two thirty in the morning here in moscow broadcasting live this is r.t. what have you with us could offer you a loyalists continue to put up strong resistance and claim that nato has killed hundreds of civilians in recent bombing raids this comes as libya's former rebels are granted a seat at the un their talks move to post-war reconstruction and. meanwhile there's another bid for recognition with palestine the president waiting for a u.n. vote on statehood despite a u.s. promise to veto it that's as some israeli west bank settlers say they're ready to

leave the area but that their government will take them. and in kosovo a standoff continues between police and ethnic serbs that are angry because pristina has taken control of the two border posts blocking serbian imports the mostly serb north of the republic and claim that their rights are being violated by kosovo albanians. but up next our special report on the reasons behind the economic crisis that has affected us all but that so few understand. who had brought down wall street. hedge funds. back in two thousand and seven with the blues still in full swing my business partner real courage to display the just off wall street for traders under the age of thirty. it reeks of affluence.

shiny new cars beautiful people huge problems were like only clubs were ungodly sums can be invested in complicated vehicles in secret outside the prying eyes of wall street regulators soon all of the traditional investment firms have been who 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 than there is and private equity which is the natural progression after a couple of years in an investment bank program well if you're 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 from compensated much higher. hedge funds were being paid one percent of the assets and twenty percent of profits and that was a so obviously that was the best way to make money if you were in a good out insurance company ai 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 then packages packages or packages of them into a package and then it will go up to a i. and they actually had a aaa rating credit rating and say you know what you take this package of junk we've just created. kind of insurance you basically write default swap to us you basically credit insure it you got a much better rating than we do so our investors will buy it from you with that insurance you make money we make money everybody is happy in the bank regulator william black leaders this was all deliberate this stuff the exotic stuff that

you're talking about. 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 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 apps are size. and. crisis. any 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 he i-g. along with others who sold the rivet is and insured their policyholders soon 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 variance possibly trillions of dollars. but i would refer to it as gambling with you know these these transactions were under that individually underwritten very carefully maybe i can provide some of background see that might be helpful. if 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 but i don't think it's the fear hedge funds i think hedge funds provide. a pretty

intelligent yesterday's more savvy investor base for the cup. oh right. down to what a 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 through 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 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 now that is out of control and probably what i would define as a predatory system frequently in markets that are manipulated or the. 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 so many in fact losing money on wall street right now as business week 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 the resistible force in this case is the us 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 the rise of a credit based economy from the ruling this already accrued nixon who has transferred from the middle class to the upper class the middle class watch that savings literally drop to nothing this ever spirit dollar menu paying off probably the upper class meanwhile think you know how to make money from money how your accurately how to sell their debt just paid in the future. real estate expert ron silverman calculates the cost you are talking. crop every transfer of hundreds. of hours

hundreds of billions hundreds of billions of dollars billions. from the pockets of the poor. who are far better. choke all victims 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 it is it's unprecedented it's essentially it makes america look like a third world banana republic. talking. to the mob they are still. ironically here stearns was also

the billions of dollars they received in the bailout did not come to the companies cheer holders but. it was a deal that ultimately saved the creditors to bear stearns by forcing it into j.p. morgan at expense of equity holders michael hudson points the homeowners and corporate america on how in hock to the debt machine many corporations are effectively in negative equity or technically insolvent position headed by the financial sector by the banks themselves. really sympathy for the demonstrators in the bill. i don't know if there's a lot of sympathy per se to to their point of view i mean we were you know in a similar similar boat so to speak a similar boat perhaps only one has life preservers in fact 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 strapped homeowners facing foreclosure as democrats thanks. to crisis increases disgrace and signs hudson says ministry is leading new on the street battles for survival we are seeing a second class war in this country such as you have 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 thought about it's not between employers and employees because employment is going to be shrinking. thousand employees would eventually be laid off by j.p. morgan chase 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 bettors but to get a government bailout for all of its own losses. employment is going to go to market are going to shrink people are going to default even more on their mortgage debts on their credit card debt on their student loans so you're going to have an exponentially rising trend of defaults you're going to see a transfer of property from debtors to creditors it's a depression not only a depression but an economic problem is ation 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 anything like that but that you know i said earlier that. was a b c reporter to me when others were assigned tell so 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 but they don't think that you're going to help them thinking their. project item cuts but the worst financial crisis hit bottom. certainly or was the media when all this was going on why were there so few naming does an investigation into what was to become an economic catastrophe things are not only to get worse you want to topple a bit more you've been incredibly pessimistic august two thousand and seven marked the beginning of the end of an era what had gone up was now coming down. foreclosures ninety three percent from the year before. in

london there was a run on northern rock bank new 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 respected financial journalists are still getting it when i get my money out there is no no no bear stearns is fine do not take your money i was right because one k. boiled in the plus four hundred pastors is not in trouble i mean if any are more likely to be taken over don't move your money that's just plain and simply don't be silly the media was complicit starkman a financial journalist 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 and i think it's a real contributing factor in fact a clue 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 what the iraq war was from it 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 within it. killer narrative that has its origins i don't on wall street i don't think that analogy is is out of whack at all . it was one the effect of this you in the media covered because it was about the media about the infusion 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 its crash in two thousand and seven. then surely the entire industry became predatory predatory like criminal. yet deceptive marketing of nascar as a as a function of age and started in america and is now everywhere some say the united states has infected the world with a kind of financial aids. to

people who these mortgages were sold to. a large majority of these people were poor black or latino people another word 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 i think that the majority of people. they killed that this is a problem for as you say this is this is a banking problem stock market problem this is investment problems for their peers side it's interesting because a gentleman says things are much more controlled here playing out of a bank room to get my house they really make sure if somebody i think that america is heading for a really deep crisis over i'm told before. you have a you have a deep etiological cultural division you're going to have i don't see that having

a you know void mess of unemployment you have extreme wealth and 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 united states is heading towards an abyss as the crisis worse and politicians family will go up to realize that the economy they had they regulated was imploding now this 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 and housing securitization and speculation. we must do so in order to avoid a continuing series of financial institution failures and frozen credit markets threaten american family's financial well being the viability of this is both small

and large in 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 who 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 know except soon into the on c.-span right on thursday at about eleven o'clock in the morning the federal reserve noticed it from anderson drawdown of the money market accounts in the united states to the chairman of the five hundred and fifty billion dollars we were having an electronic run on the banks that their estimation was that i.q. o'clock that afternoon thought i had been a half a 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 and has since it gave paulson total control to spend seven hundred billion dollars some saw it as a power grab others sold a deliberate creation of the crisis to push through a corporate agenda. i troll the media enough to ensure that i'll click well not notice that this bailout bill and get them for generations was unique was the refusal of congress to hear any testimony from expert witnesses or to have eric know your dollar bailout for wall street is being driven by fear not back this is too much money into short a time going to too few people well too many questions remain unanswered when we ask you wall street to clean up its own mess when we passing new laws the stop the speculation which triggered 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 are we helping american families pay for bankruptcy why are we do you think that's 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 relation of the federal reserve by the federal reserve in the banks is this the united states congress or the board of directors of goldman sachs congressman consented to his 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 betrayed that trust and get you to give me something of value and as a result there's no more affective acid against trust and for a lot especially fraud by top elites and that's what we have old though 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 they're all over the capital but the 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 a bigger cut to me is what we see a structural change we go through dog bad recession body waste our body struggling to rebuild that 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 bill outspent if they did the wealthy deficits and big grew by the trillions it became clear that the structure of our economy has yet to be transformed to the gulf and of course our. in june two thousand and nine president obama announced new financial reforms saying the crisis was caused by mistakes. by new and recognizing the government's inability to police wall street investors jim channels says his reforms are doomed to fail and it's a little bit tough because the 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's wizards engineered this disaster and who was complicit with them will the big fish ever be prosecuted the media too has to wake up to shift the debate to include in the. a deeper change and a crackdown on white collar crime since this is my film i get the last word this financial crisis will not come for and off like a light switch millions are struggling to survive as conditions get worse. for you to get your state i'll probably. do the same people something every one of. the charities were being created there was all lot of partying there was a lot of back slapping there was a lot of extraction a lot of extraction should lead to a major reaction and 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.

main street. food. bank. just follow the. experts. we talked. and she rocks loves. money she spoke to.

us. yes by surprise you. cannot get. on a company to not. talk . talks.

wealthy british style. markets why not. find out what's really happening to the global economy with mike's cars or the no holds barred look at the global financial headlines tune into cars a report on our key. again

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