of deportation. plus, the president's economic vision, has the president accurately defined his vision? melissa harris-perry is coming up next. thank you for getting up. [ mechanical humming ]

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this morning the rise of sighborg and the coming reality. plus, the united states makes the best of kicking the best and brightest out of the country, but that's about to change. and the world holds its breath as greeks and egyptians head to the polls. greeks and egyptians once again? once again, global stability is in their hand. but first, two men, one path of their choice. it is the path in all its nerdy glory. good morning. i'm melissa harris-perry. before we begin, the united nation observers this morning say that they are suspending their activities in syria because of escalating violence there. and this may be the latest sign any efforts at a peace plan are