from the russian capital this is all t. top stories now this america fears for its image of sensitive details of published online over its relations with its closest partners experts said it shows a degradation of washington's foreign policy. to senior iranian nuclear scientists of targeted in bomb attacks tehran blames israel and the u.s. saying it's an attempt to hamper the country's nuclear program. keeping tensions hawkeyes south korea unnerved pyongyang with a regional joint naval exercise with the us a new week after a deadly artillery exchange in the region is continues in less than half an hour from now here not in the meantime it's cross-talk compete in the van and his guests discuss whether welfare states more about socialism for the rich that's next.

if you can. follow me and welcome to cross talk i'm peter lavelle too big to fail expression if you're wealthy governments around the world have bailed out the rich and powerful for them the worst of the recession is probably over but that cannot be said for the middle class and poor it would appear that socialism does exist though only for the rich. can.

you discuss government policies towards the rich i'm joined by doug henwood in new york he is the editor of left business observer also in new york we have andrew chef he's director of communications and marketing at euro pacific capital and author of the illustrated book how an economy grows and how it crashes and in singapore we go to jim rogers he's an author and financial commentator and another member of our cross talk team you know on the hunger all right gentlemen crosstalk rules in effect that means you can jump in anytime you want and i would seriously encourage you to do that again one during the last during the midterm elections other tea party people saying that obama is building a socialist state ok but on the other side side of the political spectrum a lot of people are saying that there is a welfare state but it is for the rich it is not for its for a very small segment of the population of the united states and it's been being a it's been built for over the last forty years and they continue to benefit very much from the state how do you react to that. well there is some truth to it

certainly a caricature of obama some sort of foreign born to colonial socialist it's ludicrous but he certainly has participated very aggressively and the policy trend of the last couple of decades which is to let the rich do over whatever they want to particularly wall street do whatever it wants to and they want to hit a wall to bail it out we've seen successive bailouts and you know the state bailout mantra has gotten very skilled of the routine i think this one was much bigger than anything they bargained for but you know if you go back to the origins of deposit insurance and such in the one nine hundred thirty s. it was intended to protect small depositors but that whole system which is intended to prevent a rerun of the one nine hundred thirty s. when ten thousand banks failed and drove the country into and the much of the world into a decade long depression we were trying to do everything in policy to prevent that from happening again but the emphasis has moved from protecting depositors and actually preserving the system to preserving the wealth of the rich wall street is just you know it's like good old days for wall street bonuses are almost as big as ever the stock market not doing so great but doing pretty well by market has been

doing quite well the federal reserve now moving in to buy a lot of long term bonds and i can understand why they're doing it but it just looks and acts and feels like everything is being done the full power of the state is being mobilized to a bail out rich people while the middle and lower income brackets enjoy almost nothing i mean did about two thirds of the benefits of economic growth over the past decade went to the top one percent of the income distribution the bottom ninety percent the population about twenty percent the mass of americans have not participated in anything resembling prosperity for several decades and messes just doesn't seem like any kind of social mergence the what is a social emergency is when wall street hits the wall and the state has to be mobilized to save them but the rest of the population can live with ten percent unemployment by official measures close to twenty probably in real terms and they can just just hang it and now we have a new republican wave and congress we've got some congress people actually trying to remove the. fed federal reserve. the dual mandate is to preserve full employment

and price stability we have some republicans now looking to remove the full employment part of the fed's mandate and just focus on price stability why people are worried about inflation at this point is just insane it is kind of floating for most people to make it off the mat jim if i go to you in singapore it is the mandate of the modern. industrialized state in the west to protect the wealth of rich people because in the united states over the last few decades it seems to be exactly that to protect their wealth because they've certainly gotten very very rich over the last decade. well it's sort of been in the last two or three years that they've they've been bailing out wall street which is totally outrageous i cannot believe that taxpayers are letting them get away with it i can't believe that anybody would let them get away with it it's happening in the u.k. as well as not just happening in in america i'm afraid it's happening a lot of places but it too. was a point i would have to point out that a lot of the money which mr which the government has been spending in the last two

or three years has been going to the middle class i mean forty percent of it went to preserve the jobs of bureaucrats at the state levels around the country now you may be in favor of bureaucrats or you may not but that's it's hard to say that bureaucrats are but the rich in wall street that you just call so called of the many people many people that many people of many people have been receiving this money none of whom should receive it if you ask me but unfortunately we have a government now which likes to pay up by votes from anybody by votes and by patronage from anybody you can't do anything about that andrew i mean you know it's the last election you may kind of showed that i mean you don't have to have any kind of disclosure right now that the koch brothers they spend some people say over one hundred million dollars because supporting their candidates to protect their interests ok again to get the state to pass legislation to protect their wealth that's what some people would say and you would go ahead while their interests their interests or their interests are keeping the country country safe for business. and private interest but i think there's plenty of money being spent on

the other side i think it's interesting to think that the rich the rich don't pay anything to the society of course we do have a progressive tax system the rich pay far more in taxes that than the middle class many many the vast majority of citizens in the united states don't pay any income taxes at all so there is a massive transfer of wealth and it's interesting you call that a giveaway for the rich is allowing them to keep more of their money but yes in the last few years they've been bailouts and in wall street it's benefited wall street i agree with jim it's a tragedy but but those bailouts were made not to save the rich but but did. really to say to keep interest rates low to keep the financial financial edifice from collapsing which would raise interest rates and we have a society dictate to low interest rates not just for the rich people but but but poor people middle class people in this country survive on low interest rates and rather than letting interest rates rise and people having to live off of savings which they don't have that the government stepped in and bailed out wall street

tragical andrew to keep interest rates low jim get a jump in go ahead and do wait wait a minute andrew wait a minute and you're taking interest rates to zero is destroying the class of people in america who save and invest for the future hundreds and i mean tens of millions of americans didn't get into financial trouble didn't buy six houses with no money down and no one had no job and the people who did the right thing who saved their money didn't get in trouble now are being wiped out by the federal reserve and the central government because they've got interest rates at zero all of these people who thought they could live off their interest or their savings are now being totally wiped out when ever in a country why greed saving a great answer vanished. i'm not saying i think they did the right thing. i think they mean we had if we had there was gonna be there was a big seven most people should have to work for their let it go ahead we're hoping you're just playing with interest rates are supposed to encourage someone savings low interest rates are supposed to encourage investment they're not low interest rates are supposed to encourage investment by corporations corporations have

a trillion dollars in the balance sheet right now that they're not investing because the economy is so weak. and something has to be done about that and investors do not want to invest because the economy's weak and they're scared of losing money and that's that's the fundamental problem the prospects for there are future economy are terrible and that's why they're not hiring they are investing they're only terrible as long as the government can use to clip coupons is delusional and you want to jump on the reason i mean. well the only reason economy remains terrible is because because most of that most of the capital is flowing towards the public sector i mean if they have the government will allow first of all our real economic contraction to take place and we can get down and we can wring out some of this bad debt any way that we live by the notion or employment you want twenty percent unemployment is what we need twenty percent unemployment. well mr number one you're really so hard on mistakes in america in the past twenty years we've got some. finish i'm going to jam going. in europe right now. we've got some letter to his post already in europe right now ireland is undergoing

a vigorous austerity program it's doing exactly what i think you would like to do see budget cutting and also greece is doing the same deep budget cutting or what are we getting for that high unemployment the irish unemployment rate is fifteen percent and rising the economy is collapsing it's contract by twenty five percent of the last week of years. had we had to undergo a big austerity program it's leading to implosion too i think it's doesn't this austerity scheme does not work we have a twenty year plan docs to create want to hear that are going to be followed by mr han word go in there not jam go ahead go ahead and singapore and i mean we're in the midst and we're in the in the united states in the past twenty or thirty years as you were pointing out we've had some unbelievable dislocations we have built we have done things which no country in the world should do we have run up debts which we can never pay off no matter how hard we try what the politicians are and you say we don't have to have a recovery from that i mean when you have a long hangover you've got to recover when you have a long illness you have to be whenever you make mistakes mr hand would somebody has

got to pay for those mistakes and it should be the richie we shouldn't have my own up to the regime. that go ahead go ahead watch the debt levels united stuff public that the government out of united states is not excessively crazy i mean it's entirely managing the debt g.d.p. ratio united states i'm not outlandish by international not entirely missed we don't have a problem for at least twenty years according to official productive projections from the c b o so there's this sense of emergency that we have to cut cut cut in order to get out of the debt problem is delusional and it's going to cause immense already in the real debt and despair. go ahead jim what do you think our debt is in the united states the household what do you think the debt is than the united states that you see if you actually match sixty percent the highest anyways i have sat on a stand alone if you throw in the fannie and freddie which should be on the federal government and should because fannie and freddie are for our federal entity at this point we have higher debt levels in greece. and now almost do you know what i'm

trying to i mean and then what. doug you want to gentlemen is that he had a lot of just international debt around the world don't you want to jump in there go ahead yes now the real problem is debt in the states is the household debt the government debt is entirely manageable it's not a problem we could tax the other the other folks on this on this program you know there are a very recent or a very what matters i mean the more you can tax regulate and where you're going to actually nobody's pay fifty percent no one is paying fifty percent at the end so you thought he was like secretary fifty we're going to take a look at it. yes i was going to say your safety percentage always pay for it ok let me tell you how much i'm paying i'm paying i'm paying thirty eight percent to thirty three percent of the fair share and i think nine percent of the city of new york i pay ten percent of the state of new york i pay six percent or six and a half percent it's all security and then having to talk about my sales taxes or my property taxes mr mayor we have fifteen percent of the people in america mr hayward

p.p. fifty percent of the people in the united states don't pay any tax at all any tax at all it's left to the other fifty percent but let me go back yes question that's not true john if you were to claim what you say you claim that america doesn't have any we are the largest international debtor in the history of the world nobody in history has ever over as much as we do on the international economic and i don't mean charlie's new way to show this gentlemen please let me jump in here i'm really glad everyone's taking crosstalk rules to heart here but after a short break we'll continue our discussion on the rich stay with our team. and. straight.

it was created to serve public interests to inform and to entertain. these days there's nothing easier than opening a new media outlet but there is nothing harder than revoking its license in case of collapse. when just the. same. in trouble. you can indulge in communities where you have one large corporation controlling the buildings people radio stations television stations the cable outlets. so you tell me that that sounds like democracy public opinion versus f.c.c. broadcast blues on a large wealthy british science. market

why not. find out what's really happening to the global economy with mike's cancer the no holds barred look at the global financial headlines tune into cars a report on our. welcome back charles time people are about to mind you were talking about the so-called socialism for the rich. but before it let's see what russians think about taxing the wealthy governments all over the world claim they've gone to the limits tried everything but the results are still the same the rich are getting richer while the poor struggle to preserve what they have as

a result many are considering raising taxes for the rich the russian public opinion research center asked citizens if they support raising the tax burden of the wealthy fifty seven percent of those polled would have high earners pay more do you while twenty eight percent opposed to raising the tax burden what was not clear however is how much poll respondents themselves heard back to. ok doug i'd like to go back to you a lot of people say that taxing the rich hurts job creation there's a direct correlation between the two so george w. bush cut taxes for the top two percent. of american earners and during his presidency the country lost eight million jobs so what's going on here because i think a lot of people would say middle the middle class needs a tax break does the top two percent of the population need a tax break go ahead. no the top two percent of the population has been raking it in and been taxed very lightly for it's the bush tax cuts that happened early the

decade preceded the weakest expansion in modern american history the weakest g.d.p. growth weakest growth in employment of any of the eleven pushed forward to expansions so we have to go back to the ninety's the first thing that bill clinton did in office was to raise taxes on the top one percent of the population and proceeded quite a long boom which vigorous job creation but also across the board income gains for the first time since the early one nine hundred seventy s. every part every demographic group every income level saw strong real income gains for the probably part of the ninety's we haven't seen anything like that in the last thirty thirty five years and it's i don't know i just think it's very close to the approach is touching the rich is a good thing and you go ahead you're shot down i don't know what you consider to be i don't know what you consider to be light i don't think consider fifty percent to be light but you know it's interesting that there are more factors that go into economic growth and taxes that are going to make a direct causality between the tax rates and economic growth is overly simplistic

there are many many other factors but you know one of what i think the only sector that really grew most of the new income of the last twenty years went to the financial sector and that's where all the new income was and certainly the people on wall street have made obscene amounts of money but the reason why they were able to do that was because the government has been making money so cheap that the money business is so great because the government subsidizes it if the government didn't subsidize this money business using by lowering interest rates far too low and backstopping investment houses there wouldn't be that much money there so i think it's a government policy and i don't think do it they get to benefit the rich they do it to keep the credit flowing they do it to keep america addicted to credit and that's what's made so much money for wall street and i think that should go away but i want to know about you jim and singapore i mr disagree with that it's interesting that you want to go back to mr han was going to head towards. before that people should not be great jim just ahead was said before that people mr edwards said before that people who save their money shouldn't be allowed to earn interest on it

i must say there are tens of millions of americans who are retirees my mother being one of those ninety one years old who would love to get some income from her savings and mr henwood says she's despicable for earning money on her saving our is pitiful savings so that she can. you know national gathering i don't know dagger ring i don't want to hand what i would say should not get it just don't do anything jim did not believe anybody was ugly explain his comment he'd like to explain it if he said it go ahead. of oil as there is no god given right to earn a large income on savings i mean the low interest rates are absolutely essential to get this economy off by that people don't have a raise or what it's now we're going to end up like ireland. and i basically matter where the morally right stuff really matter going to where it is and where they produce they have a right to their money in that sense and you mr what all the people who are nice to me i like your trophy and it does not have any bearing jim go ahead go ahead you're

saying that all the people you saying that all the people live through saved and the retirees should have nothing to show for it all just go to their grave poor with no income and nothing who is going to pay for their funeral by the way and i mean like i said before you have low interest rates are going to. the idea that low interest rates are going to save us is totally false the japanese have been trying for twenty years and are still trying to recover the problem is we america and japan keep trying to trying to bail out all the fat cats and the incompetence all the incompetent people who made mistakes in the past twenty years of being propped up we're not letting them go bankrupt how can we possibly have a just system we're going to say we're just real or have a depression to clear of. but you're frankly saying we need to raise interest rates so that the minority of the population that has a large amount of savings can rake it in while the rest of the public is either debtors most of the debtors you have to so you want to get away sharing system if

you are talking about you want a one hundred thirty s. you're looking for a deflationary depression you are most people would say well i don't you want i just don't know where everyone who you want to system where everyone who save money gets wiped out and everyone who owes money gets bailed out and that might that works i was i'd like for a living get a good deal ok you know i mean and when it didn't work you want to fight about saving and you want to write it off if they want to years. you'll never get growth because savings account from saving japan is stagnant i mean it has little at risk what you want is they don't have the two percent of north korea growth doesn't come from same as it comes from investment you know if it was well you would think that's an improvement in translation is wrong here. because i'm saying it right because mr him what he's learned value in doing the research for corporations. in the last year has been to his work and with the way the savings from corporations who reinvest their profits do you ever read the flow of funds are confident it will stuff i know i'm talking about investing in real investment and real employment

comes from the for the profits of business which are generated internally they do not turn outside very much for the savings of their estates and it's a lot simpler that you have to admit and what i just had in mind you but i'm going to clean this is not a guys it's going to gym in singapore go ahead. even socialist economists say that savings leads to investment where do you think investment comes on you think it comes from the tooth fairy you think it falls out of the sky you have to have somebody saving so that can lead to investment i mean even the even crewman knows that i mean what is this doug i mean what does that lead you to believe me an investment let's not get into that. i seen most of the real investment in buildings and machinery the kind of things that make an economy grow and be productive come from corporate profits corporate profits are flat that is corporations fund almost all their investment internally over the long term about ninety percent of corporate investment comes from corporate profits it has nothing

to do with all these cute little stories about old ladies living on their retirement savings that's just not the way it works i know the flow of funds accounts i know the flow of money in the economy i know what i'm talking about this is just absolute fact i mean you can they can rant and rave and repeat received ideology all they want to but that's just not the way these calvinist homilies but that's not the way things really work ok and you want to be there a lot of leaking and you've been very patient go ahead i mean i mean well i was going to talk about you were while ago talking about savings and i was going to mention that in the north koreans you know who managed to work outside of the system and entrepreneurs and selling vegetables and and the illegal markets there and they they save their whole lives to get a little bit of money together and one day the government decides that they want to print some more money and devalue their currency so they can they can spend new money into their system and they completely destroyed the life savings of everybody who've been working there a lot and it's a very interesting you bring up that point because they if you're making an analogy

the united states is like north korea in the way it's going so you're saying you're saying you're sitting here you're talking about the sanctity of marley said anything to bring this program i've let you guys go ok i mean again it's about management of the economy here and currency flows as doug's point i go head injury . oh i'm sorry i. don't know when to compare it compares to north korea and the united states and it's i was just talking about you know doug was talking about you know he brought up the you know the sanctity of savings and why should people have a right right to their savings their right to interest and i was saying like look we'll take it to obviously an extreme example but look what happens in a place like north korea where all of a sudden their savings get wiped out overnight because of government policy and they want to spend new money into the economy i mean how could you possibly justify that obviously you can't but that's that's the that policy to take into an excuse extreme. now in terms of his point about korea is probably desperation. now i'm not i'm not i mean you brought up who has

a right to their savings so i'm saying look we'll take that to extreme and see what happened in north korea and that's what we're doing out here but in a much much slower slower fashion i mean i used to be when franklin saved to set a penny saved was a penny earned i mean he wasn't he wasn't a moron he wasn't a fool people think that now kind of sounds stupid but back then i mean the natural the natural order of prices in an economy should be to go down if you have a stable money supply and increase in productivity which is what you have and in a growing economy prices will come down over time like they did in the united states between seventeen seventeen eighty nine and one thousand and thirteen prices came steadily down we had sustained deflation in this country coupled with robust economic growth so you don't need inflation to have economic growth you also inflation if you live in a big urban labor radical socialist movement because we also know we also know your environment is incredibly punishing to everybody who is in a creditor but you know what we have we had incredible growth in this country not just for the upper class but the middle class we invented the middle class we

invented. not leisurely for. in the wall in the nineteenth century things were when from when from system to level two you know we were the wealthiest country in the world by nine hundred ten one hundred fifteen. and that was that was based on the hard work we did in the night and then in the nineteenth century we were doing that hundred century what china is doing today i generally people gentlemen i want to go to jim rogers because we're almost running out of time what about what's the future of the middle class in the united states jimmy got one minute go ahead. that's being wiped out by the government by low interest rates and by gigantic debt which nobody can finance the farmers are going to give up on a soon and then what do do we. doug what do you think what's the future of the middle class is not very good unless you. actually start investing and get the money out of the hands of financiers and into actual productive investment ok and ask where goes to andrew what's the future of the middle class who's going to decide where that productive money goes to if the government decides what the

industries need to find they're not going to work because the government has no sense of what what is productive and what isn't productive you've got to leave those decisions the hand of the of of of it's working pretty well in china kids who are doing very well in the top private sector there and they're communist in name only they're communist in their political class but but there are economists run by entrepreneurs and business people ok on the you know generally more community in america ok well let me will do a program on that in the future what's more capitalistic china or the united states many thanks to my guest today on york and in singapore and thanks to our viewers for watching us here are to see you next time and remember crosstown. story.

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