video. called. a warm welcome back it's all fall down this is all t.v. us most powerful bodies in stalemate over tensions in khosla boat and serbians northern border crossings the breakaway regions ignoring calls to towards it seem set on seizing the checkpoints all day if necessary. as the british and french leaders held a democracy they poured. some weapons continue to strengthen our arab hard line regime is. under a russian man spacecraft touching down bringing three international space station

crew members back to one of the tensest missions in its history. next the special report on the white collar criminals who push the world into economic turmoil. who had brought down wall street. hedge funds. back in two thousand and seven with the blues still in full swing my business partner rory o'connor attended this party just off wall street for traders under the age of thirty. it reeked of affluence. trying to tarnish unified people huge firms were like only clubs were ungodly sums can be invested in complicated vehicles in secret outside the

prying eyes of law street regulators. and the traditional investment firms have been through it's funny it's no wonder so many of these young people want to live and at the top. i personally spent five years in a private equity and then made the decision instead of going back to business school to move over to the public side so that was a conscious decision on my part i think most people probably get involved because there is an opportunity to move up the ranks and make more money at an earlier age in hedge funds and there isn't private equity which is the natural progression after a couple years an investment banker program well if you are going to be in the investment world the best way to and you're a good investor the best way to make money is to have a hedge fund because you get compensated much compensated much higher. hedge funds were being paid one percent of the assets and twenty percent of the profits and that was. so obviously that was the best way to make money if you were in a good or insurance company a i.g.

was a leading seller of credit derivatives so a bank for example like goldman sachs would create a c.d.o. it would stick all kinds of subprime loans and packages academic packages of the middle of this and then it would go off today i. she had a aaa rating interesting credit rating in gold it would say you know what you take this package of junk we just created. kind of insurance you basically write. basically credit in short you got a much better rating than we do so. from you with that insurance you make money we make money everybody's happy in the bank regulator william black mayors this was all deliberate this stuff the stuff that you're talking. it was created out of things like liar's loans that were known to be extraordinarily bad a on now it was getting triple a ratings now aaa rating is supposed to mean

there is zero credit risk so you take something that not only has significant it it has crushing risk that's why it's toxic and you create this fiction that it has zero risk that itself of course is a fraudulent exercise. in. most. cases. the i g made guarantees totaling more than your ability to pay an amount larger than the entire value of the company actually that's a bit of an understatement ai g. along with others from sold to rivet is and insured your policyholders to tune of an estimated five hundred ninety six trillion dollars compare this to the gross national product of the entire world and the problem should become more obvious so you were just gambling billions possibly trillions of dollars. what i would refer

to it as gambling with you know these surveys transactions were under the individually underwritten very carefully and maybe i can provide some of background see that might be helpful. but they were carefully underwritten how come no one wants to buy them how could a i.g. have possibly expected to make good on its promises one thing we know for sure a.i.g. executives made huge paychecks selling these credit derivatives to hedge funds and others right up until the economy caved. so we don't need to fear it but i don't think it's your headphones i think hedge funds provide. a pretty intelligent investor base or savvy investor base for the fore. for a. top down plays the wall street used

to invest in the american economy in companies that used its money to produce goods and services but then wall street became the american economy our financial system was a reengineered in what's been called financialization with banks credit cards and real estate and insurance companies as the new power players. capitalism is sort of gone off the rails it's ceased to be capital it's financial isolation the fact that it's now all about speculation the fact that it's about ponzi schemes of the facts about selling and buying paper from an economy of real goods real commodities and real services to a system where people were buying and selling money buying and selling assets buying and selling other firms were no new value was created and most sensibly says the whole system has gone predatory i think we had a transition from what really was

a free market system to something that is out of control and probably what i would define as a predatory system frequently in markets that are manipulated for the and about maybe a few out there who are investors mega investors it's even even that's very difficult to tell we still don't know point fact is making money while somebody's backed out losing money on wall street right now as businessweek noted what we're observing in all of its bizarreness is the ancient paradox of what happens when an irresistible force meets an immovable object irresistible force in this case is the u.s. economy the immovable object is a wall of debt that now can't be paid back we're in a position where the volume of mortgage debt corporate personal debt and even state and local debt is larger than the ability to pay a reasonable credit based economy from the ruling disparity between rich and poor

on this transferred from the middle class to the upper class the middle class watch and see things literally drop to nothing this every spirit dollar when the paying off. the upper class meanwhile think you know how to make money. and more accurately how to sell their debt or have just paid in the future. real estate expert ron silverman calculates the cost you are talking. probably every transfer of hundreds. of dollars hundreds of billions hundreds of billions of dollars billions. from the pockets of the poor or to people who are far better positioned. choke or victim to go up or one percent of the population own thirty percent

of america's returns to well that is evident interest in capital gains five years ago they'd raise their proportion from thirty seven percent to fifty seven percent and today it's estimated that the upper one percent of america's population. almost seventy percent of the returns to. the percent seventy percent that's huge yes that is unprecedented it's essentially it makes america look like a third world banana republic. talking. to the mob they're still. ironically beer stearns was also the billions of dollars they received in the bailout did not go to the company's cheer holders but. it was the deal that ultimately saved the creditors to bear stearns by forcing it into j.p.

morgan at the expense of equity holders michael hudson points out that both the homeowners and corporate america on how in hock to the debt machine many corporations are effectively in negative equity or in technically insolvent position headed by the financial sector by the banks themselves. really sympathy for the demonstrators in the book. i don't know if there's a lot of sympathy per se to to their point you know i mean we were you know in a similar similar boat so to speak a similar boat perhaps only one life preservers the fact that the government now is funneling money to a major bank and saying if you can do that with a bank why not do it with straps homeowners facing foreclosure as democrats thank. god. i think. the crisis increases disgrace saud's hudson says ministry is leading more on the

street in a battle for survival we are seeing a second i play us war in this country such as you've never seen in the entire history of the united states a class a class war except in this case the class war isn't the kind of war the marxist some socialist talk about it's enough between employers and employees because employment is going to be shrinking cast of bear stearns fourteen thousand employees would eventually be laid off by j.p. morgan sure it's a class war between creditors and debtors it's going to be a fight between the financial sector and what's called the real economy the economy of production and consumption and the financial sector has prepared well and positioned itself to come out on top by being able not only to foreclose on the property of betters but to get a government bailout for all of its losses. because

. the employment is going to go to market they're going to shrink people are going to default even more on their mortgage debt on their credit card debt on their student loans so you're going to have an exponentially rising prend of defaults you're going to see a transfer of property from debtors to creditors a depression not only a depression but an economic polarization it sounds bad yes it's very bad. the media was now out in force covering the protests many homeowners would not talk to them like that but that. there was an earlier president. was seen a b. c. reporter turned to me when others would sign up hello why do you think people don't want to talk to you because they hate you they think the media is part of the

problem they don't think that you're going to help them thinking out there. tonight of what's been the first financial crisis hit bottom. certainly was the media when all this was going on why were there so few naming those investigations in what was to become an economic catastrophe things are only to get worse we want to talk a little bit more you've been credibly pessimistic august two thousand and seven marked the beginning of the end of an era what had gone up was now coming down the . road closures were up ninety three percent from the year before. in london there was a run on northern rock bank more bank write downs followed billions that few b.s. and citi group fannie mae the largest source for home loans reported a three point five five billion dollars loss for the fourth quarter in march two

thousand and eight the fifth largest investment bank in the world here stearns was on the verge of collapse many of the nation's most and spectacular financial journalists were still getting in get my money out there were no you know bear stearns is fine do not take your money i didn't write that there's no one to boil than have cost four hundred pounds turns is not in trouble i mean if any are more likely to be taken over don't move your money that's just been silly don't be silly the media was complicit says dave starkman a financial journalist and now with the columbia journalism review the business press former colleagues of mine friends of mine did not really recognize and understand what they were up against how dramatically the the world had changed the lending industry had changes things that you kind of documented how out of control wall street had become but i think the real contributing factor tactic to how we

got to where we are today. start compares the journalists who cover wall street to reporters sent to iraq he said they too were embedded but in the corporate culture. the great panic of two thousand and eight is the equivalent for the bit business media what the iraq war was from that for the washington press corps is the national story of the last seventy years so the parallel is fair you could further extend the analogy a little bit to think about the idea this concept of being embedded and that the press corps itself was sort of imbedded with a particular narrative. that has its origins are on wall street i don't think that analogy is out of whack at all. there was one more factor in this you in the media covered because it was about the media about the inclusion of nearly three billion dollars in advertising revenues from dodgy lenders and credit card companies

between two thousand and two when the housing bubble took off until this crash in two thousand and seven. thankfully the entire industry became predatory predatory like criminal. yet deceptive marketing and mass as a as a function of. it started in america and is now everywhere some say the united states has infected the world with a kind of financial aids. the people who these mortgages was sold to. a large majority of these people who are poor black people or that he know people in other words this was targeting minorities especially so this resulted in the biggest transfer of wealth from the

poorest people in america to the richest institutions in the world and think that the majority of people. they feel that this is a problem for as you say this is this is a banking problem stock market problem this is investment problems from your past side it's interesting because a gentleman says things are much more controlled here but i got to a bank get my house they really make sure everybody i think that america is heading for a really deep crisis over i'm told before. you have a you have a deep ideological cultural division you're going to have i don't see that have a you know void mess of unemployment you have extreme wealth an extreme poverty and you have a population. that's not the case here i think what we're going to see in the united states i hope i'm wrong but i think it's heading towards an abyss as the

crisis worse and politicians family woke up to realize that the economy they had the regulated was imploding congress was finally being asked to act ironically the pitch was made by a republican treasury secretary henry paulson a former c.e.o. of goldman sachs in the years that that firm made massive profits in housing securitization and speculation. we must do so in order to avoid the continuing series of financial institution failures and frozen credit markets that threaten american family's financial well being the viability of this is go small and large and the very health of our economy the question would government intervention fix the problem or make it worse would it reward the companies that profited from massive fraud or would it lead to more fraud treasury secretary henry paulson and fed chairman ben bernanke he began

a push for what might be called the final plunder the real story was not widely known except soon into the war on c.-span on thursday at about eleven o'clock in the morning the federal reserve noticed a tremendous drawdown of money market accounts in the united states to good tone of five hundred and fifty billion dollars we were having an electronic run on the banks that their estimation was that by two o'clock that afternoon five and a half trillion dollars would have been brought out of the money market system of the united states would have collapsed the entire economy of the united states and within twenty four hours the world economy a shell shocked congress was given a three page plan in essence it gave paulson total control to spend seven hundred billion dollars some saw it as a power grab others saw the deliberate creation of the crisis to push through

a corporate agenda. control the media enough to ensure that the public will not notice that this bailout bill and get them for generations what was unique was the refusal of congress to hear any testimony from expert witnesses or to have eric billion dollar bailout for wall street is being driven by fear not that this is too much money into short a time going to too few people while too many questions remain unanswered when we asking wall street to clean up its own gas when we passing new laws that stop the speculation which triggers why aren't we putting up new regulatory structures to protect the investors how do we even value the seven hundred billion toxic assets why are we directly helping homeowners with their debt burden why aren't we helping american families face what bankruptcy why are we reducing gets for main street instead of wall street isn't it time for a fundamental change in our debt based monetary system so we can free ourselves from the net placement of the federal reserve by the federal reserve in the banks

this is the united states congress or the board of directors of goldman sachs congressman can cinches remarks were not widely reported either he was still refusing to make new loans the oversight of paulson's program was criticized because millions could not be accounted for fraud is to seat and the essence of fraud is i create trust in you and then i can trade that trust and get you to give me something of value and as a result there's no more effective acid against trust and fraud especially fraud by top elites and that's what we have although all the facts are not even about who got how much and under what terms many in the public see the bailouts as a way to loot taxpayers as fraudulent as the problems they were addressing. because we're out of the capital but this summer of two thousand and nine the

crisis had not abated unemployment continued to climb foreclosures to mount bankruptcies to grow markets to shrink firms to fold and tensions to tear apart families and communities i think you will see a bunch of people get died it cuts out first sentences more importantly the bigger question to me is will we see a structural change we go through bad recession value a start body struggling to rebuild an odd sustainable system that should have never been erected in the first place as new regulations were beginning to be put in place trillions had been spent by government on stimulus programs these measures are clearly not enough so-called reforms often pump money into the very institutions that caused the problems the bailouts benefited the wealthy deficits and big grew by the trillions it became clear that the structure of our economy has yet to be transformed to cook over the fire start. in june two thousand and nine

president obama announced new financial reforms saying the crisis was caused by mistakes. by news recognizing the government's inability to police wall street investor jim channels says his reforms are doomed to fail and it's a little bit tough because the guys who are the bad guys are one step ahead of the of the cops on the beat every single day for starters you need a full investigation like the one that followed the great crash of one nine hundred twenty nine we need to know who benefited from one of the most insidious crimes in history how did wall street some wizards engineer distance sr and who was complicit with them will the big fish ever be prosecuted the media too has to wake up to shift to the bait to come in the. and for deeper change and a crackdown on white collar crime since this is my film i get the last word this

financial crisis will not confirm golf like a light switch millions are struggling to survive as conditions get worse. to get you straight to jail ultimately. and everything. to the same people suffer every day when the search areas are being created there was all lot of partying there was a lot of back slapping there was a lot of extract a lot of extraction should lead to a major reaction the ruling egypt blunder in an age of major structural change all will be or have to be an age of protest and pitchforks first. let's go to. stanford.

to college. this. is just. the first. we saw the sun drop. and she. loves. money she dropped. out. yes. you.

were. on the company. toxic. talk.

so. far away land. where human life is ruled by nature. is scarcely preserved by the clear. lie hidden in the deep permafrost. and for those who deal with. prehistoric times are still.